The Hotel Greystone will reopen after a Miami-Dade judge reversed a previous ruling appointing a receiver to take over the Art Deco hotel. The Miami Beach property is set to start receiving guests on Sept. 16.
Former college pals and ex-business partners Branden Muhl and James Vosotas are locked in a bitter legal battle in New York and Miami-Dade civil courts for control of Hotel Greystone, a 92-key property at 1920 Collins Avenue that’s been shuttered for more than a year after its initial opening was short-circuited by the pandemic.
In a lawsuit filed in Miami-Dade Circuit Court, Vosotas and Vos Hospitality, his Boca Raton-based boutique hotel development company, accuse Muhl and a group of related entities of attempting a hostile takeover by unlawfully initiating foreclosure proceedings against him.
Muhl’s entity BBM3 sued Vosotas in New York civil court for allegedly defaulting on construction loan debt totalling about $35 million.
On Aug. 10, Miami-Dade Judge William Thomas appointed a receiver to take over management and operations of Hotel Greystone based on a motion for an emergency injunction filed by Vosotas. However, Muhl’s lawyers said he had not yet been served and did not have legal counsel present to contest Vosotas’ claims.
Three days later, during an emergency hearing, Thomas vacated his order after Muhl’s Miami lawyers, Alan Kluger and Todd Levine, made arguments and filed responses to the lawsuit against their clients, as well as after receiving a report from the receiver, attorney Stuart Grossman, court records show.
Instead, Thomas made Grossman a monitor to keep tabs on the corporate books and financial records of Hotel Greystone and its ownership and operating entities. Muhl must also cooperate with any requests for information by Grossman and Vosotas, Thomas’ latest order states. In addition, the judge is requiring that any net profits realized from the hotel once it reopens be segregated into a separate bank account.
Attorney Jason Friedman, who represents Muhl and his corporate interests, said Thomas nixing the appointment of the receiver reinforces his client’s position that Vosotas’ lawsuit is baseless and without merit.
“It was granted on false pretenses,” Friedman said. “In fact, the court upon learning from my clients and the receiver that the representations made by Vosotas … were not true immediately vacated the receivership.”
Vosotas’ lawyer William Clayton said in an email response that Thomas’ latest order was a win for his client and that his complaint ensured Hotel Greystone will open by Sept. 16.
“The Greystone Hotel is no longer Mr. Muhl’s private play toy,” Clayton said.
Hotel Greystone opened as an adults-only hotel around Super Bowl LIV weekend in early 2020, but was forced to close in mid-March of last year when emergency business lockdowns went into effect to slow the spread of the coronavirus. Muhl, CEO of Mahaska, a national food and beverage company based in Oskaloosa, Iowa, met Vosotas while attending the University of Michigan and was a groomsman at Vosotas’ wedding.
Vosotas accuses Muhl of purposely keeping the hotel padlocked so it doesn’t generate any revenue that can be used to pay down the loan and other debts. It’s part of Muhl’s “unlawful and premeditated scheme” to wipe out Vosotas’ ownership stake in the property, the lawsuit states.
In legal filings responding to Vosotas’ complaint, Muhl states the delays were caused by a fire on Aug. 31, 2020 that caused extensive damage. Shortly after, the city of Miami Beach declared the hotel an unsafe structure because Vosotas failed to obtain the building’s 40-year and recertification.
Clayton pointed to a Miami Beach Fire Department report he provided to The Real Deal that states the blaze was quickly put out and only caused $2,000 worth of damage. “None of the hotel rooms were affected by this nothing event. The hotel could have been completely filled like all other prime hotels on South Beach,” Clayton said.
Clayton said his client performed the necessary repairs and renovations required to pass the 40-year-recertification during the construction.
“Once the second temporary certificate of occupancy in March 2020, the building would have easily passed the test,” Clayton said. “Mr. Muhl forgets he too is a co-manager of the hotel and all Mr. Muhl had to do was call for an inspection after the city reopened.”
Nevertheless, the property will reopen with new management under Salt Hotels, a hospitality company led by David Bowd based in Provincetown, Massachusetts, according to a motion filed this month by Muhl.
Muhl claims he put in a considerable amount of equity into the venture by bankrolling the real estate acquisitions for Hotel Greystone from the moment Vosotas approached him in 2011. At the time, Vosotas wanted to gauge his interest in financing a deal to buy an Art Deco hotel for redevelopment, the motion states.
Vosotas and his hotel developer father, Daniel Vosotas, were unable to get traditional lending due to losses they sustained during the global financial crisis and an alleged history of defaults, the complaint alleges.
BBM3, an entity led by Muhl, financed Vos Hospitality’s purchases of the Greystone and the adjacent hotel for $14.5 million in 2012 and 2014. BBM3 provided a $10 million loan, according to the motion, and Muhl alleged he provided an additional $2.7 million to fund part of the closing costs.
The plan involved combining the two properties into a boutique hotel with food and beverage outlets. Vosotas would oversee the construction and management once completed. But the partnership went south almost immediately as Vosotas allegedly defaulted four times on the loans between 2014 and 2017.
Vosotas also caused the partnership to fall behind on a $36 million construction loan provided by the Moinian Group, forcing Muhl’s BBM3 to acquire the debt and avoid foreclosure, the motion states.
Clayton, Vosotas’ attorney, said Monian never threatened foreclosure and that his client agreed to allow MMBN3 to take over the loan based on Muhl’s assurances that his entity was providing more favorable terms such as reducing the annual interest rate to below 5 percent.
Earlier this year Muhl’s BBM3 filed a foreclosure action in New York against Vosotas alone. Greystone Tenant LLC and Santa Barbara 230 LLC, which are not named in the New York complaint, are the two Florida-based entities that received the loan on behalf of a third company called Greystone Holdco., owner of Hotel Greystone. Vosotas and Muhl own all three companies, corporate records show.
“Two months after the loan assignment, Muhl goes against what was agreed to and calls a maturity default on himself and Vosotas’ equity partnership with still over $800,000 remaining in the interest reserve,” Clayton said. “This is a direct breach of what was agreed to as well as a breach of his fiduciary duties.”