Luxury co-op pays $2.2m settlement

Cosmetics mogul alleges realty snub

By Andrea Estes
Globe Staff / September 10, 2008

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It may be hard to put a price on exclusivity, but a high-profile dispute over a slice of Beacon Hill real estate can give you a rough idea: more than $2.2 million.

That is the amount paid by an apartment cooperative board to settle a lawsuit brought by a North Shore entrepreneur who claimed he was unfairly rejected for ownership in the luxury building, according to two sources who were briefed on the settlement.

The case brought by John Walsh, the chief executive of the Elizabeth Grady chain of skin care salons, ended in May before going to the jury. Because of a confidentiality agreement, the costly consequences of the rejection had not previously become public.

The long-running saga has provided an unusual public glimpse into the class tensions that lie just beneath the surface of Boston's high society. Walsh claimed he was snubbed by wealthy Brahmin apartment owners who dominate the board at 68 Beacon St. because of his humble roots and Irish descent. The board is led by Jonathan Winthrop, a descendant of Massachusetts governor John Winthrop.

In its rejection letter denying Walsh the opportunity to buy a ground-floor unit facing the Public Garden, board members offered five reasons including their belief that he "would not reasonably coalesce as a member of the cooperative community."

They also expressed fears that his "intentions . . . were of a speculative nature" and that he might use the space for something "which is inappropriate to the decorum of the building or which is a nuisance to the other residents." The board later said it thought he might renovate and then sell the apartment, or open a salon.

But, according to his lawsuit, Walsh was rejected for lack of a proper pedigree.

"I believe [the board members] are bigoted people," he said in a deposition. "I think that they have ancient and archaic values. I think that they do not believe I'm of the same class of people that they are."

He was rejected even though he claimed a net worth of more than $100 million, offered references from US Representative Martin T. Meehan, former attorney general Tom Reilly, and former state treasurer Joseph Malone, and promised to turn the apartment into a tasteful space befitting the understated nine-story building on the flat of the hill, according to court documents. He said the board was so intent on keeping him out that it attempted to buy the 2,000-square-foot unit after Walsh had signed a $700,000 purchase and sale agreement with the owner, Sovereign Bank.

It was unclear this week why the co-op board chose to pay such a large settlement.

Walsh, who has said he has no plans now to move from his current home in North Andover, refused to discuss the case. He has run up hundreds of thousands of dollars in legal bills.

Winthrop also declined requests for comment on the case, as did the board's lawyers.

In general, a co-op board has broad powers to determine who buys into a building. Unlike condos, which are individually owned, a cooperative building is jointly owned by its residents and controlled by its board of directors.

Doug Bailey, a spokesman for the Elizabeth Grady company, said the trial testimony showed "that only one kind of person need apply - Ivy League, white, silver spoon, heirs and heiresses, debutantes and socialites."

Since the dispute was made public, he said, there's been a surprising "lack of outrage about this case. Even people who would describe themselves as progressive have said things like - couldn't he find somewhere else to live or why doesn't he live with his own kind. We thought these phrases were extinct and died with desegregation."

After hearing about Walsh's experience, several lawmakers filed a bill that would allow co-op boards to disqualify prospective residents only on the basis of their finances.

The Legislature has passed the bill twice, but each time Governor Deval Patrick vetoed it, most recently last month. Aides said the bill could inadvertently prohibit the creation of cooperative housing for the elderly or artists.

Walsh's lawyer, William Zucker, called Patrick's veto "surprising. It means that equal does not mean equal."

"I am sure this is not the first time nor will it be the last time this will happen - unless you get this legislation passed," said Zucker. "Just as Massachusetts stood first with respect to the equality of gay individuals, it should stand first in no longer making it possible for this antiquated form of housing to do what other forms of housing cannot do - namely, reject people for any or no reason."

Andrea Estes can be reached at