When we first told you last Friday about the lawsuit that developers BlueStar filed against Seattle Capital and its parent company in connection with the stalled Fauntleroy Place development, we also mentioned there was word of another lawsuit. We’ve now learned more about that lawsuit: It’s filed against Seattle Capital and Fauntleroy Place LLC, but for this one, the plaintiff is BAJ Capital, local investor Christopher NeVan‘s firm, which state corporation-information files listed as one of the “governing” parties in FP LLC along with Seattle Financial. It tells the detailed tale of what allegedly happened with the site and its ownership last year – we’ll be reading it a while to distill it, and we’ll link it here as soon as we can. The first 10 pages (which are followed by exhibits including the original 2006 LLC agreement forming Fauntleroy Place) accuse the defendants of breach of fiduciary duty and breach of contract. This suit was actually filed a few days before BlueStar’s suit (which isn’t yet available in the public online court system). ADDED 1:17 PM: Here’s the lawsuit if you’d like to read it for yourself. (The one filed Friday isn’t available online yet.) 2:28 PM: We’ve summarized the complaint, if you’d rather read the toplines than wade through the whole thing:
Here’s the quick summary of the complaint:
NeVan says he had the idea for Fauntleroy Place. After years of working on it, he says, he brought in BlueStar. The project needed money, so Seattle Capital came in. Then, it alleges, Seattle Capital said it was having trouble in early 2008, so the project sought another buyer, and was talking with UDR.
With that deal imminent, the suit alleges, Seattle Capital engaged in maneuvering to take more control, and then to cut BlueStar out of the ownership picture entirely as of June of last year. The suit then alleges that BAJ signed a new financing deal under duress – a loan with “rate of return” raised from 9 percent to 14 percent — because Seattle Capital allegedly would drop all financing otherwise, and alleges that Seattle Capital got a loan-origination fee of nearly $1 million out of the whole thing, among other purported benefits. Then, the suit goes on, Seattle Capital made the terms of the prospective sale to UDR unfavorable enough that the potential buyer walked away.
After that, the complaint goes on, Seattle Capital “refused to renew the development contract with BlueStar, refused to enter into a new development agreement with BlueStar, would not confirm that the contractor, subcontractors and others working on the Project would be paid. Such actions placed the Project in extreme danger of cessation, caused the Project to become hopelessly behind schedule, created the likelihood that the anchor tenant, Whole Foods, would be lost.”
And then, without BAJ’s consent, says the complaint, “SCC attempted to sell the LLC on terms and conditions that would distribute the entire sale proceeds to satisfy” its interests, allegedly acing out BAJ.
The suit seeks compensation and damages in a variety of ways including having that June 2008 construction loan declared void.
(We’ve been trying to reach Seattle Capital since last week for comment on where the project and the latest prospective sale stand; we’ll keep trying, and will see if their lawyers are commenting, too.)