Three years after a Palm Beach County jury agreed two South Florida developers defrauded two widows with the help of a prominent attorney who was later disbarred, an appeals court this week threw out a $4 million verdict for the families of the elderly women who died before the case went to trial.
With one judge taking the unusual step of suggesting that the families may be able to seek other ways to punish South Florida developers Arthur and Edward Falcone, the 4th District Court of Appeal said the jury verdict was fatally flawed.
The jury in 2014 found the Falcone brothers, with the help of attorney Michael Masanoff, duped widows Kathleen and Elishka Michael into selling a family-owned Boca Raton cemetery to them for $6.1 million. But even though attorneys representing the Michaels said the sprawling 18-acre cemetery was worth $40 million, the jury said the widows didn’t lose any money in the sale.
Instead, it ordered the Falcones to pay $2 million the widows spent in attorney fees and others costs associated with the sale of the cemetery now known as The Gardens of Boca Raton. It tacked on another $2.2 million in punitive damages, ruling the harm was intentional.
But, the appeals court said, if the Michaels didn’t lose any money on the sale the Falcones can’t be forced to pay the costs the widows incurred. And, the judges said, punitive damages can’t stand alone.
Masanoff, who last year convinced West Palm Beach city commissioners to give him $25 million in tax incentives to build his long discussed $550 million Transit Village near downtown, reached a confidential settlement with the Michaels’ adult children before the case went to trial.
While other attorneys, including well-known Boca Raton attorneys Spencer Sax and Peter Sax, also reached out-of-court settlements with the Michaels, Masanoff was a star witness during the trial. He admitted he accepted a $100,000 payment from the Falcones even though he had represented the Michaels in the sale.
Attorney Michael Avanatti, who represented the Michaels’ adult children, vowed to appeal. “One thing this opinion makes clear is that there’s no question that the Falcones engaged in fraud,” he said. “This opinion serves as an indictment of their conduct.”
The Falcones’ attorney, William Cornwell, disagreed. “The jury found the Falcones acted improperly but it also concluded they didn’t damage the plaintiffs as evidenced by the fact that they put in ‘zero’ for damages,” he said.
While the case is complex, he said the appeals court’s decision is simple: “If you weren’t damaged, you can’t recover anything.”
After the trial, Masanoff agreed to relinquish his law license in connection with his work for the Falcones. The Florida Supreme Court called the step “tantamount of disbarment.”
Appeals Court Judge Alan Forst suggested the Michaels’ families might pursue similar action against the Falcones. “Just as the Bar disciplinary process was utilized to punish the deceptive attorneys in this case, perhaps there is a non-judicial mechanism, outside of our purview, to similarly punish the attorneys’ partners-in-deception, the buyers,” he wrote.
Cornwell said, he wasn’t aware of any professional licenses held by either of the Falcones.
During the trial, they said they spent $15 million turning the cemetery into a luxury complex. They sold it in 2016.