Article Courtesy of The Panama City News Herald

By John Henderson   

Published February 11, 2016

PANAMA CITY BEACH — A jury has awarded nearly $12 million in damages to the Shores of Panama Resort Community Association in a lawsuit against several former directors of the association.
 
The association contended in the lawsuit that the former directors deprived the association of ownership of the beach behind the condos as well as the rental revenues that came from services offered there.
  

The lawsuit alleged “breach of fiduciary duty” on the part of the defendants: New York residents and Shores of Panama Resort condo owners Solly Halberthal, Isere Halberthal, Joshua Ostreicher and Jay Glatter. The jury’s award, issued Wednesday, includes $2.5 million in punitive damages against each the defendants. According to the lawsuit, the original developers became financially distressed and filed for bankruptcy protection in 2008. The original developers’ lender, Silverton Bank, also became financially distressed and was ultimately taken over by the Federal Deposit Insurance Corp. (FDIC). The FDIC created Shores of Panama Collateral LLC to liquidate the property.

The pool area of the Shores of Panama is seen. A jury awarded nearly $12 million in damages to the Shores of Panama Resort Community Association.

On April 27, 2012, the condos were sold to “Shores Holdings,” which consisted of five entities referred to in the suit as “Bulk Buyers.” Then in July 2012, the FDIC-controlled board of the association resigned and the association conducted a turnover election in conformance with Florida law.

“As a result, the Bulk Buyers, using the voting power of their newly acquired units, engineered the election of a new seven-member board,” the lawsuit states, which included the four defendants in this case.

The Bulk Buyer board “engaged in numerous acts of flagrant self-dealing which furthered their own self-interest and the interests of their colleagues at the expense of the plaintiff,” the lawsuit states.

Pensacola attorney Randall Rogers, who represents the defendants, could not be reached for comment Friday. According to court filings, the defendants denied “the allegations as phrased” and “demand[ed] strict proof … at the time of trial.”

In June 2014, the Bulk Buyers filed a lawsuit in Bay County seeking to obtain title to the beach parcel.

“Their people on the board settled that lawsuit by deeding beach to Bulk Buyer companies in which they and colleagues had a financial interest for no money,” said John Cottle, an attorney for Becker & Poliakoff, who represented the community association. “My clients lost the beach, lost a $1.3 million asset.”

When this happened, Cottle said, the association was deprived of making about $125,000 a year in rental revenue from chair and parasail rental companies.

“It wasn’t so much that they couldn’t go to the beach,” he said. “The income from it is the big loss, or the value of it.”

He said another lawsuit has been filed in which the association is trying to recover ownership of the beach behind the condos.

“We believe we will get it back eventually sooner rather than later, but we still don’t have title to the beach,” he said. The Bulk Buyers “still have the beach.”