Lawsuit Could Hurt Domino Development Plans

March 21, 2012 Brooklyn Eagle Staff

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One Partner Sues Another Over Contract

By Linda Collins

Brooklyn Daily Eagle

WILLIAMSBURG — In the wake of reports last week about the potential sale of the 11-acre Domino Sugar site in Williamsburg, followed by Wednesday’s report of a partner-vs-partner lawsuit and the potential “meltdown” of the site’s development plan, at least one local elected official is reacting with feeling.

State Assemblyman Joseph Lentol, who represents the neighborhood, said yesterday he is “deeply disappointed.”

“Had there been more transparency in this process from the beginning we might have been able to avoid this unfortunate turn of events,” Lentol said.

According to the report in Crain’s New York Business Wednesday, there are problems between the project’s two partners — CPC Resources Inc. (CPCR) and the Katan Group — and the Katan Group has filed a lawsuit to block the sale of the project to the lender, Pacific Coast Capital Partners. The lawsuit alleges “breach of fiduciary duty, breach of contract, breach of the implied covenant of good faith and fair dealing, negligent performance,” and more, according to Crain’s.

A lawyer representing Katan, David Scharf of the law firm Morrison Cohen, told Crain’s the sale to the lender is imminent “and CPC is rushing into it.”

But Susan Pollock, project manager for CPCR, the managing partner, told the Eagle late Wednesday the lawsuit’s charges are “baseless and frivolous” and the company

believes they will be dropped.

“There already was a TRO [temporary restraining order] hearing last week and the judge threw it out,” she said, adding that on April 4, there will be a permanent injuction hearing and “chances are that will be thrown out as well and the lawsuit will not enjoin us from moving forward.”

In the meantime, CPCR has been involved in financing and restructuring efforts, working successfully with the lender, Pacific Coast Capital Partners, behind the scenes on an agreement, according to Pollock.

“We see this as a very, very positive move,” she said, adding that rumors to the contrary can be put to rest.

The next step is to bring in a third party, an experienced developer — “we’re in negotiations now” — and then pre-development work can begin on the upland site, phase I, which will have 300 units of affordable housing.

“We’ve always said we would do this [bring in an experienced developer] because CPCR has never done a project of this magnitude before,” she added.

Pollock estimates that these steps will take place in the next few months, with pre-development work beginning by the end of the second quarter.

As the Eagle has reported over several years, plans for the 11-acre waterfront site called for several new buildings, including 30-story-plus towers, with a total of 2,200 residential units, 660 of which would be affordable. Plans also called for the rehabilitation and adaptive reuse of the main refinery building and retention of its large sign as well as retail spaces, parking, a community facility space (possibly a school) and development of a promenade, playground and more open green space.