Pizzarotti had a blockbuster NYC entrance. But did the construction company fly too close to the sun?

A look at the company’s work so far in the city and the litigation that has followed it

TRD New York /
Jul.July 12, 2019 07:00 AM
From left: One Seaport, Gramercy Square, 75 First Avenue and former Pizzarotti CEO Rance McFarland (Credit: Rendering courtesy of Goldstein Hill & West / Fortis Property Group; VUW Studio; Pizzarotti; GlobeSt)

From left: One Seaport, Gramercy Square, 75 First Avenue and former Pizzarotti CEO Rance McFarland (Credit: Rendering courtesy of Goldstein Hill & West / Fortis Property Group; VUW Studio; Pizzarotti; GlobeSt)

After more than 100 years in the construction business, Italy-based Impresa Pizzarotti still needed a fixer to break into a formidable new market: New York City.

The company began searching in 2013 for a partner with experience and connections in the city, apparently finding both qualities two years later in IBC Business Groups, a construction management firm that launched in 2012. The company was run by Rance MacFarland and Frank DeGrande, both of whom were affiliated with small construction companies before forming IBC. As the newly created New York subsidiary, IBC Pizzarotti, which was officially formed in 2015, the open shop company quickly won an impressive volume of work, by some counts $1 billion’s worth in just 20 months.

But in the past two years, the company has parted ways with its CEO, been replaced on several jobs and become entangled in a series of lawsuits with clients, former employees and subcontractors. While its Italian parent is well-known and respected internationally, some say the New York subsidiary wasn’t ready for the amount of work it took on and didn’t have adequate backing from executives across the Atlantic.

“Simply, I think they had taken on too many projects all at once, and they couldn’t support it with the local staff they have,” one source familiar with Pizzarotti’s work said. “They were a small shop that could not take on all the work that they ultimately got.”

Things fall apart

Pizzarotti’s union with IBC didn’t last long. In March 2017, the firm quietly reached a separation agreement with MacFarland, purchasing his 20 percent stake in the company, according to a lawsuit Pizzarotti filed against MacFarland. DeGrande remained at the company, serving as its head of business development and one of the only people from Pizzarotti whose name appears on permit applications filed with the city’s Department of Buildings. Still, the firm dropped IBC from its name.

In October 2017, Pizzarotti filed a lawsuit against MacFarland, claiming he misappropriated company resources to cover personal expenses, causing — among other things — delays in the firm’s projects. The lawsuit claims he committed to contracts without approval from the company’s board of directors, made unnecessary payments to vendors and subcontractors and caused “substantial harm to the company by damaging its image in the New York City market, which was especially susceptible considering the Pizzarotti Group was just emerging in that geographic area.” According to the complaint, his alleged misdeeds were the reason for the March separation agreement. Pizzarotti ultimately decided to go public with its allegations once MacFarland was hired by a competitor, McKissack & McKissack, which violated the terms of his employment agreement with Pizzarotti, according to the lawsuit.

Paolo Pizzarotti (Credit: Paolo Pizzarotti)

Paolo Pizzarotti (Credit: Paolo Pizzarotti)

McKissack put out a press release in May 2017 announcing that MacFarland had been named its CEO. The release credited MacFarland with “facilitat[ing] [Pizzarotti’s] initial entrance into the New York market, which resulted in the company securing approximately $1 billion of work under contract in 20 months.” McKissack has since filed a lawsuit against MacFarland, alleging that he failed to disclose legal judgements against him, which were masked by other LLCs he was using. Earlier this year, MacFarland declared bankruptcy, citing both the Pizzarotti and McKissack lawsuits as major liabilities. McKissask is seeking $220,000, but the damages in Pizzarotti’s lawsuit have not yet been set, according to court documents.

MacFarland did not return calls seeking comment. In court filings in response to the lawsuit filed by Pizzarotti, MacFarland denies the allegations. He also filed a motion to dismiss the McKissack complaint, arguing that it didn’t show an intent to deceive the company, but the motion was denied.

For some, MacFarland’s departure marked a crucial shift in the company. Owners had worked with MacFarland and, in some cases, decided to hire Pizzarotti because of him. Marco Martegiani, who served as COO of the New York-based company for six months, was tapped to replace MacFarland. According to his LinkedIn, before joining Pizzarotti’s New York team as COO, Martegiani worked exclusively for construction companies in Rome. A repeated complaint from some who have worked with Pizzarotti is that the management team was in constant flux and seemed to operate with little guidance from its parent company.

