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untanglingwebs
El Supremo
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Genesee County Circuit Court case # 11-96209-CK Yuille
Smith Village Development Group, LLC; a Michigan limited liability company, Comminity Improvement Group, LLC, a Michigan limited liability company,, N. Jason Staryhorn, an individual, and mark DeMaria, an individual,
Plaintiffs,
v.
The City of Flint, a municipal corporation, Smith Village Construction Services, LLC, a Michigan limited liability company, S.E. Metro Properities, LLC, a Michigan limited liability company, Gregory eason, an individual, Bret Russel, an individual, and Charles Young, Jr., an individual.
Defendants
First Amended Complaint filed September 1, 2011
NATURE OF THE CASE
1. "Defendants engaged in misconduct including, but not limited to , breach of contract, fraud, misappropriation of trade secrets, tortious interference and conspiracy for the express purpose of usurping for themselves business opportunities belonging to plaintiffs and reaping for themselves revenue and profit which would have otherwise been earned by Plaintiffs. Specifically, defendants acted in concert to cut Plaintiffs out of an approximately $14 million federally-funded housing project in Flint Michigan, but did so only after Plaintiffs invested substantial time and money getting the project off the ground and developing propriety and confidential trade secret information for use on the project. as a result of Defendants' improper actions and unlawful conduct. Plaintiffs have suffered damages in excess of $1,000,000."
General allegations state that in or about December of 2010, Strayhorn, DeMaria, and Cig became aware of the Smith Village project that was to be financed through the federally funded Neighborhood Stabilization Program (NSP). Because they had extensive experience in managing and executing large construction projects, including federally funded projects, they began discussing with Eason about partnering on the project.
The lawsuit does not explain how Strayhorn and DeMaria, as the principals of Community Improvement Group (CIG), came to partner with Charles Young, but about March 10, 2011 Young signed a Confidentiality Agreement with CIG. Because of the agreement ensuring Young would not reveal the CIG trade secrets CIG, Strayhorn, and Demaria decided to form a company to bid on the project. That company was Smith Village Development, LLC, which was formed on March 17,2011 for the sole purpose of bidding on and constructing the project.
Because the project required substantial financing, DeMaria approached Bret Russell sometime in February 2011, regarding fin ncing the project. It was Russell who produced a letter from Huntington Bank that confirmed the necessary funding for the Project.
27. "Strayhorn, DeMaria, and Young agreed that each of them, either directly or indirectly through another entity, would be members and owners of Smith Village."
28. "Under the terms of the federal NSP funds available to the City for the project, Metro Community Development Corporation ("Metro") was chosen to act as the developer on the Project . As the developer, Metro, with input from the City, would select the builder contractor to construct the Project"
29. "In or about April 2011, Smith Village began discussions with Metro about entering into an agreement, pursuant to which Smith Village would act as the builder contractor on the Project."
The discussions with Metro were primarily with Metro's Executive Officer, Ravi Yalamanchi and included Strayhorn, Demaria and Young on behalf of Smith Village. Russell participated as well.
About April 1, 2011 Strayhorn sent Young a proposed contract between Smith Village and Metro for the Project. Young, acting as agent for Smith Village presented the contract to Metro. Then, about April 28th, young, acting as Smith Village's "authorized agent" forwarded a letter of intent to Metro for the Project. On May 1, 2011, Metro sent two letters to Young recognizing Young as Smith Village's "authorized agent", and acknowledging that Metro was not negotiating with any other contractor. On May 20, 2011, Young, again acting as the agent and member of Smith Village gave Metro all the information they requested. CIG believes that Young also signed cerifications that he was the agent for Smith Village and that he was authorized by Smith Village to release the requested information.
The lawsuit further alleges that Eason represented to Plaintiffs that Smith Village would be the Builder contractor on the Project. And because of the statements made by Metro and Eason, the Plaintiffs spent substantial amounts of money on pre-construction work, including the creation and development of confidential and trade secret information such as pro formas, delivery models and schedules as well as hiring a project team.
CIG planned to use "modular/panelized/prefabricated homes" as it was the only way to meet the City's demanding construction schedule, which required completing 25 to 43 homes by december, 2011. This plan also controlled costs and unforeseen problems that would impact the Project.
Russell allegedly objected to the modular homes because he believed he would realize more profit from "stick construction".
45. "
Eason expressed that it was important to him that there be an "appearance" that people were at work during election season and that no such appearance would exist if much of the construction was being completed in a factory."
