StoryBuilt, once a fast-growing Austin developer, stunned the Texas real estate community when it entered receivership in August.
Little is known about how the company came to such dire straits, but a class action lawsuit filed by three of its former employees in August sheds new light on the calamitous days that culminated with mass layoffs, a leadership shakeup and a $2 billion portfolio hitting the market.
The class-action suit accuses StoryBuilt of violating federal labor law by not paying wages for two months and then firing employees without advance notice. The three employees who filed the suit, Rebecca Plante, Brittany Gonzalez and Gerardo Urbina, claim they were told they and 80 other employees were being fired — without severance — on July 31, the same day the layoff took effect.
StoryBuilt argued the federal regulation requiring 60 days’ advance notice of mass layoffs, known as the WARN Act, didn’t apply because of “unforeseeable business and financial circumstances.” The former employees say the writing was on the wall for months.
The trouble started in the fall of 2022, the lawsuit claims, when StoryBuilt’s largest joint-venture partner, Partners Group, started withholding payments to the developer. StoryBuilt wouldn’t announce Partners’ move until February of 2023, the lawsuit states.
StoryBuilt was facing legal challenges, too. In January, the condominium corporation at its East Austin development Eastline sued for over $1 million, alleging construction defects led to water damage in several units.
By April, the impacts of the firm’s financial challenges began to touch staffing. That month, StoryBuilt COO Chad Shepler allegedly sent a Microsoft Teams chat to the whole company saying StoryBuilt would need to delay payroll because Partners Group didn’t send its money in time. Shepler also said the company had been operating with low treasury levels since June 2022 and had missed two financial goals for the first quarter, according to the suit.
The company placed 38 employees on furlough the following month. It also told non-furloughed employees to work four days a week and seek unemployment compensation for the day they would miss.
Come June, CEO Anthony Siela allegedly announced a second paycheck delay in another all-hands Microsoft Teams chat. The company’s legal problems compounded that month when Capscar, one of its investors, sued for $400,000 in damages, alleging breach of contract, fraud, breach of fiduciary duty and violations of the Texas Securities Act.
At the end of June, StoryBuilt allegedly told employees it would only pay salaried employees portions of their checks for work in the first week of June.
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The wheels started to come off in July, as Siela announced a work stoppage for non-critical workers, on-site workers, and those raising capital. A second group of employees was placed on furlough, including the three plaintiffs in the suit. At the end of the month, the firm sent termination notices to 83 employees, effective the same day.
Plante, Gonzalez and Urbina are aiming to create a legal class to challenge the termination. They are requesting a jury trial, damages and at least 60 days’ back pay.
When called for comment, StoryBuilt’s press phone line was disconnected, and a message left with the front desk was not returned.
StoryBuilt’s troubles extend beyond the class-action suit. The firm’s court-appointed receiver recently wrote that StoryBuilt broke with standard accounting practices, potentially using money invested for specific projects on other projects.