The real estate business in South Florida is not always glitz and glamour. In fact, it can get so nasty, developers and brokers sometimes find themselves in the middle of salacious lawsuits alleging fraud, self-dealing and other embarrassing accusations.
The Real Deal regularly reports on all the scandalous complaints. Here is look back at the top juiciest cases of 2016.
A Jaded battle
When loose nails, concrete and dust rained down on the pool deck and other common areas of Sunny Isles Beach condo tower Jade Beach, the building’s condo association didn’t have to look far to find the culprit, according to a lawsuit filed in Miami-Dade Circuit Court. The association accused Fortune International Group of failing to install protective netting as the company built Jade Signature, the 57-tower tower at 16901 Collins Avenue that is directly south of Jade Beach, which was completed in 2008. As a result, the association sent a bill to Fortune for nearly $420,000 to cover repairs.
When the association didn’t get a response to its demands, it sued Fortune, general contractor Suffolk Construction and Fortune’s development entity Sunny Isles Beach Associates LLC to halt construction until the netting was installed, as well as collect damages. The lawsuit is still pending. However, Jade Signature, where 192 units priced between $3.9 million and $33 million, topped off in September and is scheduled to open in 2017.
Property appraiser vs. Setai owners
Pedro Garcia doesn’t play around when it comes to fighting for higher property assessments. Since reassuming his role as Miami-Dade County’s property appraiser, Garcia has ramped up his office’s efforts to combat value reductions awarded to owners of luxurious properties. Just ask 132 unit owners at the Setai Miami Beach, including members of the Nakash family of Jordache fame. In May, Garcia sued them in Miami-Dade Circuit Court in order to reverse a combined $163.2 million in property tax reductions the 132 owners won for their 2014 assessments.
The lawsuit doesn’t include the Setai hotel, which the Nakashes purchased for $90 million two years ago. However, the Setai Resort and Residences Condominium Association and Leon Biegalski, executive director of Florida’s Department of Revenue, are also named as defendants. According to the complaint, the property appraiser assessed the market value of the 132 units at a combined $409 million. The owners appealed to the Value Adjustment Board, which reduced the appraiser’s figure by 40 percent, or $245.6 million. If Garcia prevails, the 132 owners would owe about $3.3 million more for their 2014 property taxes.
The “defamed” Boca Raton broker
In 2009, David Roberts wasn’t happy to read a testimonial his former client Rick S. Felberbaum wrote for a competing real estate brokerage, believing it badmouthed him for not being able to sell a $4 million house at the Royal Palm Yacht & Club in Boca Raton. So, Roberts sued Felberbaum, the law firm Felberbaum & Associates PA and Premier Estate Properties, an affiliate of Christie’s International Realty, for defamation.
“After one year plus of virtual inactivity, ignored emails, unreturned phone calls and our perceived complete lack of their regard for selling our home, we signed up with Premier Estate Properties,” Felberbaum’s testimonial read. “Finally within a few short months of listing with you, our home was in contract.”
Seven years later, Roberts, who owns Royal Palm Properties LLC, or RPP, lost his seven-year battle over Felberbaum’s bad review. On April 6, a jury found the attorney not guilty. Yet he did settle with Premier, which produced the newsletter containing Felberbaum’s comments that was twice mailed to Royal Palm residents.
South Beach hustle
During a five-day courtship that included Labor Day weekend, Michael Freundlich picked up Sky Park’s $37,000 tab at local restaurants and bars in Miami Beach. At the time, Sky Park was a potential suitor looking to buy Freundlich’s Treehouse Nightclub at 323 23rd Street. But the deal never went through, according to a lawsuit Freundlich filed against Park, the proprietor of a New Jersey karaoke bar.
Freundlich accuses Park of bamboozling him into paying for a lavish party fest. Park never intended to buy Treehouse and owes Freundlich $200,000 in damages, the pending lawsuit claims. Park asked Freundlich to “please arrange for all accommodations so that we can begin our evaluation of the business as my team needs to visit and meet with your representatives,” the lawsuit says.
But the potential deal ended like a South Beach one-night stand after Freundlich agreed to wine and dine Park and his team over the holiday weekend. “$37,000 went towards Sky Park’s and his team’s travel expenses, taxi fare, air fare, hotel, meals, liquor and entertainment expenses,” the lawsuit states. “Over the course of five days, Sky Park and his team, using credit cards provided by Freundlich, partied, wined and dined all over Miami Beach.”
Porsche Design Tower drama
The hazardous trend of new projects wreaking havoc on nearby existing buildings in Sunny Isles is not limited to Jade branded buildings. The condo association for the Millennium sued developer Gil Dezer and his development team, including the general contractor and engineers, for causing cracks in the lobby, parking garage and pool deck of the 34-story tower. The lawsuit alleges the damage was caused in 2013 by the installation of foundation sheet pilings at Dezer’s Porsche Design Tower, the ultra luxe condo that is near completion at 18555 Collins Avenue that includes a personal car elevator for each unit.
The Millennium condo association hired Khaled Sobhan and D.V. Reddy, a pair of engineering professors from Florida Atlantic University, who submitted a report stating the cracks were caused by excessive vibrations from construction equipment driving the Porsche Design Tower’s sheet pilings. In addition, as the 60-story tower’s floors were poured, concrete overspray splashed over onto the Millennium’s south facade, falling onto balconies and splotching the building’s paint job, the lawsuit states. An attorney for the Millennium condo association said the building sustained damages valued at $4 million.
