The dispute, which has been simmering for more than a year, centers on both Space and Factory Town in Hialeah, the latter a relative newcomer to the Magic City nightlife scene. As Insomniac attorney Jordan Shaw characterizes the situation on the first page of the complaint, "This is a case of greed. Of biting the hand that feeds. And ultimately, a case of deceit."
"It's important to understand that this is a small part of a longer legal situation that's been going on between us, and this particular lawsuit is a negotiation tactic to scare us," David Sinopoli tells New Times.
Insomniac, half-owned by the publicly traded concert-promotion giant Live Nation Entertainment, purchased a 51 percent stake in Space in 2019, securing intellectual property rights and negotiating a long-term lease with the club's landlord. According to the lawsuit, the marriage benefited all parties, with Space's revenue increasing by 700 percent over the ensuing six years.
The union was so fruitful, in fact, that the parties subsequently entered into an agreement to outfit a much larger venue that would allow Sinopoli and his crew to stage open-air events that would accommodate in excess of 10,000 — ten times Space's capacity.
Insomniac committed $40 million to outfit Factory Town, which has since been the site for affairs including the annual Hocus Pocus Halloween celebration and assorted Miami Art Week raves. But Sinopoli and his partners — collectively referred to in the complaint as "CDD" — allegedly backed out last year after demanding millions more and a greater ownership share in the Hialeah venue.
"While Insomniac was obtaining the necessary approvals from its publicly traded parent company — a process that is all but quick — something changed.... CDD rescinded their signatures and began making outrageous demands for millions of dollars...in addition to increased ownership percentages — all while having made no capital contributions and without any financial risk whatsoever, all of which was to be borne by Insomniac," the complaint asserts.
Attorney Bruce A. Weil, who represents Sinopoli, Danese, and Cano, relayed the partners' side of the story to New Times. "[Insomniac] ended up going behind our backs. We're supposed to be partners. They took the lease from us, they manipulated it so they would end up controlling the actual property, and then we continued to do business with them on certain shares of the profit. And as each event happened, they kept decreasing what they wanted to pay us.
"They wanted to make more money and give us less money despite the fact that we started the events, we found the events," Weil continues. "And it came to a point where they just wanted us to be their employees essentially, and we said, 'No, we're not gonna be your partners at this new deal.'"
Insomniac responded by seeking mediation. This portion of the lawsuit — a copy of which is attached at the end of this story — is heavily redacted.
“Tellingly, the CDD parties did not raise any credible misconduct or violations of contract, common law, or statute as the basis for their demands,” the complaint alleges. "Instead, CDD threatened to file a lawsuit containing a 30-page smear campaign against Insomniac's CEO and founder — Pasquale Rotella — along with a pre-planned press campaign to go with it."
The upshot: After 16 hours hashing things out in front of a retired Florida Circuit Court judge, the adversaries failed to achieve a resolution.
"We came into Space in 2019 and helped it on a meteoric rise. And so there was interest by all parties to do this Factory Town venture. There were operating agreements, a new partnership, and terms that were agreed on. They signed on the dotted line and sent it over to us," Shaw sums up in a chat with New Times over Zoom.
The View From Space
Not surprisingly, the Space trio sees the chain of events from a different perspective."We started Factory Town in 2019. We found it in Hialeah. We vetted it. We were really proud of it, because it was not gentrifying an area. And it was in an area where I think noise complaints were gonna be minimized because there's not that much residential around there. "We had just signed up with Insomniac and our deal at Club Space, and we offered [Factory Town] to them for a real estate project because we had invested in the real estate. And we offered it to them to do events. They at first didn't really wanna do it. COVID hit, and then after COVID when we threw our first event there, they saw value in it. Over the next couple years, they tried to squeeze us out of it."
As for the mediation breakdown, Sinopoli says, "We originally had legal issues because of them trying to squeeze us out, and we couldn't resolve that. So we entered into a mediation. And we had a favorable mediation, and we felt like it was a fair resolution, but we didn't want to continue to work with them."
Sinopoli says he and his partners stated a willingness to see the Factory Town partnership through 2025, but demanded that it end there.
"We basically were walking away from it in 2026 for Factory Town. So they were upset about that, and they still are, and now they're retaliating at us in our other businesses."
As for the alleged "smear campaign," Sinopoli says, "We don't need to start a smear campaign. Everything in their complaint will be contradicted by documentary evidence that's coming out very soon."
Further, he assures New Times that "the plan is to continue with all programmed events until the end of the year."
Sinopoli concedes that "as operators, we have had a lot of challenges since the pandemic, and we have a really incredible community here in Miami. We have an amazing, dedicated team that works with us, and we've been able to overcome anything with that. We're hopeful that this is gonna get sorted out, and it is the legal process."
On that, at least, the two sides appear to be somewhat in agreement.
"Without question, the goal here is peace," Shaw says. "The goal is status quo. We were doing great things. We'd like to continue to do them."
INSOMNIAC HOLDINGS LLC vs. SDC HOLDINGS LLC 1:25cv23486
