Compagnie Des Garanties: Mr. Mottola, Where Are You Now That We Need You?
I had all but forgotten about the above Mr. Mottola and then, a couple of weeks ago, I received an email from an off-plan buyer who, back in 2003, thought he had secured an apartment at the development Jardin Tropical, built by Larios 2000, a company that subsequently filed for insolvency (funny enough, in the middle of the property boom!).
Sinister Mr. Mottola is the guy behind Compagnie des Guaranties, a fraudulent insurer operating off a flat at Alberto Aguilera Street, in Madrid, that boasted assets in Spain enough to guarantee hundreds of deposits on off-plan property developments. Several years later we find out that the most substantial assets they could boast was 1 premier-quality-multi-function-digital-colour Photocopier Printer Scanner and Fax.
As it happened, when this buyer tried to enforce his bank guarantee/insurance policy these guys had disappeared, the monies lost and the acting lawyers, let’s call them LF (Law Firm), who should have ensured that the guarantee/policy was fully valid end enforceable when the time arrived, began to pull funny faces.
Below is my response email to this enquiry:
Dear XX
I am writing regarding your previous email in respect of a proposal for legal action against LF and Caser Seguros which is, by default, the insurer currently covering all lawyers registered with the Malaga Law Society. As per our conversation, where I indicated the high probability that LF’s actions, or omissions in this case, caused you to lose the deposit, it would be, in this respect, possible to bring an action against them.
There is substantial case law in the matter, and, prior to me searching individually for court rulings from our electronic database, I have gone through a short cut and obtained an article written by a colleague pertaining to the matter. Most of these relate to careless or negligent actions when representing a client in Court, and a few others on non-contentious legal representation (non-litigation cases).
The basis of a claim against LF has to be based on the obligation that LF had, when representing you in purchasing a property, to ensure that the bank guarantee you had was legal and enforceable. This, in principle, could have easily been established by checking with the (Direccion General de Seguros). Our firm did pick up on this when we received our first fraudulent policy, and we published it in our website belegal.com and devwatch.com, forcing the developer Arenal 2000 to suspend the issuing of these.
Already others sites had picked up on this as early as September 2003, which is only a few months after LF represented you in the transaction, and which would objectively point to a grave professional negligence, with the result of monetary loss, for with a minimum due diligence carried out by LF it would have easily been detected that your money was at serious risk.
Aside from the above, LF should have, or could have, known full well that these documents were illegal because:
- Nobody had ever heard of them, particularly in the legal business.
- They were registered with the General Directorate of Insurance as being fraudulent.
- They looked, on the face of them, highly suspicious, and were printed off with cheap printers (we have several of these documents in our offices and the ink falls off them we ease).
- When calling the company, based in some small flat in Alberto Aguilera Street (Madrid), a Spanish-speaking Italian person would take the call, make a note and promise to call back (which he never did).
- Not once did they honour payments on a claimed bank guarantee.
All the above may have been known by LF only after representing you in the purchase, and hence they could resort to saying that it was not possible to have known then that this fraudulent entity was being used by certain not-so-solvent developers (and who presumably did not get proper guarantees for this reason). The reality, however, is that, with a minimum due diligence, any lawyer (and I even think than any layman with a cynical outlook) could have detected the fraud and prevented it. LF was processing contracts like a fast-food restaurant.
I would imagine that LF has not even reported this company to the police or the courts, nor has attempted to find remedy with their insurers to mitigate, if not totally, at least partially, the damage caused by their grave error.
The Spanish Supreme Court has established that a lawyer, not unlike doctors, architects or other professionals, have a obligation to carry out the task they have agreed to with an optimal execution, which presupposes an adequate professional preparation and entails a correct compliance with the entrusted job so that if it is not executed or it is improperly executed a full or partial contractual default of the professional’s obligations will occur.
Similarly, the Supreme Court has established that the obligation of a lawyer is not one of “result” but of “means”, which means that LF did not have an obligation to ensure, by way of searches and due diligence, that the development would be finished on time or at all, but certainly did have an obligation to ensure that, should the development not be completed, your deposit would be safe, which would have happened had LF carried out the instruction correctly.
In relation to professional indemnity insurance, the Malaga Law Society has signed a policy with the insurer Caser to cover losses of up to €600K per case. I am part of this insurance and presumably LF will be so as well, irrespective of other policies they may have taken out.
Since then we have found out that Compagnie des Guaranties has an address and accountants in London (30 City Road EC1Y 2AB and Arram Berlyn Gardner, respectively), files proper accounts, but, as expected, Mr. Mottola is never available. This evasive behaviour, coupled with the closing of the Madrid branch and, not the least, his inability to ever provide insurance services in Spain, as per the DGS (General Directorate of Insurance) ban, could be construed as a punishable offense with jail, for it is clear, if nobody else remedies it, that some hundreds of off-plan purchasers could have lost their deposits forever, as a direct result of this fraud.