The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent Bahamian realtor’s $432,000 legal claim over the sale of a multi-million dollar Eleuthera investment project has survived a US developer’s bid to strike it out.

George Damianos, pictured, president and managing broker for Damianos Sotheby’s International Realty, is alleging he was cut out of efforts to sell the Windermere Island North development despite an agreement giving him the “sole and exclusive right” to market and sell the property.

He is claiming that BISX-listed Bank of The Bahamas, which hired him to help realise its mortgage security over the property, effectively went behind his back and - without his knowledge - negotiated directly with US investment house, CrossHarbor Capital Partners, in agreeing a sale that was completed by early 2018.

A March 25, 2021, judgment by acting Supreme Court justice, Tara Cooper-Burnside, reveals that Mr Damianos is claiming the $432,000 as his 6 percent realtor’s commission that is due under the exclusive listing and sales agreement. Based on those figures, Windermere Island North’s sale to CrossHarbor was a $7.2m transaction.

The verdict, which also saw the judge refuse to dismiss CrossHarbor Capital Partners as a defendant, noted that the Lyford Cay-based realtor is claiming the buyer and Bank of The Bahamas - together with Windermere Island North’s original developer, Joseph Carry Rich - conspired in a bid to exclude him from the transaction as means to avoid paying his commission.

Mr Damianos declined to comment when contacted by Tribune Business on the basis that the matter is still live before the Supreme Court, and the substantive hearing on the merits of his case has yet to take place.

Still, the interlocutory verdict by acting justice Cooper-Burnside details the fate of one of the first foreign direct investment (FDI) projects to be approved by the first Christie administration after it took office in 2002.

Bank of the Bahamas provided financing to Mr Rich, a US citizen, via a 2003 loan that was secured on the Windermere Island North property through a mortgage and debenture charge. The sum advanced to fund the project’s build-out was increased in 2005, but the original developer subsequently defaulted on the repayment.

Last week’s judgment disclosed that Bank of The Bahamas agreed not to collect on the loan after Mr Rich signed a promissory note and gave a guarantee it would be repaid. However, it appears this was only a temporary respite.

“The bank subsequently became entitled to exercise its power of sale under the mortgage and debenture,” acting justice Cooper-Burnside wrote. “It entered into a listing service agreement with the plaintiff [Mr Damianos] for these purposes. 

“The listing agreement provided, among other things, that the plaintiff would have the sole and exclusive right, power and authority to act as the bank’s agent for the listing, marketing and sale of the property. The bank would pay the plaintiff a commission of 6 percent of the sales price plus VAT if a sale of the property was completed, and the terms of the agreement would be effective for the period June 6, 2016, to June 5, 2017.

She added: “Sometime after May 2017, the plaintiff discovered that the bank had conveyed the property to CH Windermere Lender LLC, and had sold, assigned and transferred the debt due [by Mr Rich and his company] under the loan, the security documents and all powers, rights and remedies contained in the security documents to the LLC.”

CH Windermere Lender LLC is the acquisition vehicle employed by CrossHarbor Capital Partners, a Boston-headquartered commercial real estate asset manager that was founded in 1993. Its website says it has offices in Chicago and Los Angeles, and boasts of a $21bn “investment track record”.

Mr Damianos, alleging that Windermere Island North’s conveyance to CrossHarbor Capital Partners represented a sale under his exclusivity agreement, initiated legal action demanding that he be paid his 6 percent commission as stipulated in the agreement.

He claimed that the first he knew of the sale was when Damianos Sotheby’s Eleuthera-based agent, Johnathan Morris, was contacted on March 28, 2018, by Eric Christensen of CrossHarbor Capital Partners requesting that Windermere Island North be removed from the realtor’s website because a deal had been closed.

Besides naming Bank of The Bahamas as a defendant, the realtor also included Mr Rich and his investment vehicle as well as the buyer’s acquisition LLC. CrossHarbor Capital Partners, though, said it had “no knowledge” of Mr Damianos’ exclusivity agreement while confirming that it had begun negotiating with the BISX-listed bank a month before that expired in May 2017.

CrossHarbor Capital Partners agreed to acquire Bank of The Bahamas’ interest in the loan secured on Windermere Island North on September 22, 2017. It alleged that the latter said no real estate brokerage commissions were to be paid in relation to the sale.

Denying that it conspired with the other parties to cut Mr Damianos out, and therefore save on his commission, CrossHarbor Capital Partners also rejected claims that itself and Mr Rich “induced” Bank of the Bahamas to breach the listing agreement.

CrossHarbor Capital Partners and its acquisition vehicle argued that the latter should be struck out as a defendant because Mr Damianos’ claim “fails to disclose a reasonable cause of action”, alleging only vaguely that they combined with Mr Rich to influence Bank of The Bahamas to breach the listing agreement.

Giahna Soles-Hunt, CrossHarbor Capital Partners’ attorney, described Mr Damianos’ claim as “fanciful and speculative”, arguing that it lacked specifics on the acts her client was alleged to have committed. 

While agreeing that the claim “does not clearly set out the basis upon which the plaintiff alleges a conspiracy to cause him loss”, acting justice Cooper-Burnside said Mr Damianos’ case raised issues that were fit for trial and she thus rejected CrossHarbor Capital Partners’ strike out bid.

The US investment house also alleged that Mr Damianos’ claim was “frivolous or vexatious and/or otherwise an abuse of the process of the court”. Samuel Byrne, its managing partner, alleged in affidavits that CrossHarbor Capital Partners and its executives were unaware of the exclusive listing agreement, and denied that he worked with Mr Rich to cause its breach.

The CrossHarbor Capital Partners chief said he became aware of Mr Rich’s travails on Windermere Island via “a mutual acquaintance”, and initially discussed refinancing the project on a private island on Eleuthera’s Atlantic coast that was used by Prince Charles and the late Princess Diana for their 1981 honeymoon. The island has also played host to other wealthy and celebrity homeowners.

Mr Byrne also said the deal with Bank of the Bahamas was structured as a loan purchase to save on costs and enable CrossHarbor Capital Partners to “retain priority”. Mr Damianos, though, voiced doubts about the US developer’s protestations of innocence on the basis that the listing agreement required all interested buyers to be referred to it.

“The plaintiff believes the defendants, including the LLC, knowingly conspired to circumvent him and intentionally structured the transaction under then guise of a ‘transfer’ in an attempt to assist the bank in avoiding its obligations under the listing agreement to pay commission to him and/or for tax benefits for both the bank and the LLC,” Mr Damianos alleged.

Ms Soles-Hunt argued that there was no evidence to show CrossHarbor Capital Partners participated in a conspiracy, or that it was aware of the listing agreement and its terms, but acting justice Burnside said this was not sufficient reason for striking out the claim against it.