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UIP Faces Third Lawsuit Over Stiffing Contractors As It Sues To Evict Dozens Of Renters

The Carver Hall Project at 211 Elm St. NW
The Carver Hall Project at 211 Elm St. NW

A subcontractor has filed a lawsuit against Urban Investment Partners, the third breach of contract suit the D.C.-based developer has faced in the last two years. 

The lawsuit comes as UIP has brought more than 75 residential tenants to court for nonpayment of rent since the beginning of March, according to D.C. Superior Court records.

Maj Construction, an Annandale, Virginia-based subcontractor, filed a lawsuit July 10 in U.S. District Court for the District of Columbia, claiming UIP's general contracting company owes it $176K for work it completed on the Carver Hall project in Northwest D.C. 

The Carver Hall project was a redevelopment of a former Howard University dormitory into apartments that delivered last year. Howard was a joint venture partner with UIP on the project but wasn't named in the suit.  

UIP did not respond to multiple requests for comment. Its attorney, Meiners Law Firm founding partner Michele Meiners, declined to comment. 

UIP General Contracting entered into a subcontract agreement with Maj Construction June 8, 2018, according to the lawsuit. The subcontractor completed the work, which the suit says was approved by UIP and inspected by the D.C. government. 

The subcontractor says UIP told it three times in January and February that it was preparing to send the payment. As of Friday, it had not sent the payment and no agreement has been reached, according to Maj Construction's attorney, Gill Law Firm Managing Partner Faisal Gill.

"We're hoping once the suit is served that UIP will just pay up," Gill told Bisnow. "I don't see what defense they have. We had a contract, our guys did the work and they just haven't paid. They've been telling us they're going to pay, but they haven't paid."

The lawsuit also claims that UIP didn't honor an agreement it made to give Maj Construction the right of first refusal on its next project. Maj Construction gave UIP a $12,250 discount on the Carver Hall job because of the promise it could work on the developer's next project, according to the suit. UIP then reneged on that agreement, the suit claims, and Maj is now seeking the full contract amount without the discount. 

"They started work, and my clients didn't even know they were starting work," Gill said of the second project. "They never gave them an opportunity to bid on it. They never told them about it. My client said, 'Wait a minute, that's the whole reason we gave you the discount, so we want the discount.'"

Gill said he has represented clients in lawsuits involving construction contracts and has never seen one as indefensible as this. 

"Usually I’ve represented clients who have disputes, but usually it's a legit dispute like the contractor did some work the GC didn’t ask for, or there's a dispute whether the work was done correctly," Gill said. "Usually there’s something there where the GC has been saying, 'We're not going to pay you,' or 'This isn’t done right.' This is the first time I’ve ever encountered where there is no dispute. The work was done. D.C. inspectors signed off on it, so clearly the work was done correctly, and these guys just aren’t paying.”

Steve Schwat UIP
UIP principal Steve Schwat

UIP is also facing breach of contract lawsuits from separate companies on two other D.C. projects.

Edge Commercial filed a suit against UIP in December in D.C. Superior Court. The brokerage firm is seeking $153K on seven counts including breach of contract and fraud related to UIP's September acquisition of two properties in Northeast D.C.'s Brookland neighborhood. 

The lawsuit claims Edge spent more than a year performing brokerage services for UIP as it pursued the Brookland development sites, but UIP then cut it out of the deal and refused to pay a commission after reaching a joint venture with another party.

The Edge case remains active in the court. The judge in March denied UIP's motion to dismiss the suit, court records show.

A third lawsuit from Perdomo National Wrecking Co. was filed against UIP in July 2018. The subcontractor claimed UIP did not make timely and complete payments for work on its Virginia Avenue project, and it is seeking at least $221K in damages. 

The Perdomo case also remains active. A pre-trial conference was held in June and a trial has been scheduled for October, court records show. UIP filed a countersuit against Perdomo in September 2018, alleging the subcontractor breached the contract by failing to complete the project by the agreed-upon date. 

UIP principal Steve Schwat in January responded to the two previous suits. He told Bisnow he did not pay Edge Commercial because the firm failed to secure a signed contract to buy the property. He said Perdomo failed to complete the scope of its job and over-demolished the site, which had previously been a George Washington University dorm. 

While it defends itself against these lawsuits, UIP is also pursuing dozens of eviction cases against its residential tenants. Through a series of affiliated entities, UIP filed more than 75 lawsuits in the D.C. Superior Court between March 12 and May 1, court records show.

In the cases against separate individuals, UIP claims the tenants didn't pay rent. Many of the cases have been dismissed, but at least 20 remain active in the court. UIP also filed at least 50 of these cases in January and February, and it filed dozens of similar cases last year, suggesting it is a common practice for the landlord that didn't begin during the coronavirus pandemic. 

UIP, headquartered in D.C.'s Eckington neighborhood, has invested more than $1B in developing and acquiring apartments in the District, according to its website. It also has a general contracting arm and a property management arm, which manages a portfolio of more than 2,400 units in D.C. and Maryland.