Plaintiff attorney Robert A. Stok, of Stok Folk & Kon (J. Albert Diaz)
Former partners who lost about $1 million on a Doral project after the housing market collapse came out on the losing side again — this time against the man who’d brought them into the deal in the first place.
Investors Avra Jain, Paul Cashman Murphy and defunct H-H Investments LLC were defendants in a February 2009 suit by former business associate Abraham Cohen, who alleged they owed him more than $4 million for his stake in a failed real estate venture. They lost at trial, and most recently before a state judicial panel, when the Third District Court of Appeal ruled largely in their opponent’s favor on April 19.
Cohen claimed the group agreed to pay $5 million for his 20.3 percent membership interest in Blueview LLC, a company developing a luxury condominium project near a landmark Trump-branded property. He alleged they contracted in June 2007 and paid $950,000, but stopped paying in 2008 — right around the time the housing bubble burst.
The defendants’ pleadings suggest the timing was no coincidence. They filed a counterclaim with allegations of their own: the seller saddled them with a failing development that ultimately reverted to the mezzanine lender. They claimed their former partner lied about the project’s viability to induce their participation, then misrepresented his exit.
“Cohen breached his fiduciary duty by failing to disclose the material facts regarding the CK sales,” Jain, Murphy and H-H Investment argued. “[He] took unfair advantage of Murphy and Jain, and failed to act” in their best interest. They demanded compensatory damages, pre- and post-judgment interest, court costs and attorney fees.
“Essentially in order to try to evade the debt, we were beset with an avalanche of fraud claims,” said plaintiffs counsel, Robert A. Stok of Stok Folk & Kon in Aventura. “It was a real battle between the power and effect of contract law versus the ability to raise tort claim defenses.”
Cohen beat back the accusations, claiming he liquidated his stake in the partnership to cover a family member’s emergency medical expenses.
“Even if he felt that the market was caving and he felt it was time to sell, they thought it was time to buy. And they are big boys,” Stok said. “If they had a positive view and our client had a negative view of the market and they shook hands, then that was the deal.”
Jennifer Olmedo-Rodriguez, Richard A. Morgan and Matthew J. Feeley of Buchanan Ingersoll & Rooney represented Jain, Murphy and H-H Investment.
With both sides claiming heavy losses, it was up to the courts to decide.
In January, Miami-Dade Circuit Judge Jacqueline Hogan Scola entered a nearly $8.2 million final judgment in Cohen’s favor, including nearly $4.1 million in principal, about $174,800 in interest from June 2007-May 2008 and nearly $4 million more in interest through January.
On appeal, Cohen argued he was entitled to a bigger payday. He sought review of a portion of the judgment, arguing for compounded instead of simple interest.
But the Third DCA refused the argument, affirming the circuit court decision.
“It’s really a cautionary tale because no matter how strong your contracts are, they’re only as good as the person with whom you’re contracting,” Stok said. “In truth, even though our client ultimately won the case and he is going to be made whole, he still was deprived of his money for years.”