A judge ruled that the plaintiff in a 2014 lawsuit against hoteliers Jared Galbut and Keith Menin can seek punitive damages from the Menin Hospitality principals.
Colleen Bennett, a unit owner at the Bentley South Beach, filed the lawsuit against the Bentley condo association more than six years ago. In an updated complaint filed in January against the condo association, Galbut and Menin, Bennett alleges that entities tied to developer Russell Galbut’s family had employees and family members appointed to the association’s board of directors, issued $2.7 million in fraudulent special assessments, and selectively enforced the collection of assessments.
The lawsuit also alleges commercial units owned by Jared Galbut and Menin, nephews of Russell Galbut, were improperly exempt from the special assessments at the condo-hotel at 510 Ocean Drive in Miami Beach.
Galbut family entities began buying units at the Bentley in 2010. The companies sold the majority of the condo-hotel units and ground-floor retail space to Shadi Shomar’s Sunnyside Hotels & Resorts for $28 million in 2019.
In a court ruling entered last week, Miami-Dade Circuit Judge William Thomas granted permission for Bennett to seek punitive damages against the defendants.
Keith Menin declined to comment, and the condo association’s lawyer, Craig Shankman, did not respond to requests for comment.
Attorney Josh Migdal of Mark Migdal & Hayden, who is representing the unit owner, Bennett, said the ruling shows that his client has enough evidence to seek the additional damages. Migdal said the case could go to trial in May.
“I think a point to be made is that Florida law goes to great pains to protect people who purchase condominiums, and to the extent that there’s misconduct they can be protected through demonstration of fraud and any other misconduct,” he said. “I can’t just file a lawsuit and seek punitive damages. … The purpose of the damages is to punish them.”
According to the lawsuit, after the Galbut and Menin companies took control of the association, the entities, via JKR Bentley Management, hired Menin Hospitality to manage the hotel program. The lawsuit alleges that they waged a three-pronged attack, starting with the aesthetic redesign aimed at increasing Menin Hospitality’s revenue and the value of the units owned by the real estate family; redesigning the Bentley to increase the square footage of the units owned by the family; and leaving the remaining unit owners to foot the bill.
The assessments were passed at directors-only meetings in 2012 and 2014, despite having a conflict of interest, according to the lawsuit. Bennett filed an emergency motion to stop the work, and the court’s order in December 2015 included Jared Galbut’s testimony that the work was either completed or terminated. About $2.1 million was used for the alleged improvements and the unit owners did not receive any portion or credit of the unspent money, according to the lawsuit.
The architect and the general contractor, who were hired by Galbut and Menin, testified that the purpose of the improvements was to improve the aesthetics of the building, not the mechanics, court records show.
Citing depositions of Jared Galbut and Keith Menin, court records state that Jared conceded that “it would not be in the Association’s best interest to exclude the commercial units from payment since it would increase the cost to other unit owners,” but that the association did so anyway. The commercial units were not subject to the same assessments, according to the suit.