Suffolk Construction is suing the developer of the luxury condo project 2000 Ocean in Hallandale Beach, seeking at least $16 million in damages tied to allegedly unpaid work.
The Boston-based general contractor is accusing the developer, an affiliate of Shahab Karmely’s New York-based KAR Properties, of breach of contract and of refusing to issue a certificate of substantial completion. That is despite receiving the temporary and final certificates of occupancy for the 38-story, 64-unit building at 2000 South Ocean Drive in Hallandale Beach. The building received its TCO in December and its final certificate of occupancy in May.
Suffolk is alleging that KAR Hall LLC, the KAR Properties affiliate that developed the oceanfront building, failed and refused to make contract payments for completed work, change order work and other costs. The contractor said that the developer interfered with Suffolk’s work and operations, including its contractual relationships with subcontractors, according to the complaint, filed last week in Broward County Circuit Court.
KAR Properties said it will let the legal process “for this specific situation to play out appropriately,” and that it is ready to move forward “until a fair outcome is reached,” according to a statement from a company spokesperson.
“Tellingly, Suffolk has been involved in legal disputes with numerous projects in Florida,” the statement reads, likely referring to recent lawsuits over construction at the Estates at Acqualina in Sunny Isles Beach, and PortMiami.
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Construction delays have become increasingly common over the past two years due to the pandemic’s effect on the supply chain and increased labor shortages.
Suffolk’s lawsuit alleges that it and KAR entered into contract change orders for delays outside of its control, including a setback with Florida Power and Light providing permanent power to the site and design changes to the units’ kitchens.
But the construction firm alleges KAR wrongfully withheld $2 million in progress payments for work performed between January and June, and is owed more than $6 million in retainage payments. That’s on top of $4.1 million owed for extended performance work and $1.1 million in pending change orders, according to the complaint.
Property records show 25 unit closings have been recorded since January, totaling $86.1 million, or averaging about $3.4 million each. Because a lag typically exists between the time deed transfers are submitted to the county and the time they appear online, the total is likely higher.
Preconstruction prices at 2000 Ocean ranged from about $2.6 million to $4.4 million for units, excluding penthouses. Fortune Development Group handled sales and marketing of the project.
In early January, KAR secured a $128 million condo inventory loan from Apollo Commercial Real Estate, replacing the project’s $103 million construction loan from Madison Realty Capital that was issued in 2018.
The building was designed by Enrique Norten of TEN Arquitectos, with concept design by Kobi Karp, and common areas furnished by the Italian firm Minotti.
KAR, led by Karmely, is backed by activist hedge fund manager and billionaire Daniel Loeb. KAR owns a large development site along the Miami River that was planned as a three-phase luxury condo project called One River Point, and the company also owns land in Wynwood.