Colony Lender files foreclosure suit against owners

Colony Lender LLC filed a lawsuit against Colony Beach & Tennis Resort unit owners Friday, seeking to foreclose on units at the shuttered Colony Beach & Tennis Resort. In the lawsuit, filed in the U.S. District Court’s Tampa Division, Colony Lender states it is owed more than $5.1 million in damages. Although it filed a notice of voluntary dismissal Tuesday, Colony Lender will refile the identical complaint in state court due to jurisdictional issues, according to Colony Lender principal David Siegal.

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

When the Colony was operational, unit owners paid $650,000 annually for use of the tennis courts and other recreational properties at the property to longtime owner Dr. Murray “Murf” Klauber and other leaseholders.

Colony Lender argues that it owns both a 95% interest in the land and the lease, a claim that the Colony Beach & Tennis Association denies, arguing that Colony Lender owns only real property at the resort. The association also argues that the Florida Legislature outlawed agreements such as the recreational facilities lease in 1975.

The suit lists 174 defendants, representing all owners of the 237 units at the shuttered resort — except for Siegal, who owns two units.

Approximately nine owners agreed to sell their units to Orlando-based Unicorp National Development Inc., which has an agreement to purchase Colony Lender’s resort assets. Those owners will be dropped from the suit, according to Siegal.

“I would expect there will be a number of defense lawyers talking to us, and I would expect ... being able to reach resolution with some and not with others,” he said.

Chapter 7 Bankruptcy Trustee Douglas Menchise filed a motion last month seeking sanctions against Colony Lender LLC. The motion states that when Colony Lender asserted it controls the recreational facilities lease, it violated a bankruptcy stay imposed by a judge.

“The filing in the complaint will be forcefully responded to as a further violation of the bankruptcy stay that Colony Lender and the other parties seem to be ignoring,” said association attorney Jeff Warren.
Colony Lender’s attorneys insist the stay does not exist.

KEY PLAYERS
These five individuals are key to any resolution of legal issues surrounding the Colony Beach & Tennis Resort.

Andy Adams
Adams and his entities, including Colony Beach Investors Inc. and Breakpointe LLC, own 71 units, or approximately 30% of units on the property. Because future development plans and/or settlements could require approval of 75% of unit owners, Adams will play a key role in the resort’s future.

Adams’ Breakpointe LLC also owns a 5% interest in the recreational property.

David Siegal and Randy Langley
Colony Lender LLC principals David Siegal and Randy Langley purchased overdue bank loans on resort property including an 80% interest in the 2.3-acre recreational property, from Bank of America in 2010 for a rumored $4.5 million, followed by a 15% interest in the 2.3-acre property.

It received a judgment of more than $14.3 million in a foreclosure trial in September 2013. It placed the winning bid of $15,200,001 in July to become 95% owner of the recreational property and 100% owner of the other properties.

Chuck Whittall
Chuck Whittall’s Orlando-based Unicorp National Development Inc. has an agreement to purchase Colony Lender LLC’s resort assets for an undisclosed price.

Attorney Michael Assaf, who represents Colony Lender and Unicorp, described Unicorp as “the power behind Colony Lender,” during an Aug. 21 hearing before U.S. Bankruptcy Judge K. Rodney May.
Whittall said he plans to invest $445 million to build a new, five-star resort on the property and met with five commissioners last week to discuss his plans.

Jay Yablon
Jay Yablon, a Schenectady, N.Y.-based patent trademark and copyright attorney, serves as the voice of most unit owners in his role as president of the Colony Beach & Tennis Association’s board of directors.
He recently described Colony Lender and Unicorp in a letter to unit owners as “bent on trampling over everybody else’s legal rights.”