Developer Scott LaFavre has filed claims in Freeborn County District Court alleging one of the owners of Medford-based general contractor Niles-Wiese Construction Co. Inc. made false and defamatory statements against him.

In fact, he’s saying the statements, along with the company’s actions, ultimately caused a subcontractor to quit work on his Eagle’s Rest project, which he says directly affected the sale of lots in the development and ultimately led to the foreclosure of the property.

According to court documents, the statements allegedly made by owner Daniel Niles on behalf of the company caused damage to the Eagle’s Rest housing development and in turn to LaFavre’s reputation in the Albert Lea community and in the construction and development industry.

“Through their actions, Niles and Niles-Wiese have caused severe injuries to the local community by adversely affecting what would otherwise be a successful redevelopment project, and preventing the increased tax revenue and anticipated business growth that would have resulted,” states the claim, made official Wednesday.

Eagle’s Rest development, a high-end residential subdivision, was slated to be built on the former century-old, 18-hole Albert Lea Golf Club.

LaFavre also claims that Niles, the company as a whole and its two other owners, Gary Wiese and Joe White, diverted funds that were supposed to have been paid to subcontractors and instead used them for purposes unrelated to the project.

The new claims are in addition to claims of breach of contract and fraud, among others, already filed in January 2008.

The company was hired as the general contractor for the project after LaFavre purchased the property in 2006. Documents state that once LaFavre paid Niles-Wiese for work completed, Niles-Wiese was supposed to pay the subcontractors for their work.

According to LaFavre, he made payments to the contractor but Niles-Wiese never in turn paid its subcontractors.

The claim states as a means of justifying its refusal to pay subcontractor Rud Excavating, Niles published a statement saying LaFavre had only paid $100,000 and that “he’s screwed us over on this.”

The claim notes this statement was false.

Because Rud never received its payment, it placed a mechanic’s lien on the Eagle’s Rest property in September 2007 and ceased work on the project, documents allege. This caused “substantial delays and additional and unforseen costs to the project.”

“Once the public learned of the delays … the project began receiving substantial negative publicity,” the claim states. “This had a negative impact on Eagle’s Rest’s efforts to sell lots. … The public began questioning Eagle’s Rest’s ability to complete the project in a timely manner.”

Because of this loss in expected income, the developers were unable to make payments on their mortgage, which ultimately led to the foreclosure.

The claims seek punitive damages against Niles, Wiese and White and the company.

LaFavre’s lawyer, David Miller, said there are no claims pending by Rud Excavating on his client.

A pre-trial for his client’s motions will be scheduled for 60 days from Wednesday.

Officials at Niles-Wiese were unable to be reached for comment.

LaFavre purchased the golf course in April 2006 and closed it the next month, to the dismay of the club’s members. Mortgagor American Bank of St. Paul purchased the land during a public auction in December 2007 for about $1 million. Eagle’s Rest Development declared Chapter 11 bankruptcy in December 2008.