Article Courtesy of The Daily Business Review
By Samantha Joseph
Published June 20, 2017
Putting on "a numbers case" helped the owners of the
Hilton Fort Lauderdale Beach condo hotel defeat a $10 million class action
lawsuit by residents fuming over a multimillion-dollar spike in maintenance
Q Club Hotel LLC owns the property at 505 N. Fort
Lauderdale Beach Blvd., which operates under the Hilton
brand and includes six commercial units and 333 condos that
individual owners could opt to rent as luxury suites through
It appeared cornered in December when U.S. District Judge
James I. Cohn granted class certification to residents
miffed over the spike in maintenance fees for shared spaces.
But a team of commercial lawyers, hotel analysts and noted
Miami forensic accountant Barry Mukamal helped Q Club
justify how annual costs soared to between $2 million and $3
million, up from $46,000.
"This was a numbers case," said Laurence "Larry" Litow of
Burr & Forman in Fort Lauderdale. "And these experts, through a tremendous
amount of time of and effort, were able to drill down through Hilton's books
and records and determine what the actual expenses were."
When the trial ended June 1, a Fort Lauderdale jury found in Q Club's favor.
The defense strategy: Demonstrate the hotel had incurred each charge claimed
for shared services, disproportionately covering about $11 million in
expenses between 2007 and 2012, thanks to an accounting error. The $46,000
unit owners had paid for years didn't come close to their actual tab,
according to the defense.
The misstep occurred when the parties first launched the hotel. The head of
accounting at that time mistakenly relied on a budget for a standard
residential condominium, instead of one with more than 100 differences for
more complex mixed-used hotel condos, according to Litow. When it discovered
the error, Q Club adjusted maintenance fees.
"That resulted in the dramatic rise," Litow said. "The hotel owner was
shortchanging itself for years, and the unit owners were not paying their
Litow teamed with Burr & Forman colleague Howard Scott Marks, Hinshaw &
Culbertson partner John Charles Lukacs and Pena Garcia & Diz managing
partner Ronald Pena to represent the hotel.
"Frequently whenever there's an exponential increase in assessments, owners
question and rightly so," said Gelfand & Arpe senior partner Michael Gelfand,
a homeowners' association mediator who is not involved in the litigation.
"We look at it with 20/20 hindsight. Folks should go back to their documents
and determine what the agreement requires. Hopefully the agreement is not
only is clear but also makes practical sense under the circumstances."
Robert A. Sweetapple of Sweetapple Broeker & Varkas joined Farmer Jaffe
Weissing Edwards Fistos & Lehrman partners Mark S. Fistos, Matthew Douglas
Weissing and Steven R. Jaffe in representing the class led by named
plaintiff Gary Dear. They did not respond to requests for comment by
But court documents show residents felt Q Club charged for valet parking and
other expenses outside their agreement.
"The problem is there's very little transparency about what is going on as
far as the charges," Weissing told the Daily Business Review in December.
The parties are still feuding over a proposed partial judgment, but defense
attorneys say the victory will help keep other condo hotel owners and
timeshare operators out of the crosshairs of plaintiff lawyers angling for
their next big cause.
"Every once in a while something comes along that becomes a hot topic for
plaintiff class action attorneys," Litow said. "Their target was shared
costs for hotel condominiums, and we were going to be the test case."