Landlord accuses entertainment concept of fraud, stiffing contractors

Fraud allegations are swirling around a much-anticipated entertainment retail project at San Antonio’s South Park Mall.

Construction of a movie theater and entertainment complex stopped amid a financial dispute between the project’s developer, EVO Entertainment, the guarantor, Cinestarz Entertainment, and the landlord LLC, SP Hwy 35 Investment, the San Antonio Express-News reported.

The ownership accuses EVO and Cinestarz of failing to pay a contractor for work completed on the project in the lawsuit, filed in state District Court in San Antonio. The landlord is seeking over $1 million in damages and also accused EVO of skipping out on rent and other expenses. 

The lawsuit was a last resort after EVO allegedly failed to meet its obligations under the lease, said Michael Morfey, the attorney representing SP Hwy 35 Investment. 

“They’re obviously very disappointed that it didn’t work out with the tenant through no fault of my client,” Morfey said. “They wouldn’t have filed the lawsuit if the tenant had simply lived up to their obligations under the lease.”

EVO Entertainment, which rebranded as Elevate Entertainment Group last year, had ambitious plans for the 68,600-square-foot space at 2310 Southwest Military Drive, including a dine-in theater with recliners, an arcade, 14 bowling lanes, virtual reality experiences and bumper cars. 

The landlord agreed to give the company $5.5 million to build out its space, a former Sears store, with 70 percent of the tenant allowance provided by November. The remaining funds were to be distributed upon the project’s completion and certificate of occupancy.

However, EVO informed the landlord of a funding gap for construction costs in January and requested additional funds to cover those costs, promising to complete the project if the landlord complied. 

Although SP Hwy 35 Investment paid the contractor $1 million, EVO allegedly failed to fulfill its financial obligations, leading to the contractor halting work.

EVO allegedly failed to pay rent and other expenses for March and April, further exacerbating the situation. In response, the landlord placed liens and locks on the property and initiated legal action for breach of contract and fraud. 

EVO denied the allegations in a response to the lawsuit. 

— Andrew Terrell

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