The lawsuit alleges that, unbeknownst to CIG, Strayhorn and DeMaria that in or about may of 2011, Young, Russell and eason started a plan to cut Strayhorn, DeMaria and CIG out of the Project. It is alleged that Young began discussions to have the contract for himself and Russell and during his discussions with the City and Metro, Young disclosed the confidential and trade secret information developed by Strayhorn, DeMaria, and CIG. On June 8, 2011 Young formed Smith Village Construction, whose address is 2050 Warner, the business address of Young.
About the same time eason and the City terminated Metro as the developer and stopped discussings with Strayhorn, DeMaria and CIG. Then Eason and the City hired Smith Village Construction as both developer and builder of the project-cutting out Smith Village Development, Strayhorn, DeMaria and CIG. |
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Thu Sep 08, 2011 7:14 pm |
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untanglingwebs
El Supremo
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Note: see Has Smith Village Stalled Again for details on the corporations involved. Also see Community Improvement Group and DCED. Allegedly the FBI pulled records on CIG during their raid (Flint Journal story).
Although the CIG, Strayhorn, and DeMaria state they were prepared to bid on a contract, there is no mention of a bid process or even a Request for Proposal. This may be the reason the FBI were looking at the CIG documents. Federal rules are very specific and there must be open and public competition for federal contracts. In this instance, there appears to not even be written contracts in place before work was commenced.
I was told this afternoon that modulars are being moved into Smith Village. |
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Thu Sep 08, 2011 7:37 pm |
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untanglingwebs
El Supremo
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COUNT l-BREACH OF CONTRACT
(YOUNG)
There was an agreement btween Young, Strayhorn and DeMaria that they would be members of Smith Village Development and that Young would act as the agent for Smith Village Development and act on behalf of Smith Village Development in discussions with the City. They further agreed that each of them would not act on behalf of another entity other than Smith village Development.
58. "These agreements formed and constitute a valid and enforceable contract between the parties."
Young breached his contractual obligations when he seized Smith Village Developments business relationship for himself and others not associated with Smith Village Developmentand began working for himself and these others with Eason and the City.
As a result of Young's actions, Plaintiffs suffered substantial damages.
COUNT ll- BREACH OF CONTRACT
(CITY)
62. "The City, through Eason and others, reached an agreement with Plaintiffs that Plaintiffs would act as the builder contractor on the Project.
63. Plaintiffs' agreement with the City is valid and enforceable.
64. Plaintiffs performed all of their obligations pursuant to the agreement.
65. The City breached the agreement with Plaintiffs in numerous ways including, but not limited to, wrongfully terminating the agreement and failing and refusing to pay Plaintiffs pursuant to the agreement.
66. As a direct and proximate result of the actions of the City and its representatives, Plaintiffs have suffered substantial damages and other economic injury, loss of goodwill, harm to their business reputation, loss of esteem and standing in the community, and loss of business opportunities." |
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Thu Sep 08, 2011 7:58 pm |
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untanglingwebs
El Supremo
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COUNT lll- BREACH OF CONTRACT
CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT) (YOUNG)
The "Confidentiality Agreement" is a valid and enforceable contract. Young breached the agreement when he disclosed and improperly used trade secrets and confidential information provided to him by the Plaintiffs.
COUNT lV- BREACH OF CONTRACT -LOAN AGREEMENT
(YOUNG)
About may of 2011, Young asked Strayhorn and Demaria for a $10,000 loan. text messages were exchanged between Strayhorn and Young regarding the loan. The loan was given to Young using CIG funds. Young breached the loan agreement and failed to repay the loan.
COUNT V-PROMISSORY ESTOPPEL
79. "Young and Russell made several clear and definite promises to Plaintiffs including, but not limited to, promises that: (1) Young and Russell would interact with Metro, Eason and the City solely on behalf of Smith Village and for its exclusive benefit and would not attempt to usurp any business opportunity associated with the Project for themselves, (2) Young and russell would keep all trade secret information created by Smith Village, Strayhorn and DeMaria confidential, would not disclose it to third parties and would not use such information for their personal benefit or for the benefit of any person or entity other than Smith Village.
80. When Young and Russell made these promises, they knew, or should have reasonably expected, that these promises would induce Plaintiffs to take certain actions and refrain from other actions.
81. Plaintiffs did take action and did refrain from taking action in relaince on Young's and Russell's promises including, but not limited to, engaging in months of pre-construction work, including the creation and development of confidential and trade secret information such as pro formas, delivery models and schedules, hiring a project team to execute the Project and expending substantial time and resources in the furtherance of the Project."
COUNTVl- PROMISSORY ESTOPPEL
(THE CITY)
84. The City through Eason and others, made numerous clear and definite promises to Plaintiffs including, but not limited to, the promises that Plaintiffs would act as the builder contractor on the project."
