Atlas Capital Group’s plan to transform two buildings in a changing part of downtown Los Angeles has hit a brick wall due to lawsuits.
The New York City-based developer in 2017 began gutting a 99-year-old, six-story building at 712 South Olive Street and adjacent two-story structure at 410 W. 7th St. with the plan to lease out retail and office space.
But last month the project’s general contractor, downtown L.A.-headquartered City Constructors, filed a lawsuit against Atlas.
The lawsuit filed in Los Angeles County Superior Court alleged that Atlas failed to map out the scope of the building revamps, and that the developer owed City Constructors at least $1 million.
Atlas fired back 10 days later with a lawsuit of its own, stating that City Constructors bungled its work and owes Atlas $5.5 million.
Adding to the project’s troubles is a number of subcontractors who both lawsuits suggest went unpaid.
One subcontractor, Arleta-based DMR Construction, filed its own lawsuit last week. The complaint alleges that Atlas owes DMR Construction $159,000 for drywall and installation work.
The litigation would appear a big setback for Atlas’s L.A. growing portfolio. The 14-year-old company bought the L.A. Times printing plant for $240 million in December, and it has proposed a 725-unit residential building by Chinatown.
The buildings at 7th and Olive Street are part of downtown’s Jewelry District, an area filled with decades-old jewelry shops, shuttered storefronts, but also trendy new dining spots. In fact, civic boosters have taken to rebranding the area “Row DTLA” or “Restaurant Row.”
In the initial lawsuit filed regarding the redevelopment, City Constructors said that it ran into problems with the six-story, 160,000-square-foot Olive Street building because Atlas did not properly communicate plans with the L.A. Department of Buildings.
This triggered a “cascade of delays” furthered by Atlas providing incomplete design specifications, the lawsuit alleges. City Constructor said it consequently had to do preliminary waterproofing, plumbing, and sidewalk replacement just to begin the construction work Atlas specified.
Atlas’s countersuit contends project delays were because City Constructors had neither a subcontractor payment plan nor the sufficient manpower to deliver on its contract.
Messages left with Atlas, City Constructors, and DMR Construction were not returned.
The post Lawsuits run Atlas Capital’s DTLA project off course appeared first on The Real Deal Los Angeles.
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