Niagara Falls company sues Niagara Hotel developer

Faisal Merani and his Niagara Falls-based Merani Hotel Group Inc. sued Edward Riley and his Brine Wells Development company last week, alleging Riley breached a January 2023 agreement when he terminated the agreement in an April 30 letter and then sought approval for the project from Empire State Development Corp. and tax breaks from the Niagara County Industrial Development Agency.

In the lawsuit, Merani claims that under their agreement he was to act as “sole agent and representative” to obtain approvals and sign contracts for the $50.8 million development project. And the lawsuit says Merani and his company spent more than 1,000 hours developing the project – work that will now benefit Riley and Brine Wells.

The lawsuit, filed by the law firm Hodgson Russ LLP in Niagara County Superior Court, cites breach of contract and unjust enrichment by Riley, noting that Merani was not paid for his work.

“Plaintiffs did not provide Defendants with services related to obtaining ESD’s consent for the Project free of charge,” the lawsuit states. “It would be unfair for Defendants to retain benefits received from Plaintiffs in connection with the development of the Project without compensating Plaintiffs for those benefits.”

The lawsuit seeks at least $2 million in damages for “lost profits and loss of reputation” and an injunction to block the project from being implemented without Merani’s involvement.

“Defendants’ conduct will cause irreparable harm to Plaintiff that cannot be readily remedied by monetary damages,” the lawsuit reads. “More specifically, Defendants’ conduct has caused and will continue to cause harm to Plaintiff’s reputation with its financial partners, contractors, and government officials.”

Reached by phone Sunday, Riley declined to comment, saying he was still working on a response with his lawyer in Syracuse. Empire State Development officials also declined to comment, citing ongoing litigation, while NCIDA attorney Mark Gabriele said the lawsuit has no current impact on the agency’s potential actions because the developer would only benefit from tax credits if the work is performed.

Merani is a family-owned hotel developer with interests on both sides of the international border, including the 140-room Niagara Riverside Resort, the 189-room Holiday Inn and the 192-room Doubletree by Hilton, all on Buffalo Avenue in Niagara Falls. The company also owns the 41-room Cannery Lofts, the 41-room Sterling Inn & Spa and the 155-room Days Inn & Suites, all on the Canadian side of the Falls.

The lawsuit and the potential for at least a delay in the project mark the latest setback in Riley’s eight-year effort to renovate and revitalize the historic, century-old hotel. Hotel Niagara, located at 201 Rainbow Blvd., was designed by Buffalo architects Esenwein & Johnson and opened in 1925, with a large ballroom, a second-floor balcony overlooking the lobby, a restaurant and a bar offering live entertainment .

But the 12-story luxury hotel fell into disrepair for decades. It most recently operated as the Travelodge Fallsview and then the Ramada Niagara before being acquired in 2007 by a Houston developer promising a $15.2 million renovation. That never happened, and it never reopened. After several false starts, it was acquired for $4.4 million by Empire State Development, which selected Riley as its designated developer a year later.

Riley now plans to renovate it and transform it into a new four-diamond hotel with 160 guest rooms, a main ballroom, a second ballroom that will serve as a three-course restaurant during the tourist season, a sports bar and a full-service restaurant for the rest of the holidays. year, a living room opening onto the sidewalk, an outdoor patio, a rooftop patio next to the penthouse, and space for private dining and meetings. However, the project stalled when the pandemic disrupted its financing.

According to the lawsuit, a contractor hired by Brine Wells approached Merani in 2022 to “commence the implementation of the project,” and Riley and Merani signed a joint development proposal on Jan. 31, 2023.

Under the agreement, Merani was to be the “sole agent and representative” of Empire State Development, and Riley and Brine Wells were to “use their best efforts to assist.” A new joint venture was also envisaged, owned 51 percent by Merani and 49 percent by Riley, but only after ESD approval.

Merani says he and his company “worked relentlessly” over the next 15 months to arrange financing for the project and paid $45,000 in application fees to arrange financing. They also spoke regularly with state officials to justify several extensions, and provided Riley with “frequent updates” and ultimately obtained a $4 million allocation from the Empire State – including $1.9 million that was originally intended for another Merani project.

However, according to the lawsuit, Merani claims that Riley “entered into discussions with another developer” earlier this year, “breaching their obligations under the agreement.” Then, the lawsuit says, Riley wrote to Merani on April 30 to terminate the agreement, claiming that Merani “has failed to move the project forward and that the project is at risk of being canceled due to lack of progress.” Merani denies both claims.