Sunday, July 22, 2018
Business

DeBartolo Development accused in lawsuit of sabotaging partnership

TAMPA — Two lawsuits; two seemingly contradictory claims.

In the one suit filed in Hillsborough County on April 14, DeBartolo Development, the Tampa-based builder and real estate investment company, is accused of "sabotaging" a lucrative venture with partners in a $150 million project by withdrawing its cooperation and use of its name to raise money.

The cost of the scuttled deal with Mainstreet Capital Holdings, Mainstreet's suit said, is more than $20 million in anticipated investor profits involving the development of apartment complexes. The suit said DeBartolo fraudulently scuttled that deal and misrepresented itself.

Then there is the second suit Mainstreet filed in Palm Beach County a month earlier against its former lawyer, Robert Lee Shapiro. That lawsuit said this:

"Shapiro failed to inform Mainstreet of the most-significant risk in the investment: neither DeBartolo Development nor (its president) Edward Kobel had a written contractual duty to remain active" in a fund being used as the investment vehicle for the apartment venture.

Nor did DeBartolo and Kobel have an employment, consulting or licensing agreement with the fund or "other obligation to continue to lend their efforts and name to the fund," the suit said.

So which is it?

Mainstreet's attorney, Michael Beltran, said in a statement to the Tampa Bay Times, "Any omissions by Shapiro wouldn't exonerate DeBartolo."

But Beltran didn't explain why. A DeBartolo spokeswoman declined to comment, and Shapiro could not immediately be reached late Thursday afternoon.

The DeBartolo suit includes claims of fraud, a breach of fiduciary duty and tortuous interference, which conceivably could leave DeBartolo liable for damages even if no legal, written obligation exists. Or a jury might quickly reject such a claim upon hearing evidence of the other lawsuit.

The DeBartolo suit said the company in 2014 became interested in expanding into the "multifamily residential sector" in the Southeast, when DeBartolo's president Ed Kobel was introduced to Todd and Craig Marshall, brothers in the business of buying and managing apartment projects in Florida.

The Marshalls would later form Mainstreet as they entered into a partnership with DeBartolo in the fall of 2014.

The suit said the project hinged on DeBartolo's name and successful track record as a developer as the partnership sought financing. But after a deal was inked in September 2014, the suit said, things quickly went sour.

The suit accused DeBartolo of misrepresentations, including that it had already obtained a commitment of $40 million from a Canadian pension fund. The suit also accused DeBartolo of failing to cooperate in the effort to get financing from big financial institutions.

DeBartolo "suddenly announced that they would not proceed with the venture, and… that the venture could not continue to use their name even though it had already been extensively marketed," the suit said. A hearing in the suit has not yet been scheduled.

Contact William R. Levesque at [email protected] Follow @Times_Levesque.

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