HOUSTON (CN) – The owner of Amigo Adventures tour company claims an attorney he hired to stop a condo development next to his property in Mexico took $800,000 in legal fees from him, with no result, then won a $42 million judgment against him in a phony Mexican arbitration proceeding.
Jon Shirley and his company Amigo Adventures sued Eric Coufal Diaz Garcia and his company Ajijic Investments, in Federal Court.
Defendant Coufal is an Austrian citizen who lives in Guadalajara and Houston, according to the complaint.
Shirley says in his 35-page complaint: “In April 2004, Amigo acquired certain residential property and a home on the Bahia de Banderas (Bay of Flags), in the State of Nayarit, Mexico … Because of the location of the home, and applicable provisions of Mexican law, the home cannot be owned by a foreign person or controlled or entity directly.”
After its revolution of 1910-17, Mexico, jealous of centuries of interference from its northern neighbor, strictly limited foreigner’s ability to own land, particularly near the coasts. Misunderstandings about Mexican law, and its judicial system, have led to repeated lawsuits over the years from U.S. citizens who thought they were buying land in Mexico, or leasing it on long terms.
Amigo says its home is owned by Mexican bank trustee Banco Mercantil del Norte. “In 2006, a third-party developer began constructing a 7-story condominium project immediately adjacent to the home,” according to the complaint. “The construction of the condominium project included drilling tiebacks underneath the home without permission or easement rights, and excavation work that undermined the foundation and adjacent support for the home. As a result of these activities, the home was damaged.”
Amigo says it hired Eric Coufal Diaz Garcia in November 2008 to get an injunction to stop the condo project.
Amigo says Coufal represented himself as licensed to practice law in New York, and a “regular practitioner of law in New York and Texas,” but says it learned later that “Coufal is not licensed to practice law in either New York or Texas.”
The complaint states: “Beginning in December 2008, and pursuant to the original agreement, Coufal instituted a number of judicial and administrative proceedings on behalf of the trustee for the home in Mexico against the neighboring condominium development and various government agencies. … Amigo’s trustee issued a limited power of attorney to Coufal to prosecute the Mexican proceedings.”
Amigo claims that without saying a word to it, Coufal entered into a services agreement, allegedly on its behalf, to hire Mexican attorney Jose Campirano Marin to help with the litigation.
Campirano is not a party to this complaint.
“The Services Agreement is a direct violation of the original agreement between Coufal and Amigo,” Shirley says. “The original agreement between Coufal and Amigo expressly provided that any associate attorneys used by Coufal were to be retained at Coufal’s expense but this new services agreement purported to make Amigo directly responsible for payments to Marin and others.
“Coufal did not inform Amigo or Shirley of the services agreement or obtain the approval or Amigo or Shirley to enter into the services agreement on Shirley’s behalf. Coufal’s limited power of attorney from Amigo’s trustee did not authorize him to enter into contracts requiring the trustee, Amigo, or Shirley to separately pay for such services.”
Shirley says he met with Coufal in April 2009 for a status review of the case, at which time Coufal billed him for $647,000 in legal fees, which “far exceeded the maximum of $180,000 provided for in the original agreement.”
Shirley says that when the case stalled out in Mexico, he expressed concern about the “unsubstantiated expenses” for which Coufal was billing him.
“Coufal claimed that the legal system in the State of Nayarit was corrupt and to blame for the unexpected amount of time it was taking to get an injunction against the developer,” the complaint states.
Shirley says he met Coufal again in Houston in September 2009 to discuss the case, and Coufal did not tell him about hiring another attorney for the case.
Meanwhile, Shirley says, Coufal’s charges kept skyrocketing, and by February 2010, he claims, Amigo had paid Coufal more than $800,000.
Shirley says Coufal’s bungling of the case caused the Mexican government to bring a criminal defamation claim against him (Shirley).
