A month after Jaime Sturgis left Metro 1 to launch his own brokerage firm, a high-profile former client is suing him and his former employer.
Recently retired pro football player Stephen Tulloch alleges Sturgis and Metro 1 failed to disclose an apparent conflict of interest during the negotiations and closing of a downtown Fort Lauderdale office building, according to a lawsuit filed in Miami-Dade Circuit Court.
Through a company called SMT Investments of Miami, Tulloch purchased a three-story building at 727 Northeast Third Avenue in the Flagler Village neighborhood in January for $1.42 million from AJAX FTL. Metro 1 sales associate Jenny Arias May represented Tulloch and Sturgis represented AJAX, according to the complaint. The brokerage firm collected a 4 percent commission on the deal.
Tulloch alleges shortly after the deal closed, he learned that AJAX is owned by Sturgis’ in-laws through another entity, Mortagex LLC and that they made a $500,000 profit when they sold the building to SMT Investments. No one from Metro 1, including Sturgis, disclosed the information to him while representing him on the transaction, Tulloch alleges.
“Sturgis failed to deal honestly, fairly and with skill, care and diligence in the transaction,” the lawsuit claims. “At all relevant times, Metro 1 had a duty to and should have taken swift and appropriate action to prevent Sturgis from harming innocent clients of Metro 1.”
Tulloch’s attorney Alan Kluger did not respond to requests for comment. Sturgis declined to comment on the allegations against him. In a statement, Metro 1 founder and CEO Tony Cho denied wrongdoing, asserting his brokerage holds itself and its agents to “the highest standards of ethics, care, and diligence and looks forward to getting to the bottom of this complaint.”
“The alleged actions which give rise to the plaintiff’s complaint, if proven true, would be unfortunate and is without the knowledge and consent of Metro 1,” Cho added. “Mr. Sturgis will have to answer for these allegations.”
After six years, Sturgis left Metro 1 in May to start Flagler Village-based Native Realty Co. A Fort Lauderdale native, Sturgis was Miami-based Metro 1’s sales director and oversaw all sales and leasing in Broward County. Tulloch, who is from Miami, played 11 years in the NFL for the Tennessee Titans, the Detroit Lions and the Philadelphia Eagles before retiring in April.
According to the complaint, Tulloch hired Metro 1 in 2016 to assist him in finding his first commercial real estate investment. Initially, May was working with Tulloch to identify properties in Miami. He then began working with Sturgis when Tulloch decided he wanted to explore real estate deals in downtown Fort Lauderdale.
Last year in June, Sturgis found three properties in downtown Fort Lauderdale that Tulloch submitted a $2.45 million offer for, but was rejected. Subsequently, Sturgis told Tulloch that an office building at 727 Northeast Third Avenue was under contract to another buyer that wanted to immediately flip the property.
“In order to induce Tulloch, Sturgis provided him with financial pro formas regarding the property, showing the favorable investment returns he could allegedly make,” the complaint states.
At closing, Tulloch was able to bring the price down to $1.42 million from $1.5 million. But he subsequently learned that Sturgis and Metro 1 represented the property’s previous owner James K. Pedley, who had a contract to sell the building to AJAX for $900,000, according to the suit. Tulloch accuses Sturgis and Metro 1 of never disclosing the inherent conflict of interest.
“If SMT had known Sturgis’ in-laws had the property under contract for $900,000 and stood to make ‘a risk-free’ $520,000 profit at the closing, SMT would not have acquired the building for the ‘excessive price of $1.42 million,'” the lawsuit states.
Tulloch also accused Sturgis and Metro 1 of pulling a similar stunt in July 2015, when the brokerage represented 27 Twenty Seven Bar + Lounge LLC in its purchase of a property at 835 Northeast Third Avenue. According to the complaint, 27 Twenty Seven paid $500,000 to 835 Holdings, another company owned by Sturgis’ in-laws that sold the building for $220,500 the month before.