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. |
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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.
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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.”
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