Jury Awards Real Estate Investor $3.5 Million in Shareholder Dispute
According to reporting from The Real Deal, a jury has awarded a California real estate investor named Arturo Rubenstein $3.5 million in financial compensation for damages that he suffered in a shareholder dispute.
The award came after the jury determined that his shareholder rights were violated when he was improperly “muscled out” of a multimillion dollar commercial real estate transaction that involved a Broward County hotel property.
The Dispute: Sale of the Seabonay Beach Resort in Pompano Beach, Florida
The dispute in this case centers around the sale of Pompano Beach’s Seabonay Beach Resort. In 2017, that large hotel property was sold by a company called Oceanside LLC to another company named BH3. According to the shareholder lawsuit filed by Arturo Rubenstein, he was initially brought into this project in 2012 — when Oceanside LLC still owned the hotel property. His claim was solely against Oceanside LLC.
Among other things, Mr. Rubenstein claimed in his lawsuit that he guaranteed a $6.5 million loan that was used to help finance the purchase and renovation of the hotel property. In exchange for this financial contribution, Mr. Rubenstein, and his company, were allegedly given a 50.5 percent ownership stake in the hotel property. Eventually, the project went into bankruptcy and Oceanside took action to remove Mr. Rubenstein from the ownership group.
The Verdict: Shareholder was Improperly “Muscled Out”
Mr. Rubenstein filed a lawsuit alleges that the sale between Oceanside LLC and BH3 was improper and should be rescinded. The case was heard by the United States District for the Southern District of Florida. Upon reviewing the evidence, the court denied part of Mr. Rubenstein claims, but also granted another part of it — including awarding him financial damages.
The court determined that the owners of Oceanside LLC did attempt to take advantage of Mr. Rubenstein and his company. While the jury determined that recission of the transaction between Oceanside LLC and BH3 — a company that was not in any way involved in the shareholder dispute at issue in this case — was inappropriate, it did grant Mr. Rubenstein significant compensation.
In fact, the jury verdict included not only $1.5 million for compensatory damages, but also an additional $2 million for punitive damages. Also called exemplary damages, punitive damages are designed to punish the bad actions of parties. In this case, a Florida jury awarded punitive damages on the grounds of unjust enrichment. In contract law, unjust enrichment occurs when one party receives a benefit that is deemed to be improper. Unjust enrichment claims are highly complex — they must also be assessed on a case-by-case basis.
Speak to Our Florida Shareholder Dispute Attorneys Today
At Pike & Lustig, LLP, our West Palm Beach shareholder & partnership disputes lawyers have the skills, training, and experience required to represent clients in the complete range of shareholder disputes. To learn more about our commercial litigation attorneys can help you, please contact us right away. We handle shareholder disputes in West Palm Beach, Miami, and throughout the region.