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A California-based company has sued the developer of the Skye Condominiums uptown saying the developer engaged in egregious and unscrupulous conduct by failing to pay a $500,000 commission after the company helped secure financing for the hotel-condominium project.

Workmen s Life Insurance Company sued Small Brothers Charlotte, LLC last week saying the developer offered to pay only a third of what was due and told Workmen s it would bury it in litigation that would tie up its money for years, according to documents filed in Mecklenburg Superior Court.

Jon Small, managing member of Small Brothers, said in an email: We feel we have a legitimate dispute with Workmen s...This dispute will be settled in normal due process and we do not discuss pending litigation.

The project at South Caldwell and Third streets, where the developers plan 69 luxury condominiums, a 172-room Hyatt Place hotel, retail shops and a rooftop restaurant, is nearing completion and expected to open during the third quarter.

Small Brothers Charlotte, a subsidiary of Naples, Fla.-based developer Small Brothers LLC, bought the property in a private auction for $4.5 million in summer 2009. The partially finished building had been announced in 2000 and envisioned as uptown s first luxury condo tower. But work later stopped and the project went into foreclosure, leaving the unfinished steel skeleton exposed.

In court filings, Workmen s says it entered into an agreement with Small Brothers last July to provide permanent financing of the project after construction was finished and the project was open. Workmen s also agreed to procure a construction loan that would be funded by a third-party lender.

But Workmen s had trouble securing a construction loan because the project was partially built, said Greg Grantham, secretary and general counsel with Workmen s.

It was an unusual situation, Grantham said. Banks won t give construction loans when there is an issue of existing construction. They don t know if there are problems or mechanics liens. They want to get in on it from the beginning.

Court documents say Small Brothers had invested millions of dollars in the project but lacked the money to finish it.

In September, according to the lawsuit, the groups amended their agreement to say Workmen s would procure a bridge loan so Small Brothers could complete the project. In exchange, documents say, Small Brothers would pay Workmen s 2.5 percent of the gross loan amount as commission. Bridge loans typically carry higher interest rates than construction loans.

Grantham and court documents say Workmen s arranged for a $20 million bridge loan from Starwood Property Mortgage, LLC., which Small Brothers closed on in December.

Two weeks before closing on the loan, Small Brothers disputed the commission, according to filings.

Instead of paying $500,000 as agreed, Defendant balked and gave bogus reasons for needing to reduce the commission..., filings say. Defendant told Plaintiff that it would bury it in litigation that would tie up its money for years, all in an unlawful attempt to strong-arm Plaintiff into taking much less than was owed.

In his statement, Small said we in fact have paid the commissions to a different company.

Grantham said Workmen s is not trying to interfere with the orderly course of business. He said the company simply wants to be paid.

We don t want to give any alarm to citizens of Charlotte who may be buying their condos that this would pose a tremendous problem, Grantham said. We think it is a beautiful project. It is going to be extremely successful.

On the other hand, we are extremely disappointed and a bit shocked at the way we were treated when we worked so hard to get them this $20 million facility, he said.

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