Developer Stephen Atkins, who wants to restore the Barnett Bank building and Laura Street Trio, is facing a civil lawsuit over alleged unpaid consulting fees.
On April 7, Atlanta-based Sterling Consulting LLC filed a complaint in Circuit Court against SouthEast Development Group LLC alleging that it owed Sterling $750,000 plus interest for breach of contract, fraud and attorney’s fees.
Atkins disputes the claim.
According to Sterling Consulting principal Allen Miller, the suit stems from a financial arrangement he said he made with Atkins in 2015 when Atkins was looking for a partner to redevelop the Downtown buildings.
Miller said his firm “consulted with Atkins and his related entities to help obtain offers from potential capital partners, including introducing him to and assisting him with negotiating a deal with Molasky.”
Las Vegas-based The Molasky Group is Atkins’ development partner for the Laura Street Trio and Barnett Bank building projects.
Molasky, through PH LLC in Nevada, bought the Barnett Bank building in February for $4 million from Jacksonville Jaguars owner Shad Khan’s Stache Investments Corp.
On May 22, Sterling amended the complaint after SouthEast Development’s attorney, Gilbert Feltel of Tanner Bishop, filed motions to stay and dismiss the case.
According to the amended complaint, Atkins pursued Hailey Realty Co., based in Atlanta, when a deal with Stache Investments fell through.
Atkins borrowed $3 million from Stache in 2013 to buy the Barnett building. Stache foreclosed on the property, claiming Atkins never made payments.
Stache took control of the property in September 2016 after a circuit court judge ruled in its favor.
Sterling’s suit claims Hailey connected Atkins to Miller and Sterling Consulting.
It says Miller introduced Atkins to PH Jacksonville LLC, Molasky’s group, to provide $3.1 million in “capital contributions” to move forward with the deal.
Miller alleges Atkins agreed to pay a $760,000 consulting fee as part of a brokerage agreement for Sterling to “broker debt and equity for SouthEast.”
The complaint claims that on July 24, 2015, Atkins gave Miller a verbal agreement during a recorded conference call to pay the fee, beginning with a $10,000 initial payment that was to be wired that day.
Miller claims Atkins sent a signed letter Oct. 20, 2015, confirming that arrangement.
In a letter dated March 2 this year, Atkins denies he agreed to pay Sterling any fees, and threatens criminal action for “a signature that appears to be forged” on the Oct. 20 letter.
Atkins referred questions to Feltel, who provided a statement:
“Southeast Development Group LLC is aware of and has timely responded to an action recently brought by an Atlanta-based company, Sterling Consulting LLC, in the local circuit court.”
It goes on to say that, “In sum, Sterling claims entitlement to a fee from Southeast for allegedly brokering certain debt and equity funding for Southeast. As set forth in its court filings, Southeast disputes Sterling’s claim.”
Feltel filed another motion May 31 to dismiss the case.
Miller sent emails to City Council members and the mayor’s office saying they should be concerned since Atkins and his development group are seeking local incentives for the projects.
In a June 2 email, District 3 council member Aaron Bowman told Miller this was “a Civil matter and belongs in the court system, not city hall.”
On June 8, council Vice President John Crescimbeni told Miller by email this was a “private dispute” that “will have no bearing on the Barnett Bank building and Laura Street Trio redevelopment project.”
Other council members emailed similar responses.
Curry’s office declined comment.
Council is reviewing a $9.8 million incentive package for the combined Laura Street Trio and Barnett Bank building development. If approved, the development group will have 60 months to complete the projects.
Feltel said SouthEast “believes there is no reason for this private dispute to impact the important revitalization of the Barnett Tower and Laura Street Trio buildings.”
No court date has been set by Circuit Judge Virginia Norton.