Longboater submits $10 million claim against Colony unit owners

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Longboat Key resident Manfred Welfonder submitted a $10 million claim as well as a request for punitive damages against the Colony Association of Unit Owners last week.

Welfonder, who sought to be but was not chosen by the Association to redevelop the property, says that Colony Association President Jay Yablon intended to damage and harm his reputation in business through false and misleading statements.

The claim was made on the final day that the Sarasota Circuit Court allowed claims to be made since the Association is nearing its dissolution and heading into the final stages in the consolidation of ownership of the 17.3 acre property.

The Court imposed a cutoff as is customary for any and all claims to be made against the Association and Welfonder submitted his request on Feb. 20.

Nature of the complaint

After the Colony closed more than 10 years ago, the Association of Unit Owners, led by Yablon, sought out and interviewed numerous developers in its goal to either rehabilitate or rebuilt the property. The Association ultimately chose Orlando-based developer Unicorp and a majority of unit owners agreed to a contract that pays $140,000 and additional costs to each owner for their unit with an additional premium for water-view and waterfront units.

Welfonder, representing his namesake M.W. Group, made a proposal that was vetted and not chosen by the Colony Association.

In his complaint, Welfonder writes that his group started working on the redevelopment of the property in 2006, and that in 2007 he states that, “owners approved our proposal to move forward with the renovation of the Colony.”

Welfonder elaborates that the Board of the Association of Unit Owners preferred to hire an attorney to move the Association into bankruptcy rather than accept his offer which he maintains “would have built a Marriott Hotel Resort which could have opened its doors in 2011/2012.”

His complaint says in 2015/2016 his group offered a “higher and faster payment to the owners than developer Unicorp, but the Board preferred to deal with Unicorp whereby we were refused the opportunity to negotiate our offer and its terms with the Board.”

Welfonder in his complaint says that his proposal, “has been reasonable, doable and feasible. We will use the grandfathered 237 tourism units and ask for a moderate number of additional tourism units.”

Welfonder then in his complaint goes on to say that he has more than 35 years in international and domestic corporate real estate business. He adds that M.W. Group has “extensive business relationships with numerous capital sources” and that no sales of units are required for the project financing.

Welfonder says he submitted a memorandum on Jan. 13, 2016 offering a $53 million cash payment to the owners “as an initial consideration and to initiate negotiations.”

Welfonder said his offer was more advantageous compared to Unicorp’s and that Yablon and Association directors breached their fiduciary duty.

In another part of the complaint, Welfonder says he and his development group were treated rudely in a telephone call by the Colony Association’s Chairman of Development Salvatore Zizza.

Welfonder accuses Zizza of breaching his fiduciary duty, and he writes that Zizza, “has shown intentional misconduct and gross negligence by the lack of beneficial dealings for the owners. It appears that Mr. Zizza had an undisclosed intent to eliminate M.W. from a well-prepared transaction to develop the Colony.”

Welfonder attached a letter written by Jay Yablon dated March 1, 2018 and sent to Longboat Key Town officials, the press and others, in what he refers to as “wrong, insulting and harming statements.”

The letter by Yablon is attached in Welfonder’s complaint, and in the letter Yablon writes, “The choice of the developer for the Colony is entirely and exclusively a decision within the purview of the Colony Association and the Unit Owners who own the property.”

He goes on to address a plea made by Welfonder in an earlier memo to the town commission stating his objection to Unicorp. Yablon went on to write, “I also reiterate that we have in good faith, given Mr. Welfonder – who is really little more than a broker – multiple chances to present and deliver a viable Colony redevelopment for more than a decade now, and that he has repeatedly failed to do so…Having heard him make numerous promises for more than a decade about deals he would make that he was never able to fulfill, it would be the height of foolishness to give such statements even the slightest modicum of credence. The only thing Mr. Welfonder is capable of delivering would be years more of stagnation and likely brand new litigation at the Colony.”

Response to Manfred Welfonder by Colony Association

The claim made by Welfonder has no merit and no legal basis according to a response filed by attorney Jeffrey Warren on behalf of the Colony Association of Unit Owners.

