Stone v. Jetmar Properties, LLC

Keith Hammond (defendant) drafted and signed articles of organization for Jetmar Properties, LLC (Jetmar) (defendant), but failed to file the articles with the secretary of state. Acting as president of Jetmar, Hammond purchased commercial property from Selwin Ortega (defendant). Hammond financed the purchase with a $200,000 loan from Ortega. Hammond then met with Dale Stone (plaintiff), a retiree, and convinced Stone to quitclaim a duplex property to Jetmar, which Jetmar would use to secure financing for a condominium development. In exchange, Hammond promised Stone an interest in the condominium development. Hammond also told Stone that Hammond would deed the duplex property back to Stone, and that Stone could continue to collect rent. Stone quitclaimed the property to Jetmar, and Hammond mortgaged the duplex to Ortega in exchange for an extension on the $200,000 loan. Hammond did not repay the loan to Ortega or deed the property back to Stone. Ortega foreclosed on the duplex property. Hammond subsequently filed Jetmar’s articles of organization and received a certificate of organization. Stone filed suit against Jetmar, Hammond, and Ortega, alleging that Hammond and Jetmar defrauded Stone. Stone argued that Jetmar did not exist at the time of the quitclaim deed on the duplex, and therefore Jetmar was incapable of taking title. Therefore, Stone argued the quitclaim deed was void, that Jetmar never acquired the property, and that Ortega’s mortgage and foreclosure were also void. The court awarded Stone damages and title to the duplex property. Ortega appealed.