Ruben Socarras featured in Daily Business Review front-page article – Auction Error Ends With $1.5M Tab for NonbuyerMay 27, 2016
Samantha Joseph, Daily Business Review
Maybe it was the speed of the auctioneer’s prattle, the thrill of bids rising in $100,000 increments or the rush to snag a multimillion-dollar mansion at a discount, but the buyer with a NASCAR pedigree mistakenly thought it scooped up two beachfront estates for $6.2 million.
Haas Automation Inc. now faces a steep loss after Miami-Dade Circuit Judge Jacqueline Hogan Scola ruled the company forfeited a $1 million deposit by failing to close on the sale for twice what it thought it owed. Haas also is liable for another $486,500, including nearly $237,500 in interest, more than $224,400 in attorney fees for the sellers and auctioneer, and about $24,600 in cost courts.
The company linked to NASCAR team founder Gene Haas is one of the largest machine tool builders in the world, according to its website. The company sent Palm Beach general contractor Albert Wadsworth to bid on its behalf at a 2011 auction of two oceanfront mansions at 401 and 229 Ocean Blvd. in Golden Beach.
The homes belonged to retired cardiologists, brothers Robert and Steven Fox, and their spouses, who listed the estates for $11.5 million and $12.9 million, respectively.
Wadsworth was the highest bidder in a rapid-fire process that sealed his $6.2 million offer as the highest during the sale by Fisher Auction Co. He thought the offer covered both mansions.
The sellers insisted Wadsworth participated in a high bidders’ choice auction, which gave the first winner the chance to walk away with both properties — but at double the price.
Wadsworth balked and refused to close, leaving the Foxes to sell at lower prices to backup bidders.
Instead of $6.2 million for each mansion plus a 10 percent buyer’s premium to be split evenly with Fisher Auction, the sellers got $6 million for the first property and about $4.7 million for the second. The dollar difference on the bids was $1.7 million.
To calculate the loss, the sellers added their share of the buyer’s premium on each property — $310,000 — to the bid to claim an auction sale price of $6.51 million per mansion. They then subtracted the subsequent sale prices and 6 percent real estate brokerage commissions to arrive at nearly $2.5 million lost on both deals.
“Everybody knew the auction fell apart,” said seller’s attorney Eric Isicoff of Isicoff Ragatz & Koenigsberg in Miami. “My two clients sold their homes to people who were not going to pay the high bid.”
Bidding lasted about a minute, but the fallout and litigation over the botched sale spanned nearly five years and shows no signs of cooling as Haas’ lawyers weigh a challenge to Hogan Scola’s findings.
“I expected they would appeal,” Isicoff said. “They fought tooth and nail every step of the way.”
The Foxes and Fisher Auction insisted all marketing material noted the homes would be sold separately, not as a pair, unless the high bidder opted for both.
Each participant deposited $500,000 in an escrow account to qualify to bid on one property or $1 million for the chance to purchase both. Haas deposited $1 million.
“Everybody else in the room understood what the rules were,” Fisher Auction attorney Ruben Socarras of Marshall Socarras Grant in Boca Raton said. Wadsworth “was just inexperienced, in our opinion.”
Haas’ attorneys are Thomas Shahady and John Joseph Shahady of Kopelowitz Ostrow Ferguson Weiselberg Gilbert in Fort Lauderdale. They argued Wadsworth signed a bid acknowledgment form confirming his offer, but Fisher Auction altered the document without his knowledge to add a multiplier.
“They got a pen out and wrote ‘times two’ on it,” Thomas Shahady said. “The case really surrounds that document and the legal meaning of that document.”
Questions about the form and deposit receipt led the Third District Court of Appeal to reverse summary judgment in favor of the Foxes.
Without elaboration, the appellate court issued an unsigned opinion on Dec. 19, 2014, pointing to “genuine issues of material fact” that remained unresolved and precluded summary judgment.
Isicoff suggested Haas’ team seized on that ruling as the basis for its defense and claimed auction staff routinely edit acknowledgment forms to itemize buyer expenses after each sale.
“They didn’t even raise the issue until way into the case. I would call it a red herring,” he said. “At the time the gavel fell, it couldn’t have been clearer that the high bidder took both properties at two times the bid.”
Hogan Scola presided over the case during a two-day bench trial held April 19-20. She heard testimony from nine witnesses and examined a video of the auction before issuing findings of fact in the sellers’ favor May 23.
The tape shows auctioneer Lamar Fisher, who’s also the mayor of Pompano Beach, leading the sale. It runs nearly 32 minutes and shows Fisher providing instructions to participants, taking bids and selecting the winner.
A key segment — the minutes following Wadsworth’s winning bid — shows the audience break into applause and multiple conversations while Fisher continued to explain the terms of the purchase.
“He takes them both,” the auctioneer said, his voice sometimes drowned out by audience chatter. “Auction’s closed, everybody.”