CHINESE CO. DROPS $160M SUIT AGAINST BECKER & POLIAKOFF
Law360, Miami (October 10, 2017, 8:03 PM EDT) — A Chinese real estate investor walked away from a $160 million malpractice suit against its former attorneys at Becker & Poliakoff PA after a Florida federal court hinted at sanctioning the company for failing to produce requested documents.
U.S. District Judge William P. Dimitrouleas dismissed the legal malpractice claims against Becker & Poliakoff on Friday after the law firm and Tangshan Ganglu Iron & Steel Co. Ltd. filed a joint stipulation of dismissal. The suit had claimed the law firm caused Ganglu to lose millions on a Florida shopping mall property.
Earlier on Friday, Ganglu’s attorney had called to ask if Becker & Poliakoff would agree to assume its own costs of the litigation if Ganglu dropped the claims, the law firm’s attorney Robert Critton told Law360.
“I got the phone call from the plaintiff’s attorney, and within an hour, the stipulation was filed,” Critton said. “The settlement is the plaintiff dismissed this case and didn’t receive a dime from us. They walked away without receiving a dime.”
A magistrate judge last month had ordered Ganglu to show why sanctions should not be imposed for failure to produce 10 years’ worth of the company’s audited financial statements.
Lawrence Kellogg, who represents Ganglu, said the company made a decision not to proceed with the litigation, “which is a decision that was best for all the parties involved.”
Ganglu had argued that Becker & Poliakoff and its former attorney Pamela Anselmo, now with Hinshaw & Culbertson LLP, helped minority owner Wei Chen shut Ganglu and its founder, Zhen Zeng Du, out of the project to redevelop the former Plantation Fashion Mall in Plantation, Florida, even though the firm purported to represent all of their interests.
Du is the majority owner of Mapuche Holdings LLC, the entity formed to oversee the Plantation Fashion Mall redevelopment.
The May 2016 complaint alleged that Chen convinced Du to invest in the mall, helped the investor form Mapuche in November 2004 and encouraged him to deposit more than $10 million in the company during the next year to cover its initial investment in the property’s development of housing, offices and shopping.
Ganglu alleges, however, that Chen put that money into US Capital Holdings LLC, a holding company he indirectly controlled.
US Capital was the sole member of US Capital/ Fashion Mall LLC, which was organized to purchase, own and operate the mall, according to the complaint.
Becker & Poliakoff began representing Chen, Mapuche and related entities in 2005, and Ganglu claims that after it and Du got involved in the project, the firm and Anselmo represented their interests as well.
After US Holdings and US Capital/Fashion Mall defaulted on the loans that had been taken out to purchase the property in February 2007, Chen asked Du to become the project’s sole investor, fund the development and retire the loans, according to the complaint.
Ganglu said that by 2010, it had advanced more than $100 million to Mapuche for the mall’s redevelopment, but that the firm and Anselmo drafted documents that destroyed Ganglu’s control over the project.
The project ultimately ended up in bankruptcy as Chen unilaterally filed voluntary Chapter 7 liquidation petitions for all three of the related entities.
Ganglu asked a Florida bankruptcy judge to convert the liquidation into a Chapter 11 reorganization, but the request was denied in February 2015. Encore Housing Opportunity Fund won the auction for the mall property the next month with a $37.7 million bid.
Ganglu is represented by Lawrence A. Kellogg and Jezabel P. Lima of Levine Kellogg Lehman Schneider & Grossman LLP.
Becker & Poliakoff is represented by Robert D. Critton Jr. and J. Chris Bristow of Critton Luttier & Coleman LLP.
The case is Tangshan Ganglu Iron & Steel Co. Ltd. v. Becker & Poliakoff PA et al., case number 0:16-cv-61031, in the U.S. District Court for the Southern District of Florida.
–Additional reporting by Alex Wolf. Editing by Nicole Bleier.