|By Lorraine Mirabella, The Baltimore Sun|
Knight Ridder/Tribune Business News
Jul. 28, 2005 - The developer of Baltimore's Ritz-Carlton Residences yesterday sued Edward V. Giannasca II, its Baltimore partner who shepherded the Inner Harbor project for the past five years, for fraud and breach of contract.
Midtown Baltimore LLC, developer of the $250 million luxury condos under construction at the foot of Federal Hill, filed the nine-count complaint in U.S. District Court in Baltimore, marking the latest tangle in a project long dogged by financial and legal disputes.
Jack Cayre, senior vice president of Midtown Baltimore, said he took over Giannasca's duties as day-to-day manager of the project on July 11, when Midtown terminated Giannasca.
Giannasca did not return phone calls yesterday.
The developer still expects to meet a mid-2007 completion date for the first-of-its-kind residential project for the Chevy Chase-based Ritz-Carlton Hotel Co., manager of Ritz properties, Cayre said.
"We are very much committed to this project," said Cayre, noting that the developer and its parent company, New York-based Midtown Equities LLC "are prepared to spend any resources necessary to deliver the most magnificent project that Baltimore has ever seen."
About half of the Ritz's 178 condos have sold, with units priced from $1.9 million to $2.2 million the best sellers so far, Cayre said. Condos are priced up to $5 million. He said the first phase of construction, including putting in bulkheads, is nearing completion. The second phase, including excavation and foundations, should start after Labor Day, he said.
Giannasca, who had taken over the Ritz project in 2000 after an initial partnership fell through, brought Midtown Equities in as an investor in 2002. He became an employee of Midtown Baltimore, Cayre said.
Midtown had reached an agreement with Giannasca stipulating "if he committed 100 percent of his effort (to the Ritz), we would give him 10 percent in profits of the project once it was done," Cayre said.
The complaint, which seeks more than $20 million in damages, claims Giannasca defrauded Midtown by spending time developing a New Orleans condo project rather than working full-time on overseeing sales, marketing and construction of the Ritz. Giannasca used Midtown's employees' time, computers, designs and consultants to work on the New Orleans project, the complaint charges.
The suit says that Midtown representatives became concerned early this year that Giannasca was not devoting his full attention to the project and was lying about frequent trips to New Orleans on work time. Cayre repeatedly confronted Giannasca about devoting substantial time and energy to a $100 million project in New Orleans to convert a high-rise apartment building into condos, the lawsuit says.
"When confronted with his wrongdoing, Giannasca attempted to cover up his fraud and self-dealing through a consistent pattern of egregious misconduct including lying and destroying evidence," the complaint says.
The Ritz, originally envisioned as an upscale hotel, was first planned by Florida developer Stuart C. "Neil" Fisher on its current site, an abandoned Bethlehem Steel propeller yard on Key Highway. Fisher stepped aside as the developer in January 2000 after news surfaced that he had no apparent assets, was refusing to pay a fraud judgment, and past developments ended in lawsuits and bankruptcies.
Some of Midtown's complaint focuses on Giannasca's alleged continued involvement with Fisher.
In February, after Giannasca returned from a New Orleans trip, "Mr. Cayre reiterated to Giannasca how crucial it was that... Giannasca have no contact or association with Fisher because the project [the Ritz] had experienced certain problems due to Fisher's prior involvement in the project," according to the complaint. It says Giannasca gave Fisher a power of attorney to act on his behalf on the New Orleans project..
Midtown has invested about $45 million so far in the Ritz project, which in addition to the condos includes a 22-slip marina, private movie theater, gourmet restaurant and spa.
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