Procedurally, the Association had to respond and object to the claim within 30 days. The next act is up to Welfonder if he seeks to escalate the claim into a court action, which essentially means file a lawsuit.

In the  Association’s response, Warren says that neither Welfonder or M.W. Group has ever owned a unit at the Colony or has had any contractual relationship with the Colony Association at any time. He says there has been no agreement or evidence supporting Welfonder’s claim.

“Despite more than a decade of litigation, neither Mr. Welfonder, nor the M.W. Group has ever previously sought to intervene as a party in this litigation or in any other litigation involving the condominium,” wrote Warren.

Warren adds that the Association in good faith gave Welfonder the opportunity to deliver a viable redevelopment plan for more than a decade, however, “these proposals never materialize and were never approved by the Association or the Unit Owners.”

Warren says that the Association objects to the Welfonder Claim in its entirety, “because it fails to state a claim upon which relief can be granted and is not supported by sufficient documentation.”

In its objection, the Association says that it denies each allegation asserted by Welfonder and that the Association has no duty or obligation to negotiate a redevelopment proposal with Mr. Welfonder or the M.W. Group.

“The choice of developer for the condominium is entirely and exclusively a decision within the purview of the Association and the Unit Owners who own the condominium. Unit Owners at the condominium never voted to approve moving forward with any of the redevelopment plans proposed by Mr. Welfonder or M.W. Group,” wrote Warren.

Regarding the accusation by Welfonder against Yablon, Warren writes that condominium association directors are protected from liability unless they commit fraud, criminal activity or engage in self-dealing. He adds that this is basic condominium law in Florida.

In closing, Warren says that Welfonder’s claim is not recognized under Florida law and that the Association reserves its right to claim attorney fees and costs for any actions caused by Welfonder.

As stated, it is now up to Welfonder to decide whether he wishes to hire legal counsel and pursue his claim in Circuit Court. That action is the legal path necessary if he wishes to attempt to validate his claim and contentions.

backstory and current direction…

The Colony and its unraveling has seen years of litigation and hundreds of thousands of dollars in legal fees dating back before its doors were closed in August 2010.

The original battle started after Murf Klauber, who managed the resort, demanded an assessment to repair and renovate the buildings. The Association refused and the tense legal battles between the managing partner, Klauber, and the Unit Owners led to the eventual bankruptcy of both entities.

The Colony, to add to the complexity of the situation, was comprised of 237 tourism units that were individually deeded to various owners. Each owner was entitled to use their unit for 30 days and it was the job of Klauber to run the resort. Klauber owned the supporting entities including the restaurant, spa and many other administrative functions including the tennis program, a flower shop and a boutique. These commercial operations that supported the resort existed on 2.3 acres of the more than 17 acres that made up the entire resort.

In the ensuing years after the closing of the Colony, Klauber’s interest went into bankruptcy and were eventually bought by Unicorp.

Unicorp has spent the last few years as the chosen developer and has made progress on several fronts. First, Unicorp received approval from the town of Longboat Key for its redevelopment proposal to build a 166-room St. Regis Hotel and 78 luxury condominiums on the site. Unicorp also performed the demolition of the former Colony, which was ordered by the Town of Longboat Key, after it was found to be a threat to public health, safety and welfare.

More recently, Unicorp has resolved litigation on several fronts including a handful of unit owners and parties who objected to its redevelopment proposal.

The final and major act before Unicorp can move forward with developing the property is it must consolidate the property, which means either settling or buying out the interests of Andy Adams.

Adams owns about 74 of the original Colony units and has objected to the Association’s actions as well as Whittall’s redevelopment plan. The matter is due to be resolved in April when there will be a court hearing in which Judge Hunter Caroll will decide on how best to equitably value the units and convey ownership.

Unicorp has proposed that the value should be based on its existing contract with all of the remaining owners. Adams has sought a public auction to the highest bidder.

Another outcome that could materialize soon is if Whittall and Adams reach an agreement wherein Adams sells his units to Whittall. Such a sale would resolve the ownership consolidation issue and preclude either side from appealing any method decided by the Judge in April.

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