A state appellate court ordered sanctions against two Fort Lauderdale attorneys for filing a frivolous action tied to a stipulated $584 million judgment for Miami-based home-builder Lennar Corp. in its fraud lawsuit against convicted swindler Barry Minkow.
A three-judge panel of the Third District Court of Appeal in Miami sanctioned Grumer & Macaluso managing partner Keith T. Grumer and associate Jason N. Goldman for filing a frivolous appeal.
The penalty, to be set later, will be half of Lennar’s attorney fees on the issue. The court also referred the attorneys to The Florida Bar for possible disciplinary action.
“Counsel might have cast a dagger into the heart of the rule of law,” Chief Judge Frank Shepherd wrote for the panel. Judges Richard J. Suarez and Vance E. Salter concurred.
Grumer & Macaluso represent developer Nicolas Marsch whose company Briarwood Capital LLC has been in a long-standing litigation with Lennar after a partnership failed on a proposed development in Rancho Santa Fe, California.
While Goldman said he had no comment, Grumer called Wednesday one of the darkest days in his 28 years of practice. He noted Miami attorney David M. Gersten, a former Third Circuit judge, represents Lennar.
“I have to say the viciousness of this opinion smacks of the political strength of Lennar and its counsel,” Grumer said. “I am crushed that I was treated like this by the Third.”
Lennar’s civil suit against Marsch and Briarwood accused the developer of hiring ex-convict Barry Minkow to disseminate false information about Lennar through his Fraud Discovery Institute Inc. to drive down the stock price.
After a Miami-Dade trial court found Minkow destroyed evidence, it entered a $587 million default judgment against him.
Minkow was a renowned entrepreneur who went to prison for fraud. After his release, he became a pastor and a purported fraud fighter who worked with authorities.
He is serving a five-year prison sentence for using his Fraud Discovery website to falsely accuse Lennar executives of fraud in a stock manipulation scheme. One of Marsch’s attorneys in California confirmed an unnamed co-conspirator in the federal case filed against Minkow was the developer.
Once the default judgment was handed down against Minkow, Grumer & Macaluso argued the case should be closed. When the motion was denied, Grumer and Goldman filed a writ of prohibition in the appellate court.
The sanctions stem from that filing, which Shepherd said was made in bad faith. The chief judge said the lawyers intentionally misstated the facts of the final judgment, which applied only to Minkow and his institute.
“This patently false assertion by Marsch counsel is antithetical to the ethical obligations lawyers with the privilege to pass before the bar to address a court have to the judges before whom they appear,” Shepherd wrote.
Grumer said he attached the stipulated judgment to every brief he filed. “I am undeserving of this humiliation. We never misled this court,” he said.
Shepherd forwarded the opinion to The Florida Bar, noting it was the second time Grumer had been sanctioned for filing a frivolous action. The judge cited the case of Daniziger v. Alternative Legal, which involved a Palm Beach County property dispute.
“The evidence supports a finding that Daniziger, as well as Grumer, knew or should have known that their claims were not supported by material facts,” the Fourth District Court of Appeal found in the 2008 ruling.
Grumer said it was Gersten who pointed out the Daniziger opinion to the panel.
“There is no reason for this court to cite other appeals,” he said.
Grumer said he has been successful repeatedly on the appellate level, including the Florida Supreme Court.
“I’m an incredibly hard-working diligent attorney,” he said. “I devoted my life to the practice of commercial law.”
The Third DCA remanded the sanctions issue to Miami-Dade Circuit Judge John W. Thornton to determine the dollar amount to be paid to Lennar.
Thornton also must decide the amount of the award against Marsch on a default judgment entered in December. A judge found Marsch attempted to erase emails between himself and Minkow.