Plaintiffs relied on these promises and engaged in month of pre-construction work.
COUNT Vll- UNJUST ENRICHMENT
(ALL DEFENDENTS)
90. "Plaintiffs conferred substantial benefits on Defendants including, but not limited to , engaging in months of pre-construction work, including the creation and development of confidential and trade secret information such as pro formas, delivery models and schedules, hiring a project tean to execute the Project and expending substantial time and resources in furtherance of the Project.
91. Defendants refusal to return these benefit or compensate Plaintiffs for them has resulted in an inequity to Plaintiffs." |
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Thu Sep 08, 2011 8:29 pm |
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untanglingwebs
El Supremo
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COUNT Vlll- BREACH OF FIDUCIARY DUTY
(YOUNG)
94. "As a member and agent of Smith Village, Young owed fiduciary duties to Smith Village and its other members, including DeMaria and Strayhorn.
95. Those duties include the duties of loyalty, confidentiality, honesty, due care, good faith and fair dealing.
96. Young breached those fiduciary duties by failing to act in the best interests of Smith Village, usurping Smith Village's opportunities for himself and disclosing and using Smith Village's confidential and trade secret information, including but not limited to pro formas, delivery models and schedules, for his own benefit and the benefit of others."
COUNT lX- AIDING AND ABETTING BREACH OF FIDUCIARY DUTY
(RUSSELL)
99. Russell knew of Young's relationship with, and fiducuary duties to, CIG, Smith Village, Strayhorn and DeMaria.
100. Russell further knew that Young's and Russell's attempts to usurp the Project for themselves and cut Plaintiffs out of the Project constituted a breach of of Young's fiducuary duties to CIG, Smith Village, Strayhorn and DeMaria.
101.
Russell provided substantial assistance in furtherance of Young's breach of fiduciary duty including, but not limited to engaging in secret discussions with Eason and the City for the express purpose of obtaining the Project for Young and himself and cutting out Plaintiffs."
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Thu Sep 08, 2011 8:45 pm |
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untanglingwebs
El Supremo
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COUNT X- TORTIOUS INTERFERENCE WITH BUSINESS EXPECTANCY
(ALL DEFENDANTS)
104. "Plaintiffs had a business relationship with metro, the Project developer, whereby Plaintiffs would act as design-builder on the Project.
105. Plaintiffs' business relationship and expectancies with Metro had a reasonable liklihood of future economic benefit for Plaintiffs.
106. Defendants knew of the Business relationship and expectancies between Plaintiffs and Metro.
107. Defendants intentionally and improperlyinterfered with Plaintiffs' business expectancies with metro by engaging in secret discussions with Metro without Plaintiffs' knowledge and by attempting to convince Metro not to engage Plaintiffs as builder contractor on the project, but rather to engage Young, Russell, Smith Construction and S.E. Metro for that purpose.
108. defendants conduct was intended to, and did, interfere with the business relationship and expectancies between Plaintiffs and Metro, causing their breach, disruption, or termination." |
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Thu Sep 08, 2011 10:36 pm |
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untanglingwebs
El Supremo
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COUNT Xl- TORTIOUS INTERFERENCE WITH BUSINESS EXPECTANCY
(YOUNG, rUSSELL, SMITH CONSTRUCTION AND S.E. METRO)
111. "Plaintiffs had a business relationship with the City, wherby Plaintiffs would act as builder contractor on the Project.
112. Plaintiffs' business relationship and expectancies with the City had a reasonable liklihoood of future economic benefit for Plaintiffs.
113. Young, Russell, Smith Construction and S.E. metro knew of this business relationship and expectancies between Plaintiff and the City
114. Young, Russell, Smith Construction and S.E. Metro intentionally and improperly interferred with Plaintiffs business expectancies with the City including, but not limited to, engaging in secret discussions and negotiations with the City without Plaintiffs' knowledge and attempting to convince the City not to engage Plaintiffs as builder contractor on the project,but rather to engage Young, Russel, Smith Construction and S.E. Metro for that purpose.
115. Young, Russell, Smith Construction and S.E. Metro's conduct was intended to , and did, interfere with the business relationship and expectancies between Plaintiffs and the City, causing their breach, disruption, or termination."