“I got the sense that their ownership was not on the ground in terms of really understanding the complexities of New York real estate,” one person who worked on a project with Pizzarotti said on the condition of anonymity. “While things were good, it was all good. But when it turned, these things have a way of quickly becoming dominos. Unfortunately, I think they got too far out over their skis.”

Thank you, next

Pizzarotti Impresa was founded in 1910 by Gino Pizzarotti, whose first project was a small church on a Tuscan mountain pass. Since then, the company, which is headquartered in the northern Italian city of Parma, has grown into one of Italy’s largest contractors. The firm specializes in large-scale infrastructure projects, which have included modernizing sections of the Reggio Calabria Motorway, a 307-mile long roadway. Pizzarotti also built Cinderella and Sleeping Beauty’s castles at Disneyland in Paris.

By 2016, Pizzarotti Impresa had a presence in more than 20 different countries, its website states. According to Associazione Nazionale Costruttori Edili, an Italy-based contractor group, the company was the country’s fourth largest construction contractor by revenue in 2017, taking in $807 million. In 2017, the company formed a joint venture with Australia-based RF Holdings, which goes by Roberts Pizzarotti. The JV’s website boasts that within 12 months of forming Roberts Pizzarotti, the company was tapped to build a 29-story office building for Zurich Australian Property Holdings in North Sydney. The team is also working on the first phase of a hotel redevelopment and is building medical office space in St. Leonards.

In Australia, Pizzarotti paired up with one of the most well-known construction families in the country. Andrew Roberts had previously served as CEO of Multiplex, a company founded by his father that Brookfield Asset Management purchased in 2007. But in New York, Pizzarotti didn’t team up with a major local player, instead merging with a company led by two lesser-known professionals.

“You don’t hire people from the marketplace, put up your flag and think that you’ve got it figured it out,” said one NYC-based contractor who has watched the company’s progress in the city. “New York’s still a very parochial marketplace.”

However, after MacFarland’s departure, the company’s U.S. arm made a few key hires, bringing on seasoned leaders in the New York City market. In February, Pizzarotti tapped Michael Holloway to replace Martegiani as COO. Holloway previously worked for established firms like Lendlease, Plaza Construction, the Alexico Group and Madison Equities. The firm also hired two vice presidents, Michael Wewiora and Martin Hirko, both of whom worked for major city contractors, in August. In November, the company hired Plaza and L&L Holding Company alum Scott Lakow as a vice president and project executive. However, according to LinkedIn, seven months later, Lakow joined Shvo as vice president of development. He didn’t return messages seeking comment.

Until recently, Fortis Property Group’s South Street Seaport condo tower at 161 Maiden Lane was the most visible of Pizzarotti’s New York operations. But over the past several years, construction issues have plagued the Seaport project. A worker fell to his death in September 2017, shutting down construction for more than two months. The city halted construction several other times for safety issues at the site, including an incident in which a concrete bucket grazed the tower’s 34th floor, causing some of the material to pour into the street and partially lifting a section of the floor’s deck.

Fortis blames Pizzarotti for the 13 stop-work orders that were issued at the site and claims it fired the construction company on April 2, 2019, replacing the firm with Ray Builders. Pizzarotti is suing Fortis, claiming that it’s owed $32 million for its role on the project. Pizzarotti’s lawsuit also blames the tower’s misalignment on Fortis, alleging that the developer elected to use a cost-cutting method on the building’s foundation that caused it to lean three inches to the north. Fortis has filed a countersuit.

“As the sole and exclusive result of Pizzarotti’s failures, among other things, the project has endured endless stop work orders, a lack of competent project and site management for nearly the entire duration of the project to date,” Jonathan Landau, CEO of Fortis, said in a letter to Pizzarotti, which was filed as an exhibit in the ongoing lawsuit. “In fact, at multiple meetings, Pizzarotti executives acknowledged these problems, conceded that there was no excuse for these epic failures and even went so far as to acknowledge that the dysfunction was in large part attributable to its parent company abroad failing to support Pizzarotti sufficiently to meet its contractual obligations.”

Jonathan Landau (Credit: Fortis)

Jonathan Landau (Credit: Fortis)

Portions of an email exchange between Fortis and Pizzarotti, also included as an exhibit in the lawsuit, include discussions about clashes between the development and construction teams. In an April 2018 email, Pizzarotti executive vice president Stefano Soncini seems to acknowledge some organizational issues in his company, indicating that he’s replaced 100 percent of his team from the year prior.

