Litigation may delay construction of a $100 million mixed-use development in Delray Beach. One of the two partners in the Midtown Delray Beach development has sued the other, and a potential buyer of the project also has sued to complete the purchase.
The partners in the Delray project are Hudson Holdings, led by principal Steven Michael, and Marshall Florida Investments, led by Rick Marshall. They assembled the seven-acre development site along West Atlantic Avenue for $26 million.
In January, the partners negotiated a deal to sell Midtown Delray Beach to an affiliate of Boca Raton-based Pebb Enterprises for $40 million. But Pebb failed to close on a purchase of the project by the contractual deadline on February 28.
On March 21, two affiliates of Hudson Holdings filed a lawsuit in Palm Beach Circuit Court against Marshall Florida Investments and two entities linked to Pebb Enterprises.
Hudson’s lawsuit alleged that the defendants started working together to extend Pebb’s purchase deadline in “a conspiracy to enrich Marshall and Pebb” by cutting Hudson out of a $20 million interest in the Midtown Delray Beach development.
The lawsuit accuses Marshall of breach of contract, Pebb of tortuous interference with a contract, and both Marshall and Pebb of civil conspiracy.
On April 16, Pebb affiliate Delray Midtown Properties filed its own lawsuit, claiming it deserves to complete its planned purchase of Midtown Delray Beach.
Pebb’s lawsuit claims the company was unable to buy the project by the Feb. 28 deadline because the sellers undermined a due-diligence review of the deal by failing to provide certain documents.
The requested documents include a signed letter of intent by World of Beer and a proposal to relocate historic homes on the development site from Wolfe Movers.
Michael, the Hudson principal, told the Palm Beach Post he expects a quick resolution of the lawsuits but did not elaborate. [Palm Beach Post] – Mike Seemuth
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