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Blood Feud
Yale-Schiavone relationship descends into War of the Roses
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Business New Haven
3/5/2001
By: Michael C. Bingham
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In seemingly two shakes of a lamb's tale, the rancor between the Schiavone Management Co. and Yale University Properties escalated from he-said-she-said dustup to legal Armageddon. The dispute rattles the foundations of New Haven's most successful retail district - and casts a pall over the first serious Republican mayoral challenge in years (see related story, page 3).
While particulars of the feud grow thornier by the day, the fact that one of the city's most prominent real-estate developers, Joel Schiavone, is locked in mortal combat with his alma mater may say something about Schiavone's business fortunes, or perhaps his hubris - and may as well say something about how University Properties conducts its business.
On February 12, Schiavone Management filed suit against Yale for allegedly breaching its ten-year property-management and leasing agreements on Yale's Chapel Street properties. The suit charged that Yale had failed to pay Schiavone employees a “living wage” and had ceased to pay agreed-upon benefits to the same employees.
Two days later, Yale pulled the plug on Schiavone's management duties for university properties on Broadway and in the Whitney-Grove district, which Schiavone was managing on a month-to-month basis. That same day Yale officials arrived unannounced at Schiavone's Chapel Street office and forcible removed files. Schiavone likened the incident to “burglary” and said he was forcibly pushed aside by his visitors as they carted files down a rear stairway. Yale denies those claims, and after a brief investigation New Haven police declined to take any action in the matter.
Eight days later, on February 22, Schiavone filed a second lawsuit in Meriden Superior Court charging wrongful termination of the management contracts, trespassing and assault.
For its part, Yale maintains it was within its rights to terminate its agreement with Schiavone, and says the termination was based on lack of performance in managing the Chapel and Whitney-Grove properties.
Schiavone responds that Yale neglected to inform his company of specific corrective measures it wanted his company to take. He also says Yale failed to pay commissions on certain lease agreements, and says he is owed an additional $150,000 in fees and commissions on top of the $250,000 buyout he says the original agreement included.
The legal wranglings would have attracted less attention had Schiavone not embarked on a quest to become the Elm City's first GOP mayor in a half-century. That aspiration, too, has kept lawyers in gainful employ, as Schiavone had filed suit to contest the city's five-consecutive-year residence requirement, which early last month a judge affirmed to be plainly unconstitutional.
But with so many headlines and court appearances, the question inevitably is raised: Is Schiavone a serious prospective mayor who is repeatedly forced to resort to the legal system to defend himself against injustice, or a maverick businessman who can't bring himself to play by the rules of the game?
Schiavone earned well-deserved plaudits for assembling the College-Chapel retail district in the early '80s and integrating them into a coherent urban attraction. The properties fell into FDIC receivership during the '90s recession, but Schiavone remained a player by brokering a deal to sell them as a unit to Yale - and to keep his own company in place as property manager - not just of College-Chapel, but also of Yale's Broadway retail properties.
But after four-plus years, the Schiavone-Yale deal blew up, ostensibly over Schiavone's failure to maintain the Broadway district to Yale's liking.
But Schiavone maintains that Yale never specified standards of performance, even after repeated written queries. He also says Yale violated the terms of the management agreement by unilaterally and arbitrarily withdrawing benefits to his company's workers, forcing his former wife, Craig Schiavone (who runs the day-to-day operations of Schiavone management), to make up the difference “out of her own pocket.” Schiavone's original lawsuit also alleges sexual discrimination against University Properties for their conduct of business with Craig Schiavone.
Is Schiavone the Don Quixote of New Haven, forever tilting at windmills? Or is he the genuinely aggrieved small-businessman willing to tread where few others dare - taking on the Yale behemoth in court?
That will be for others to decide, but this much seems certain: We haven't seen the last of Joel Schiavone in the headlines in 2001.
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