Bonita Bay Club members file class-action lawsuit against developer |
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Article Courtesy of The Naples News By LAURA LAYDEN Published September 25, 2009 BONITA SPRINGS — Bonita Bay Club members have filed a class-action lawsuit against their developer. The suit was filed Sept. 22 in Lee County Circuit Court against Bonita Bay Properties and the company’s chairman, David Lucas. The named plaintiffs are John Klocko III and Cynthia White, who both sit on the Turnover Committee that has been handling negotiations for members trying to buy their club from the cash-strapped developer. The suit has been brought on “behalf of all members who have promissory notes issued prior to January 2004,” according to a Turnover Committee report. The panel is supporting several legal actions against the developer, which last year stopped honoring its policy to refund the deposits of resigning members within 30 days. Members say they have promissory notes that guarantee they’ll get their money back if they leave the club. It appears that negotiations are once again at a standstill between Bonita Bay residents and the developer after they resumed a few weeks ago. “We have been negotiating with the Turnover Committee in good faith and as recently as yesterday provided them with an updated term sheet,” said Brian Lucas, vice chairman for the Bonita Bay Group, in a statement Wednesday about the class-action lawsuit. “Their verbal feedback at that time was very positive so we are obviously disappointed with this development. “With this action, they have embarked on a journey that will take several years to complete,” he said. “We question whether the majority of residents feel that this is in the best interests of their community.” The class-action lawsuit seeks damages in excess of $100 million. The suit alleges a Ponzi-style scheme involving member deposits, which Bonita Bay Group has vehemently denied. Other claims in the lawsuit include breach of fiduciary duty, violation of the Deceptive and Unfair Trade Practices Act, constructive fraud and unjust enrichment. It alleges that Lucas “actively participated in” and had a significant “measure of control over” the developer’s deceptive and unfair practices. “In sharp contrast to their representations and stated ‘core values,’ defendants ignored the interests of the members, defaulted on their legal obligations, failed to fulfill their promises, and disregarded the pledge to ‘never do anything other than the right thing by our residents,’” the complaint says. The same plaintiffs also filed an action to impose a lien on all of the golf courses and other amenities used by residents Tuesday. That would make it harder for Bonita Bay Group to sell them to an outsider. In its latest report, the Turnover Committee says that it’s “still a long way from finding any common ground” on the purchase of the club that would be acceptable to Bonita Bay Group and its lender, Key Bank, and would be approved by a majority of members. The developer owes more than $70 million to a group of lenders, led by Key Bank. “One of the critical issues that has not been resolved is the allocation of responsibility for providing refunds to resigned members,” the Turnover Committee said in its report. “BB (Bonita Bay) Group has reversed its previous position with respect to accepting liability for all resigned members.” The liability could be $25 million or more for resigning members. Bonita Bay Group says it hasn’t changed its mind about accepting such a huge liability. “We have consistently communicated to members of the clubs and the advisory boards that any liability left behind from non-signing members would have to be minimal,” said Tim Boates, the developer’s chief restructuring officer, in a recent statement. The Turnover Committee presented a revised offer to purchase the club Sept. 3. The offer was to pay $11.5 million in cash and surrender the promissory notes of all continuing members, with Bonita Bay Group retaining the liability of deposits paid by members who have already resigned or who would not join the new club. The offer expired Sept. 21 and was not accepted by the developer. Bonita Bay Group sent a new offer to the Turnover Committee on Sept. 21. In its report, the committee said it was “categorically rejected in writing” on Sept. 22. Under the proposal, Bonita Bay Group, would have created a new company that would own the assets of the club, and assume the developer’s $20 million in debt and all liabilities for members’ initiation deposits. This scenario would mean that Bonita Bay Club would continue to operate the club. In its report, the committee said the developer’s latest offer was “even less attractive” than one made on July 7. Under that original offer, Bonita Bay Group would not have continued to operate the club. “The members no longer have any faith in having Bonita Bay Group or New Leaf continuing to operate the club and controlling the disposition of members’ dues,” the committee wrote in a letter to Bonita Bay Group. Despite its “profound disappointment” at the developer’s newest offer, the committee said it’s willing to continue negotiations “for a successful turnover of the club to the members.” If a purchase agreement is not reached soon, the committee said, it expects a large number of the club members to stop paying their dues or resign. In the meantime, the committee has demanded to see the developer’s books to “verify” its “financial condition.” “It has been evident to many that BBG (Bonita Bay Group) has been all but officially out of business for months now,” said Bonita Bay resident Art Herman, who has stopped paying his club dues. “Their reluctance to negotiate is very clearly a stall tactic while they milk the BB (Bonita Bay) cash cow. |