Deauville Beach Resort loses court battle tied to $400K judgment

UPDATED, Oct. 14, 12:35 p.m.: The Deauville Beach Resort’s management company and a Miami attorney engaged in a “sham” court petition to transfer assets so the firm could avoid paying a six-figure judgment, according to a recent ruling by Miami-Dade Judge Michael Hanzman.

Hanzman dismissed a 2018 petition filed by lawyer Felix Caceres seeking an assignment for the benefit of Deauville Hotel Management’s creditors. The assignment is a state court alternative to federal bankruptcy that allows a debtor to voluntarily assign its assets to a third party. The assets are to be liquidated so that the debts are fully or partially paid back.

Belinda Meruelo, manager for Deauville Hotel Management, LLC., signed an agreement conveying all of the company’s assets to Caceres, who was supposed to act as a trustee and disperses the assets. However, the Caceres-Deauville agreement stated the management company has zero assets and zero money. It’s only creditors are Kemesia and Patrick Ward, a married couple who won a judgment of more than $400,000 against Deauville Hotel Management in a separate lawsuit.

Hanzman determined Caceres was conflicted because he is an acquaintance of Meruelo and her family, who own the 63-year-old oceanfront hotel at 6701 Collins Avenue under a separate company called Deauville Associates LLC.

“The Court finds that this assignment was effectuated not for the legitimate purpose of marshaling assets for the benefit of creditors … and with the intent to shield the debtors’ principal from potential liability,” Hanzman’s order states. “This assignment was a sham intended to frustrate the collection efforts of creditors Kemesia Ward and Patrick Ward.”

An attorney for Deauville Hotel Management did not respond to requests for comment.

Faudlin Pierre, the attorney representing the Wards, said the Meruelos have put up a fight at every turn, expecting that his clients would not push back. “Clearly, they are mistaken,” Pierre said. “This has been a long road in which the Deauville hotel has fraudulently attempted to avoid paying this judgment. The court correctly found this was a total sham.” 

“The court was wrong both procedurally and factually,” Kaeiser said. “The court did not allow us to present any evidence at the hearing. It made its findings based on the word ‘acquaintance,’ which is defined as a person one knows slightly but who is not a close friend. Obviously, from the litigation in the case, Mr. Caceres became an acquaintance of all the parties.”

Designed by famed architect Melvin Grossman, the Deauville Beach Resort is part of Miami Beach’s rich history. In 1964, the Beatles stayed and performed at the hotel for the Ed Sullivan Show. The property, owned by the Meruelos since 2004, has been shuttered for nearly three years after it was damaged by fire and Hurricane Irma.

Kemesia and Patrick Ward sued Deauville Hotel Management for allegedly ruining their wedding in the summer of 2010. Their complaint claims that the couple had booked a ballroom at the hotel for their wedding reception, but were not able to hold it there after a Miami Beach building inspector deemed the space unsafe for occupancy. The ceremony and party were relocated to the Deauville’s lobby, where the event was crashed by other hotel guests, including people in their bathing suits, according to court documents.

In 2015, a jury ruled in favor of the Wards, awarding them $27,986 in damages and $405,222 in attorney fees. Deauville Hotel Management appealed and lost in 2017.

Last year, the city of Miami Beach sued Deauville Associates for failing to maintain the property, which is considered a contributing structure to the city’s North Shore Historic District. In its lawsuit, the city alleges the owners have no intention of fixing the building voluntarily and are “hedging [their] bets” that Miami Beach will allow the demolition of the hotel.