Judge hears Pelican suit against WCI

Group accuses developer of fraud

Published November 2, 2004
Article Courtesy of The News Press

Pelican Sound residents in Estero will have to wait a few weeks to find out if they can pursue all complaints in a lawsuit against developer WCI.

The Pelican Sound Golf and River Club claims WCI failed to account for homeowner association money that should have been turned over when residents took ownership in January 2003.

WCI attorney Thomas Roehn argued in a hearing Monday that Judge Jay Rosman should throw out the majority of the 23 complaints.

The lawsuit's allegations include:

The reserve fund collected by WCI and paid into by members for future repairs and maintenance was empty.

WCI marketing and development expenses were subtracted from accounts funded by homeowners for the operation of the association.

Payment due to the association from cable television service provider MediaOne was remitted to WCI but never turned over to the homeowners.

WCI filed incorrect personal property tax returns, incurring taxes, penalties and filing fees the association was required to pay.

The developer failed to collect assessments from owners of homes it was using as models and from homes owned by WCI employees, creating a monetary shortage.

WCI built golf course bridges that did not meet Occupational Safety and Health Administration standards, requiring costly upgrades before the club could obtain insurance.

WCI accepted deposits for events scheduled after turnover but failed to turn the money over to the new association.

WCI had proposed a settlement of $645,000, but the homeowners association estimated that the developer owes several million dollars.

Roehn said WCI has agreed to court intervention to investigate the accounting practices referred to in five of the complaints.

Until those accounting questions are answered, he said, the remaining complaints are premature and should be dismissed.

"The way they've pled their case, accounting is a necessary precedent," Roehn said.

Pelican Sound homeowners' attorney Herbert Brock said the lawsuit's intention is for all complaints to move forward at the same time.

"We're allowed to proceed simultaneously on both causes of action," he said.

Brock also said four of the 23 complaints are for legal damages.

"Some claims are wholly unrelated to the accounting claims," he said. "Why should they be held up?"

Brock said to dismiss all but the five accounting complaints would be an undue burden on all parties because they will have to go through the process twice.

Roehn disagreed and said limiting the complaints will save time and money and may lead to a quick resolution of the dispute.

He also said he cannot defend his client against complaints of common area defects and deficiencies without a list of specific problems.

Brock said if such a list were required, he would have to amend the complaint each time a new problem is found.

"We think the rules provide for a short and plain statement of facts," he said. "... We have fulfilled the rules."

Pelican Sound Homeowners Association President David Ray attended the hour-long hearing with half a dozen people. Afterward, he couldn't venture to guess the outcome.

"We won't know until we hear the judge's decision," he said.

Both attorneys said they expect to receive Rosman's written decision within the next two to three weeks.