Hours of arguments, no rulings in Colony case

U.S. Bankruptcy Judge K. Rodney May didn’t rule Thursday in the Colony Beach & Tennis Resort case.

The judge heard three-and-a-half hours’ worth of arguments, the majority of which focused on whether Colony Lender LLC violated a stay that it insists was not in effect when it sent two demand letters to unit owners seeking more than $5.1 million before filing a lawsuit with 174 defendants last month in the 12th Judicial Circuit Court.

Colony Lender’s suit seeks $4,594,276.40 for accrued unpaid rent plus interest on a disputed recreational facilities lease for the period from Oct. 29, 2008 through Aug. 15, 2014, plus $525,244.82 in unpaid real estate taxes plus interest, and attorney fees.

Attorneys did not have time to finish their arguments by the Tampa courthouse’s 5 p.m. closing time, so May scheduled another hearing for Nov. 12.

Association attorney Jeffrey Warren told May that Colony Lender is only a landowner and has no claim to the disputed lease.

“They got title to the land,” said Warren. “That’s all they were permitted to get.”

Warren asked May to schedule further proceedings to determine sanctions against Colony Lender for violating the stay he says was in effect.

However, Colony Lender attorney Michael Assaf argued that his client’s actions did not constitute a stay violation.

“We have done nothing with the recreation damages claim other than to say we own it,” Assaf said. “That’s not a stay violation.”

Assaf said Colony Lender “has acted as any investor would with respect to pursuing their investment.”

The lease stems from a 1973 agreement between unit owners and longtime Colony owner Dr. Murray “Murf” Klauber in which unit owners paid Klauber and leaseholders $650,000 annually for use of the property’s tennis courts and other recreational facilities on 2.3 acres in the shuttered resort. Unit owners stopped paying on the 99-year lease in October 2008.

The Colony Beach & Tennis Association has argued that the Florida Legislature outlawed such agreements in 1975.

Colony Lender owns a 95% interest in the 2.3-acre property but plans to sell its resort assets to Orlando-based Unicorp National Development Inc.