Lawsuit tangles up PabstCity project

James Haertel had hoped he would be celebrating Oktoberfest with his wife, Karen, this month by sipping a cold one at a new Hofbrauhaus and Museum of Beer and Brewing in the PabstCity redevelopment in downtown Milwaukee.
Instead, Haertel is locked out of the former Pabst brewery and awaiting a court ruling on a lawsuit he has filed against the primary developers of the project.
Haertel’s complaint accuses the developers of breach of contract and paints a picture of betrayal, arrogance and vindictive intimidation.
Haertel and his company, Brew City Redevelopment Group LLC, filed the complaint May 17 in Milwaukee County Circuit Court against Juneau Avenue Partners LLC, a partnership formed to develop the PabstCity project on Milwaukee’s near west side. Juneau Avenue Partners includes: Wispark LLC, the real estate development arm of Milwaukee-based Wisconsin Energy Corp.; and The Ferchill Group, a company operated by Cleveland developer John Ferchill.
The defendants filed a motion for the court to dismiss Haertel’s complaint. A hearing on the motion to dismiss has been postponed twice.
Margaret Stanfield, spokeswoman for Wispark, said the company has a policy of not commenting on lawsuits, other than to say, "We’re disappointed that they have taken this action."
Haertel’s complaint alleges Ferchill and Jerold Franke, president of Wispark, violated the terms of an agreement by refusing to transfer ownership of three key buildings at the site to Brew City Redeveloment Group.
The complaint accuses Juneau Avenue Partners of breach of contract.
"We’re suing them for contract breach. They breached the contract. We have to sue them to enforce our claim," Haertel told Small Business Times. "Time is of the essence, and deadlines are very critical."
At stake are millions of dollars and quite possibly the direction, the scope, the ownership and even the future of the PabstCity redevelopment project.
"The breach of defendant Wispark was a cause of the injuries and damages sustained by Brew City, including but not limited to loss of time, money, potential tenants and business opportunities, loss of past and future profits, damage to Brew City’s business and reputation and other consequential and incidental damages," Haertel’s complaint states.
Haertel is being represented in the case by attorney William Cannon of Cannon & Dunphy S.C., Milwaukee.
In the past, officials from Juneau Avenue Partners have said they are planning $300 million in mixed-use development for PabstCity, including retail, entertainment, condominium and office uses.
However, in one section of the complaint, Haertel said Franke threatened to simply redevelop the site north of Juneau Avenue with a Wal-Mart or other big-box retailers.
According to the complaint, in a meeting earlier this year, "concerning the proposed buyout of Brew City’s interest, Jerold P. Franke told James Haertel that it was possible that the entire site north of Juneau Avenue may need to be demolished, potentially in favor of a new Wal-Mart or other big-box retailer. Franke also stated that the entire area west of 10th Street and south of Juneau Avenue may also need to be ‘razed.’"
When asked to comment about Franke’s intentions, Haertel told SBT, "That’s always a bit of a threat that Jerry Franke falls back on. He uses that against the city and us, that it could be a big-box area if he doesn’t get what he wants."
Both parties are awaiting for a new court date to consider Juneau Avenue Partners’ motion to dismiss the lawsuit.
The timeline of grievances alleged in Haertel’s complaint includes:
Sept. 6, 2001 – Haertel’s company enters into an agreement with Pabst Brewing Co. to acquire the former brewery site for $12 million, with $50,000 in earnest money down and $500,000 in deferred earnest money. Haertel embarks upon finding investors with deeper pockets to help him complete the purchase.
June 5, 2002 – Haertel’s company, Brew City Redevelopment Group LLC, assigns all of its interest in the sales agreement for the site to Wispark LLC. In exchange, Wispark agrees and promises to assign title to three of the brewery site’s buildings and all of the contents in those buildings to Brew City Redevelopment Group when the sale is completed. The buildings, described in the agreement as "buildings 27, 28 and 35," to be assigned to Brew City are the former Pabst office complex, Blue Ribbon Hall and the corporate office building. The buildings, which were constructed between 1858 and 1933, are described in the complaint as the "crown jewels" of the Pabst complex. The agreement calls for the remainder of the buildings and the land within the 22-acre site to be developed by Wispark. Pabst Brewing Co. agrees to sell the complex to Wispark under the terms of the agreement.
