The original developer of the stalled $2 billion Wade Park project has lost a legal battle against lenders on the high-profile development on the Dallas North Tollway in Frisco.
In August 2020, commercial real estate developer Stan Thomas, the original developer behind the project formerly called Wade Park and more recently going by “Project X” in its latest iteration, claimed his company was defrauded out of its position in the project.
Two of Thomas’ business entities, Wade Park Land LLC and Wade Park Land Holdings LLC, filed for bankruptcy at the time and accused New York-based lenders Gamma Real Estate Capital and Gamma Lending Omega of wrongly taking ownership of the property in 2019 after a loan default.
A New York federal court on Friday dismissed fraud and other claims against the lenders with prejudice, meaning the same claim cannot be refiled.
The developer, which is based out of Newnan, Ga., had sought hundreds of millions of dollars in damages from Gamma and its executives.
Thomas and Wade Park Land LLC had alleged that the Gamma companies and Jonathan Kalikow, president of Gamma Real Estate, had schemed with others to wrest control of Wade Park from Thomas and his companies. Thomas’ claim made wide-ranging allegations, including fraud, breach of contract, money laundering, theft of trade secrets, racketeering and tortious interference with business relations.
In January 2017, Gamma Real Estate Capital made a four-month $82.75 million bridge loan to the Wade Park developer. Thomas’ 2020 complaint accused Kalikow and the Gamma entities of a “loan-to-own” scheme.
Gamma contended that the Wade Park plaintiffs did not repay the bridge loan, or another $48 million loan a Gamma’s affiliate acquired in July 2018. After three extensions, the lender entered into six forbearance agreements and a deed-in-lieu agreement that further extended plaintiffs’ time to repay. In February 2019, when the Wade Park development entities defaulted again, an affiliate of the lender took title to the Wade Park property.
In a 90-page opinion issued late Friday, after oral arguments, U.S. District Judge Lewis Liman spelled out his reasons for dismissing each of the 17 counts that Thomas and the Wade Park companies alleged.
Liman found that Thomas and his Wade Park entities’ argument that Gamma schemed to take the Wade Park property was undermined by the many forbearances defendants granted to the plaintiffs.
“Rather than exercise their rights of control — which they could have if their objective was to obtain ownership of Wade Park — Defendants continued to grant Plaintiffs further opportunities to pay the loan and retain control of Wade Park rather than simply foreclosing on the asset at first opportunity,” Liman’s opinion states.
Liman’s order concludes: “The motion to dismiss is granted, and the complaint is dismissed with prejudice. The Clerk of Court is respectfully directed to close the case.”
“Our clients are gratified by the court’s comprehensive and compelling rejection of plaintiffs’ baseless claims,” said Michael J. Dell, a partner with law firm Kramer Levin and part of the team representing Gamma Real Estate, in a statement.
The allegations in the case involved the financing for the former Wade Park project located along the “$5 Billion Mile,” a one-mile stretch of land in Frisco that’s home to The Star headquarters and training center for the Dallas Cowboys, Toyota Stadium, and various high-end, mixed-use developments such as Frisco Station and The Gate.
The Wade Park project was initially envisioned to involve the construction of two office towers with more than 5 million square feet of office space, 1 million square feet of high-end retail space, roughly 2,400 luxury residential housing units, and five hotels.
Construction on the 176-acre mixed-use development stopped in the summer of 2017, leaving a large excavation and two partially constructed buildings. It was repeatedly posted for foreclosure throughout 2018 then repeatedly removed from the list, sparing it from auction.
Gamma Real Estate has been working with the city of Frisco to come up with new development plans. The city of Frisco previously approved $122 million in economic incentives for the massive project more than six years ago.
In September 2020, the city said it was working with Gamma — not with Thomas — on the property, according to an email from the city to the Dallas Business Journal at the time.
”To our knowledge the property is now wholly owned and controlled Gamma Realty,” the 2020 email said. “We have been working with Gamma representatives to keep the site maintained and continue an open dialogue with them about potential future uses.”
All initial incentive agreements involving Wade Park are “null and void due to nonperformance,” the city said.
For more DFW business news, please visit the Dallas Business Journal.