Real estate developer Sam Mizrahi has filed a lawsuit against Edward Rogers and Constantine Enterprises Inc., the real estate investment trust Mr. Rogers owns, escalating a dispute between the businessmen who allegedly suffered a $30 million loss on their flagship condominium project has.
In a lawsuit filed this month Ontario In court, Mr. Mizrahi alleges that Mr. Rogers and his business partner Robert Hiscox, co-owner of Constantine, blocked several attempts by Mr. Mizrahi to extract more value from the two real estate companies they were developing together. After Mr. Mizrahi's efforts were rejected, Constantine applied for a court-appointed receiver for both projects.
Mr. Mizrahi is suing Messrs. Rogers, Hiscox and Constantine for, among other things, breach of contract, negligence and breach of fiduciary duty, seeking $100 million in damages.
Mr. Mizrahi claims that his 20-unit luxury condo project developed with Constantine, known as 128 Hazelton in Toronto's Yorkville neighborhood, has suffered losses totaling more than $30 million and that Constantine wants him to claim 50 percent of that loss Splits. Because Mr. Mizrahi refused, he claims Constantine blocked his attempts to sell vacant land at their other project, known as 180 Steeles or 180 SAW, and also blocked other financing initiatives he put together.
“Defendants refused to realize the profit to be made on the 180 SAW Project based on the bids obtained from Sam because Sam was asserting his legal rights and could not be compelled to pay Constantine 50 percent of his losses on the 128 Hazelton Project “A condition of acceptance of the bids for the 180 SAW Project,” the lawsuit states.
In an email to The Globe and Mail, Constantine's Mr. Hiscox disputed Mr. Mizrahi's account, claiming that “in December 2021, as a 50 percent partner of Hazelton, Sam, through one of his companies, agreed to share equally the losses of this project.” to wear. This was documented in the ‘contribution agreement’.”
Mr. Hiscox also wrote, “We are nearing the tenth year of what Mizrahi presented as a three-year project,” adding that the project exceeded Mr. Mizrahi's original budget by more than $50 million, or nearly double original estimate.
Mr. Mizrahi filed his lawsuit following two major developments. In January, 128 Hazelton's senior lender, Duca Financial Services Credit Union Ltd., claimed a default and filed for a receiver for the project.
A month later, Constantine bought out Duca's debts and then filed his own application for court-appointed receivers for 128 Hazelton and 180 Steeles, hoping that a third party would complete the sale for each. In an interview with The Globe at the time, Mr. Mizrahi described the action as “predatory” behavior.
As of January, Constantine and Mr. Mizrahi owned eight units at 128 Hazelton, and in its bankruptcy filing, Constantine alleged that Mr. Mizrahi's company “failed or neglected to provide its share of the additional funds required to complete and sell the property.” remaining units of the Hazelton project would be required.”
As for the 180 Steeles project, Constantine claimed Mr Mizrahi owed him $29 million but had lost confidence in his ability to repay the debt. Constantine was also concerned that Mr. Mizrahi's company “will continue to fail or fail to make its required capital contributions to the partnership.” Located on Toronto's northern border, 180 Steeles is in the pre-construction phase and was listed for sale a year ago.
As the legal dispute escalated, both sides claimed the other had acted in bad faith. In February, for example, Mr. Mizrahi told The Globe that he had tried to arrange financing from Third Eye Capital, or TEC, a private lender, to buy out Duca's loans and had sought Constantine's approval, but later learned that Constantine had a private deal completed the same thing myself. “They didn’t tell me, they weren’t transparent,” he said.
In his email on Wednesday, Mr Hiscox wrote: “There were a number of problems with this funding proposal, not least the cost of the TEC debt being much higher than the existing Duca debt.”
Mr. Mizrahi also brought in Hyundai Asset Management, a South Korean company, as a potential buyer for the 180 Steeles project, but Constantine did not agree to the transaction, he alleged in his lawsuit.
Mr Hiscox wrote in his email that the potential buyer “has withdrawn from the deal due to the current status of the planning permission”.
While Mr. Mizrahi battles Constantine in court, another of his Yorkville condo projects, known as The One, is under a receiver. The 85-story project was placed into receivership last fall because it owed $1.6 billion to its lenders, is years behind schedule and faces multiple lawsuits. Mr. Mizrahi was recently replaced by Skygrid Construction Inc. as Project Manager.