Bath Club fight pits Peebles against unit owners over sale of private club

Peebles Corp. alleges two owners launched a campaign to destroy the historic property’s market value in a hostile takeover bid

Feb.February 13, 2019 11:30 AM

Don Peebles and the Bath Club (Credit: Zilbert)

UPDATED, Feb. 13, 2:20 p.m.: Two unit owners at the Bath Club in Miami Beach — a Washington, D.C. power broker and a Weston-based developer — allegedly teamed up to sabotage Peebles Corp. from successfully managing the historic private members club in hopes of buying it at a sharp discount.

That’s according to a new recently-filed lawsuit by Peebles entity Bath Club Entertainment. The group is suing Mark Penn, a former Clinton administration strategist who now manages a private equity firm; and Thomas Ireland, chairman and CEO of commercial real estate firm the Ireland Companies. The suit alleges conspiracy to commit slander, breach of fiduciary duty and causing economic harm by interfering with a contract.

An attorney for Peebles Corp. said Penn and Ireland, in their roles as board members of the Bath Club’s condo and maintenance associations, engaged in a campaign to disrupt and undermine Peebles’ management of the club for more than a decade. “[Peebles] Corporation has tried to be a good neighbor, but enough is enough,” the attorney, Eleanor Barnett, a partner at Waldman Barnett.

The suit alleges Penn and Ireland conspired with real estate investment company Rubicon Holdings to drive down the value of the Bath Club so Rubicon could buy it at a steep discount. In March 2017, Peebles listed the five-acre property at 5937 Collins Avenue for $30 million. It includes the 1930s clubhouse, a fitness center, 60 cabanas, on-site parking and a courtyard.

The suit claims Penn and Ireland made a “low-ball offer” of $10 million, followed by a slightly higher offer from Rubicon. The suit alleges Penn and Ireland then attempted to scuttle that deal. Rubicon later returned with an identical $10 million offer, which was rejected, Barnett said.

The lawsuit, filed in Miami-Dade Circuit Court in December, also names Rubicon and the Bath Club condo and maintenance associations, as defendants. Rubicon representatives and Evelyn Greenstone Kammet, the lawyer for the associations, did not return phone messages and emails for comment. Penn referred comment to his attorney, Todd Legon.

Legon call the lawsuit “utterly meritless and a desperate attempt by Mr. Peebles and his entity to avoid the financial impact of a court order that forced compliance with food, beverage and cabana obligations to unit owners that were avoided during almost a decade of litigation.” Legon, a partner at the firm Legon Fodiman, called the addition of Penn and Ireland in the lawsuit “nothing more than harassment.”

The legal battle between the Peebles Corp. and the associations have gone on for years, with both having sued each other several times between 2007 and 2012.

In its most recent lawsuit, Peebles Corp. alleges Penn and Ireland have engaged in numerous actions to short-circuit the developer’s revenue streams. For example, the two men led a boycott against Bath Club restaurant, the Cape Cod Room, that caused Peebles Corp. to “lose significant amounts of revenue,” according to the suit.

Near the end of 2016, Peebles Corp. began exploring the possible sale of the Bath Club. Penn and Ireland showed an interest in buying the property and signed confidentiality agreements to begin negotiations, Peebles Corp. alleges. However, the lawsuit states that Penn submitted a “low-ball offer” of $10 million that was quickly rejected.

In June 2017, the company received a letter of intent from Rubicon to purchase the Bath Club for $17.1 million. Penn and Ireland got wind of the Rubicon offer and began “aggressively attacking Bath Club Entertainment and its ability to operate,” the lawsuit states. Their attempts to scuttle the Rubicon deal and devalue the Bath Club included making statements that anyone who bought the private club would not have access to amenities and beach services, the complaint alleges.

Seven months later, Rubicon lowered its offer to $10 million, “coincidentally the same amount that Penn had originally offered,” the lawsuit states. Peebles Corp. claims it “was clear” that Penn and Ireland “were in cahoots with Rubicon in an attempt to wrongfully wrest the property from Bath Club Entertainment.”

Correction: An earlier version of this story incorrectly identified Mark Penn as a hedge fund manager. He manages a private equity firm. Also, the name of Eleanor Barnett’s law firm was incorrect. 

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