A brokerage firm has filed suit against the former and current owners of the Sagamore Hotel for $1.26 million in unpaid commission related to the $63 million sale of the Miami Beach property.
Cornerstone International Realty sued Sagamore Partners Ltd. and InSite Group in Miami-Dade Circuit Court last week, alleging that its broker, George Smith, brought the buyer and seller together, but was never paid a commission after the deal closed.
InSite Group was the lead partner in a venture that paid $63 million for the Sagamore Hotel at 1671 Collins Avenue in April, a month after the death of Sagamore Partners’ principal Martin Taplin. The deed was signed on April 6, five days before $45 million in debt and interest payments were due on the oceanfront hotel.
According to the lawsuit, Smith contacted Taplin in October 2015 to offer brokerage services for the sale of the hotel. Taplin told Smith that Sagamore would pay a commission if Cornerstone procured a “real” buyer, and referred Smith to deal with his son-in-law, Neil Sazant, on behalf of Sagamore, the suit says.
Smith contacted InSite Group‘s Mario Abati about the opportunity to buy the hotel in an off-market deal, according to the suit. Sazant required Cornerstone to sign a confidentiality agreement so that Smith could negotiate with a potential buyer, the lawsuit says, which Smith signed on Oct. 15, 2015.
The next day, Sazant said he also needed a confidentiality agreement from the prospective buyer, which Abati signed and Smith forwarded to Sazant, saying in his cover letter, “these are serious buyers,” according to the suit.
Smith and Sazant then corresponded back and forth regarding terms of a potential sale, and Smith told Sazant that InSite wanted more information such as trend reports and budgets. On Oct. 19, 2015, Sazant expressed concern about divulging financial information about the property to a competitor, as InSite owns another hotel in South Beach, according to the suit.
Smith responded, saying “these are real buyers motivated buyers and understand the value of land and location in the beach. Before I proceeded with them, I confirmed the value you put on the asset, so there wouldn’t be time wasted. They are willing to reach the numbers you mentioned to me when we first spoke, but before proceeding we need your cooperation,” the lawsuit says.
Savant replied, according to the suit: “I have to think about this. In any event, the asset will not get sold based on the current income, so that really should not factor that much into their decision.” Smith replied: “Absolutely, we are on the same page, but it does hold some weight in their offer.”
Sazant never got back to Smith, according to the suit.
Messages left for Sazant and an InSite executive were not immediately returned to TRD on Wednesday.
On April 5, just before the sale to InSite, Cornerstone’s attorney made a demand for the “customary and reasonable” 2 percent commission, or $1.26 million, the lawsuit says.
“Sagamore and InSite dealt directly with each other and intentionally excluded Smith and Cornerstone from the continued negotiations that immediately preceded consummation of an agreement,” the suit alleges. “Cornerstone, having brought the parties together, is nevertheless entitled to a commission as the procuring cause of this transaction.”