Broker vs. broker
When Bustamante Investment Group sold a Little Havana CVS Pharmacy on July 19 for $13.1 million, the Brickell Avenue-based commercial brokerage collected a hefty 10 percent commission it was supposed to split with another firm that originally represented the seller. But on Oct. 4, Bustamante sued Surfside-based Municoy International Realty and its owner Elizabeth Municoy, also known as Elizabeth Ortiz Municoy, in an attempt to nullify the agreement. The squabble provided a rare glimpse at the lucrative fees commercial brokers receive from the sale of net lease properties.
Bustamante wants a Miami-Dade Circuit judge to rule against Municoy’s demands for 7 percent of the $1.3 million commission allegedly per the brokerages’ referral agreement. According to the lawsuit, the seller was originally represented by Municoy, which brought in Bustamante to handle the listing. The pending lawsuit accuses Elizabeth Municoy of repeatedly changing the referral agreement and that she is also not entitled to a commission because Florida law prohibits payments to unlicensed real estate brokers. A check of Florida’s Department of Business and Professional Regulation online database confirmed Municoy is not licensed in real estate sales, but her business partner, Thomas Baker, is licensed.
The great Privé war
Lawsuits between developers and existing property owners is a cost of doing business in real estate. But the ongoing legal war between builders of Privé at Island Estates in Aventura and homeowners on Williams Island is close to reaching DEFCON 1, where an all-out nuclear assault threatens to obliterate both sides. In the latest skirmish, developers BH3 and Gary Cohen sued 11 Williams Island homeowners in late September. The lawsuit alleges the homeowners violated a 34-year-old settlement agreement prohibiting them from objecting to any new projects on the island.
According to the lawsuit, Cohen, who owns the land on the north island where Privé is rising, entered into a settlement agreement with the Williams Island Property Owners Association on August 3, 1982, stipulating that all island residents could not object to any project on the two islands. The lawsuit claims the agreement bars any homeowner challenges that would prevent the 160-unit Privé from being built.
The Privé war has been ongoing for quite some time. In December of last year, a $225 million lawsuit filed by the developers against specific property owners was dismissed. Two months later, the developers filed another, separate class action lawsuit targeting all 2,000 residents of Williams Island and the property association. On May 26, Circuit Court Judge Jerald Bagley denied the developers’ motion to certify a counter-defendant class.
Bal Harbour Shops attacks councilwoman
Stymied by Bal Harbour Assistant Mayor Patricia Cohen’s efforts to block the expansion of their luxury mall, the Whitman family sued her this past March to determine if she had been in cahoots with their competition. The owners of the Bal Harbour Shops sought a court order instructing the Bal Harbour village clerk to take possession of any computers, tablets and cell phones, including personal ones, used by Cohen.
The Whitmans accused Cohen of violating Florida’s public records law by refusing to let the shopping center’s attorney John Shubin and his legal team examine three personal email accounts she maintains for any messages concerning official business, specifically ones in which she discusses the mall’s long desire for a land swap with the village for its expansion project. The Whitmans have long maintained that Cohen opposed their plans due to a personal relationship she has with the Soffer family, owners of Aventura Mall.
Magic City Casino owner busts on big gamble
Southwest Florida Enterprises made a $500,000 bet on hotelier John Yanopoulos and lost. So in June, the holding company for Magic City Casino in Miami sued Yanopoulos and his firm Y Group for fraudulent inducement by promoting a sham investment opportunity.
According to the lawsuit filed in Miami-Dade Circuit Court, Magic City Casino Vice President Isadore Havenick, a longtime friend of Yanopoulos, and Leon Reitnauer, another casino executive, partnered with Y Group to acquire a two-story mixed-used apartment building with ground floor retail at 1040 South Miami Avenue for $33 million.
The complaint accuses Yanopoulos of extracting $500,000 from Havenick for the purchase, but the deal never happened. Furthermore, Yanopoulos, co-developer of the W Fort Lauderdale which he and his partner sold in 2014 to a company headed by Miami Dolphins owner Stephen Ross, hasn’t paid the money back. “Yanopoulos [led] Havenick and Reitnauer to believe that Yanopoulos was experienced in the real estate industry and said investment is a ‘unique opportunity’ to acquire ‘one of the last trophy pieces of real estate in the Brickell corridor,’” the lawsuit alleges. “According to Yanopoulos, the proposed plan for the property included development of a hotel, retail, and condominiums.”
Allegedly uninhabitable units at Faena House
Despite closing on his $8.6 million two-bedroom condo at Faena House in December of last year, Ruslan Shudrik has not been able to move in because the unit remains unfinished due to alleged construction defects that make his apartment unfit for living conditions. So in October, the Russian buyer sued developer Alan Faena’s Tower 3315 LLC for breach of contract, negligence, and breach of warranty under Florida law.
Shudrik’s lawsuit put a damper on the Art Basel grand opening for Faena Forum, the performance theater that is the latest project to be completed in the much-ballyhooed Faena District in Miami Beach. According to the complaint, Shudrik was notified in October 2015 that construction on his condo was complete and set the closing for Nov. 2 of that year.
However, during the walkthrough, Shudrik allegedly discovered the unit was not complete and that Faena would need to replace substantial portions of ceramic, marble, Terrazzo and wood floors, requiring partial demolition and other dangerous and invasive construction activities that rendered the unit unlivable. Despite Faena’s assurances that the unit would be completed in a short amount of time, Shudrik is still waiting to move in. Another buyer, fashion industry tycoon Haresh Tharani, filed a lawsuit against Faena House and Tower 3315 making similar allegations as Shudrik. Both complaints are still pending.