An investor in the Miami Beach outpost of Charissa Davidovici’s Sugar Factory believes he’s gotten a sour deal, according to a recently filed lawsuit in Miami-Dade Circuit Court.
An entity managed by John Sullivan is suing Davidovici, founder of the Sugar Factory national chain, entities that own the company’s restaurant at 1575 Alton Road, the restaurant’s manager Blackstar Hospitality Group and Blackstar’s principals Darin Feinstein and Larry Rudolph.
In his Nov. 9 complaint, Sullivan alleges that Davidovici, Feinstein and Rudolph diverted and failed to pay him nearly $1 million in profit disbursements since 2020, and haven’t paid back a $2.1 million promissory note he loaned in 2018 to the operating entity for Sugar Factory’s Miami Beach restaurant. In addition, Sullivan has also provided $1.6 million in capital calls to the ownership entity since 2017, the lawsuit alleges.
Sullivan is also seeking to block an proposed deal by Davidovici to sublease another restaurant space in Miami Beach her company rents, but that is currently empty.
Jeremy Kreines, Sullivan’s lawyer, and Beshoy Rizk, legal officer for Sugar Factory, declined comment.
Sullivan alleges that Davidovici did not seek approval from the partnership to enter into an agreement with Frank DiMattina, a New York-based social media influencer with more than 2 million followers known as the Food Boss. According to a copy of an Oct. 15 capital call letter attached to the lawsuit, Davidovici informed Sullivan and other partners that Sugar Factory’s Miami Beach ownership entity and DiMattina are teaming up to open an Italian pizzeria and wine bar in the empty restaurant at 1444 Drexel Avenue.
In her letter, Davidovici noted that the partners were required to put more money into the entity to fund its $100,000 contribution to the new Italian restaurant. Since Sullivan owns 14.8 percent of the entity, he would be required to put up $14,890, the letter states.
The Sugar Factory Miami Beach entity had previously leased the space to Calista Taverna, but the Greek restaurant closed several months after opening, Davidovici wrote.
“We now find ourselves back to square one,” Davidovici wrote. “In a last ditch effort to avoid protracted litigation with the landlord and to salvage the investment that the company made in the space located at 1444 Drexel Avenue,” Sugar Factory brought in DiMattina.
However, DiMattina told TRD that he backed out of the deal “right away” before Sullivan filed his lawsuit because he learned about Davidovici’s problems with the investor. He put no money into the scuttled venture, DiMattina added.
“They are in a big battle that has nothing to do with me,” he said. “We didn’t want to get involved when we learned about there being other investors.”
In his lawsuit, Sullivan alleges that Davidovici violated a 2017 operating agreement by not seeking the partnership’s approval to enter into a lease for the Drexel Avenue space, and that she did not have the authority to sublease the restaurant.
Sullivan also accuses Davidovici of diverting $1.8 million from the ownership entity to bankroll the buildout of a proposed doughnut shop on Miami Beach’s Espanola Way that another Sugar Factory affiliate is opening with David Grutman, the Miami Beach-based nightlife mogul. Grutman is not a party to Sullivan’s lawsuit.
In May, Sugar Factory opened in the former Firestone Garage at 1575 Alton Road that previously housed Grutman’s Winker’s Diner. It moved from its longtime home in The Strand, an Art Deco hotel at 1052 and 1060 Ocean Drive owned by New York-based Nakash Holdings.