$1.3 million lawsuit against city headed to arbitration

A circuit court judge ordered non-binding arbitration Monday to try to resolve a lawsuit between the city of Cape Coral and two real estate professionals who claim the city owes them a $1.3 million commission.

The suit flows from the city’s 2012 purchase of hundreds of acres of property for $13.1 million from Thiemann Enterprises. Real estate broker Jim Boback and Paige Rausch filed the lawsuit two years ago.

A hearing was held Monday in front of Circuit Court Judge Keith Kyle on a request from Boback and Rausch to declare the city liable. Kyle declined to do that.

The defendants, First National Bank of Pennsylvania and the city, asked Kyle for a summary judgment to end the case. He said he’d reserve judgment on that motion and send the case to nonbinding arbitration. He gave them 90 days to reach a settlement.
If you can’t agree on an arbitrator one will be appointed, Kyle told the attorneys.

“Frankly this should have been sent to some sort of alternative dispute resolution prior to now,” Kyle said.

Much of the hearing focused on whether Rausch was eligible for a commission as her real estate license was inactive when she got involved in the sale. It was reactivated in the course of events that culminated in the foreclosure auction of the land.
“She was not licensed when she presented it to the city. There is no retroactive activation,” said bank attorney John Strickland.
Jason Holtz, a Real estate Lawyer with Holtz, Marshie, Decosta attorneys at Law in Ft. Myers, Boback and Rausch’s attorney, told Kyle the bank and the city knew his clients wanted compensation for their roles in the purchase.

“All of the parties in this transaction knew that Boback was not doing this as an act of charity,” Holtz said.

He acknowledged, however, that there was no formal contract providing for a commission. But Holtz said real estate sales involving foreclosures and an auction can move quickly and are not always as formal as other real estate sales.

Strickland also noted that Rausch testified during depositions that she did not have any written authorization from the bank to represent it.

Rausch and Boback claim the city didn’t pay them for their services, according to the lawsuit. Those services included bringing the availability of the property to the city’s attention, negotiating the purchase and advising the city on how to participate in the auction for the land. They claim in the suit that the property was worth more than $17 million at the time, so they saved the city more than $4 million on the purchase.

During Monday’s hearing, Holtz said the property was worth more than $20 million.

*Article written by Don Ruane of CapCoral.com.