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Sheets Hit The Fan In Hotelier's Latest Flap

By Forrest Norman

In the latest legal troubles facing developer Robert Falor, attorneys for a Miami linen vendor have asked a judge to order Falor to return $230,000 in deluxe bed sheets and comforters he ordered for the Royal Palm Hotel in Miami Beach.

The linen vendor's attorneys claim that Falor's Royal Palm Hotel Property LLC never paid for the linens but now is using these luxury items as an inducement for potential buyers of Royal Palm hotel-condominium units.

Attorneys Mac Phillips and Alfonso Perez asked Miami-Dade Circuit Judge Maria Espinosa Dennis to force the hotel, which is owned by the Falor Cos, to return linens that their client, Daniel Tuaty, claims was delivered and never paid for.

Tuaty, of Ty Ty & Ty Inc., wants the linens returned even before the judge rules on the merits of the case. A hearing on the issue is scheduled for Sept. 6.

"The reason we have taken this extraordinary step is that we think the goods are in the process of being sold to unsuspecting customers," Phillips said.

As proof, he cited sales literature for Royal Palm Hotel units that Falor converted and tried to sell as condo units. The sales literature describes 300-thread-count Egyptian cotton linen and down comforters, the same type of items Tuaty provided to Falor.

"If these types of goods are used even once, they're no longer useful to us," Phillips said. If the judge orders return of the linens before ruling on the case, Tuaty likely would have to post a sizable bond as collateral.

In an interview Monday, Falor, who is represented by attorney Glenn Widom in the lawsuit, said he'd be happy to return the linens because they are of inferior quality. "When we ordered it, the specs called for Egyptian cotton," Falor said. "After we got it we had independent lab tests done to prove that what we were billed for wasn't what we got. This was made in China."

Falor said he personally can attest to the poor quality of the sheets. "This is a true story, so help me, God," he said. "I literally stayed overnight [at the Royal Palm Hotel] and slept on the sheets and I turned over and literally got a burn, like a rug burn on my elbow. True story. I swear on my children."

Falor said he has been trying to return the linens. "The stuff's all been boxed up waiting for them to pick it up," Falor said. "We've told them to come pick it up."

Tuaty's attorneys disputed Falor's assertions about the quality of the linens and Falor's attempts to return them. "This is all news to me," Phillips said. "My client confirmed that all of Mr. Falor's statements were absolutely false. If the goods had been made available for us to pick up, why would we file a motion with the court asking for them?"

Phillips said an affidavit from Crown Linen, the company that received the linens for the hotel, disproves Falor's claim that the goods were of poor quality. In the affidavit, Crown Linen plant manager Jorge Suarez says that the linens were inspected and that there was no objection to the quantity or quality of goods received.

"The goods received were as ordered," Phillips said. "As far as the rug burn, I'm not going to touch that."

Robert Falor and his Chicago-based Falor Cos. arrived in South Florida three years ago touting ambitious plans to renovate glamorous but fading hotel properties and convert them into hip condominium-hotels.

The Falor Cos. has taken the public lead in the conversion and operation of projects including the Royal Palm, the Tides, Breakwater and Edison hotels in Miami Beach and the Mayfair Hotel in Coconut Grove. The Falor Cos. acquired the Royal Palm for $128 million.

The Falor Cos., which is owned in trust by the Falor family, including Robert, his father, David, his brother, Chris and their current and former wives, has amassed a nationwide portfolio that Robert Falor and his firm currently value at $1 billion. Of those assets, 65 percent are in South Florida.

But the Daily Business Review reported in May that since the Falor Cos. arrived in South Florida, litigation filed by partners and investors has mounted in the local state and federal courts. In civil lawsuits, the Falor Cos. has been accused of mismanagement, theft, fraud, embezzlement and overcharging hotel customers' credit cards.

A Standard & Poor's report released Aug. 2 cited Falor's stalled conversion plans at Royal Palm as an example of the troubled hotel-condo conversion market. The report revealed that Falor missed a July loan payment for the Royal Palm hotel.

Last October, the broker in the Royal Palm deal, Dianna Cheng, sued Falor personally in Miami-Dade Circuit Court for breach of contract. According to the suit, Falor claimed he was strapped for cash, borrowed $500,000 from fees owed to Cheng to close the deal and gave her a promissory note. On the $500,000 loan, Cheng alleges, $300,000 remains unpaid.

Forrest Norman can be reached at fnorman@alm.com or at (305) 347-6649.


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