Masoud Shojaee and Ugo Colombo’s split over the development of Collection Residences in Coral Gables has just gotten much more heated, with Shojaee filing a lawsuit alleging breach of contract, among other counts.
Shoma Coral Gables filed the 114-page suit in Miami-Dade County Circuit Court on Wednesday against Gables Investment Holdings LLC; Colombo, individually; and the Collection, Colombo’s Coral Gables car dealership.
In November, following a major falling out, Shojaee and Colombo pulled out of their joint venture to develop the Collection Residences, a planned mixed-use project with 128 condo units in Coral Gables, across the street from the Collection.
The suit points to much deeper underlying problems, alleging that after Shoma “refused to capitulate to improper demands of CMC and Colombo, after having invested millions of dollars in the future project, Colombo and his company, CMC Group, proceeded to sabotage the entire project, causing substantial damages to Shoma.”
Colombo issued a statement through a spokesperson: “This is a frivolous lawsuit filed by a peculiar fellow.”
The suit centers around retail space and parking spaces for the Collection. It outlines Shojaee and Colombo’s business relationship dating back to 2013 when they decided to develop Collection Residences. The suit says they paid $27 million for the property plus a $1 million bonus upon execution of a sale or lease of underground parking spaces to the Collection, plus 10 percent of the gross rental income from any lease or the sales price for the purchase of any underground parking.
According to the suit, the Collection’s revenue exceeded $500 million in 2014, up from $50 million in 1994, and to meet its needs for additional retail and parking space for cars, CMC and Colombo allegedly attempted to use their relationship with Shoma “to unfairly enrich themselves and the Collection at Shoma’s expense by acquiring underground garage space for the cost of construction and without payment for the land or profit.”
The suit alleges that the Collection has been storing vehicles on the property, without paying rent, and refuses to move them.
Shojaee declined to comment on the suit, but his attorney, Andrew Hall, told The Real Deal: “This lawsuit is going to hold Mr. Colombo and his interests responsible for attempting to exploit a joint venture to his own benefit, to the harm of his partner,” said Hall, founder of Hall, Lamb & Hall, who represents Shoma along with Matthew Leto and Frank Silva. “The Collection was going to expand and shift the costs of the expansion to Shoma. We all know what that means, and as a result a project that should have been phenomenally successful failed. It’s now time for accountability.”
In September 2015, CMC and Colombo asked Shoma to agree that the Collection would pay $14.25 million for 26,500 square feet of prime retail space and $3.16 million for the basement garage area, the suit says. Shoma countered with $18.55 million for the retail space and $5.48 million for the basement garage. The suit then describes a standoff and the alleged sabotage of the joint venture development.
“Ugo Colombo and I will no longer be pursuing a joint venture to develop The Collection Residences,” Shojaee, president and chairman of Shoma Group said in a statement in November. “… At this point, it was simply a matter of terminating our relationship to co-develop the project.”
Jason Giller, an attorney for Colombo’s Gables Investment Holdings responded to the suit: “A few months ago, Mr. Shojaee announced that he was ‘dropping’ the project. It now seems that he suffers from dropper’s remorse,” Giller said in a statement. “It is nonsense for Shoma to seek injunctive relief to remove a few cars from a warehouse leased and paid for by The Collection. Shoma is not the owner of any of this property.”
Colombo, had told TRD in November that he still plans to build the Coral Gables project — eventually. The land, which his firm owns together with Shojaee’s Shoma Group, is not for sale, he said.
“The project is not dead, because it was never alive,” Colombo told TRD in an interview at a November Urban Land Institute conference in Miami.
“We’re putting every effort now in [Brickell] Flatiron, and we’re about to break ground,” he said. Once that project has progressed, he will turn his focus to the Collection Residences, he said.
Yet according to the suit, Colombo had already told Shojaee that the project was not going forward and closed the sales office and canceled marketing events for the project. He also discharged Realtors that had been hired to market and sell the project, all “in retaliation for Shoma’s refusal to capitulate to CMC and Colombo’s improper demands,” according to suit.
In addition to breach of contract, the suit alleges breach of fiduciary duty, breach of implied covenant of good faith and fair dealing, interference with contract, and interference with prospective economic advantage.
The Collection Residences’ 2.8-acre site, which includes 4101 Salzedo Street and 4112 Aurora Street, was acquired by Coral Gables Luxury Holdings, a company owned and managed by the former joint venture partnership. The site currently includes two office buildings, a small amount of warehouse space and parking lots.
Coral Gables Luxury had originally filed development plans with the city to build 270 high-end residences and about 40,000 square feet of ground-floor retail space. Arquitectonica was hired to design the mixed-use development.
The Collection Residences marks the second project within a year linked to Colombo that is not moving forward as planned.
In May, Colombo and his partners put an assemblage of parcels at 830 Southeast First Avenue in Miami on the market. The 0.8-acre property, marketed as 830 Brickell, across from the planned Brickell City Centre, includes development rights and plans. A second Brickell Flatiron tower was originally planned for the site.