The embattled developer of the Mandarin Oriental-branded Residences in Boca Raton sued their lender, an affiliate of Madison Realty Capital, ahead of a UCC foreclosure auction.
Via Mizner Owner III LLC and Via Mizner Pledgor III LLC sued Via Mizner Lender 1 and Via Mizner Lender 2 LLC in New York state court on Thursday, seeking damages of more than $500 million. The plaintiffs, led by Mark Gensheimer, president and CEO of Penn-Florida Companies, alleged that Madison Realty “created the defaults” it’s using as the basis to foreclose on the properties.
New York-based Madison, which is led by managing principals Brian Shatz, Josh Zegen and Adam Tantleff, did not immediately respond to a request for comment.
The project lender filed a nearly $418 million foreclosure suit against the developer in July, alleging missed payments beginning in 2024 and the failure to repay the loan when it matured nearly a year ago.
At the center of the foreclosure suit is the 1.5-acre site at 105 East Camino Real, where the stalled 164-key Mandarin Oriental-branded hotel and 88-unit luxury condo have sat unfinished after years of delays. The hotel and condo connect via a sky bridge, and are set to share many of the project’s amenities.
Lender accused of going “scorched-Earth”
The foreclosure isn’t the only lawsuit to hit the troubled project — buyers, contractors and subcontractors have gone after the developer in separate filings over the years. The project was first announced in 2015.
In the developer’s complaint filed last week, the Penn-Florida affiliates are seeking a declaratory judgment regarding the relationship between the developer and lender, a declaratory judgment of Madison’s violations under New York’s Uniform Commercial Code (UCC) and an order blocking the UCC sale. The developer claims Madison committed “gross mismanagement and gross negligence.”
On Monday, Justice Andrew Borrok signed an order temporarily blocking the UCC foreclosure auction and setting a hearing for Oct. 1.
In 2023, the developer secured more than $300 million in financing, led by Madison.
The Penn-Florida affiliates claim that months after the loans closed, Madison stopped funding the project, claiming the loans “were out of balance.” As a result, the developer alleges they were unable to pay project vendors, and that’s when Madison demanded “exclusive
and unfettered control over construction and all of the roles reserved to the developer of the project,” according to the complaint.
Madison replaced the project manager with Straticon LLC, and later resumed funding the project by paying vendors directly. Madison tapped Zachary Kadden, “a young lawyer who lacked the construction experience and technical knowledge to lead a project” of that magnitude, to be the de facto decision maker, the lawsuit alleges.
The firm also hired Project Management Advisors to oversee the project, and reportedly told a PMA employee to go “scorched Earth,” “crush the project,” and to “mother-fuck them up,” according to the lawsuit.
Once Madison stopped paying vendors, all work stopped on the project, according to the lawsuit.
By late 2024, the two sides negotiated restructuring agreements that confirmed Madison’s control over the condo portion of the project, including its completion. The project is still unfinished.
Penn-Florida alleges Madison “has engineered and manufactured the very events of default upon which its enforcement actions are based.”
The lawsuit was filed just weeks after a condo association in downtown Miami sued Madison, accusing the private equity firm of financial mismanagement and negligence regarding the maintenance of the Marquis Miami condo-hotel tower. The complaint asks a judge to appoint a receiver to take control of the property, oversee necessary repairs, and recover allegedly misused unit owner funds.
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