Related Group Delays Are Irking Judges

(This story, in slightly different form, originally appeared in ALM’s Daily Business Review.)

MIAMI-For months, lawyers for condominium buyers have complained that Related Group is improperly delaying litigation over deposits. Now judges have joined the chorus, accusing the giant developer of dragging its feet and ignoring a court order.

Related, one of the largest condo developers in the country, is defending lawsuits involving more than 1,000 purchase contracts. In most cases, the buyers failed to close following the meltdown of the condo market and they are trying to get their deposits back. Under federal law, buyers in condos with more than 99 units are entitled to any money they put down in excess of 15% of the purchase price.

In one recent order, Miami-Dade Circuit Judge Peter Adrien said Related ignored his order to refund a portion of deposits to a group of buyers in the 1,796-unit Icon Brickell project in Miami. In another order, Judge Lynn Gerald Jr., a circuit court judge in Lee County, cited Related’s legal delays.

“Through [the] entire case, the defendant has constantly missed dates on which they were supposed to file and/or filed something at the last minute just apparently to delay the proceeding,” Gerald wrote in an order denying Related’s motion to vacate his ruling. “It is clear that the defendant has failed to establish excusable neglect.”

Related is appealing both orders. Betsy McCoy, vice president and associate general counsel for the Related Group, says she is “deeply offended” by the judges’ orders and said the problems they cite are isolated cases.

“Do you think I would risk my reputation for the Related Group when I’ve got 22 years of experience as an AV-rated lawyer? There are legitimate reasons for these defenses,” McCoy says.

Gerald didn’t buy Related’s reasons for delaying responses and then seeking to vacate a judgment in a case involving a dispute over a $132,000 pre-construction deposit on a unit in the 240-unit Oasis Tower 2, a Related project in Fort Myers. Peter Huy, the attorney representing the two buyers in that suit, says there is a pattern in Related’s actions.

“You can see a complaint is filed, then they file a notice of appearance to avoid default, then they file motions for enlargement of time, then the day before the hearing they file an answer or something else to avoid a judgment,” Huy says. “When they are hit with a judgment they file a motion to vacate and even after that is denied they still don’t return the money.”

Huy says he has a hearing in two weeks to compel a title company holding deposits in escrow to release the money to his clients. Related has appealed the case and claims the money should remain in escrow until the dispute is resolved. McCoy calls it an isolated case caused by “service issues.”

“That case had to do with logistics,” she says. “We didn’t receive the paperwork that was served by the council. The mail was going to the wrong place. That order is outrageous. It was a procedural error on our side and I think [the judge] went way overboard on his findings and I don’t think the 2nd [District Court of Appeal] is going to agree with him.”

Related has also “chosen to ignore and intentionally violate” orders to release partial deposit refunds to buyers, according to an order by Adrien in the case involving Icon Brickell. The court gave Related 10 days to return escrowed deposits exceeding 15% of the purchase price. The contracts say buyers are entitled to refunds exceeding 15% of the purchase price if they default on the contract.

Since the order was issued in December, Related has returned money to about 41 buyers, says attorney Robert Cooper, who is representing the buyers of 150 units in the case who have paid a total of about $23 million in deposits.

Cooper says Related refuses to return money to about 102 buyers who received letters of default after August, claiming the order only applies to buyers who defaulted before August. Related also says it cannot return money to seven buyers because there are discrepancies in the spelling of their names on the contract and the lawsuit. “They are still playing games and are simply ignoring the court order,” Cooper says.