Last edited by untanglingwebs on Fri Sep 09, 2011 7:29 am; edited 1 time in total |
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Thu Sep 08, 2011 10:48 pm |
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untanglingwebs
El Supremo
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COUNT Xll-VIOLATION OF MICHIGAN UNIFORM TRADE SECRETS ACT
(ALL DEFENDANTS)
This count alleges that the trade secrets created by the Plaintiffs provided the Plaintiffs with a competitive advantage over those who did not know or use them. The Plaintiffs guarded these secrets and these trade secrets contained information on how to execute the Project while being in compliance with federal rules and regulations and while doing so in a timely and profitable manner. The Defendants misappropriated these trade secrets regarding the pricing and execution of the Project when they used plaintiffs trade secrets for their own benefit and the benefit of others.
COUNT Xlll- FRAUDULENT MISREPRESENTATIONS
(YOUNG AND RUSSELL)
130. "Young and Russell made numerous material misrepresentation of fact to Plaintiffs either by word or by actions including, but not limited to representations that: (1) Smith Village had been selected as the builer contractor on the Project and should therefore "stand down" and not take furtheracion in furtherance of obtaining the project, but instead allow Young, Russell, Eason and others to engage in activity on Plaintiffs' behalf. (2) Young and Russell were working solely for the benefit of Smith Village on the Project, (3) Young's and Russel's interaction with Metro, Eason, and the City regarding the Project were solely on behalf of Smith Village, and 94) Young's and Russell's use of Plaintiffs' confidential and trade secret information was solely for the benefit of Smith Village.
131. These representations were false when they were made by Young and Russell to Plaintiffs.
132. Young and Russell knew these representations were false when they made them or they recklessly made them without regard for their truth.
133. Young and Russell made these representations with the intention of inducing Plaintiffs' relaince on them.
134. Plaintiffs acted in relaince on Young's and Russell's misrepresentations.
135. Plaintiffs acted in reliance on Young's and Russell's misrepresentation." |
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Thu Sep 08, 2011 11:14 pm |
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untanglingwebs
El Supremo
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COUNT XlV - FRAUDULENT MISREPRESENTATION
(EASON AND THE CITY)
137. Eason and other City representatives made numerous misrepresentationsnto Plaintiffs regarding the Project, including that Smith Village had been selected as the contractor builder on the Project and should therefore "stand down" and not take further action in furtherance of obtaining the Project, but instead should allow Eason and others to engage in activity on Plaintiffs' behalf.
138. These representations were false whenthey were made by Eason and other City representatives to Plaintiffs.
139. Eason and other City representatives knew these representations were false when they made them or they made them without regard for the truth.
140. Eason and other City representatives made these representations with the intention of inducing Plaintiffs' relaince on them.
141. Plaintiffs acted in reliance on Eason's and other City representatives' misrepresentation.
142. The City is liable for the fraud and msrepresentations perpetrated by its agents including, but not limited to, Eason
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Thu Sep 08, 2011 11:26 pm |
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untanglingwebs
El Supremo
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COUNT XV- GROSS NEGLIGENCE
(THE CITY)
145.
'The City had a duty to properly supervise its agents, including Eason, to prevent them from misconduct including, but not limited to, secretly engaging in negotiations and discussions with Young, Russell, Smith Construction and S,E, Metro, the purpose of which was to cut Plaintiffs out of the Project.
146.
The City breached its duty by failing to properly supervise its agents and representatives including, but not limited to Eason, and allowing those agents and representatives, including Eason, to engage in all manner of fraud, misrepresentation and secret backroom dealing
.
147.
The City's conduct was so reckless as to demonstrate a substantial lack of concern for whether injury resulted therefrom.
148.
Plaintiffs suffered damages and other injury, which damages and injury were proximately caused by the City's gross negligence
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Thu Sep 08, 2011 11:36 pm |
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untanglingwebs
El Supremo
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COUNT XVl- CIVIL CONSPIRACY
(ALL DEFENDANTS)
151.
Defendants engaged in concerted action to eliminate plaintiffs from the Project and obtain the Project, and all economic benefits associated therewith, for themselves and/or entities associated with them.
152.
Defendants engaged in this concerted action for a criminal or unlawful purpose, and/to accomplish a lawful purpose by criminal or unlawful means, which purpose was the elimination of Plaintiffs from the Project.
153.
Plaintiffs have suffered damages as a direct result of Defendants' conduct.
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Thu Sep 08, 2011 11:48 pm |
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untanglingwebs
El Supremo
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COUNT XVll- CONSTRUCTIVE TRUST
(ALL DEFENDANTS)
156.
The Project was to be funded through federal NSP funds
.
157.
Plaintiffs would have been paid for their out of pocket expenditures on the Project and would have realized a profit on the Project, but for Defendants misconduct.
158.
The Defendants are in possession of, and continue to unlawfully retain, money and property that rightfully belongs to Plaintiffs.
COUNT XVll-ACCOUNTING
(ALL DEFENDANTS)
162.
