Lake Worth’s Gulfstream Hotel project snarled in partner lawsuits

The partners behind the $65 million Gulfstream Hotel renovation project have sued one another, meaning the next step could be in court — and not on the site.

CDS Gulfstream, headed by south county developer Bill Milmoe, owns 51 percent of the project and was started to arrange financing for it. It sued partner HH Gulfstream, a company led by developer Hudson Holdings, on Dec. 22, claiming a breach of the operating agreement.

Hudson Holdings, a Delray Beach company, is headed by developer Steven Michael.

In a Palm Beach County Circuit Court filing, CDS said HH failed to meet its obligations to close on the deal to buy the site on Dec. 20 and that HH had more than $2.9 million available to do it.

CDS said HH was either unwilling or unable to buy CDS’ interest in the project. CDS added that Hudson told it on Oct. 20 that HH wanted to buy CDS’ interest and that CDS agreed to a closing date within 60 days, according to the complaint.

The project would transform the 106-room downtown Gulfstream Hotel, built in 1925, into an 87-room hotel with a downstairs restaurant, a champagne room and a rooftop sky bar while also building a five-story hotel annex to be branded by the Curio Collection, an upscale Hilton Hotel brand.

Eric J. Rayman, CDS’ attorney, did not return several calls for comment.

HH filed a countersuit Tuesday, saying HH had an operating agreement with CDS for a buy/sell provision.

J. Spencer Jenkins, the Fort Lauderdale attorney representing HH, said his client properly exercised its right to purchase CDS’s interest.

“We were ready, willing and able to close on the date we were supposed to close and CDS failed to come to the closing table,” Jenkins said.

Michael, a co-owner of Hudson Holdings, declined to speak with The Palm Beach Post and referred questions to Jenkins.

Glen Torcivia, Lake Worth’s attorney, said the suits sounds like a divorce.

“It looks like a mortgage foreclosure,” he said. “They’re hurling stones at each other saying ‘Bad on you, bad on you, it’s you’re fault,’ and ultimately a judge and jury will figure out who’s right and who’s wrong. It’s unfortunate that any reopening of the Gulfstream Hotel will be delayed by the dispute between these two parties.”

For instance, in the complaint, HH said CDS, as an act of bad faith, went out of its way to damage the project’s success in February by trying to remove HH as the project manager “for allegedly entering into a financing agreement with a third party in violation of the operating agreement,” according to court documents.

HH said it never entered into any such financing agreement, but was just having “preliminary discussions” regarding construction budgeting.

Aside from the feuding partners, the renovation plans also faced a 2016 lawsuit over building heights filed by former City Commissioner Jo-Ann Golden and two others. A three-judge panel dismissed the suit.

Hudson Holdings also has been named in several code violations, including a citation for construction signs that have fallen down, trash and debris building up in front of the property, graffiti on the company’s signs and fence screens blowing away.

“The neighbors aren’t very happy,” William Waters, the city’s director for community sustainability, told The Palm Beach Post in 2017.

As for the partner lawsuit, CDS is asking the court for damages, while HH is asking that the court force CDS to negotiate in good faith.

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