PANAMA CITY BEACH —
Bay County Circuit Court Judge William Henry has denied a
request by the condominium association for the Shores of
Panama complex to throw out a lawsuit filed by residents.
The lawsuit claims the
association failed to properly inform tenants of its plans
to assess them for millions of dollars of repairs to the
At the same hearing, Henry also extended a "standstill"
order preventing the association from doing any work on the
building until at least Sept. 7.
The order not to dismiss the case means that unless
attorneys for the homeowner's association can convince Henry
to reverse his decision, the residents' case will come to
trial, said Dana Matthews, who is representing owners of 58
units in the 709-unit complex.
"It's a very important
ruling," he said. "The case can move forward."
Condominium association attorneys were given 20 days to file
an answer to the judge's ruling, which was handed down Aug.
Michael Kelly, the
attorney who presented the condominium association's
argument in favor of dismissal, said he expected an answer
would be filed "within the timeframe required to do so."
Kelly could not comment further because the Aug. 22 hearing,
at which three issues were scheduled to be discussed, was
not completed. At a continuation of the hearing slated for
Sept. 7, Matthews will ask the judge to issue a temporary
injunction that would prevent all structural work at the
building from taking place prior to the case coming to
What did the lawsuit filed against the condo association
The original lawsuit was filed May 11 on behalf of three
condominium owners, David Spira, Rachele Doukas and Laura
Doukas. It alleges that the Shores of Panama COA is
attempting, without notification, to thrust a special
assessment upon owners to cover $76 million in renovations.
It sought an injunction and declarative relief regarding
"condominium governance issues."
The litigants "are in doubt as to the rights of the
association to proceed in committing each of them to a
long-term debt obligation through special assessments
without their knowledge, consent, or participation," the
They "are without any adequate remedy at law if the
defendants are allowed to move forward with a special
assessment obligating each unit owner in the Shores of
Panama Condominium to the extent disclosed," it said.
On June 7, the condominium association board voted to pass
an $8.9 million special assessment. Work had gotten underway
before the original standstill order was issued July 27.
The standstill order prevents the association from
collecting additional funds related to the $8.9 million
special assessment or from pursuing repairs, other than
safety repairs, related to the special assessment. It also
prevents the association from collecting money from unit
owners for work related to the special assessment.
Additionally it bars the association from entering
agreements with or paying special assessment funds to
contractors, subcontractors, architects and others for work
other than safety work.
If granted Sept. 7, the temporary injunction will uphold the
standstill order until such time as the lawsuit filed by the
owners comes to court.
"We're safe against the Board's outlandish spending," Laura
Doukas said in an email discussing the continuance of the
standstill order. "The board of directors cannot spend,
collect or perform any work regarding the Special Assessment
until our next court date. But, this isn't the end."
Cost estimate for damage mitigation
The original lawsuit alleged that the condominium's board of
directors "solicited and encouraged the city of Panama City
Beach to accept, and act upon, self-authored allegations of
widespread unsafe conditions on the premises of Shores of
Mark McWaters, the Panama City Beach Building Official, said
at the time the suit was filed the $76 million estimate for
damage mitigation likely represented Florida Architects
"worst case scenario" of a cost of repairs. Engineering
reports and other documents obtained through public records
requests, however, provided graphic evidence of a building
badly in need of a makeover.
In 2009, just two years after the two buildings at the
Shores of Panama complex were completed, a Santa Rosa Beach
law firm notified six companies that had played a role in
construction of its intent to sue on behalf of the Shores of
Panama Resort Community Association.
The long list of defects reported over the years includes
roof leaks, exterior stucco in poor condition, water
infiltration of an exterior wall and leaks in seven units.
Engineering reports said investigators had detected shifting
or settling of a wall holding up a structure that connected
the two high-rise buildings that comprise the complex.
One engineering report compiled in 2019 said a water
absorption test conducted in 2014 found the waterproof
finish on the building was failing in several locations and
needed to be replaced.
"Our recommendation is to remove the entire wall finish
system down to the surface of the stucco," it said. "Over
time as it continues to fail it will lead to leakage into
the units as well as increase the rusting of the reinforcing
steel in the concrete walls and slabs."
In its motion to dismiss, the condominium association
attorneys cited state law in defending its decision to levy
the special assessment.
"When the purpose of the special assessment is limited to
the payments of costs of construction and repair(s)
immediately necessary to avoid damage to the condominium it
may be made by the board of directors without approval of
the unit owners," association attorneys argued.
"Certain repairs are immediately necessary to avoid damage
to the condominium," they argued in their motion.