The beachfront Hollywood Beach Resort hotel and timeshare is embattled in lawsuits, and the latest alleges a former management company turned a blind eye to improper dealings by former board members and aided the diversion of association money.
The Hollywood Beach Resort Condominium Association Inc. and the Hollywood Beach Hotels Owners Association Inc. are suing former association manager KW Property Management LLC in Miami-Dade Circuit Court.
The company, also called KW Property Management & Consulting, is a Miami-based association management company.
The resort at 101 N. Ocean Drive has two commercial units, 1,976 timeshare units and 360 condominiums, which operate as a hotel, according to attorney Gregory Elder of the Law Offices of Gregory R. Elder in Fort Lauderdale, who filed the complaint.
The Hollywood Beach Hotels Owners Association oversees the common areas and timeshares and represents the condo, timeshare and commercial owners. It is the master association over the Hollywood Beach Resort Condominium Association, which oversees the residential condos and represents their owners, according to the complaint.
In March 2011, the associations hired KW Property to manage association activities, collect and allocate assessments, prepare financial records and help with budgeting, according to the complaint. The Dec. 23 complaint insists the company failed at the tasks. The complaint lists breach-of-fiduciary duty and breach-of-contract counts.
Among the allegations is that former association board members conducted business in secret, and one illegally signed a lease for a commercial unit as well as a next-door bar and pool to run a hotel, bar and restaurant business, all on behalf of the associations, according to the complaint.
Decisions were made at closed-door meetings. While the rental program was disclosed, the lease wasn’t properly disclosed, Elder said. The next-door bar and pool aren’t owned by resort but are accessible to hotel and timeshare guests.
“Under the law you cannot lease or purchase off-site property without a vote of the unit owners,” he said. The lease “contains a reduction of assessments to one of the commercial unit owners without giving the other unit owners a proportionate reduction.”
KW Property was present at the closed-door meetings and knew of the commercial lease but did nothing to protect the rights of the associations and unit owners, according to the complaint.
When the leased bar, restaurant and hotel businesses started to fail, the former board members misappropriated money from association reserves to prop up the businesses, and KW Property helped by issuing checks and changing balance sheets to make it look like there was more money in the reserves, the complaint alleged.
KW Property attorney Frank Simone of Frank Simone P.A. in Miami said a complaint hasn’t been served, and he denied the allegations outlined in an email.
“KW Property Management never received prior notices of such allegations. And if served with a complaint, KW Property Management will vigorously defend itself against the lawsuit, which has no valid basis,” Simone said. “I don’t see any of it as being true.”
It’s unclear exactly how KW Property and the associations parted ways.
KW Property started working at the property in April 2011, a month after signing contracts with the associations, and was terminated in early 2016, according to the complaint. Two months later the associations rehired KW Property, but it quit later that year, according to the complaint.
KW Property said it was never fired, but it parted ways with the associations in an email and accompanying resignation letter sent Oct. 21, 2016, effective Jan. 31, 2017, according to records Simone emailed to the Daily Business Review.
Simone said the associations have been involved in other lawsuits.
One was filed by the associations against former board members Michel Jekic and Laura Welliver, who were accused of arranging the closed-door meetings to discuss the business lease and not properly disclosing the lease. The lawsuit was filed in 2015 in Broward Circuit Court and amended in last month.
Stefanie S. Copelow, a West Palm Beach associate with Cole, Scott & Kissane, is listed as counsel for Jekic. She didn’t return a request for comment by deadline.
Dale L. Friedman, a partner with Conroy Simberg in Hollywood and one of the attorneys who represents Welliver, declined to comment.
Separately, the owner of one of the commercial units at Hollywood Beach Resort sued the associations in Broward Circuit Court in 2016.
The latest lawsuit against KW Property was filed in Miami because the contract dictates that any litigation must be filed in Miami-Dade Circuit Court. The complaint requests a jury trial even though the contract states the two sides waive the right to a jury trial, records show.