A Miami bakery was deemed unsafe. Was it a ‘conspiracy’ exploiting post-Surfside fears?

The landlords for Grupo Sur, a commercial bakery in Miami, saw the unglamorous restaurant supplier as “a bit of a bad egg” in the $80 million Little River portfolio they acquired in 2021. They had other ideas for the property in a fast-changing neighborhood.

Grupo Sur had operated out of a 17,000-square-foot warehouse in the area for 13 years. The property’s new owners, Nashville-based AJ Capital Partners, envisioned something far different: a music and entertainment venue.

In emails later made public in a lawsuit, the landlords spoke candidly about their desire to get out of a lease agreement that gave Grupo Sur the option to stay until 2028. In one email, an AJ Capital executive wrote of the bakery: “Sounded like there might be a strategy to get them out. Anything I can do to help?”

In another, a consultant suggested the landlords could “control” an engineering firm to “produce the exact report we need” for a government-mandated 40-year recertification for the bakery site.

AJ Capital hired the consultant’s recommended engineering firm, which found safety problems with the building and said it needed to be vacated. Acting on that report, the city of Miami ordered Grupo Sur and its employees to get out in August 2022.

The bakery owners now allege in a lawsuit that their landlords and the engineering firm “conspired” to take away their livelihood, weaponizing the city’s inspection process amid safety fears after the 2021 Surfside condo collapse in furtherance of their redevelopment plans for the neighborhood.

The case underscores the vulnerabilities of a building recertification process that relies heavily on third-party inspections commissioned by property owners. And it offers an unusual peek into some of the alleged tactics being used to transform the sleepy but evolving Little River neighborhood, which consists largely of warehouses and modest one-story homes but has been targeted by developers seeking to “hand-pick” tenants and rebrand the area as a burgeoning food, music and culture scene.

The city’s decision to have Grupo Sur evacuate was based on a report by the landlords’ third-party engineering firm, Plaza & Associates, which inspected the building and said that it could not be safely occupied while repairs were being made to address “significant cracking” and possible weight overload on the roof.

Representatives for AJ Capital and Plaza & Associates declined to comment for this story. But in court filings, they maintain they did nothing wrong.

The landlords have said they never instructed Plaza & Associates to produce an inspection report that deemed the building unsafe. In March 2023, they filed a counterclaim against the bakery, asking a judge to declare that the lease was properly terminated because the bakery owners had failed to maintain the building and the city’s evacuation notice had rendered the lease “unenforceable.” If a judge decides the bakery has a right to return to the building, the landlords added, the bakery should pay rent dating back to the evacuation.

AJ Capital bought the Grupo Sur building — and dozens of others in an area bounded by Northwest 71st and 76th streets, Third Avenue and North Miami Avenue — from the previous owner, MVW Partners, in 2021. An affiliate of MVW continued to manage the properties.

Among the properties in AJ Capital’s portfolio is Understory, a home-turned-music venue that the restaurant recommendation site The Infatuation dubbed “one of the coolest hospitality spaces in town,” and La Natural, a pizza restaurant that Michelin Guide reviewers say feels like “an underground party by way of concrete floors and dim lighting.”

The area’s gentrification has been controversial among longtime residents . In 2019, the opening of The Citadel, an upscale food hall in the northern end of Little Haiti, drew protesters angry that developers had sought to rebrand the neighborhood as Little River, a historic name that had faded into disuse after Haitian refugees began settling in the area in the early 1980s.

Now, AJ Capital, a major landowner in the neighborhood, will play a crucial role in shaping the area’s next chapter .

But Grupo Sur’s owners, Raul Ortiz de la Renta and Jose Molina — immigrants from Argentina and Venezuela who met in business school in Arizona in the early 1990s — said in an interview that the bakery they ran successfully for nearly 20 years was “destroyed” by their landlords’ predetermined vision for the neighborhood.

The business was a livelihood not only for them, they said, but also for approximately 35 employees, many of whom were immigrants from Haiti, Cuba and Central America.

They say they are now trying to keep their business afloat while operating remotely, using third-party manufacturers to sell bread products to wholesale customers they established at Grupo Sur.

“I felt doing it in the U.S. would provide me with the right environment to grow a small business in a fair fashion,” Ortiz de la Renta said. “Obviously my assessment was incorrect, because nothing that happened here is right.”

‘A pretext for what is to come’

Several of the emails at the heart of the litigation were sent in early 2022 as the landlords discussed their options regarding the bakery.

