Mayor's office threatened Melnyk over LeBreton withdrawal, suit claims

Ottawa Senators owner Eugene Melnyk alleges in a lawsuit filed Friday that Ottawa Mayor Jim Watson's office responded with "threats and intimidation" to news that the LeBreton Flats redevelopment project was in peril, just weeks before the recent municipal election.

$700M lawsuit alleges Watson's chief of staff threatened to sever ties with Senators owner

Mayor Jim Watson and Senators owner Eugene Melnyk met in August to discuss next steps in the process to develop LeBreton Flats. A lawsuit filed Friday alleges Watson knew by September that Melnyk wanted out of the project. (Laura Osman/CBC)

Ottawa Senators owner Eugene Melnyk alleges in a lawsuit filed Friday that Ottawa Mayor Jim Watson's office responded with "threats and intimidation" to news that the LeBreton Flats redevelopment project was in peril, just weeks before the recent municipal election.

Melnyk's firm, Capital Sports Management Inc. (CSMI), is suing his partners in the project for $700 million.

According to the statement of claim, which hasn't been tested in court, CSMI wrote to Watson on Sept. 17 to ask for help with the project.

In the letter, CSMI informed the mayor that the company no longer believed the LeBreton project was financially viable in its current structure, and that CSMI and Trinity remained unable to overcome a disagreement over financing.

"The mayor's office responded with threats and intimidation," the claim states. 

'A direct attack'

It claims the mayor's chief of staff, Serge Arpin, told CSMI's chief operating officer at a meeting on Sept. 20 that "any attempt to withdraw from the LeBreton Project during the current election cycle … would be viewed as a direct attack on the mayor's political career and re-election effort."

It also claims Arpin threatened to sever the relationship between Watson and Melnyk if CSMI withdrew.

The Senators organization "interpreted this as a thinly veiled threat" that Watson would withdraw support for a new arena, and any other project proposed by Melnyk or CSMI.

"CSMI was not wrong to take this threat seriously, as Mayor Watson had previously favoured local developers over CSMI on at least two other occasions," according to the claim.

A lawsuit claims the mayor's chief of staff, Serge Arpin, threatened the Senators' chief operating officer with reprisal if the team announced its withdrawal from the LeBreton project during the fall election campaign. (Kate Porter/CBC)

Arpin had 'inside knowledge,' suit claims

The lawsuit also alleges Arpin had  "demonstrated inside knowledge of confidential information" that could only have come from Trinity Development, CSMI's partner in the LeBreton bid and a defendant named in its lawsuit.

In an emailed statement, Arpin said he would not be able to comment on the matter as it will be before the courts.

Watson, who announced on Twitter Friday morning that he's taking three days off, is also unable to comment, his office said.

In the detailed statement of claim, CSMI alleges "the joint venture failed because of an egregious conflict of interest on the part of Trinity and its principal, John Ruddy."

In particular CSMI argues that Trinity is in conflict because it moved forward with plans to build three high rises at 900 Albert St. "in direct competition" with the LeBreton project.

In a statement released Friday evening, Ruddy said that "Trinity strongly denies the allegation in CSMI's lawsuit and intends to vigorously defend the claim."