Judge orders Colony board to fix units

The Colony Beach and Tennis Resort Association must work to get each dilapidated and moldy 237 unit at the shuttered resort habitable again, a Sarasota judge ruled last week.

Sheldon and Carol Rabin, owners of two beachfront Colony units, filed a lawsuit in the 12th Judicial Circuit Court in December 2014, asking Judge Rochelle Curley to rule that the association has been negligent and must restore the buildings and units to their original configuration and usage. 

Sarasota attorney Alan Tannenbaum, who represents the Rabins, argues the condominium association and its board of directors are obligated to maintain and repair units.

Curley agreed with Tannenbaum’s assessment, entering an order May 13 granting the Rabins’ request for injunctive relief. Curley wrote that within 14 days of a final judgment being issued, “Sarasota-based Karins Engineering must be retained by the association to provide an estimate and plan to get each unit habitable, including, but not limited to, mold remediation and pest control … prepare and adopt a budget … and develop a plan to collect current and past due assessments.”

The order states that once a proposal is presented, a hearing may be needed to determine whether assessments can be imposed on unit owners because the units are still considered a grandfathered tourism use. 

Association President Jay Yablon said the association’s Tampa-based attorney, Jeffery Warren, is still reviewing the ruling, which the association plans to appeal in the 2nd District Court of Appeals in Lakeland.

According to court documents, Tannenbaum argued that the Rabins and other unit owners actually own the interior of the buildings, in addition to their ownership of the common elements of the resort property.  The only entity that can undertake repairs to the common elements at the Colony is the condominium association. 

Tannenbaum argues the association is required under its condominium documents to maintain the property and its units, noting that a Karins Engineering report from 2005 called for $50,000 per unit owner to be assessed to fix units and common elements. Those assessments and repairs never happened.

Tannenbaum says the loss of the use of the units, which are now boarded up and uninhabitable, is a direct result of the association’s failure to maintain the units. The lawsuit also states that if the board doesn’t make repairs, it should vote to terminate its condominium association, which would dissolve the association and make each unit owner a direct shareholder in the title of his or her property. 

“The court has upheld the clear mandate of the Florida Condominium Act requiring without exception that repair and maintenance of the common elements of the condominium be undertaken, even in the face of a majority of the owners not desiring to be assessed for it,” Tannenbaum wrote in a statement to the Longboat Observer. “The Rabins have been unable to use their units for going on five years. Hopefully, this decision will lead to their being able to enjoy their units once again come 2016.”

Warren argued in Curley’s courtroom in March that the Colony is not a residential condominium. Instead, unit owners act as investors in a business enterprise that’s operated by a hotel entity. 

“They don’t have rights to do anything with their units,” Warren said. “They can’t live in them.”

Warren believes the Rabins’ lawsuit is an attempt to “shoehorn” residential condominium law into a business enterprise. 

The town, meanwhile, allows no one to enter the mid-rise hotel building due to structural deficiencies and a fire sprinkler system that doesn’t work properly. The association placed a fence around the entire property at the town’s request, and there’s no running water or sewage connected to the buildings.

Asked if existing Colony units in their current state can be rehabilitated to be made habitable again for future occupancy, Planning, Zoning and Building Director Alaina Ray said, “No, I don’t believe so.” 

A February 2014 engineering report of the entire property the town commissioned revealed that all 18 elevated wooden condo buildings on the site have “foundation systems at the end of their functional service life, extreme corrosion of concrete re-bar, rotting wood beams, unprotected windows and detachment of wood members and connectors to balconies.” 

“They (unit owners) don’t have rights to do anything with their units. They can’t live in them.”
– Jeffery Warren, The Colony Beach and Tennis Resort Association’s Tampa-based attorney

 

Judge May issues sanctions

U.S. Bankruptcy Judge K. Rodney May entered his expected sanctions order against Colony Lender LLC and Unicorp National Development Inc. last week.

The May 12 order requires Colony Lender to dismiss lawsuits within 14 days against all unit owners, in which Colony Lender and Unicorp seek more than $5 million in damages for unpaid rent plus interest on a disputed recreational facilities lease. May ruled in March that those letters violated an automatic bankruptcy stay.

May also is requiring Colony Lender LLC principals David Siegal and Randy Langley, along with Unicorp President Chuck Whittall, to write a letter to every unit owner on official company letterhead that includes their names on it, asserting the claims being sought against them are being dismissed. 

And five Colony unit owners who sold their units to Unicorp last year for $20,000 apiece after all owners received demand letters in August telling them they could face millions of dollars in liabilities if they do not sell their units to Unicorp, will have a 30-day opportunity window to get their units back. 

Liens placed on Colony units for rent by Colony Lender and Unicorp are required to be removed as part of the order.

May said both punitive and actual damages unit owners accrued by paying for legal fees associated with the lawsuits will be considered. Punitive damages would be money ordered to pay to make an example of certain Colony Lender actions, and actual damages would be assessed for costs and delays unit owners had to endure for the state court lawsuits while they wait for a resort to be developed.

A hearing will be held at 10 a.m. June 5 to review the sanctions, and May still must decide on monetary judgments for Colony Lender and Unicorp. 

May also ruled that Colony Lender has no other claims pending in other bankruptcy estates.

Colony Lender and Unicorp have filed multiple appeals with the U.S. Middle District of Florida against the sanctions order, which must be heard before May can set any future bankruptcy sales. U.S. Middle District of Florida Judge Steven Merryday, who reversed key May rulings from 2009 in 2011, could be chosen to hear the appeals.

— Kurt Schultheis