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A construction company is suing the developers behind an ambitious housing project, once expected to transform a troubled Portland neighborhood, for fraud.
In a federal lawsuit, a Vermont construction firm claims that the developers of the proposed Midtown complex have broken contracts and been playing a corporate “shell game” to avoid paying for more than $235,000 worth of work on the $85 million project that’s been held up for years.
Since 2013, PC Construction Company has held a series of contracts to do preliminary work for the Midtown developers, who initially proposed putting hundreds of apartments, commercial space and a parking garage on 3.25 acres of vacant industrial land in the Bayside neighborhood. But the developers misrepresented which legal entity actually owned the land and with the project stalled have failed to pay, the Wednesday suit claims.
A local lawyer for the developers dismissed the suit as “frivolous” and said that PC Construction’s contract states it would work for free unless another company were selected to build Midtown.
“This action is nothing more than a character assassination intended to compel the defendants to unjustly compensate the plaintiff,” said Patrick Venne, who represents the developers, commonly known as Federated Cos.
At this point, Midtown hasn’t been constructed either way. And the suit only adds to the legal tangle around the project, which was long delayed by neighborhood opposition, revised and, more recently, pushed to the brink by the city’s decision to deny its building permits.
The developers, Florida residents who have operated locally in part through a number of limited liability corporations, are scheduled to appeal the city’s decision to the Zoning Board of Appeals in June. Venne has said they are considering legal action against the city for allegedly breaking its own contracts related to the project.
A city spokeswoman declined to comment on PC Construction’s suit.
According to the court filing, the construction company agreed to waive fees associated with its four contracts if the Midtown developers selected it to build the project. Since Midtown hasn’t been built, the company’s lawyer argues that developers Jonathan Cox and Nikolas Wexler must pay up.
Venne said the suit’s claims “lack merit” and that the contract “clearly provides that services were to be rendered at no cost unless the project is constructed without [PC Construction’s] involvement.”
The suit also says the developers misled PC Construction as to what legal entity owned the site of the Midtown project. The company was “expressly and impliedly” told that Federated Equities, LLC was the owner, but in fact two other limited liability corporations controlled by the developers own the site, according to the court complaint.
In February, PC Construction sued Federated Equities, LLC in state court only to be informed that the company no longer exists, the suit states. Florida incorporation records state that the company was dissolved in September 2016 with the failure to file an annual report.
PC Construction is suing Cox, Wexler and four limited liability corporations for punitive and compensatory damages, as well as legal fees. The company’s lawyer, Timothy Connolly of Portland, declined to comment.
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