“On February 8, 2010, a summons was delivered to the home in Mexico requiring Mr. Shirley to appear for questioning by Mexican government officials in a criminal defamation investigation by the prosecutors for the State of Nayarit, Mexico,” according to the complaint. “Subsequent investigation revealed that the criminal defamation claim against Shirley is based on statements made on a website created by Coufal about the condominium development adjacent to the home. Shirley was not involved in the development of the website’s content.”
Amigo says that though Coufal’s legal work was ineffectual, Coufal tried to change the fee agreement from a contingency basis, and demanded $50,000 a month for 6 months, plus a separate lump sum of $256,444 – a total of $526,000.
“As of March 2010, the Mexican proceedings had failed to stop construction of the neighboring condominium project or cause any part of it to be torn down,” the complaint states. “Coufal told Shirley of his lack of success and began filing appeals and ‘amparo’ writ proceedings to try and overturn the adverse decisions. Coufal now claimed that the losses were not unexpected and that although recent developments appeared to be a setback, his strategy was still moving forward and would be successful.
An amparo is a standard, wide-ranging writ in the Mexican justice system, a request for protection.
By this time, Shirley says, Coufal claimed his associate attorneys had racked up more than $2 million in legal fees, in addition to the $880,000 Amigo had already paid him under the original agreement.
“Shirley refused to continue under any arrangement other than the existing contingent fee agreement,” the complaint states. “He also refused to make the requested additional payments. The records in Mexico indicate that no trials, hearings or discovery occurred during the relevant period Coufal allegedly incurred over $2 million dollars in legal fees; Coufal had simply filed some review proceedings because he had been largely unsuccessful in the various actions he had initiated.”
Shirley claims that due to Coufal’s slippery ways he hired the Mexican office of U.S. law firm Baker & McKenzie in June 2010 “to secure a full understanding of the status of the Mexican Proceedings.”
Shirley says Coufal did not respond to Baker & McKenzie’s requests to review documents in the case. And he claims Coufal carried out the coup de grace by bringing an arbitration proceeding against Amigo and its trustee, in the name of Coufal’s Panama-based company, Ajijic Investments.
“Neither Coufal, nor the ‘honorary’ arbitrator, nor the arbitration agency that managed the arbitration, and which Coufal conveniently controls, informed Amigo or Shirley of the arbitration,” the complaint states.
It adds: “The arbitrator issued an award in favor of Ajijic on September 27, 2010. The arbitrator purportedly found Amigo liable to Ajijic for over $42 million. In addition, the arbitrator purportedly found Shirley jointly liable, despite the fact that Shirley was not a party to any of the agreements at issue.”
Amigo says the arbitration award, which Coufal did not tell it about, authorizes the transfer of its home to Ajijic, and authorizes Ajijic to sell it.
Shirley says he sued Coufal in Houston Federal Court in December 2010, alleging fraudulent inducement and breach of fiduciary duty, before he knew about Coufal’s “fabricated arbitration proceedings in Mexico.”
He claims the U.S. court granted Amigo and Shirley default judgment against Coufal on June 9, 2011, finding the parties’ contingent fee agreement was valid, and binding, and that he owed Coufal nothing.
But since winning the Mexican arbitration award, Shirley says, Coufal has tried to enforce it several times through legal maneuvers in Mexico.
Shirley says they are now he is selling the home in Mexico that started the whole mess.
“Despite the fact that there are multiple potential buyers interested in purchasing the home, the fraudulent arbitration award and Coufal’s ongoing attempts to enforce that award are interfering with the sale of the home,” the complaint states.
Shirley seeks a declaration that the $42 million arbitration award is not valid in the United States, and an injunction to stop Coufal from taking further steps to enforce the award.
He also seeks damages for breach of fiduciary duty, fraud, conspiracy, tortious interference and unfair business practices.
He represented by Charles Stinneford.
On its website, Florida-based Amigo Adventures says: “AA is committed to offering Responsible Tourism. We create hand-crafted and fully customized journeys to match your interests.”