Mediation appeals to both sides in Colony dispute

U.S. District Judge Steven D. Merryday issued three separate rulings Wednesday, Oct. 12, that longtime Colony Beach & Tennis Resort owner Dr. Murray “Murf” Klauber and his daughter, Katie Moulton, hailed as a “great legal victory.”

The judge directed a bankruptcy court to decide whether the Colony Beach & Tennis Association should return possession of units to the Partnership that ran the Colony and recommended that the Partnership receive damages of $7,751,470 or an award of $20,646,312 for the Partnership with no return of units — amounts based on two damage scenarios presented by Klauber’s expert, Dr. Henry Fishkind. Merryday also allowed the bankruptcy court to consider again the Association’s counterclaims for damages against the Partnership.

The judge also remanded the dispute over a recreational lease, which previously allowed unit owners to use the tennis courts when the resort was operating, to bankruptcy court to recommend an amount of damages owed to Klauber and other lessors. But the ruling stated that the bankruptcy court “should not hear argument on either mitigation or offset, for which the Association’s opportunity to argue has passed.”
He also directed both parties into mediation by Dec. 15.

Jeffrey Warren, attorney for the Association, had said that his client would appeal any judgment request for damages to the 11th Circuit U.S. Court of Appeals. He said he wasn’t surprised by Merryday’s latest ruling. And within 24 hours, he filed the notice of appeal.

Although the appeal stays the judge’s rulings, both parties are optimistic that the fate of the Colony won’t be decided in court but in mediation.

“My reaction is that Judge Merryday’s rulings are riddled with legal and factual errors, which we believe would be overturned on appeal,” Yablon said. “It is our expectation that the federal circuit will never get to rule on this end, because we fully intend to reach a global settlement of all the disputes at the Colony long before that would ever happen.”

Put another way:

“No more lawsuits at the Colony,” he said. “We need to clear this out of the way so we can start rebuilding.
Moulton said she wasn’t surprised by the appeal. But she was also hopeful about resolving the matter outside of the courts.

“We believe that the upcoming mediation is the most important thing we can focus on,” she said. “It’s time to resolve this longtime dispute and begin the rehabilitation of the Colony as soon as possible.”

In August 2009, Judge K. Rodney May ruled in favor of the Association, finding the 1984 agreement ultra vivres and the Partnership’s calculations prohibitively speculative. The motion denied the Partnership relief and declared “moot” the Association’s other counterclaims and third-party claims. May converted the Colony Chapter 11 bankruptcy reorganization to a Chapter 7 liquidation, giving the resort’s 232 unit owners complete control of their units. The Colony has been closed since then, but in July, Merryday ruled in favor of Klauber in his appeal of the August 2009 bankruptcy rulings.