February 8, 2018 – Waldman Barnett continued its successful representation of Privé Developers last week, leading to a $26 million jury verdict in favor of the developer against Williams Island Property Owners’ Association, Inc. The jury found that the Association violated a recorded covenant from 1982 that prevented any objection to development on two islands in Dumfoundling Bay on the Intercostal Waterway in Aventura. The jury agreed that the Association’s own lawsuits and its encouragement of others to protest the building of Privé at Island Estates was a breach of contract for which Privé suffered $26 million in additional financing costs, carrying costs and related expenses. The verdict was covered by the South Florida Business Journal, The Real Deal Miami and the Daily Business Review and Law360.
In addition to the $26 million award, Williams Island Property Owners’ Association, Inc., must pay interest in an amount that has not yet been determined but is estimated to range from almost $4 million to $6 million.
During the seven-day trial that led to the jury’s decision, the Waldman Barnett litigation team, led by co-managing partner Glen Waldman, presented evidence that the 1982 agreement prevented homeowners on neighboring islands from objecting to development on the private island where the two, 16-story towers of Privé stand today. “Neither guy would interfere with one another’s development plans they had on the islands,” Waldman explained about the terms of the agreement. “They also would not encourage or participate with others to object. It is that simple.” Nevertheless, the Williams Island HOA filed a first lawsuit challenging Privé in 2013 and encouraged the neighboring Island Estates Homeowners Association also to sue to challenge the high-rise project. Ultimately three lawsuits were filed directed to stopping the construction of the project.
According to Waldman Barnett co-managing partner Eleanor Barnett, while those lawsuits were pending, the developer was forced to obtain vulture funding at a high interest rate in place of a conventional loan for a project that met all of the metrics in terms of loan-to-value ratios and with contracts already in place. The developer had to pay about $21 million more in interest than what a traditional loan would have required, a sum reflected in the damage award.
As the court battle raged on, “Buyers were scared,” Waldman said. “Brokers testified that they wouldn’t even go to the project. Privé should have sold out two years ago.” Waldman led a team of Waldman Barnett lawyers that included partners Eleanor Barnett and Jeffrey Lam.
A significant decision by Miami-Dade Circuit Court Judge William Thomas seven months ago cleared the way for this trial against the Williams Island Association and the January 30 verdict. Judge Thomas eliminated the complaints by Williams Island and Island Estates regarding the underlying development rights on statute of limitations grounds. He ruled the associations were too late to challenge the development rights that had been in place since 1976 and were affirmed by the City of Aventura in 1999 and in a recorded document from 2006.
The ultimate winners are Waldman Barnett’s clients Privé Developers, Gary Cohen whose father entered into the 1982 covenant, and BH3, as well as Privé’s owners.
“My clients have been wrongfully attacked from all sides for so long,” said Glen Waldman, co-managing partner and lead attorney for the developer. “They feel vindicated that a jury listened to the evidence, got it right and ordered substantial damages against the people who caused harm to the project.”
Despite the litigation, the 160-unit development, where unit prices start at $2.3 million, is 75 percent sold out. It opened in early January. “People are moving in,” Waldman said. “We’re looking forward and not looking back.”
Pending Related Lawsuit
In another case related to the neighbors’ consistent challenges to the Privé project, the Third District Court of Appeal on January 24, 2018, ruled that a lawsuit for slander of title against the board members of the South Island Homeowners’ Association could proceed. These board members engaged in a variety of misconduct to try to thwart the Privé project from being constructed and tried to dissuade potential buyers by telling them that the project would never be built. The lawsuit demonstrates how their actions hurt sales and the marketability of the project. Now a jury will determine what those individuals should have to pay.