Pizzarotti has also had issues with its subcontractors. Its former concrete subcontractor on the Seaport tower, SSC High Rise, filed a mechanic’s lien against Pizzarotti, claiming it’s owed $3.8 million. Pizzarotti has called the lien “willfully exaggerated” and says SSC abandoned work on the tower without giving notice. In July 2018, SSC pleaded guilty to second-degree manslaughter in connection to the death of Juan Chonillo, who fell from the building’s 29th floor. Officials said Chonillo had unhooked his harness to fix a scaffolding platform that became stuck. An SSC foreman had ordered workers to move the platform despite the fact that five workers were still on the unit, according to prosecutors. The city’s building code bars a platform from being moved when workers are on top of it. SSC High Rise’s phone number was disconnected, and the firm could not be reached for comment.

Fortis also filed a complaint against Pizzarotti in May over its work at eight townhouses at 88-98 Amity Street in Brooklyn, known as the Polhemus Townhouses. Fortis alleges that Pizzarotti failed to meet the 12-month construction schedule they agreed to, instead only completing 80 percent of the project after 28 months of work. The developer alleges that Pizzarotti fell behind schedule because it was unable to hire enough manpower for the project. Fortis also claims Pizzarotti’s work is riddled with defects. According to the lawsuit, Fortis was forced to pay for the customization of individual townhouses as a way to keep buyers from walking away. In some cases, buyers backed out of their contracts, leaving Fortis to find replacements in a “less favorable sales market,” according to the lawsuit. Three townhouses are listed as in-contract on StreetEasy, and there’s only been one closing so far.

34th floor of 161 Maiden Lane after concrete bucket grazed the deck

“Throughout the course of the project, the manpower provided was woefully inadequate. Importantly, the manpower inadequacy was not limited to workers — project management on site was grossly deficient and incompetent,” the lawsuit states. “Pizzarotti lacked the ability to negotiate with subcontractors to complete all phases of work and/or failed to obtain multiple bids to reduce costs.”

The Fortis developments aren’t the only projects Pizzarotti has lost (though, the firm maintains it terminated its contract with Fortis before the developer fired the company). DOB records show that Wonder Works construction replaced Pizzarotti at Colonnade Group’s condo project at 75 First Avenue in April. The developer and Pizzarotti are also currently locked in a dispute over the project’s costs. Pizzarotti has filed a lien, claiming it’s owed a little more than $1 million. In a counter complaint, Colonnade alleges that Pizzarotti hasn’t properly itemized its expenses and “claimed a lien for significantly more money than it has spent on the project.” In its complaint, Colonnade calls Pizzarotti’s billing practices “false and possibly fraudulent.”

In 2016, RXR Realty tapped Pizzarotti to manage a $1 billion mixed-use project in Glen Cove known as Garvies Point. The construction firm was already working at RXR’s Ritz Carlton-Residences North Hills, whose final phase received a temporary certificate of occupancy in June. Though Pizzarotti remained on the Ritz Carlton project, the company wasn’t retained for the majority of work at Garvies.

“They were a contractor for pre-construction services and completed that scope of work,” Robert Leonard, a spokesperson for RXR Realty said. He would not elaborate on RXR’s reason for hiring a different firm for the remainder of the Garvies Point project. When asked if he could comment on how Pizzarotti operates or how it’s performed on the Ritz Carlton job, he would only say: “We continue to deliver a Ritz Carlton-quality product at North Hills.”

A representative for Pizzarotti said “allegations on the company’s performance on various projects are untruthful.”

“The company is closely monitoring all allegations that are directly or indirectly being disseminated on the media, and our attorneys are working on a lawsuit for defamation,” a spokesperson for Pizzarotti said.

Pizzarotti is also a development partner — alongside Madison Equities, Gemdale Properties and AMS Acquisitions — on a 1,115-foot-tower planned for 45 Broad Street. The development team held a groundbreaking ceremony in April 2017, but two years later, the tower has yet to go vertical. Madison Equities did not respond to a request for comment, nor did Gemdale. The company is a co-developer — with Centaur Properties and Greyscale Development — at the Jardim, a 36-unit condo building at 528 West 28th Street. That project topped out in September 2017. A groundbreaking ceremony was held in October for Anbau Enterprises’ 39 West 23rd Street, a 39-unit condo project that Pizzarotti is building. The developers at the Jardim and 39 West 23rd Street did not respond to requests for comment. The company has also successfully completed a Marriott-branded AC Hotel New York Downtown at 151 Maiden Lane for the LCRE Group, which opened last year.

But Clipper Equities recently replaced Pizzarotti at its Gramercy Square project, a four-building hotel that’s being converted into luxury condo units. When reached by email, Clipper’s David Bistricer declined to comment. Sources familiar with the project, however, said construction has dragged at the site.

“[Pizzarotti] spoke a good game,” one person familiar with the project said. “It was a two-year nightmare.”


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