Ottawa Senators owner Eugene Melnyk suing partner over 'failed' downtown NHL arena bid
Jon Willing, Ottawa Citizen
Updated: November 23, 2018
Senators owner Eugene Melnyk is accusing his LeBreton Flats business partner of leveraging the historic redevelopment to grow the allure of a nearby condo complex, while pinning the blame on John Ruddy and Trinity Developments for Ottawa residents losing out on a downtown arena and new community.
All of the behind-the-scenes wheeling and dealing — the promises allegedly made, the promises allegedly broken — are contained in a staggering $700-million lawsuit filed in Ottawa court Friday by Melnyk against Ruddy, Trinity-involved companies and consultant Graham Bird.
The allegations, pitting two business moguls against each other over the transformation of the most important undeveloped land in the region, could wipe out the National Capital Commission’s latest attempt to make something happen on LeBreton Flats, which currently sits as a barren, contaminated site west of the downtown core.
Certainly, the RendezVous LeBreton Group partnership that exists today, and the immediate prospect of a downtown arena built for the Ottawa Senators, appears to be toast.
In a statement, John Ruddy said that Trinity “strongly denies” the allegations in the lawsuit and intends to vigorously defend itself.
“For over 30 years, I have sought to make a contribution to the communities in which Trinity operates, and in particular my hometown of Ottawa. I will always find ways to build Ottawa up and continue to make a contribution to our great city,” he said.
Bird, for his part, didn’t respond to requests for comment.
None of the allegations has been tested in court.
The plaintiff is Capital Sports Management Inc. (CSMI), a company that’s owned by Senators Sports and Entertainment, which owns the Ottawa Senators. Melnyk is the principal and majority owner.
Melnyk’s lawyer, Robert Brush, wouldn’t say how long the highly detailed lawsuit, which describes various meetings between Melnyk, Ruddy, the NCC and the City of Ottawa, has been in the works.
“We’re not going to litigate it in the media,” Brush said.
It was only on Thursday that the NCC revealed the problems inside the RendezVous partnership and gave Menlyk and Ruddy until the next NCC board meeting in January to finalize a governance structure.
Brush said Melnyk wasn’t doing interviews.
So, is RendezVous finished in Melnyk’s eyes?
“The claim sets out the concerns of CSMI and Mr. Melnyk, and really we have to wait and see how the process plays out,” Brush said. “I can’t say to you now one way or the other where Mr. Melnyk considers RendezVous. What we have to see is what response we get back and where things go from here.”
While people involved in the LeBreton negotiation have accused Melnyk of being the roadblock to landing a final development deal, Melnyk’s lawsuit claims he was kept in the dark about Ruddy’s development interest at 900 Albert St., across from the Bayview LRT station and near LeBreton Flats.
Trinity is part of TIP Albert GP, which last July received city council’s blessing to build a 65-storey condo complex at the high-profile junction of the municipal rail lines.
The lawsuit says Melnyk hired PricewaterhouseCoopers to look into the residential market and found the massive project at 900 Albert would “destroy the viability of the LeBreton project outright.” The market, according to the lawsuit’s description of the report, couldn’t support both projects.
The expanded 900 Albert project “destroyed the joint venture to develop LeBreton Flats,” the lawsuit says.
Melnyk accuses Ruddy and Trinity of leveraging their RendezVous joint venture and using inside information to make business decisions about 900 Albert.
“Instead, the joint venture failed because of an egregious conflict of interest on the part of Trinity and its principal John Ruddy, that ought to have been identified to CSMI and resolved but instead worsened over time,” the lawsuit says.
The acrimony between Melnyk and Ruddy has allegedly been going on for more than two years. The relationship “soured” right after the NCC named RendezVous the highest ranked candidate to take on the development in April 2016, the lawsuit says.
It was the NCC, according to the lawsuit, that approached Melnyk’s company about its interest in redeveloping LeBreton Flats, leading to Melnyk partnering with Ruddy and submitting a proposal in an NCC-led competition.
Melnyk, whose businesses run the Canadian Tire Centre and have built Sensplexes, needed a partner with residential and commercial development experience for the LeBreton bid.
Eventually, Melnyk learned about Ruddy’s development plans for 900 Albert, a triangular piece of land beside the City Centre complex, once eyed by DCR/Phoenix for a chunky office complex, but then sold to Trinity, which plotted a major transit-orientated development and attracted other investors. Melnyk, who was interested in rolling in the 900 Albert project with the LeBreton project, wanted to know why Ruddy didn’t include him in the 900 Albert investment, the lawsuit says.
Last January, Melnyk’s company said it was reconsidering its involvement in the LeBreton project, solely because of the impact of 900 Albert, the lawsuit says. The NCC “turned a blind eye” and pressured Melnyk’s company to sign the term sheet, the lawsuit says.
According to the lawsuit, the NCC announced an agreement in principle with RendezVous on the redevelopment of LeBreton Flats, despite Melnyk voicing concerns over the economic viability of the project in light of 900 Albert.
Bird and his GBA Development and Project Management company were RendezVous’s project manager. According to the suit, Melnyk fired Bird from the project, but Trinity then retained Bird as its own representatives for the development. The lawsuit alleges Bird also helped Trinity on the 900 Albert project.
The lawsuit says Trinity submitted the municipal land-use applications on behalf of RendezVous without notifying Melnyk’s company. According to the lawsuit, the development plan proposed to build the arena near 900 Albert on the western part of LeBreton Flats, instead of near the Pimisi LRT station on the eastern part.
From a legal standpoint, the lawsuit accuses Trinity of breaking a fiduciary duty allegedly owed to Melnyk’s company and not working in good faith.
“Instead, Trinity betrayed the trust of its joint venture partner by continuing to conceal, overtly and by omission, the worsening conflict when it knew or ought to have known that its conduct … would threaten and ultimately destroy the very joint venture it had agreed to advance and promote,” the lawsuit says.
The NCC said it’s not commenting on the lawsuit.
https://ottawacitizen.com/news/local-new...r-failed-joint-venture-at-lebreton-flats
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