Two businessmen who lost deposits when the Trump International Hotel & Tower project failed in Fort Lauderdale started trial Monday against Donald Trump in the Broward Circuit Court.
Trump did not attend, but jurors will hear his deposition during the expected two-week trial before Judge Jeffrey Streitfeld in the lawsuit filed by New Jersey-based Crest Ultrasonics CEO J. Michael Goodson and retired Boston restaurateur John Taglieri.
While the stakes are immediate for the two plaintiffs, another 81 plaintiffs are waiting in the wings and watching how this case plays out. Attorney Joseph Altschul of Pembroke Pines will take the lion’s share of plaintiffs to trial this summer.
Goodson and Taglieri signed reservation contracts in December 2005 for hotel condominium units in a proposed 24-story Fort Lauderdale beachfront resort.
Since these were pre-construction contracts, their attorney Jared Beck of Beck & Lee in Miami told jurors in opening statements that they had only the promotional materials and contracts to rely on when making a decision.
Trump was the face of the project, Beck said. His name and likeness were all over the promotional materials and gave the impression he was the developer.
However, Trump was not the developer, and investors were not told his involvement was only as the licensor of the Trump brand since Trump Florida Management LLC was the proposed hotel manager of a property that touted “Trump luxury at its finest,” Beck said.
It was an attractive deal limited to seasonal residents who could put their units into the hotel program when the owner wasn’t occupying it and get a share of hotel rental profits.
Investors had to pay 20 percent down. Half of their down payment went into escrow, and the other half went to finance construction. Goodson was buying a $1.73 million unit. Taglieri was getting a $730,000 unit.
Goodson and Taglieri recovered their escrow but are suing to recover their construction deposits, Beck said. They are claiming fraud through misrepresentation and inducement.
Defense attorney Herman Russomanno of Russomanno & Borrello in Miami told jurors the plaintiffs were wealthy and sophisticated businessmen who should have realized, had they read the contract, that Trump was not the developer.
He especially targeted Goodson, a tax attorney and accountant who took on a failing technology company, Crest Ultrasonics, and turned it into a multimillion-dollar success.
Goodson, 73, was no stranger to contracts and had been involved in creating more than 20 patents and 25 real estate transactions, Russomanno said. When it came time to buy a luxury residence for himself, Goodson didn’t read the contracts or refer them to his attorney.
“If there’s any fault, we start with the plaintiffs themselves,” Russomanno said.
The contracts were signed in 2005 “when the market was rocking and rolling,” Russomanno said, and the investors gave no thought to the possibility of a crash.
The crash was so devastating that it forced a stop to the tower and helped bring down the project’s lender, Corus Bank of Chicago, Russomanno said.
He referred to the prospectus, the property report and condominium agreement, highlighting how the legal documents said SB Hotel Associates LLC was the developer and Trump was the licensor of the tower at 551 N. Fort Lauderdale Beach Blvd.
Taking the witness stand, Goodson said Trump’s name appeared 72 times in the promotional brochure he received. It did not say that SB Hotel Associates was the developer, but it described the project entities as a team assembled by Trump, he said.
The brochure highlights a Trump quote, “It is with great pleasure that I announce my latest development.”
Plaintiffs attorney Elizabeth Lee asked Goodson if the brochure ever said Trump’s involvement was limited to the role of licensor, and Goodson said no.
CFLB LLC bought the unfinished Trump tower Dec. 19 from Corus Construction Venture LLC and obtained a $120 million purchase and construction loan to complete the project. The hotel component will be under Hilton’s Conrad brand.