Coral Gables Developer Gets Another Shot in Case Against Real Estate Tycoon Ugo Colombo
Shoma Group won its appeal on a breach-of-contract claim against Colombo over a failed 10-story condo-retail project.
July 23, 2020 at 03:15 PM
4 minute read
Developer Masoud Shojaee will get another go at his breach-of-contract claims against Miami real estate powerhouse Ugo Colombo in their dispute over a failed Coral Gables joint venture.
The Third District Court of Appeal reversed the trial court's decision in favor of Colombo and his Gables Investment Holdings LLC on claims by Shojaee's Shoma Group. The three-judge panel upheld other judgments in favor of Colombo and Gables Investment, notably on Shoma's claim of breach of fiduciary duties.
Judges Fleur Lobree wrote the opinion for a unanimous panel issued Wednesday with concurrences from Judges Kevin Emas and Vance Salter.
Shoma Group, a Coral Gables-based developer of high-end real estate, and Gables Investment partnered in 2013 on a 10-story condominium-retail project with a basement garage on 2.8 acres south of Bird Road between Salzedo and Aurora streets.
They formed Coral Gables Luxury Holdings LLC with Shojaee and Colombo as equal partners. Coral Gables Luxury that year acquired four lots plus an adjacent 10,000-square-foot parking lot.
Shoma and Coral Gables Luxury attorney Raoul Cantero, a partner at White & Case in Miami, said he is "pleased" with the partial reversal.
"The appellate court recognized that my client has viable breach-of-contract claims against both Ugo Colombo and his company for unilaterally shutting down their joint development project. We look forward to litigating those claims and finally getting some closure," Cantero said by email.
He worked on the appeal with firm partner David Draigh and senior associate Zachary Dickens.
Colombo and Gables Investment attorneys John Crabtree and Charles Auslander, partners at Crabtree & Auslander in Key Biscayne, didn't return a request for comment by deadline. They worked on the case with associate Brian Tackenberg.
Shoma sued Gables Investment, Colombo and his luxury car dealership The Collection, which is next door to the proposed Gables project, in 2016. Shoma followed up with a derivative complaint on behalf of the failed partnership's Coral Gables Luxury limited liability company.
Hall, Lamb, Hall & Leto partner Matthew Leto filed both complaints in Miami-Dade Circuit Court.
Shoma maintains the two sides couldn't agree on the sale price of the development's retail space and garage to Colombo's The Collection LLC. Colombo and Gables Investment wanted to pay $17.4 million, much less than the previously estimated $37 million sale price.
The Collection had expanded sales and needed the garage to park its vehicles, but the price difference amounted to The Collection buying the real estate at its construction cost without taking into account land and contingencies, the complaints said.
The Collection wanted to buy the property at $500 per square foot, less than the $700 per square foot estimate supported by an independent appraisal obtained by Coral Gables Luxury, according to Shoma's second amended complaint in the 2016 suit and an amended complaint in its 2017 suit.
Shoma claimed Colombo and Gables Investment embarked on a "bad faith scheme" to "sabotage" the project over the price dispute by shutting down the residential sales office and project marketing, dismissing real estate agents and skipping a meeting meant to address project issues.
Colombo and Gables Investment denied the allegations and in a counterclaim cited provisions from a 2013 operating agreement to support its position.
Colombo and Gables Investment also claimed it actually was Shojaee who wanted to "sabotage" and "undermine" the project because of financial restraints following his divorce and with the "malicious intent" to harm Colombo.
The Collection offered $17 million for the retail segment and garage because it wanted to satisfy a pre-sales condition for a pending project EB-5 loan, attorney Kevin Kaplan wrote in the counterclaim.
Kaplan, president of Coffey Burlington in Miami, represented Colombo, Gables Investment and The Collection in the trial court. Counsel changed in 2018 to Jesse Dean-Kluger.
Miami-Dade Circuit Judge William Thomas granted Gables Investment's motion for judgment on the pleadings in both cases, issuing a final judgment in its favor and dismissing the case with prejudice.
In their filings, Gables Investment and Colombo argued Shoma's breach-of-contract allegations were insufficient, but the appellate panel disagreed.
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