Allegations of backstabbing and double-dealing fly among developers of Palm Beach townhouses

The partnership behind the Palazzo Villas townhome development in Palm Beach has ended amid a hail storm of fraud and breach of contract accusations.

According to a lawsuit filed in Palm Beach Circuit Court, three companies managed by developers Josh McAlees and Bryan J. Mylett are suing Brazilian businessman Arnaldo Cunha Campos and his companies ARCA Group International Ltd., ARCA 21 LLC and ARCA Group U.S. Holding Corp., over the ownership of Palazzo Villas, which consists of four luxury townhouses that are near completion at 215 Brazilian Avenue in Palm Beach.

Campos and his firms are being accused of repeatedly making false promises and misrepresentations, and then restructuring existing agreements with his partners so he wouldn’t have to pay Mylett and McAlees their share of the profits from the joint venture, according to the suit. The plaintiffs allege Campos owes them approximately $7.2 million.

“We intend to present this case to a jury in an effort to seek monetary justice on behalf of our client,” said Michael J. Pike, a lawyer for the Mylett and McAlees entities. “At a later date, we intend to add claims for punitive damages.”

Campos’ and ARCA’s attorney Andrew J. Bernhard refuted the allegations made by Mylett and McAlees.

“Our clients have conducted themselves in the most fair, honest, and straightforward maner possible, under the circumstances,” Bernhard said. “The lawsuit is without merit and we will address the specific allegations therein directly. In the interim, our clients continue to work diligently in good faith to achieve the immediate and successful completion of the real estate project.”

According to the lawsuit, Campos moved to cut ties with Mylett and McAlees earlier this month. On Oct. 18, Campos’ lawyer Bernhard sent a termination letter to Capital Construction and Development Inc., the general contractor managing construction of Palazzo Villas that is owned by Mylett and McAlees. The same notice also stated that Palazzo Villas of Palm Beach Development, another one of their companies, had “defaulted and [was] terminated pursuant to its contracts.”

Campos linked up with Mylett and McAlees in 2014, when they bought the lot from New York City real estate tycoon Aby Rosen for $6 million, the lawsuit states. Campos approached Capital Development Group International, the main plaintiff, to create the joint venture and said that his company, ARCA Group International, would pay for the land and the cost of construction, according to the suit.

Capital assigned the title to a limited liability company controlled by ARCA, according to the suit, with the understanding that the Mylett and McAlees entity’s interest would be protected by the terms of the joint venture. The lawsuit alleges that Capital and ARCA would split the profits from the finished townhouses, which they planned to sell for between $6.1 million to $6.7 million each. Capital passed up an opportunity to partner with Two Roads Development because ARCA offered a more favorable 75-25 split for Mylett and McAlees, they allege. Two Roads offered a 51-49 split.

To “seal the deal,” ARCA continuously charmed Mylett and McAlees, including treating their wives to a trip to Brazil during the 2014 World Cup. Mylett and McAlees allege that ARCA never legally finalized the joint venture, and used its position to take control of the entire development and freeze out Capital, according to the suit.