However, in the months that follow, Haertel makes "repeated requests" to Franke and Ferchill for documents and information related to Brew City’s rights under the agreement. "These agreements were largely ignored," the complaint stated.
"On or about" July 8, 2002 – "Mr. Haertel and Jerold P. Franke were giving then Mayor of Milwaukee, John Norquist, a tour of the Pabst property. When it was mentioned that Brew City owned or had rights to buildings 27, 28 and 35, Mr. Franke stated, ‘We’re going to have Haertel so tied up with covenants and restrictions, that we will control those buildings as well."
July 25, 2002 – During another tour of the site, "Mr. Franke advised Mr. Haertel not to disclose to the group that Brew City owned or had rights to buildings 27, 28 and 35."
August 2002 – Following a meeting regarding the hiring of former Pabst employees, Martin L. Herman, president of The Ferchill Group, "yelled at James Haertel, ‘You’re a loud mouth! You’re a loose cannon! And we want to buy you out.’" The complaint alleges Herman "forcefully insisted that Brew City sell its interests and buildings to Juneau Avenue Partners."
At a subsequent meeting, Haertel and his wife, Karen, are invited to a meeting where "Mr. Ferchill verbally berated Mr. Haertel, directed profanities towards him and told Mr. Haertel he was in ‘over his head’ and that ‘he would (expletive deleted) fail.’"
Aug. 27, 2002 – Wispark provides a new draft of the agreement, in which Brew City Redevelopment would be a "Class B" member of the partnership with no voting rights. "This was not consistent with the terms of the assignment," the complaint stated.
Sept. 10, 2002 – The sale of the Pabst site to Juneau Avenue Partners is closed. The titles for the three buildings are not transferred to Brew City Redevelopment.
Feb. 11, 2003 – Haertel writes an e-mail to Ferchill, requesting transfer of title for the three buildings to Brew City, as the original agreement stipulated. "A response e-mail was sent indicating that John Ferchill rarely reads his e-mails, but that he had instructed the architects for the project, Eppstein Uhen Architects Inc., to restrict all further information to Brew City until there was a signed agreement in place."
Early 2003 – At several meetings, Franke and Ferchill "made comments with respect to whether James Haertel had ‘suffered enough.’ At several meetings, Franke or Ferchill concluded the meeting by saying, ‘No, Haertel had not suffered enough.’"
Feb. 18, 2003 – Haertel is assured by Franke that agreement for the transfer of title to the three buildings will be completed quickly and presented to Brew City Redevelopment Group for review.
March 2003 – Haertel receives a copy of the documents, which are "more onerous and one-sided than the draft previously provided in December 2002" and provide no recourse for Brew City Redevelopment. Juneau Avenue Partners makes alternative offers, including buying Brew City Redevelopment Group’s interests in the buildings for $1 million. Haertel responds with counteroffers, including an offer to sell his entire interest in the project to Juneau Avenue Partners for $10 million.
April 8, 2003 – Juneau Avenue Partners officials advise Haertel that he is no longer "permitted anywhere on the project, except in the designated buildings," and Haertel is told not to tell anyone that he is involved in the PabstCity project. Brew City Redevelopment Group is told "to delete any references to PabstCity or the overall project in any written materials or brochures or Web sites immediately."
March 2004 – "Wispark and/or Juneau Avenue Partners had the locks on the buildings changed to prevent Brew City from entering its buildings 27, 28 and 35."
May 17, 2004 – Brew City Redevelopment Group files a complaint in Milwaukee County Circuit Court against Juneau Avenue Partners, The Ferchill Group and Wispark.
October 29, 2004, Small Business Times, Milwaukee, WI