California industrial real estate investor and developer The O’Donnell Group was slapped with a lawsuit alleging it tried to inflate the sale price of a Hialeah property above the prospective buyer’s agreed amount.
The buyer, Brooklyn-based Sound Around, sued two O’Donnell Group ownership affiliates, Hialeah Last Mile Fund VII and Hialeah Last Mile, alleging that they did not finish repairs to the building and then tried to “indefinitely delay” the work, with the “ill-intended” purpose of extorting millions of dollars more from the buyer, according to the lawsuit filed last week in federal court in Miami.
Sound Around entered a contract with Hialeah Last Mile to buy the building at 6501 Northwest 37th Avenue in unincorporated northwest Miami-Dade County for $11.4 million. Under the March 2021 agreement, the sellers had to renovate the interior and exterior of the building, which was expected to be finished in the fall for the deal to close by the end of 2021, according to the complaint.
In a December letter to Sound Around’s broker, Douglas O’Donnell of the O’Donnell Group wrote that issues arose with the inability to connect the facility to a water utility provider.
Although historically the city of Hialeah serviced the area, the city and the county were locked in a dispute that hindered the seller’s ability to connect to water and renovate the building, O’Donnell wrote.
He also cited delays created by the pandemic. “Indeed, no one could have ever imagined the scope of these problems,” O’Donnell added in his letter, saying the sellers wouldn’t proceed with the deal and would return the buyer’s deposit.
In a follow up February letter, Hialeah Last Mile’s attorney Robert Salkowski said that the sellers only would proceed with the deal if the price is increased by $3 million to compensate for the unexpected costs.
Sound Around countered in its complaint that it has ended up spending hundreds of thousands of dollars more to rent a warehouse space elsewhere. It is seeking more than $1 million in damages and is asking the court to force Hialeah Last Mile to finish the repairs and close the deal for the agreed price.
The O’Donnell Group, based in Newport Beach, bought the 76,227-square-foot facility spanning 2.4 acres for $7.6 million in 2020, records show.