A feud following a sale of an oceanfront Hillsboro Beach hotel ended with mixed results, as the Los Angeles man who claimed the deal was the result of a con job was awarded $3.5 million, but the sale itself was upheld.

Development firm BH3 bought the Seabonay Beach Resort for $13.5 million in April 2017 from Oceanside Mile LLC, which comprised individuals and firms that collectively owned the property through the limited liability company.

Arturo Rubinstein sued two business partners the following month, saying the deal wasn’t legitimate because he, as the majority owner of seller Oceanside Mile, never approved it. According to Rubinstein’s second amended complaint, partners Sharona Yehuda and Yoram Yehuda secretly forged his signature on records so that he lost his 50.5% ownership in Oceanside Mile, then sold the property.

Rubinstein sued the Yehudas and others, including companies and individuals who split the remaining 49.5% interest in the resort. He also sued the buyer, BH3, seeking rescission of the sale and to quiet the title in favor of the seller.

BH3 won a ruling that upheld the sale, but others fared with mixed outcomes.

After a jury heard testimony in a seven-day trial, U.S. District Court Judge Kathleen Williams in Miami on Aug. 12 issued a directed verdict for the two LLCs BH3 used to buy the property, saying they are the rightful owners.

Buyers’ attorney Christopher Smart hailed the judgment, saying the buyer knew nothing of the dispute between the Yehudas and Rubinstein, and bought the resort legally.

“Our clients had nothing to do with this whole long history between members of this limited liability company. They are just professional real estate developers,” said Smart, a Carlton Fields shareholder in Tampa.

The trial continued, and on Thursday the jury directed Sharona and Yoram Yehuda to each pay part of a $3.5 million verdict to Rubinstein. A verdict form wasn’t available by deadline, but attorneys for the Yehudas and Rubinstein confirmed the verdict.

Rubinstein’s attorney, Barry Postman, said the verdict was for $1.5 million in compensatory damages and $2.5 million in punitive damages with a $500,000 offset.

“While disappointed that the judge issued a directed verdict in favor of the buyer defendants, Mr. Rubinstein takes solace the jury realized that the Yehudas stole his property and awarded him both compensatory and punitive damages,” Postman, partner at Cole, Scott & Kissane in West Palm Beach, said in an email.

As for the Yehudas, their attorney, Baker McKenzie partner William Roppolo in Miami, declined addressing the verdict specifically.

“We respect the jury’s time commitment and effort. This was clearly a difficult matter to decide as evidenced by the four days of deliberations,” he said.

The minority owners of Oceanside Mile also won on several levels. In her November order, Williams dismissed unjust enrichment counts Rubinstein had levied. In July, she granted summary judgment in their favor on other counts.

What Happened? 

Exactly what happened between Rubinstein and the Yehudas and which one was the true resort owner depends on whom you ask.

Oceanside Mile bought Seabonay, at 1159 Hillsboro Mile, for $10.45 million in 2007.

According to filings by both sides, Sharona and Yoram Yehuda owned 50.5% of Oceanside Mile. The couple didn’t own the interest outright but through another entity of theirs, The Keshet Inter Vivos Trust.

The remainder of the resort was owned by The Mayo Group LLC, which had 33%, and Orit Maimon and Bridge to the Future LLC, each of whom had 8.25%, according to court filings.

Oceanside Mile took a $6.5 million loan due in October 2013.

The Yehudas couldn’t pay off the loan or refinance because they didn’t have good credit and turned to Rubinstein for help, he said in his second amended complaint. They transferred their ownership to a company headed by Rubinstein, Fab Rock Investments LLC, to use his good financial standing to refinance.

Stonegate Bank in October 2014 issue a loan, but it was $1 million short of what was owed. Rubinstein said he put in $500,000 to help bridge the gap and after that, the Yehudas started working to secretly take back the majority ownership.

The ownership transfer was “temporary,” just so the Yehudas could refinance, and it wasn’t a giveaway to Rubinstein of a property they already had invested millions in, they said.

“The Yehudas did not forfeit their considerable capital contribution and ‘gratuitously’ assign their majority stake in the hotel,” write Roppolo, the Yehudas’ attorney.

It’s Rubinstein who wanted to oust his long-time friends and take their resort, all by pretending that he is temporarily taking over their ownership but then refusing to step away, the Yehudas argued.

“Rubinstein had successfully manipulated his close friends, agreeing to a temporary transfer of Oceanside’s ownership while simultaneously laying the groundwork for fake claims of fraud,” Roppolo said, “so he could later disclaim the temporariness of the assignment and seek to steal the Yehudas’ interest in Oceanside, along with the millions of dollars they invested along the way.”

The Yehudas also denied that Rubinstein contributed money to the hotel and paid the loan.

From buyer BH3′s perspective, this dispute is irrelevant.

All that matters is who was registered as the Oceanside Mile manager when the deal closed, and that was Sharona Yehuda, meaning the sale was legitimate, said Smart, the buyers’ attorney.

BH3 is renovating the currently closed resort and will reopen it early next year.