The last piece of Modern Continental’s real estate empire has fallen into the hands of a Cambridge developer who boasts of carrying a degree from the School of Hard Knocks, and who has summed up his business strategy by saying, “The all-encompassing word would be, I make money.”
That developer, Paul Lohnes, has big plans for the former Modern parcel, 35 acres of raw land along Route 99 in Everett. But first, Lohnes has to get past Billy Thibeault.
Thibeault is a developer and trash hauler whom Lohnes has panned as “an unsavory character.” Thibeault believes the Modern land belongs to him. He slapped a lis pendens notice on the parcel that says as much. Such legal maneuvers usually scare off investors. Not Lohnes and his business partner, Gary DeCicco. The pair scooped up the parcel for $8 million in cash in October.
Now they’re locked in an epic tug-of-war with Thibeault. It’s a colorful, classically Boston dispute featuring threats, epithets and indignant legal memos. It touches on arson, Hollywood, mob lawyers, the Big Dig, and the Monsanto chemical company. And the prize is an environmentally devastated parcel that abuts a power plant.
Polluted Parcel
The disputed site sits along the Mystic River in Everett. It’s sandwiched between Route 99 and the MBTA commuter rail tracks, between a power plant and the back end of Gateway Center. After Suffolk Downs, it’s the largest tract of open land left around the city of Boston.
For five decades, the predecessors to Monsanto used the site to make acids, store sulfur, bauxite, iron oxides and salt, and dispose of aluminum sulfate. O’Donnell Sand & Gravel bought it in 1995. At the time, the Massachusetts Water Resources Authority was tunneling through Boston Harbor. The MWRA took that sediment – in federal court documents, it’s referred to as “tunnel muck” – and dumped it atop O’Donnell’s land. Modern used the site as a staging ground for its Big Dig construction work. Documents show Modern also broke down steel and stored asbestos-containing materials and petroleum on-site. From 1996 to 2001, Modern made $4 million to $7 million in lease payments to O’Donnell. The firm purchased the property outright in 2001, for an additional $300,000. The ground is believed to be contaminated with a rainbow assortment of chemicals, petroleum byproducts and lead.
Modern’s founder, Les Marino, financed the purchase with a $10 million mortgage from Banknorth. That mortgage was eventually assumed by the St. Paul Fire and Marine Insurance Co.
Marino was a horizontal construction magnate with a real estate habit. He also acquired Boston’s Independence Wharf office building, and developed the Yacht Haven marina at the tip of Commercial Wharf.
At his Everett site, Marino contemplated building everything from a big-box retail development to a new home for the Boston Red Sox. He eventually settled on a project he dubbed Mystic Landing.
In Mystic Landing, Marino envisioned turning the former industrial site into a mixed-use community that would feature 537 condos and townhouses, 25,000 square feet of retail, and a marina. But Modern’s financial troubles aborted the entitlement process. Big Dig cost overruns forced Modern to launch a wind-down plan in 2005 that included the liquidation of its $60 million real estate portfolio. Earlier this year, the firm’s president pled guilty to defrauding the $15 billion public works project. It filed for bankruptcy protection immediately afterward.
The commercial downturn has all but iced deals for raw land. Sliding commercial values and deal inertia might have kept the contaminated Mystic Landing parcel on the market for years. So the fact that two development teams are now warring over it – with one willing to plow $8 million in cash into the site, in spite of the other’s memorandum of lis pendens – makes it an anomaly in today’s market, to say the least.
Calling A Bluff
Thibeault, a developer and Everett trash hauler, had been chasing the site for years. He’d put the land under agreement in 2007, renegotiated the terms four times, knocked the price down, then ultimately backed out of the deal. A year later, he put the 35 acres under agreement again. Thibeault put down a $3.5 million deposit. The $8.5 million sale was to close in April 2009.
The sale didn’t close, though. Modern, being bankrupt, fell behind on its real estate taxes. That caused the city of Boston to seize the 235,000-square-foot portion of land that lies in Charlestown. Modern’s lawyers paid the Boston tax bill, but paperwork releasing the tax taking couldn’t be filed with the registry of deeds before the closing date. First American Title was willing to insure title to the entire site, but Thibeault balked, refused to close, and demanded his $3.5 million deposit back. The purchase and sale agreement required Modern to deliver clear title, his lawyer said in a letter, and Modern couldn’t do that.
A day later, the lawyer for Modern and the mortgage holder, St. Paul, returned fire. He wrote that Thibeault’s claim about clear title was “a naked and unsupported pretext … to obtain concessions” from the seller.
“I must forcefully disagree with the assertions in your letter,” Thibeault’s attorney shot back. “I am very troubled by your client, a financial and surety institution, apparently disregarding clear and unambiguous terms of the purchase and sale agreement by wrongfully withholding the return of the deposit.”
In court filings, Modern’s attorneys said Thibeault “refused to close unless the purchase price was substantially reduced.” Lawton Bloom, an executive for the management company selling Modern’s assets, said Thibeault told him he should take the lower price “in part because litigation will tie up the property for years and prevent a sale” to another party. Modern feared it “could be left with no buyer for the property in a difficult real estate market.”
It did find a buyer, though.
