As reported in the South Florida Business Journal, prominent Miami developer, Richard Meruelo, has filed suit against Ocean Bank seeking $9 million in damages after he and his family members were hit with foreclosure actions.
As our attorneys previously discussed, many banks have taken a very aggressive approach to this very prominent family and their many real estate projects. In the latest chapter of their ongoing legal saga, Mr. Meruelo filed suit against Ocean Bank alleging that Ocean Bank should not have loaned $12.4 million dollars to them to buy land in Golden Beach while then turning around and refusing to give him a construction loan. The Golden Beach property is now under foreclosure, with Mr. Meruelo listed as a guarantor.
This latest lawsuit alleges that Mr. Meruelo’s family had more than $130 million in loans on multiple projects with Ocean Bank dating all the way back to 1984. However, Mr. Meruelo, and his family, including his brother, Homero F. Meruelo, have been hit with numerous foreclosure lawsuits over the last two years. That includes an ongoing fight with a different bank that pulled the financing on renovations that were underway with the Grand Bay Hotel in Coconut Grove, and a fight to enforce a settlement agreement regarding that case.
“As the relationship grew, Ocean Bank exerted increasing influence over the investment activites of the Meruelo family,” the complaint alleges. “Over time, Ocean Bank exercised control over their investments because it could unilaterally restrict credit or refinance or extend terms of existing loans.”
It turns out that back in 2006, Mr. Meruelo informed Ocean Bank of his plan to purchase two lots in Golden Beach, divide them into three lots and build beachfront homes on them. Ocean Bank executives visited the site, and approved the purchase of the lots. As a result, Mr. Meruelo purchased the Golden Beach lots for $17 million, including a $12.35 million loan from Ocean Bank.
According to the Complaint, Ocean Bank had agreed to fund future construction costs estimated at $12 million, and this was agreed upon before the deal closed. However, the Complaint alleges that Ocean Bank violated internal policies, which requires that construction financing be in place before lending on vacant land. Moreover, it is also alleged that Mr. Meruelo never would have purchased the property if Ocean Bank had not agreed to make the construction loan.
In May 2008, Ocean Bank agreed to a modified cease and desist order with regulators that severely restricted its construction lending and ordered it to get tougher on problem loan. Like many banks that agreed to such orders, Ocean Bank was prevented from extending or renewing credit to borrowers with troubled loan.
This case is further illustration of the problems many individuals are in today because their bank failed to live up to its obligations. If you are in a similar situation, or if you feel short changed by your bank, please contact our office to discuss your options.