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Longboat Key Wednesday, Sep. 2, 2009 8 years ago

Colony disputes foreclosure

by: Kurt Schultheis Senior Editor

Colony Beach & Tennis Resort Chairman and owner Dr. Murray “Murf” Klauber is disputing Bank of America’s foreclosure suit, which alleges he and seven of his corporations have defaulted on three loans, which total $8.02 million in outstanding amounts.

In a motion to dismiss filed June 17 in the Sarasota County 12th Judicial Court, Colony attorney Charles Bartlett claims that Bank of America is attempting to take several loans and lump them into one foreclosure count in an effort to foreclose “everything against everybody.”

The motion to dismiss states that “the bank cannot foreclose all property of all defendants when the security for the debts is not consistent and the loan documents do not support such an action.”

The foreclosure suit, filed April 23, in Sarasota, alleges that Klauber and seven corporations controlled by him have been in default of loan covenants and payments since October 2007.

The suit says the bank notified Klauber twice at the end of 2007, on April 23, 2008, and on Dec. 18, 2008, that he and the corporations were in default. In the December letter, the bank said the balances due “were being accelerated.”

The bank filed its foreclosure suit shortly before Klauber and his lawyers began arguing in federal bankruptcy court in Tampa that the Colony’s unit owners owed the resort about $14 million in unpaid association fees for the resort’s upkeep and maintenance.

The federal bankruptcy court did not rule in favor of The Colony last month.

The bank’s response to the motion to dismiss, filed June 30, states that “the loan documents speak for themselves and clearly provide that the borrowers pledged all of the collateral under all of the loan documents as security for three loan notes, all of which are cross-defaulted.”

In the original foreclosure complaint, Bank of America lists collateral on the three loans as The Colony Dining Room restaurant; The Monkey Room bar; tennis shop Le Tennique; a locker-room unit; meeting-room unit; two hotel penthouse units that make up Klauber’s office and living quarters; the beachfront, three-bedroom Vagabond unit; the tennis courts, walking trails and swimming pool; and “all income and profit of every kind from the mortgaged property.”

According to the foreclosure complaint, Bank of America says Klauber and his companies are past due on three loans totaling $6,434,464.50 in principal outstanding amounts. An additional $1,593,837.60 is due in interest, which is being assessed at 18% and at a rate of $3,271.23 per day.

Court documents show the loans date back to March 1995, when Klauber and four of his companies borrowed $4.2 million from Republic Bank. In the 14 years since, the loans have been revised and assigned to Bank of America.

Moulton said the three loans in question date back to March 1995, when the Colony underwent extensive renovations on the outside of its separate condo-unit buildings. Court records show the loans and lines of credit were modified in 2005, with the consolidated, total loan amount of $6.8 million.

The court will rule on whether The Colony’s motion to dismiss will be granted or not at a special hearing held before Magistrate Deborah Bailey Monday, Oct. 5, at the Lynn Silvertooth Judicial Center, in Sarasota.

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