$1B expansion of Fort Worth Stockyards put on ‘indefinite hold' in legal dispute
Phase 2 redevelopment of the Fort Worth Stockyards may be on hold due to disputes between the project's developers, court documents have revealed.
In documents filed on May 6, Majestic Realty Co.'s former executive vice president Craig Cavileer alleged that a dispute between the developer and its local partner for Stockyards redevelopment, The Hickman Companies, resulted in his firing and has stalled the almost $1 billion redevelopment project.
'Phase Two of the project — which would have converted a surface parking area into new mixed-use developments — has been put on indefinite hold,' the lawsuit states.
The second phase of redevelopment is expected to double the size of the Stockyards, adding three hotels, 300,000 square feet of commercial space, at least 295 units of multifamily housing and two underground parking garages. The Fort Worth City Council approved economic incentives for the project in June. Developers Majestic Realty and Hickman Companies agreed to invest at least $630 million in the project. Construction has yet to begin.
Cavileer filed a lawsuit against Majestic Realty Co. and the company's chairman of the board Edward Roski Jr., who recruited him to join the company in 1993. In court filings, Cavileer alleged Majestic and Roski forced him to suddenly pay back tens of millions of dollars in loans, after he refused to side with the company in a Stockyards-related dispute. The case is being heard by the Superior Court of Los Angeles County.
Cavileer's stakes in a number of Stockyards properties were auctioned off on May 6, after Majestic took legal action requiring him to sell them in order to pay back 31 loans he had gotten from Majestic worth a combined $75.9 million.
The loans were promissory notes issued to Cavileer by Roski on behalf of Majestic. In court documents, Cavileer states that Majestic's development partners usually receive ownership interests in the company's projects; promissory notes are typically issued to them, so they have enough cash to buy into their share of equity at a project's start.
Cavileer alleged Roski promised partners that their debt wouldn't be called in until the property is sold or recapitalized, which would provide the development partner with enough capital to pay off the loans. Cavileer stated he wouldn't have agreed to take the promissory notes without Roski's promise.
Cavileer alleged in his over three decades working with Majestic, Roski never called in a debt on a note without a significant capital event — until he demanded Cavileer pay back his loans. He said Roski and Majestic knew he wouldn't be able to pay back the loans without the sale of property.
In court filings, Cavileer describes the action as a retaliatory move designed to rob him of the benefits earned from his time with Majestic. He alleged Roski and Majestic called in his loans after he refused to side with the company in a dispute with its Stockyards development partner, Fort Worth-based firm The Hickman Companies. According to a statement Cavileer submitted to the court, Majestic wanted Hickman Companies to invest additional capital into Phase 2 redevelopment, a dispute that resulted in arbitration.
'Roski and Majestic did not consult me before they demanded additional capital from the Hickmans or entered litigation. Despite this, Roski and Majestic demanded that I support their position in the litigation,' Cavileer states in court filings.
In the lawsuit, Cavileer alleged Roski and Majestic stopped holding meetings and communicating with him in October. He also asserted that Roski and the company diverted cash distributions he was owed.
Cavileer oversaw the creation of Mule Alley, the first phase of redevelopment in the historic district. Majestic fired Cavileer in December, and has since appointed Rick Kline III as lead representative for Stockyards projects. Kayla Wilkie, Majestic's director of design and development for lifestyle and hospitality, left the company on May 14, the Dallas Business Journal reported. Wilkie and Cavileer helped create plans for Phase 2 of redevelopment.
Cavileer's legal actions are the latest move in his ongoing legal battle with Majestic.
Majestic filed a lawsuit against Cavileer in Superior Court of Los Angeles County on Jan. 2, which alleged he failed to pay back 31 loans worth $75.9 million. The company is seeking the value of the loans plus interest, as well as attorneys fees and other costs incurred in the suit. Cavileer denied Majestic's allegations in documents filed on April 15. Both parties demanded a jury trial in the case.
Over a dozen of Cavileer's assets, including a stake in the company that operates Cowtown Coliseum, were auctioned off on May 6.
Cavalier's stakes in the management companies that own the Hyatt Place Fort Worth Historic Stockyards, Hotel Drover, Stockyards Hotel and the Stockyards Station shopping center were part of the sale. Also part of the auction were his stakes in the companies that own and operate two warehouses and undeveloped land along Interstate 35W in south Fort Worth and an over 1.1 million-square-foot warehouse at 9449 Silver Creek Road, which was leased by Google in October.
Cavileer attempted to stop Majestic from selling his interest in the properties through legal action on the day of the auction, but the court denied his request due to 'lack of sufficient evidence and lack of irreparable harm.'
'If Roski is successful, the forced sale of Cavileer's ownership interests on the auction block will mean that the past 32 years of Cavileer's professional life has been for nothing,' court documents state.
Arbitrations that Cavileer instituted against Roski and Majestic in February are still pending. Cavileer alleged Majestic entered into arbitration under the guise of resolving their dispute over his loans, but never intended to come to an agreement. He states Majestic instead used negotiations as a ploy to prevent him from taking additional action that could've protected his interests.
Majestic Realty Co. declined to comment on legal proceedings, but a spokesman said the company is continuing 'to focus on our long-term development plans for the Stockyards and our work with our Hickman family partners.'
The city of Fort Worth declined to comment on the developers' legal actions.
'The City continues to work with Fort Worth Heritage in support of progress on the second phase of the Stockyards,' said a statement from the city.
Stockyards Heritage Development Co., the partnership between Majestic and Hickman Companies, did not respond to a request for comment. Hickman Companies and Cavileer's lawyer also did not respond to a request for comment.
Based in Fort Worth, Hickman Companies was founded by entrepreneur Holt Hickman in 1964. Los Angeles-based Majestic Realty is the largest private developer of master-planned business parks in the country.
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