Judge orders developer to construct condos, buildings

Photo by J. Patrick Pepper

Photo by J. Patrick Pepper

Najib Rizk fires up the hookah at his cigar bar, Le Cigar, in the West Village Commons development. Rizk said it was “good news” that Burton-Katzman, the WVC developer, is facing a court order to finish construction on the unfinished project.

Times-Herald Newspapers

DEARBORN — A judge’s ruling last week moved the city and its beleaguered west downtown one step closer to being made whole on a development deal gone terribly awry.

    Wayne County Circuit Judge Michael Sapala in an oral opinion ordered Burton-Katzman Development Co. to finish construction on the West Village Commons project, City Attorney Debra Walling said Thursday.

    The order requires the Bingham Farms company to construct 12 condominiums and two midrise buildings that were specified as part of a 2003 development agreement with the city, but never were built. 

    Sapala’s ruling is the culmination of more than nine months of testimony and arguments in a breach of contract lawsuit filed against the company by the city earlier this year. Throughout the proceedings, B-K attorneys never argued that the company didn’t breach the agreement; rather they contended it was impossible to find financing for a speculative project in one of the worst economies in decades.

    But through depositions of the company’s highest-ranking executives, city attorneys discovered B-K never even attempted to obtain financing.

    “They said because of the economic tsunami, as they call it, it would be impossible for them to obtain financing,” Walling said. “But we made very strong arguments about different projects they have completed since August 2006, when they were supposed to be finishing the (West Village Commons).” Barring an appeal, the judgment closes one large chapter on the lawsuit. But there still are some key aspects to be decided.

    The city also is seeking more than $21 million in damages stemming from several project-related expenditures, including land acquisition and construction of two five-story parking decks. A hearing on the matter has been scheduled for early December.

    “Every penny the city spent, I’ve asked for back, and we have very detailed records outlining those costs,” Walling said.

    But where those pennies would come from remains unclear. City attorneys initially believed Burton-Katzman Development Co. was the parent company of several subsidiaries related to the project, but subsequent discoveries have revealed a complex corporate structure with more than 80 different entities in play.

    In a hearing scheduled for January on that issue, Sapala also will hear arguments on a silent fraud claim against several B-K executives. While winning the silent fraud claim is not essential in obtaining damages or having the buildings constructed, it could be instrumental.

    “We’ve filed a motion so that (B-K executives) Peter Burton, Robert Katzman, Lawrence Goss and Steven Bentley are individually liable to make sure the projects get done,” Walling said. “If they don’t, then they would be subject to contempt proceedings and going to jail. That’s the hook.”