In February 2022, Denali Therapeutics announced, with great fanfare, plans to open labs in Salt Lake City’s Granary District — a “state-of-the-art” manufacturing facility in the new INDUSTRY SLC building.
Denali’s CEO, Ryan Watts, said at the time that he was “excited” about the move. Salt Lake City Mayor Erin Mendenhall touted Denali’s impending move as a key step in the city’s campaign to boost biotech and health care innovation.
Just over a year later, in March 2023, the Bay Area-based Denali quietly backed out of its lease, and the labs never opened. A new lawsuit, filed Wednesday in Utah 3rd District Court in Salt Lake City, lays out the reasons why — with Denali blaming the building’s owners and investors for breaching their half of the lease, alleging shoddy construction and frequent lies.
The new lawsuit makes four claims, including fraud and breach of contract, against Industry Office SLC and Catalyst Opportunity Fund. Denali is seeking at least $30.5 million per claim.
Industry Office owns the building at 650 S. 500 West, according to the complaint, and Catalyst Opportunity Fund is a private equity firm that invested heavily in the property — putting up $39.5 million out of its $112 million cost, according to its website.
Industry Office is partially owned by Jason and Ellen Winkler, the husband-and-wife owners of the building group Q Factor — whose suite of companies include the now-defunct contractor Makers Line, which stopped operations in November. Makers Line rebuilt the INDUSTRY SLC building from a former industrial facility. The Winklers are minority owners in Industry Office, according to court filings.
Representatives for the Winklers and Industry Office SLC did not respond to requests for comment or declined to comment on the record Thursday.
Denali’s lawsuit is the 20th filed in recent months against the Winklers or their companies — and is seeking the most in damages by far.
The claims in Denali’s lawsuit are similar to allegations made by Recursion Chemicals in a counterclaim against Industry Office SLC, after Industry Office accused Recursion of breaking its lease for the same building. That case is still pending; a hearing is scheduled in February. Industry Office SLC has denied some of Recursion’s major claims and alleged that Recursion never intended to honor the lease agreement.
Denali’s lawsuit claims Industry Office SLC and Catalyst, in tandem, knowingly and repeatedly lied to Denali about the lab’s progress. According to the complaint, the space in which Denali was to move was already occupied by a brewery, but Industry representatives said the brewery was scheduled to move out quickly. It didn’t, the lawsuit alleges, nor was it scheduled to. The brewery’s continued occupancy caused serious delays on lab construction, the complaint claims, and Industry Office and Catalyst “misled” Denali into thinking the space would be vacant earlier than it was.
Once construction did start, the complaint alleges, it was consistently inadequate. The lawsuit alleges numerous structural issues with the building, including damaged steel columns, incomplete framing and improperly connected steel beams.
Denali’s lawsuit also alleges a more close-knit relationship between Industry Office and Catalyst than was represented. According to the complaint, Catalyst effectively fired Industry Office, and Makers Line as the general contractor, after Denali complained about construction delays and structural “defects.” The complaint alleges Catalyst and Industry Office represented themselves as separate entities, but were, in fact, “governed by the same, or substantially overlapping, leadership.”
“At all times relevant hereto, Industry was not only influenced and governed by Catalyst, but there was such a unity of interest and ownership that the individuality, or separateness, of Catalyst and Industry has ceased,” the complaint claims. Denali’s attorneys argue in the complaint that the “flimsy corporate veil” between the two companies should be “pierced,” and that Catalyst bears the same financial responsibility to Denali as Industry Office.
Jason Winkler was CEO of Industry Office SLC, according to the complaint, but was “removed” from the project and from Industry leadership in 2023. He still shares a one-third membership interest and 2% of equity ownership, the lawsuit claims.
Earlier this month, the property owners of two unfinished apartment buildings in Ogden, one of which saw demolition start just after Christmas, filed a lawsuit against Makers Line — accusing the company of dooming the project by cutting corners. That suit listed 22 causes for action against Makers Line and its officials, with damage requests ranging from $150,000 to $9.7 million per cause.
Most of the other previous lawsuits filed against Makers Line and its related entities are from subcontractors seeking payment for labor performed on various projects. Those suits seek damages that, put together, would cost the contractor slightly less than $3 million.
Shannon Sollitt is a Report for America corps member covering business accountability and sustainability for The Salt Lake Tribune. Your donation to match our RFA grant helps keep her writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.
