Michael Stern Fires Back At Lender In Fight For Control Of Mercedes-Benz-Branded Project
The legal battle over one of the highest-profile developments in Miami is intensifying.
An affiliate of Michael Stern's JDS Development Group filed suit last week against its lender on the $2B Mercedes-Benz Places project, claiming it breached a confidentiality agreement in an attempt to take over the project via foreclosure.
Stern's company, 191 SW 12 Owner LLC, alleged that Cottonwood Group violated a nondisclosure agreement by using confidential information about the project to negotiate and communicate with the project's original lender, according to the complaint filed May 6 in Miami-Dade Circuit Court.
At issue is an $86M loan provided to JDS by Maxim Capital Group in 2022 for acquisition and construction financing for the project at 100 NE Eighth St. Stern purchased the assemblage, which included city-owned property and adjacent land, for $24M in 2020.
Stern is planning to build a 67-story tower with 791 condos, a 174-key hotel, 130K SF of amenities, retail outlets and 200K SF of office space. He secured the German car company to brand the project as Mercedes-Benz Places in Brickell in 2024.
After delays set back the project, Cottonwood “feigned interest” in refinancing the $86M loan “in order to fraudulently obtain access to highly confidential information” about Stern and the project, according to the suit.
Cottonwood purchased the loan from Maxim in March and filed a suit to foreclose a month later, claiming Stern had failed to repay the loan upon its maturity date in January 2025 and owes $80M, plus interest and fees.
A source familiar with the project said the companies are close to a settlement and an extension on the loan and are in the process of securing a $755M construction loan by June.
Stern declined to comment. Cottonwood didn't respond to a request for comment.
In 2024, after extending and modifying the Maxim loan, JDS hired Walker & Dunlop to solicit proposals to refinance its mortgage, according to the suit.
In early September 2024, Cottonwood expressed interest in refinancing the loan, then signed an NDA and was given access to confidential information, including marketing plans and strategies, financial information, business plans and processes, and scientific and technical information, according to the suit.
The NDA, attached as Exhibit A in the suit, states that Cottonwood would not communicate with the project's lenders, investors, managers, management companies, employees and/or tenants.
JDS claims that Cottonwood's "improper use" of the information to acquire loan documents and file to foreclose has caused damage to the project and led to the city of Miami sending a notice of default under its Public Benefits Agreements.
The foreclosure filings have also resulted in a "number of concerned inquiries from existing buyers, has severely harmed sales to potential buyers" and have complicated efforts to refinance the project, according to the suit.
Stern is known for his projects in New York City, including the world's skinniest skyscraper and Brooklyn's tallest tower, which he lost to lender Silverstein Properties.
The developer's Miami projects are tied up in a handful of disputes.
In December, JDS was sued by investor Gianluca Vacchi, an Italian entrepreneur, who claimed Stern schemed to gain a $2.5M investment for a Miami Beach development.
Vacchi is also an investor in the Mercedes-Benz tower, the $120M condo buyout development with Terra Group in Miami Beach and JDS' Dolce & Gabana Residences in Brickell.
Stern is also suing to unmask the anonymous operator behind the website JDSPulse.com over its online "smear campaign."
