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high-stakes dispute between investment partners in a $250 million Texas multifamily portfolio has escalated with a scathing countersuit. The lawsuit, filed by Fundamental Partners against WindMass Capital, reverses the claims made by WindMass just two months prior. WindMass had accused Fundamental of mismanaging cash flow and using partnership funds for unrelated projects.

    Fundamental disputes these allegations, instead claiming that WindMass' poor management led to a significant debt burden, unpaid bills, and maintenance costs. The countersuit alleges that WindMass contributed significantly less than its ownership stake required in the partnership's companies, with some instances showing it provided only 10-32% of the expected funds.

    Fundamental claims it removed WindMass from nine joint venture agreements due to repeated failures to meet contractual obligations. The lawsuit details several instances where WindMass allegedly breached their agreements, including failing to complete work outlined in business plans, going over budget, and violating non-compete clauses by purchasing nearby properties.

    The countersuit also accuses WindMass of misusing partnership funds, such as borrowing $1 million from an affiliate without notifying Fundamental and signing a seven-year contract with ADT for smart home technology without approval. Fundamental claims that WindMass' original lawsuit was a desperate attempt to bully its partner.

    This dispute highlights the challenges faced by value-add investors in the multifamily market, particularly those who purchased older properties with floating-rate loans when values were high and interest rates were low. As rates have increased and values fallen, these investors are struggling to pay higher debt service while cash flow has shrunk.