Ritz-Carlton developers accused of blocking sale of neighbor to preserve view

Rendering of the Ritz-Carlton Sunny Isles
Rendering of the Ritz-Carlton Sunny Isles

The condominium association at the nine-story Tropicana building in Sunny Isles Beach has filed suit against developers Edgardo Defortuna, Manuel Grosskopf and their related companies for allegedly blocking a sale of the Tropicana in order to preserve the oceanfront view at Ritz-Carlton Residences, a 52-story condominium that the developers are building next door.

The Tropicana Condominium Association alleges in its suit, filed in Miami-Dade Circuit Court, that Defortuna and Grosskopf used straw buyers to acquire five of the 48 units at the Tropicana and to block efforts by the condominium association to dissolve itself and sell the entire nine-story building to a developer who could put a much taller building in its place.

The Tropicana Condominium Association is seeking $120 million of damages from the defendants. Defortuna is president of Fortune International Realty. Grosskopf runs the real estate development firm Chateau Group.

Ownership of five Tropicana units equates to 10 percent of the voting power of the association’s membership, just enough to block a dissolution of the condo association and a sale of the building as a whole, said Miami attorney Glen Waldman, who represents the Tropicana Condominium Association. “Nobody’s occupying any of these units,” told The Real Deal. “They’re only for one purpose, to block us.”

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While Florida law requires 80 percent voting approval to dissolve the condominium ownership of a building, “there is also a provision in the statute that says if you have 10 percent that vote against it, you can’t” dissolve a condominium association, Waldman said.

The Tropicana Condominium Association claims in the suit that Defortuna and Grosskopf arranged for employees and other straw buyers to purchase five Tropicana units for a total of $1.17 million in a “fraudulent scheme” to block proposals to dissolve the condominium ownership of the building and sell it outright.

The buyers of the five Tropicana units had filed suit in January against the Tropicana Condominium Association, contending that its declaration of condominium requires 100 percent voter approval to dissolve the association, and that the board of directors invalidly adopted two amendments lowering the required threshold below 100 percent. Juan Farach, a partner of Miami law firm Shubin & Bass, which is representing the buyers of the five condo units, told TRD that the original 100 percent threshold for dissolving the Tropicana Condominium Association still applies. Calls to Defortuna‘s representatives were referred to Farach.

According to the suit, many Tropicana condo owners, including a large number or retirees, believe the combined sales of their individual units would be less than the price a developer would pay for the Tropicana and its oceanfront location at 15645 Collins Avenue. Developers have made offers up to $100 million, according to the Tropicana Condominium Association’s suit.

Chateau Group, run by Grosskopf, has offered less than $50 million for the Tropicana property, Waldman said. “They were told, ‘No.’ And there was a discussion with Defortuna, but it didn’t go anywhere.”