Colony appeal rulings favor Klauber

A federal bankruptcy appeals court judge has ruled in favor of longtime Colony Beach & Tennis Resort owner Dr. Murray “Murf” Klauber, who appealed August 2009 bankruptcy rulings that eventually led to the eradication of his hotel partnership with the resort’s 232 unit owners and forced him to close his 45-year-old resort.

Tampa-based U.S. District Judge Steven D. Merryday, in two orders released Wednesday night, reversed the actions and rulings made by U.S. Bankruptcy Judge K. Rodney May. This forces the parties (Klauber and longtime Colony General Manager Katie Moulton; and the Colony Association, made up of the unit owners) to attend an Aug. 11 hearing and a future mediation session to determine how to move forward.

In essence, Merryday sided with Klauber on the fundamental argument Klauber has had against the Colony Association: Klauber has always maintained the association was required to pay for repairs and make assessments to keep up the common elements of the property.

The association disagreed, which led Klauber to file an April 2007 lawsuit seeking $14 million from the association; that started years of legal battles that led to the resort’s closure in August 2010.

Merryday cites in his appeal ruling that the association was still liable to make assessments to the property’s common elements, even if it voted not to pay for two separate emergency repair assessments  that cited storm damage from hurricane seasons.

Klauber has maintained since the rulings were issued that May incorrectly interpreted the hotel partnership’s documents and the association still had to assess the unit owners for repairs even though its board rejected two previous assessments.

Merryday states several times in his appeal rulings that “the bankruptcy court erred” and went above and beyond in its rulings when it ruled to dissolve the partnership and rule that unit owners who made their units available for hotel use didn’t need to pay assessments.

Both sides had differing opinions on what the rulings meant.

Klauber and Moulton released a joint statement to the Longboat Observer, expressing that they felt vindicated by the appeal rulings.

“The orders speak for themselves and obviously vindicate our operation of the Colony Beach and Tennis Resort and our claims against the association,” the release states. “Sadly, the Colony was closed wrongly, as we claimed from the start of the legal disputes. We are eager to hear the decision on remedies to us as a result of the reversals, and are committed to continuing our efforts toward a rehabilitation of the Colony.”

Colony Association President Jay Yablon declined comment, but sent an email to unit owners Thursday, calling the rulings “disappointing” but “not final.”

“These non-final rulings do not deter the association from continuing forward with our efforts to revitalize the Colony,” Yablon wrote. “If anything, the remedy that the judge suggests in his ruling to get the Colony fixed is exactly what we have been intently focused upon already.”

Attorneys for both sides are still reviewing the 59 pages of rulings that were released and declined to comment on the ramifications of the rulings.

For more information, pick up a copy of the Aug. 4 Longboat Observer.

Contact Kurt Schultheis at [email protected].