judge denied foreclosure on a failed Miami condo building,
fraud allegations had not been addressed.
Article Courtesy of The
October 10, 2010
The Filling Station Lofts, the stalled Miami condo
project steeped in allegations of fraud and unpaid construction bills,
is set for even more litigation after a judge ruled Thursday to deny
foreclosure proceedings, opening the avenue for a jury trial.
Miami-Dade Circuit Court Judge Pedro Echarte found
that the building's Miami-based mortgage holders failed to address a
slew of counterclaims and fraud allegations waged by the defendants --
unpaid contractors who helped build the structure.
"How can you guys obtain summary judgment
with a motion that doesn't address the affirmative defenses and the
counterclaims?'' Echarte asked the foreclosure-seeking lawyers.
"What you guys are telling me just sounds wrong.''
After nearly two hours of debate and case law
references, the judge denied the motion for summary judgment with a curt
The 10-story building shell at 1650 N. Miami Ct.
has sat idle since December 2008 as lawyers have battled over
questionable title purchases, multimillion-dollar personal guarantees
and nearly $3.5 million in construction bills that went unpaid as the
property slid into default.
The judge's ruling means the property will not
immediately go into foreclosure, and the case will likely undergo
additional hearings and possibly a jury trial over fraud allegations.
For Alina Rivero, owner of Miami-based Gulf Plumbing, it represents
continued hope that she might one day be paid for three months of
construction work her company did in the building.
"We're very satisfied with today's outcome,
and we think that at least now we have a chance to prove our case in
front of a jury,'' said Rivero, who filed a $222,500 lien against the
building in 2009.
After the property went into default, its lender,
Ocean Bank, sued the developer, Daniel Holtz, for $20 million on his
personal guaranty of a 2006 loan. A couple of months later, an investor
group bought the property's note and mortgage from Ocean Bank for $7
million and then released Holtz from his personal liability on the debt.
In August 2009, the investor group moved to foreclose on the property, a
process that would effectively shut out contractors from ever claiming
At issue is whether the transaction that sent the
note from Ocean Bank to the investor group, Versa Capital, was a scheme
devised by Holtz to defraud and stiff construction workers.
Lawyers for Versa and Holtz argued in court that
evidence of such fraud was non-existent. "There have been
depositions of defendants, there have been depositions of
cross-defendants, there have been depositions of plaintiffs -- in all of
that, what have we got?'' asked Versa's lawyer Frederick Sake. "We
have not one affidavit in opposition of the summary judgment.''
Joseph Rebak, attorney for Holtz, said "there
is no relationship between Daniel Holtz and Versa. Mere paper
allegations, as Mr. Sake has cited, do not suffice to defeat a motion of
But attorneys for the contractors -- Gulf
Plumbing, Biscayne Construction and B & R Engineering -- presented
the court with an intricate allegation of fraud, claiming that business
and blood ties between the developer and the mortgage purchasers tainted
Because the investor group consists of family
members and business associates of Holtz -- and because Holtz personally
guaranteed the entire purchase -- defense lawyers argued that the sale
was not an arm's length transaction. Holtz appears to have gained from
the note purchase since it resulted in him being released from a $20
Holtz is the son of Abel Holtz, the former owner
of Capital Bank.
"It appears that if you have friends and
family with enough money, you can get away with something like this,''
said Douglas Roberts, lawyer for Biscayne Construction. "On its
face, it smells to high heaven.''
Jorge del Valle, who represents B & R
Engineering and Gulf Plumbing, said that the property's value has
nosedived since the initial default, and now the contractors -- second
in line for any foreclosure sale proceeds -- have been left out to dry.
"This court is the only place that our
clients -- who are small, working contractors -- have to get some
redress,'' he told the judge.
Roberts and del Valle said they would push to take
the case before a jury. Sake and Rebak did not return calls requesting
comment on Thursday.