Defendants have wrongfully obtained and appropriated funds in which Plaintiffs have an interestincluding, but not limited to, private financing and federal NSP funds relating to the Project.
163.
Defendants must provide an accounting of those funds wrongfully obtained in which Plaintiffs have an interest."
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Thu Sep 08, 2011 11:59 pm |
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Dave Starr
F L I N T O I D
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| WOW |
_________________
I used to care, but I take a pill for that now.
Pushing buttons sure can be fun.
When a lion wants to go somewhere, he doesn’t worry about how many hyenas are in the way.
Paddle faster, I hear banjos. |
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Fri Sep 09, 2011 6:59 am |
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untanglingwebs
El Supremo
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Before he started CIG Mark deMaria was on Crain Detroit's 40 under 40. He made the list at age 32 as he grew up in his father's construction company. Eason should not have messed with this guy!
Mark DeMaria, 32
Principal
Denali Development Group
Royal Oak
Biggest achievement: Creating and completing the Metro Lofts luxury condominium development in Royal Oak.
Current goal: Seeking land and locations for other luxury urban loft communities.
Mark DeMaria was ahead of the curve on developing warehouse-style lofts in Royal Oak and is now adapting his business to other types of real estate and to other cities.
DeMaria, who co-founded Denali with co-principal David Wilson in 2003, completed construction on the Metro Lofts project in Royal Oak's warehouse district last year. The 30-unit project sold out in five months with units priced from $320,000 to $800,000.
DeMaria took the commercial expertise gained when he worked at DeMaria Building Co., the company headed by his father, and applied it to Metro Lofts through details such as commercial-size windows and high walls. Architectural firm Neumann/Smith & Associates developed the award-winning design.
"People really prefer the heavier, industrial aspect of the building. … It's what makes the units unique," DeMaria said.
DeMaria reported 2005 revenue for Denali Development of $26.8 million, up from $21 million in 2004.
Metro Lofts, off Harrison east of Main Street, was the first phase of a $59 million, three-project endeavor. A second phase of 45 units is under construction with prices from $270,000 to $500,000. A third phase is on hold, probably until 2012, because the residential market has cooled, DeMaria said.
The company has a two-part strategy to keep its momentum going during the lull. It is working with an urban land planner to create a Royal Oak warehouse district development plan, including retail, restaurants, pubs, single-family homes, town homes, and lofts priced from the low $200,000s to the $700,000s. The concept could bring an additional $100 million in development over 10 years.
The other part of the strategy is to investigate other U.S cities with demand for the type of project DeMaria has built. Two deals are being investigated so far in La Jolla, Calif., and Providence. R.I., DeMaria said. In addition, DeMaria's 21-unit Loft 322 project is under construction in Ann Arbor.
DeMaria said the plan is to have the Royal Oak warehouse district design complete in May for the 20-acre area that the company owns or has options on.
- Jennette Smith |
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Wed Sep 14, 2011 8:55 am |
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untanglingwebs
El Supremo
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Current Projects for CIG
Neighborhood Stabilization Program Projects in Michigan
Wayne County, Michigan Neighborhood Stabilization Program (NSP)
CIG is acting as Program Manager reponsible for managing and administering the $27 Million Neighborhood Stabilization Program
City of Flint, Michigan Neighborhood Stabilization Program (NSP)( scope was to acquire and rehab 18 houses and demolish 80 homes)
Detroit Land Bank Authority - Neighborhood Stabilization Program (NSP)
Grosse Pointe Park, Michigan Neighborhood Stabilization Program (NSP)
City of Highland Park, Michigan Neighborhood Stabilization Program (NSP)
City of Hamtramck, Michigan Neighborhood Stabilization Program (NSP)
City of Romulus, Michigan Neighborhood Stabilization Program (NSP)
City of Harbor Woods, Michigan Neighborhood Stabilization Program (NSP)
City of Ecorse, Michigan Neighborhood Stabilization Program (NSP)
City of River Rouge, Michigan Neighborhood Stabilization Program (NSP)
City of Melvindale, Michigan Neighborhood Stabilization Program (NSP)
City of Garden City, Michigan Neighborhood Stabilization Program (NSP)
City of Detroit, Michigan Neighborhood Stabilization Program (NSP)
Van Buren Township, Michigan Neighborhood Stabilization Program (NSP)
City of Wayne, Michigan Neighborhood Stabilization Program (NSP)
City of Wyandotte, Michigan Neighborhood Stabilization Program (NSP)
City of Southgate, Michigan Neighborhood Stabilization Program (NSP) |
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Wed Sep 14, 2011 9:02 am |
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