MedProperties Sues for Allegedly Hidden Plumbing Problems

A “literal shit storm” is at the center of MedProperties Realty Advisors’ lawsuit against 11 defendants, accusing them of conspiring to hide severe plumbing problems when selling a health care property north of Houston for $36 million.

The Dallas-based private equity firm, which specializes in health care real estate, got more than it bargained for in May of last year when it bought the three-story building at 155 School Street in Tomball from an entity of the Bryant Stacy Group, which developed it in 2022 in partnership with Global Healthcare Partners. It spans 62,000 square feet and was 94 percent occupied at the time of the sale. 

Now MedProperties wants out of the allegedly crappy deal.

“Defendants’ unlawful conduct stinks to high heaven, quite literally,” the lawsuit states. It is among the first two cases filed in Texas’ newly established 11th Business Court Division.

MedProperties, claiming fraud and conspiracy, is requesting a court order to undo the sale, claiming it was “fraudulently induced” to purchase the property after the sellers conspired to hide the severity of sewage leaks. It claims defendants, including two doctors who previously owned the ground and Global Healthcare Partners principals Timothy Delgado and Bruce Phillips, worked together to artificially inflate the price. The building’s property management company, Transwestern Development Company, is named as a defendant but wasn’t part of the price-inflation allegations.

MedProperties accuses the sellers of breach of contract and is asking for compensatory damages and attorney fees. The defendants haven’t yet filed a response.

The Bryant Stacy Group declined a request for comment. Other parties named in the suit either did not immediately respond or could not be reached.

A purchase and sale agreement gave the buyer 45 days to conduct due diligence, and 15 more to close, according to the suit. That feasibility period was pushed back six times, the suit says.

MedProperties wasn’t aware of the plumbing woes until a month after the agreement, when an employee from Transwestern “mentioned in passing to a MedProperties’ representative” that a recent leak had penetrated the third floor and flowed into the second floor, the suit alleges.

The alleged price-inflation conspiracy involves two doctors, Jason DeMattia and Maninder Guram, who previously owned the land but traded it to the Bryant Stacy Group entity in exchange for a 49 percent stake, according to the suit. DeMattia practiced on the third floor, while Guram occupied part of the second. 

They are also accused of jacking up the price in bad faith.

The sellers “instructed Guram to lease far more space than he needed, convincing MedProperties that — because a large percentage of the building was already leased — the building deserved a higher valuation.”

Guram abandoned his lease after the sale, then, in a gambit “stunning in its sheer cynicism,” invoked “the same plumbing problems he had conspired to conceal from MedProperties” to get out of his lease, the lawsuit states.

The suit cites internal emails between Transwestern employees that seem to show one referring to a particularly severe leak in March 2023 as a “literal ‘s’ storm” and recommending “a biohazard team be onsite.”

Read more

Chinese investor sues Medistar over alleged deal gone bad

University Health buys $28M office building to save on leasing costs

Residential construction up 32% in Greater Houston this year