Maria Drummond approached Marc Puleo with an offer to purchase Marc’s Miami Beach residence for $13 million. Marc believed that Maria intended to reside at the property with her family. Consistent with this representation, Marc agreed to sell the residence fully furnished.
In reality, Maria was a straw buyer. Edmund Irvine, a real estate developer and Maria’s domestic partner, forged her name on the contract. Edmund did not intend to live at the property. Rather, his plan was to demolish the residence and flip the land.
Marc learned of Edmund’s involvement a few days before Closing, when a Settlement Statement identified Edmund as the authorized member of the LLC used to take ownership of the property. Regardless, the Closing proceeded.
Edmund’s entity listed the property for resale two months after Closing. Within a year, Edmund resold it for almost $16 million – a $3 million profit.
On learning of the resale, Marc asserted litigation. The basis of the claim was that the parties misrepresented both the true identity of the buyer and intended use of the property. And that had Marc known, he would not have sold it or minimally would have substantially increased the pricing.
Although the trial court found evidence of misrepresentations, the showing of justified reliance, materiality, and damages were insufficient. So Marc appealed when judgment was rendered for the defendants.
When the Appellate Court led with “In fraud cases, summary judgment is rarely proper,” Ed must have known he was in trouble. It didn’t get better for Ed when the Court continued with “justifiable reliance is not a necessary element of fraudulent misrepresentation.”
The Court concluded that Marc was entitled to rely on Maria’s misrepresentations that she was purchasing the property with the intent to reside there with her family, unless he knew the representation was false or its falsity was obvious to him. Since it appears that Marc was never placed on notice that the intended use was redevelopment and resale, it is reasonable to assume that Marc relied on the representations to his financial detriment.
Consequently, the Appellate Court bounced this case back for a full trial on the misrepresentation and fraud issues. If not resolved through settlement or bankruptcy, Marc Puleo will have his day in court. See Puleo v Cohen, 3rd District Court of Florida, Case No. 3D24-0586, March 11, 2026: https://law.justia.com/cases/florida/third-district-court-of-appeal/2026/3d24-0586.html.
My thoughts:
Perhaps I’ve led a sheltered life. Maybe. But I don’t recall seeing a claim against a Buyer alleging damages due to Buyer’s misrepresentations. In fact, my world is opposite. Buyers are constantly formed (new entities created) to shield the identity of the actual principal, as well as the principal’s intent to flip the contract, demolish the buildings, and change the use even though all of these may be detrimental to the Seller.
In my orbit, if Sellers want to protect themselves from these events then they say as much in their contracts. Contractual provisions can prohibit assignments, development and change in use, as well as prohibit use of the property in such a manner that diminishes value from adjacent properties also owned by the same Sellers or their affiliates.
Presumably Marc’s contract had none of these guardrails. But that’s on him – shouldn’t Maria and Ed be allowed to do whatever is lawful, if Marc failed to adequately protect himself with appropriate contractual provisions?
Stuart A. Lautin, Esq.*
* Board Certified, Commercial and Residential Real Estate Law, Texas Board of Legal Specialization
Licensed in the States of Texas and New York