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Colony latest victim in Coronavirus pandemic

STEVE REID
Editor & Publisher
sreid@lbknews.com

The Coronavirus pandemic has taken human casualties, business casualties and interrupted our lives on every level. Now, the pandemic is threatening the final agreement – more than 10 years in the making – that would consolidate ownership at the former Colony Beach and Tennis Resort on Longboat Key.

Would-be Colony redeveloper Unicorp, run by Chuck Whittall, had an agreement with Andy Adams to buy out his remaining interest of 74 units that was due to close on March 31.

Whittall had placed about $2 million into an escrow account as a deposit on the transaction on Feb. 24. They reached an agreement three days prior on Feb. 21 and soon the Coronavirus pandemic started to affect both our everyday and business lives.

On March 18, Unicorp asked Adams to extend the closing date due to the extraordinary circumstances related to the Coronavirus pandemic. Adams refused on March 19.

After the March 31 closing date came and went without the transfer of the property, both parties filed complaints in Sarasota Circuit Court.

Adams is asking the Judge to agree to one of two outcomes. He is asking for the Judge to enforce the contract through Specific Performance and essentially find that the Coronavirus is not a valid impediment to the transfer and that the contract was and is valid and must be executed.

The other option Adams is asking the Judge to agree to is to find Unicorp in breach of contract and render the contract void and rule that Adams is entitled to keep the deposit due to the failure of Unicorp to close on the agreed day.

Adams, as is customary, is also seeking all associated costs and damages in filing the litigation.

The exact sale price agreed upon between Unicorp and Adams is under seal and has not been made public. It is estimated to be between $12 million and $15 million.

In his complaint, Adams argues that he is prepared to perform all the obligations required under the contract and that Unicorp has failed. His complaint goes onto say that the contract mandates that the parties perform their obligations on a date and time certain but that Unicorp contends its obligations have “been tolled as a matter of law due to COVID-19.”

The complaint argues that Unicorp and Adams have adverse and antagonistic interests relative to the timing of the performance of the contract.

In short, Adams says it is “Now ready, willing, and able to comply with the terms of the agreement and sales contracts by conveying property,” and “Unicorp has failed and refused to perform their part of the agreement and sales contracts.”

 

Unicorp’s position

Unicorp also seeks Specific Performance of the sales contract but Whittall wants the Judge to assign an appropriate time frame following the Corona pandemic.

In Unicorp’s complaint, which was also filed on April 8 at 5:17 p.m., it is argued that “The agreements are heavily-negotiated documents that sought to end a fiercely litigated dispute spanning several years.”

Unicorp goes on to argue that time “is not of the essence for closing,” and that following the contract to purchase execution, “significant and unprecedented events have transpired.”

The argument continues that “The current and ongoing COVID-19 pandemic and the various related declarations, mandates, and orders made by Federal, State and Local agencies/courts have resulted in a complete shutdown of all non-essential commerce in the State of Florida and nearly everywhere in the United States.”

Unicorp’s complaint says that in the context of the Coronavirus pandemic the closing date of March 31, 2020 must be extended as a matter of law in keeping with the existing moratorium on nearly all obligations, nearly all businesses and individuals are facing throughout the world.

Unicorp’s complaint then says that despite the pandemic’s disruptions, Adams is seeking a “punitive forfeiture of the deposit,” and he has no intention on abiding by the agreements.

“These actions (by Andy Adams) are predatory and exploitative in light of the current environment caused by the pandemic,” says Unicorp in its complaint.

Unicorp maintains that it is ready, willing and able to reschedule the closing to a later date “after the pandemic has been lifted and the foregoing disruptions have subsided.”

Unicorp’s complaint says that Adams’ “greed oriented motives are clear: renege on the agreements to exploit the horrific impacts of the pandemic for their pecuniary gain.”

In short, Unicorp is asking the court to find that the closing date can and should be extended due to the pandemic. Unicorp is also seeking a declaratory judgment that it did not breach the sale contract by seeking to extend the closing date amid the pandemic. Unicorp is also seeking that the Judge impose specific performance to compel the sale of the property at a later date certain after the lifting of the pandemic and its related restrictions.

In another alternative, Unicorp argues that Adams by not extending the contract date, breached the contract and must return the deposit to Unicorp as well as pay damages and legal fees.

 

Colony context and how we got here…

The above is the latest skirmish following years of lawsuits and fighting. The once world-famous Colony Beach & Tennis Resort was developed and managed by Murf Klauber for four decades. Klauber sold individual units, a total of 237, and buyers received a deed but the management agreement allowed Klauber to rent the units for 11 months of the year and owners could visit for one month.

In the early 2000s, Klauber assessed unit owners for general repairs to the properties and the condominiums. The unit owners, through the Association of Unit Owners, resisted and numerous lawsuits and countersuits ensued.

Klauber was forced to close the resort in August 2010 as the condition of the units continued to deteriorate.

Over the next decade, Klauber successfully won a judgment against the Association that found that he did not mismanage the Resort or funds and was entitled to the assessments. Meanwhile, he and all his entities entered bankruptcy.

The Association sought a developer of the property and after years of interviewing and entertaining various suitors, the majority of unit owners and the association leadership entered an agreement with Chuck Whittall and Unicorp.

Unicorp successfully received an approval from the town of Longboat Key to allow the construction of a St. Regis Hotel and Luxury Condominiums. The caveat is Whittall needs to consolidate complete ownership of the property before he can receive a building permit. Over the past year, Whittall successfully has reached an agreement with every unit owner with the exception of Adams who owns about 74 units, which forms a blocking interest under condominium law.

Adams and Whittall were destined to hold a court trial this month and Judge Hunter Carroll was due to decide if the property should be auctioned to the highest bidder or whether Adams should be compelled to sell at fair market value to Unicorp.

The agreement, which was reached outside of the courtroom through negotiation, between Whittall and Adams, would have put an end to the divisive ownership battle if it had closed on March 31. The matter and the arguments currently being made about the contract for sale that was supposed to occur on March 31, will be heard by Judge Carroll at 2:30 p.m. on Monday, April 13.

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