In January 2022, an AJ Capital executive floated a plan to press the bakery owners to improve their building and operations. He wrote that, if the bakery couldn’t afford to make the changes, the landlord could offer the bakery money to end its lease early.

“We can probably re-lease their space at a higher rent, and so perhaps can afford a mutually [agreeable] buyout number that would please all parties,” he said.

Writing to an MVW Partners email address the next day, a property manager for MVW said that the bakery making fixes would merely delay its departure. He instead suggested moving straight into financial negotiations to end the lease.

“Jose is smart enough to know that is all just a pretext for what is to come,” he wrote, seemingly referring to bakery co-owner Jose Molina. “If they comply, then we’ve just wasted time and they won’t [be] leaving anyway, so we will look like chumps.”

The property manager added that he wanted AJ Capital to let him present the bakery with “a dollar amount [AJ Capital] would be willing to pay to get them to leave.”

Court records do not indicate that the landlords ever made such a buyout offer.

In April 2022, Rick Hernandez-Espino, the landlords’ consultant, suggested hiring Plaza & Associates to evaluate several of their properties for recertifications that the city was ordering them to complete. Hernandez-Espino recommended the engineering firm and its CEO, William Plaza. In an email, he told the landlords he felt “confident that we can control William and his team to provide us with the exact report we need for Grupo,” according to court filings. The email was marked as confidential by the landlords in court proceedings but was referenced in filings by the bakery.

In May 2022, after Plaza’s firm had completed its inspection of the Grupo Sur warehouse, an AJ Capital executive asked colleagues where things stood with the bakery. “How are we looking at Grupo Sur? Sounded like there might be a strategy to get them out,” he wrote. “Anything I can do to help?”

The property manager said he planned to meet with the bakery owners to discuss the report by Plaza’s firm and “inform them that they will not be able to legally operate in the space due to the significant work that needs to be done to bring the property into compliance.”

The AJ Capital executive responded: “So your [sic] saying theres [sic] a chance!”

A conflicting engineering report

An engineer at Plaza’s firm visually inspected the building in April 2022, then produced a report saying it could not safely be occupied while repairs were being made. The report, which was submitted to the city of Miami building official, cited “significant cracking,” water pooling on the roof and indicators of “possible weight overload” caused by heavy equipment on the roof.

City officials met with representatives of the Grupo Sur landlord and Plaza’s firm to discuss the firm’s report on Aug. 4, 2022, before visiting the site later that day.

The landlords have since accused the bakery owners of blocking city inspectors from accessing the warehouse that day to conduct their own inspection. In an unsafe structure notice issued by the city, a city inspector wrote: “Access to interior denied by tenant.”

The bakery owners deny that they blocked a city inspection, saying they would have welcomed an attempt by the city to vet the report by Plaza’s firm. Molina said a city official told him during the site visit that the city isn’t required to inspect the building and ordered him to leave or else be removed by police.

In response to questions from the Herald, a city spokesperson said the city was seeking to conduct an “unsafe structures inspection” when it visited the building and that “the tenant prevented the … inspectors from entering the property.”

The spokesperson did not address a question about whether the city typically conducts its own inspections before ordering a building to be evacuated.

The city is not a defendant in the lawsuit.

After getting the unsafe structure notice and then filing suit, the Grupo Sur owners commissioned an inspection of their own.

They hired Pistorino & Alam, whose principal, John Pistorino, helped Miami-Dade County write the rules requiring that buildings be recertified as safe after 40 years and every 10 years after that, following the deadly 1974 collapse of a downtown Miami office building.

In September 2022, Pistorino and three other inspectors concluded that the Grupo Sur building “could have and should have been able to [remain] occupied” while repairs were being made. The report said that some repairs should be made before the building was reoccupied but that those items would take about two weeks to complete and didn’t require displacing the bakery indefinitely.

Pistorino’s report questioned several of Plaza & Associates’ key findings, including those about water pooling on the roof and possible weight overloads. The city of Miami, the report said, “has been given a recommendation to vacate the building based upon minor deterioration commonly observed in these types of buildings that is normally repaired without vacating the building.”

Across Miami-Dade County, local governments are allowed to rely on the assessments of third-party inspectors to determine whether buildings are safe. That means city building officials don’t always conduct inspections of their own.

The Grupo Sur owners say their landlords exploited that process, knowing that city officials had heightened sensitivity to building safety issues after the collapse of Champlain Towers South in Surfside left 98 people dead.

