Marc Realty and Vesta Capital Sue Each Other

A dispute over a multifamily property in Oklahoma has put a major Chicago developer at odds with one of its project partners.

Marc Realty was sued by Vesta Capital, an Oklahoma-based real estate investment firm, over a multifamily property the two purchased in a joint venture. The suit was filed earlier this year, and Marc has since countersued Vesta.

The firm moved forward on a countersuit after it hired a forensic auditor to examine the accounts and the deal and believes there are inconsistencies with Vesta and the compensation agreement, Marc principal Larry Weiner, told The Real Deal.

“We got caught in a rat’s nest of fraud and deceit and we’re trying to make our way through it the best we can,” Weiner said.

Attorneys for Vesta Capital did not respond to a request for comment.

The suit centers on an agreement between the companies regarding the purchase and payment structure of Somerset Apartments, a multifamily property in Tulsa. Marc Realty purchased the property through an LLC via a 1031 Exchange of a property it had recently sold in Chicago, and then teamed up with Vesta on a joint LLC to govern the property.

The firms entered into an agreement in Oct. 2019, which laid out the compensation structure. The initial lawsuit alleges that Marc did not pay Vesta what it was owed.

Marc alleges in its countersuit that the lawsuit was an attempt to get ahead of information that would reveal Vest had taken money out of the joint venture’s account. Specifically, the countersuit said that Vesta “breached its duties and defrauded Somerset” by paying itself an unauthorized construction management fee, improperly paying its own overhead expenses without authorization or right and improperly paying itself a property management fee and an asset management fee.

These alleged breaches caused the joint venture to pay “hundreds of thousands of dollars for purported construction services that were never performed” or not worth the amounts that were paid.

“Vesta Realty’s claims in this case are a preemptive strike against Somerset to defend against the numerous claims that Vesta Realty knew Somerset was preparing to bring against it,” the countersuit states. “After being confronted with its misconduct, Vesta Realty went on the attack and sued first, alleging baseless claims against Somerset and its ownership group, so that it could “get out in front” of the claims that were coming.”

The lawsuits are currently in discovery. Weiner said that Vesta has tried to settle its lawsuit with Marc, but he’s now determined to see the litigation through.

”I don’t want to settle a lawsuit,” he said. “I want to find out exactly what happened.”