DeWaay and partners can’t collect on Florida real estate deal
DeWaay and partners can’t collect on Florida real estate deal
By Kent Darr
The Iowa Court of Appeals has ruled that West Des Moines investment adviser Donald DeWaay and two partners in a Florida condominium cannot collect $81,000 in capital calls they covered for a fourth partner, Greater Des Moines builder Steven Dallenbach.
The deal involved an attempt to buy, renovate and sell an upscale residence in Destin, Fla., on the state’s Gulf Coast. DeWaay and Dallenbach formed a partnership in 2005 along with two out-of-state businessmen who were brought into the deal by DeWaay.
The four men bought a condominium for $1.6 million, with DeWaay contributing $50,000 in earnest money and all four men contributing $100,000 each. The balance of the loan was provided by Wells Fargo & Co., according to the court record. Dallenbach acted as the contractor. They also obtained a $400,000 line of credit from Legacy Bank.
However, the deal soured in the face of a collapsing real estate market that was aggravated by hurricane winds that battered the Gulf Coast between 2006 and 2008, according to the appeals court ruling.
As his construction business faded, Dallenbach was unable to meet capital calls for loan payments and construction and repair costs on the Florida property. DeWaay suggested at one point that Dallenbach should use his retirement fund to cover his share of the deal, according to the court record.
Dallenbach offered to transfer his interest in the condominium via a quit claim deed. Instead, the other partners filed a lawsuit in Polk County District Court claiming breach of contract.
Polk County Judge Artis Reis ruled in Dallenbach’s favor in October 2010, noting that the partnership agreement did not specify how any of the partners would recoup their expenses in the event any or all of them defaulted on their obligations.
Reis also declined an effort by DeWaay’s attorneys to dismiss two counts of the original lawsuit, saying it would allow DeWaay and his partners to file a separate lawsuit in the event the property sold for less than the partners had invested.
The appeals court said Reis erred in that ruling, saying that the partners had a right to file a separate lawsuit to collect any deficiencies remaining, whenever the property might be sold. The court also ruled that Dallenbach could not collect $36,000 in attorney fees accumulated in fighting the lawsuit.
The Iowa Court of Appeals has ruled that West Des Moines investment adviser Donald DeWaay and two partners in a Florida condominium cannot collect $81,000 in capital calls they covered for a fourth partner, Greater Des Moines builder Steven Dallenbach.
The deal involved an attempt to buy, renovate and sell an upscale residence in Destin, Fla., on the state’s Gulf Coast. DeWaay and Dallenbach formed a partnership in 2005 along with two out-of-state businessmen who were brought into the deal by DeWaay.
The four men bought a condominium for $1.6 million, with DeWaay contributing $50,000 in earnest money and all four men contributing $100,000 each. The balance of the loan was provided by Wells Fargo & Co., according to the court record. Dallenbach acted as the contractor. They also obtained a $400,000 line of credit from Legacy Bank.
However, the deal soured in the face of a collapsing real estate market that was aggravated by hurricane winds that battered the Gulf Coast between 2006 and 2008, according to the appeals court ruling.
As his construction business faded, Dallenbach was unable to meet capital calls for loan payments and construction and repair costs on the Florida property. DeWaay suggested at one point that Dallenbach should use his retirement fund to cover his share of the deal, according to the court record.
Dallenbach offered to transfer his interest in the condominium via a quit claim deed. Instead, the other partners filed a lawsuit in Polk County District Court claiming breach of contract.
Polk County Judge Artis Reis ruled in Dallenbach’s favor in October 2010, noting that the partnership agreement did not specify how any of the partners would recoup their expenses in the event any or all of them defaulted on their obligations.
Reis also declined an effort by DeWaay’s attorneys to dismiss two counts of the original lawsuit, saying it would allow DeWaay and his partners to file a separate lawsuit in the event the property sold for less than the partners had invested.
The appeals court said Reis erred in that ruling, saying that the partners had a right to file a separate lawsuit to collect any deficiencies remaining, whenever the property might be sold. The court also ruled that Dallenbach could not collect $36,000 in attorney fees accumulated in fighting the lawsuit.
Trending News
