US court dismisses fraud lawsuit against RE/MAX

An aerial view of the business area of downtown George Town, Grand Cayman
An aerial view of the business area of downtown George Town, Grand Cayman. – Photo: Chris Court

An American federal district court has thrown out a lawsuit alleging fraud against Cayman Islands real estate brokerage firm RE/MAX after a judge found the matter could not be properly heard in that jurisdiction.

According to records filed with the U.S. District Court in the Northern District of Illinois [Chicago], the joint official liquidators of a company named Caribbean Island Developments Ltd. and a number of its investors alleged RE/MAX and individual defendants defrauded 30 people out of more than US$5.6 million. The suit alleges the defendants did this by selling them luxury condos on Grand Cayman in a development which was never built.

Attorneys for RE/MAX, its broker/owners Kim Lund and James Bovell, one of its agents Oliver De Hart, as well as developer Michael Beggs, denied all claims filed in the lawsuit, which they stated were “without merit.” They argued the case in Illinois should be dismissed essentially because it was brought to an improper venue, namely the United States.

Mr. Lund said last week that a similar allegation had already come to court in Cayman years ago and was dismissed in 2014 due to the plaintiff’s failure to provide security for costs. The U.S. lawsuit was filed in 2015.

U.S. District Court Judge Andrea Wood agreed with the defendants’ position in an opinion issued Oct. 11.

“The entire dispute centers on a Cayman Islands company, a Cayman Islands franchise, and the project on Grand Cayman, and at least some of the claims are governed by Cayman Islands law,” Judge Wood wrote. “There is no reason for such a dispute to be litigated in the Northern District of Illinois.”

In going through the arguments made by the parties in the case, Judge Wood noted that none of the primary parties to the claim and only one of the witnesses involved resided in the Northern District of Illinois.

Moreover, she said it appeared that the attempts to bring a similar claim in Cayman had failed, partly due to the Caribbean Island Developments Ltd. investors’ decisions indicating that they were not willing to contribute toward funding a Cayman lawsuit.

The decision to dismiss the claim was made, the court stated, without prejudice to the joint liquidators acting on behalf of the investors to pursue claims in another “more appropriate forum.”

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