In a deposition conducted amid the lawsuit, the property manager said his team had felt confident that the city would follow Plaza & Associates’ recommendation to declare the building unsafe.

“We knew that the city … would not actually do anything other than go ahead and take whatever recommendation was given by the engineer,” he said, according to a transcript reviewed by the Herald.

Greg Batista, a South Florida structural engineer who is not connected to the Grupo Sur case, said local building officials have to strike a delicate balance between enforcing building codes themselves and trusting the reports of third-party inspectors. But generally, he said, they err on the side of caution.

“I’m going to go with the most conservative view. I don’t lose anything by that,” Batista said, speaking from the perspective of a local building official. “In engineering, a lot of times it’s not a black-and-white thing.”

Consultant proposed changes to report

As part of their argument that the first engineering report was tainted, the Grupo Sur owners have pointed to emails that show the landlords’ consultant, Hernandez-Espino, suggested changes to the report before it was submitted to the city.

In one instance, after an engineer at Plaza’s firm had already signed and sealed the report, Hernandez-Espino flagged a portion of the electrical inspection in which an engineer had answered “yes” to a question about whether the building was safe to occupy while repairs were being made. The answer was changed to “no.”

Hernandez-Espino later said in a deposition that he was simply trying to clarify “contradictory statements” in the report and ensure it would move through the city’s review process “in a smooth fashion.”

The consultant marked other proposed changes to the report, according to court filings. A document detailing his suggestions was marked as confidential by the landlords’ attorneys.

Batista, the structural engineer with no affiliation to the case, said it’s generally “a big no-no” for non-engineers to review an engineer’s work, especially once it has been signed and sealed.

“You just can’t have a non-engineer peer review an engineer’s document,” Batista said. “That’s highly suspicious. It’s a red flag.”

The bakery owners cite other reasons for skepticism, too. According to court filings and marriage records, Hernandez-Espino is married to an employee of Miami’s unsafe structures division who supervises the office’s clerical staff, a relationship Grupo Sur claims he “exploited” to “obtain access and benefits” from the city.

According to a deposition transcript, Hernandez-Espino copied his wife on an April 2022 email to the city seeking an extension on a 40-year recertification deadline for Grupo Sur. The email was sent on a Saturday, but a city official responded that day as the landlords sought to avoid a violation that they said would have kicked in at midnight.

In an email to Matthew Vander Werff of MVW Partners later that day, according to the transcript, Hernandez-Espino wrote: “Fortunately, in this case, I live with a bureaucrat, and I was immediately recommended to file for formal extensions.”

Hernandez-Espino’s wife said in a deposition that she didn’t recall discussing the deadline extension with her husband. She said it’s common for clerical staff in the unsafe structures office to work overtime on Saturdays and for her to be copied on emails.

Hernandez-Espino also serves on the board of directors of the Latin Builders Association alongside Plaza, who isn’t an engineer himself but runs a firm that employs a licensed special inspector.

In depositions, Hernandez-Espino and Plaza said they know each other through the Latin Builders Association but denied ever discussing the landlords’ desired outcome for the Grupo Sur recertification report.

Hernandez-Espino defended his email about being able to “control” Plaza to get “the exact report we need,” saying he was referring only to the landlords’ desire to follow local recertification guidelines that changed in the wake of the Champlain Towers collapse.

“William [Plaza] was one of the only ones that was up to date on the current laws and the recertification requirements,” Hernandez-Espino said, according to a deposition transcript.

The property manager similarly said in his deposition that he was unaware of any improper coordination between the landlords and the engineering firm. But he was candid about what the landlords wanted — and acknowledged that his team could have played some role in the inspection process.

“There’s a difference between doing things by the book and also making sure that you make the inspector aware of every potential issue or problem,” he said. The landlords, he said, “were hoping that the building report would allow for the removal of the tenant.”

During a recent interview at the former bakery site, the Grupo Sur owners watched as a construction crew worked on the now-vacant building where they spent more than a decade of their working lives. Molina and Ortiz de la Renta don’t know what’s next for the property, but they say they imagine it could morph into a music venue, as their landlords envisioned.

Ortiz de la Renta said he understands that neighborhoods change and that gentrification is happening across Miami. He said he would have been open to a conversation with the landlords about relocating.

Instead, he said, his business was forced to leave through an opaque and ruthless process.

“It doesn’t have to be this way,” he said. “It doesn’t have to be running over the existing community.”

Miami Herald staff writer Tess Riski contributed to this report.