Appeals court upholds $8M judgment against former Z Ocean condo-hotel partners
Current owner Louis Taic alleged ex-partners hid South Beach project’s dire finances
The co-developers of Z Ocean, a South Beach condo-hotel, will remain on the hook for an $8.2 million judgment after their appeal was denied.
In an opinion issued last week, the Third District Court of Appeals upheld Miami-Dade Circuit Court Judge William Thomas’ 2020 ruling in favor of Louis Taic and his company So. Beach Hotel LLC, which owns the entity that owns the hotel. Thomas’ order ended Taic’s seven-year legal battle with his former partners who in 2008 sold him a majority share of the Crowne Plaza South Beach Z Ocean Hotel at 1437 Collins Avenue in Miami Beach.
The former partners on the hook for the judgment are GG Investment Realty, Gene Grabarnick, Pauline Grabarnick, Garett Grabarnick and Ronald Molko. The Grabarnicks and Molko completed Z Ocean in 2006 after acquiring the property six years earlier for $6.4 million, according to records. Molko was not part of the appeal.
The appeals court determined that Thomas made his “thorough final judgment” on “factual findings based on credibility determinations derived from live testimony” and “supported by competent substantial evidence.” In his 2013 lawsuit, Taic alleged that the Grabarnicks and Molko misrepresented the financial viability of the condo-hotel project when they brought him on board in 2008.
Taic’s company, So. Beach Hotel, currently owns Z Ocean’s common areas and several units, including a pair of penthouses. The property is designated for short-term stays, so owners can rent out their units.
Reached on his cellphone, Gene Grabarnick said he had not discussed the appeals court’s ruling with his attorney. “So I don’t have an opinion,” he said. Michael Compagno, the attorney for the Grabarnicks and their company GG Investment Realty, declined comment.
In a statement, Richard Sarafan, a Genovese Joblove & Batista law firm partner who represented Taic and his company, said the appeals court ruling “represents a complete victory for our clients.”
“The extensive, well-reasoned findings and conclusions of the trial judge, who worked through and resolved each of the many complex issues in the case, proved to be a major factor in this appellate success,” Sarafan said.
Miami-Dade Judge Thomas based his ruling on voluminous documentation that Taic’s legal team presented at trial, including a balance sheet a Grabarnick family member provided showing the hotel’s ownership entity had $31.4 million in total assets and was profitable. But the entity’s 2007 tax return filed in 2009 — a year after Taic purchased two-thirds of Z Ocean — showed it only had $12.3 million in total assets and negative equity of $7.2 million.
In his ruling, Thomas noted that the entity was “a terribly struggling company on the verge of insolvency, with negative equity.” The judge also concluded the Grabarnicks used fraudulent inducement in the sale.