In the weeks after Thibeault refused to close, Modern’s broker procured a new buyer: Gary DeCicco, the third-party developer Thibeault had contracted with to build out the Mystic Landing property.
DeCicco partnered with Lohnes to put the property under agreement for $8 million. They signed a purchase and sale agreement in mid-June – nearly two weeks after Thibeault sued Modern, slapping a lis pendens on the property and demanding that the bankrupt contractor sell to him.
The lis pendens “certainly gave us pause,” Lohnes told Banker & Tradesman. “Nowadays, there’s not a deal that doesn’t have hair around it. It’s not an insurmountable problem.” The deal closed Oct. 13. Lohnes admits Thibeault’s lawsuit could drag on for years.
In a deposition on file with the Suffolk Superior Court, Lohnes told Thibeault’s lawyer he didn’t read the purchase and sale agreement he signed because, he said, “I’m lazy.” Asked why he would buy a piece of land with a title subject to litigation, Lohnes testified, “I hate to say this, we’re not real conventional real estate guys. We’re kind of seat-of-the-pants. [If] it looks good, we’ll buy it. Probably not the smartest, but it’s worked for me so far.”
He added, “For the price, I was willing to take a chance.”
Speaking about the chances of a judge awarding the Mystic Landing site to Thibeault, Lohnes’ and DeCicco’s attorney, Paul Feldman of Davis, Malm & D’Agostine said, “It’s something our client is aware of, but not something we consider likely to happen. The prior buyer brought a claim that he was entitled to own the property. He sought a preliminary injunction blocking the sale, and it was denied.”
The judge ruled Thibeault had no reasonable likelihood of success.
‘Real Good Fishing’
Lohnes told Banker & Tradesman a soundstage is a possibility for the Everett site – as is a hotel, or office and research space, or industrial, or a marina.
“Every one of those is an option,” he said. “It’s been a wasteland too long.”
Lohnes said he was drawn to the site because of its size and proximity to Boston, and, he joked, because “I thought the fishing off the end would be real good.” He added he’s not worried about his neighbor, the hulking power plant, spoiling the riverfront views. “I wouldn’t mind living there myself.”
Before Lohnes can call his interior decorator, though, there remains the problem of Thibeault’s claims. Thibeault isn’t just using a lawsuit to prevent Lohnes and DeCicco from building a movie soundstage, or a hotel, or office or industrial or a marina or whatever. Two years ago, he moved an office trailer onto the Mystic Landing site and set up shop. And he’s refused to leave ever since.
“They have $3.5 million of my money,” Thibeault said, referring to Modern and St. Paul. “The new guys came in, and I think they thought they could push us aside. I think they have a long road to hoe.” He added, “We’ll be in litigation for awhile. We’ll prevail. I’m used to fighting for deals, and I have no intentions of leaving.”
Lohnes first met Thibeault when he was considering making an offer on the Mystic Landing site. Lohnes described the encounter in his deposition. He drove onto the property, saw Thibeault’s trailer, and then “Mr. Thibeault appeared and ejected me.”
“He told me he owned the property,” Lohnes testified, adding, “It really wasn’t a discussion. He threw me off the property.”
When Modern signed its purchase and sale agreement with Lohnes and DeCicco, the firm committed to spending up to $15,000 to try to evict Thibeault. But Modern also demanded the developers take the Everett parcel, whether or not Thibeault was still dug in there. He is. He believes he has a right to occupy the site, and is currently fighting appealing an eviction order in court. That process alone could stretch between six and 12 months.
In May, after Modern decided to sell the Mystic Landing site to somebody else, Thibeault put a further squeeze on the parcel’s buyers by scooping up the easement on its primary access point. He paid Jay Cashman $1 million for an easement Cashman had paid $500,000 for just a few years before. The play left the Mystic Landing site with no direct access from Route 99.
“I bought the easement for the main access,” Thibeault said. “I have a tenancy agreement. They’re out to take it away from me.” He added, “It was a little shocking they bought it with a lis pendens on it and no clear development access. We’re scratching our heads.”
Asked why he was pursuing the Everett site so forcefully, Thibeault replied, “That’s what we do. We buy environmentally impacted sites, clean them up and redevelop them.”
No Strangers To Controversy
Gentlemen on both sides of the dispute have had brushes with the authorities. In April, the attorney general fined Thibeault $230,000 for failing to contain what the AG termed “a foul, rotten-egg smell” wafting out of a landfill he runs in Newburyport. The AG also cited him for piling up construction waste at his Everett waste-recycling facility.
DeCicco had been fingered in connection with arson at a Chelsea warehouse he owned during the 1990s. According to court documents, he was about to lose the building to foreclosure when it burned to the ground. However, it took three separate fires to fell the warehouse. When it did eventually burn to the ground, DeCicco collected $116,000 from the building’s insurance company.
DeCicco was charged with four counts of felony mail fraud in 2002, in connection with the insurance payout. He got two charges of arson thrown out at trial. In 2005, he was fined and sentenced to 24 months probation in accord with federal sentencing guidelines. His defense attorney was Anthony Cardinale, counsel to Carmen “The Cheese Man” DiNunzio and Jerry Angiulo.
In late 2006, DeCicco asked the federal court to terminate his probation early. That request was denied.
