Lotis Wellington, a 60-acre-plus mixed-use project promising to transform open land in west Palm Beach County, is further devolving into disputes among the partners, this time with a new lawsuit against an investor.
Investor Brian Lulfs and entity AMKBJ Partners, which is tied to Lulfs, are accused of failing to provide project capital funding they committed to in contracts, resulting in construction delays, increased costs and carrying expenses, and other issues with the project, according to a lawsuit. JKM Wellington Capital, an entity tied to the developer, filed the complaint on behalf of in Palm Beach Circuit Court on Friday.
It marks the latest Lotis Wellington dispute. The trio of developers also are fighting in court, while subcontractor liens have piled to the tune of roughly $5 million, though the developers have said most have been paid and that remaining claims will be reimbursed soon.
Lotis Wellington a partially built project on the west side of State Road 7, north of Wellington Regional Medical Center, has been in the works for over six years, with developer Lotis Group scoring zoning approval in 2020, after buying the site.
The completed portion consists of five buildings with 35,000 square feet of retail and 16,500 square feet of offices, according to James Gielda, a development partner. Plans for future additions call for 372 apartments and a restaurant building, while a day care is under construction.
Separately, Lennar is developing 100 single-family homes and 72 townhomes, while Lotis Group also wants to sell to another developer a portion of the site entitled for 60,000 square feet of medical offices.
From the outset, project developer Lotis Group has been publicly marketed as led by John Markey, Adam Freedman and Gielda. Since Markey retired about three years ago, a rift has emerged, pitting Freedman and Gielda on one side and Markey on the other.
Lulfs and members of his family have a soil mixing and landscaping equipment business, as well as soil mixtures manufacturer Atlas Peat and Soil in Boynton Beach. Lulfs also has been an investor in Palm Beach County land and development deals, including backing Brian Tuttle’s land deals in South Florida and the rest of the state.
Lulfs didn’t return a request for comment on the new suit.
He’s had a long professional relationship with the Lotis developers, collaborating with them on real estate ventures over a decade, the complaint says.
JKM Wellington Capital –– an entity that ties to Freedman, Gielda and Market, according to state corporate records –– joint ventured with AMKBJ on Lotis, with the understanding that JKM would focus on the development and project management, and AMKBJ would contribute the capital, according to the suit. They hammered out operating agreements for their two JVs, Lotis Wellington Venture and Lotis Wellington 2 Venture. Two JV entities were formed likely because the project has two phases.
Per their agreements, AMKBJ had a 75 percent stake in Lotis Wellington Venture, and JKM held the balance. AMKBJ had a 60 percent stake in Lotis Wellington 2 Venture, and JKM held the balance, according to the complaint. AMKBJ failed to meet JKM’s “reasonable” capital draw requests, the suit says.
JKM filed the complaint derivatively on behalf of Lotis Wellington Venture and Lotis Wellington 2 Venture.
The complaint brings breach of contract claims against AMKBJ, and breach of fiduciary duty claims against Lulfs.
As for the dispute among the developers, Freedman and Gielda sued Markey in March, accusing him of violating his separation and redemption agreements that he signed prior to stepping back from the partnership in 2023.
Markey has continued to contact company investors, partners and consultants in a bid to “influence or disrupt” Lotis operations, according to that complaint.
Markey’s separation and redemption agreements included him transferring his stake in any joint limited liability companies to Gielda, Freedman and their affiliates in exchange for $2 million total, to be paid monthly through 2029, the suit says.
Freedman and Gielda’s claim is partly based on a January email Markey allegedly sent outlining a “strategy” to remove Gielda and Freedman as managers of the Lotis project and a Tamarac apartment project, appoint himself and Lulfs as managers and “seize control of accounting records, server, staff and bank accounts,” according to the email that is included as an exhibit to the complaint.
The email claimed Freedman had made and “concealed” loans to Lotis at a 15 percent interest without investor approval, financing nearly $3.3 million in loans and paying himself nearly $286,600 in interest. Freedman and Gielda “conspired” with each other and commingled funds, Markey allegedly wrote in the email.
In court filings, Freedman and Gielda said the statements in the email are false and defamatory.
Markey has denied the allegations against him, and he countersued Freedman and Gielda, demanding an accounting of the amounts they received in loans and interest, and the distribution of those investments, according to court filings.
Gielda and Markey declined to comment on pending litigation, and Freedman didn’t return a request for comment.
Last month, Markey issued a news release announcing he’s coming out of retirement to “reassume leadership” of Lotis Wellington. Markey and his partners have purchased all of the project’s debt and are working to address outstanding obligations and ensure partners are paid, the release said.
Last month, entity Wellington Bailout, led by Lulfs, was assigned millions of dollars of Lotis debt, according to records.
Gielda has previously told The Real Deal most of the liens have been paid, though the lien resolutions haven’t been reflected in public records yet.
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