EAST NAPLES — After a 14-year legal battle, senior citizens at Naples Estates mobile home park were surprised Friday to hear that a tactic they suspect was used to fight their attempt to purchase the park may have backfired.
Their attorney, A.J. Stanton, argued to Collier Circuit Judge Hugh Hayes that park owner Norton S. Karno's strategy of stopping mortgage payments on a $6 million loan might mean residents would get the 484-lot East Naples mobile home park without paying.
Stanton contended the park owner knew that if the loan debt, now roughly $20 million, exceeded the $11.7 million purchase price Karno paid in 1997, "he'd get a way out" because it would cancel the purchase agreement.
However, Stanton said that tactic wouldn't work because the loan maturity date was 2004 and it expired five years later.
"Mr. Karno flew too close to the sun when he was allowing this debt to accrue in this fashion," Stanton said of the $20 million, likening Karno's tactics to the mythical Icarus who plummeted to the ground after his waxed-on wings melted.
Turning over the 55-and-older park to residents without being paid for it is a "harsh result for a game that was played and lost," Stanton said.
Karno wasn't available for the hearing to refute claims made about his tactics, his attorney said.
Stanton said residents could waive a clean title to the park and deal with that later, but the judge didn't rule on that.
Hayes did grant a request to require Karno's Manufactured Home Communities (MHC) management company to turn over an accounting of income, expenses and profits from the park, at the corner of County Barn and Rattlesnake Hammock roads. In the past, Karno had testified its yearly net income was $2.4 million.
That ruling is significant because residents are entitled to the park's income since February 1998, when they sued, while MHC would be awarded interest since then on the purchase price set by Hayes, $14.4 million. That price would be reduced by $300,000, which homeowners paid for a sewer hookup. Residents also would get $293,000 that Karno was paid by Collier County government when he sold some land as an easement for a planned widening of County Barn Road, which never occurred.
Although getting the park without paying was a proposal argued during a day-long hearing Friday, the 17 residents who attended don't believe they'd ever get it without turning over money to Karno or MHC.
"That's never going to happen," Priscilla Smith, the homeowner association's first vice president, said of not having to pay anything.
About 90 percent of the homeowners want the right to purchase the 484-lot park and their lead attorney, Lee Collins, has lined up lenders willing to help them.
Smith, who has lived there 12 years with her husband Francis, 104, left the courthouse hopeful — agreeing the judge and attorneys had made great strides. She noted it was the first time MHC's attorney, J. Allen Bobo, had mentioned finality.
"I heard him talking like there's a sale in the future — not next week or next month, but it's something that exists now," she said. "Before that, he was always arguing against it."
Residents hope one of the orders the judge soon signs is the one outlining their right to purchase the park, which he already ruled on. The lack of an order has prevented defense attorneys from filing an appeal.
In March 2009, Collier Circuit Judge Hugh Hayes ruled the purchase price would be based on the park's value on Feb. 24, 1998, when residents sued the mobile home park's then-owner Ell-Cap/75 to state their intent to purchase the park and exercise their right of first refusal if it were to be sold.
"I feel like we took a giant step forward in this case," said Jack Setser, a 12-year resident with his wife, Susie. "It's not over yet, but we're one step closer to owning the park."
Naples Estates was part of a bundled package of 39 parks that owner Jerry Ellenburg wanted to sell for about $390 million in the late 1990s. It was valued at $11.6 million — a price cited in a 1997 agreement outlining the homeowners' right of first refusal to buy it from Ellenburg's company, Ell-Cap/75. Residents weren't aware of any pending sale until a homeowner discovered it in an appraiser's records.
That prompted residents to sue Ell-Cap/75 in 1998, arguing they had the right of first refusal to buy the park and should have the right to purchase and operate it themselves.
In 2008, Hayes ruled in their favor. The next year, he ruled the purchase price would be based on the park's value on Feb. 24, 1998, when they sued. Last year, after days of testimony from appraisers, he set the price at $14.4 million, well over the $11.8 million residents hoped for.
Although they were happy Friday, residents were upset the judge granted a request requiring them to pay defense attorneys' fees because Bobo had successfully argued in the past that residents breached their contract by withholding rent increases; the fee amount isn't known. But his past argument ended in MHC receiving roughly $500,000 held in a court registry; an appellate court upheld that ruling.
"Those were big boys in a big-boy contract with good lawyers," Bobo argued, referring to residents losing that battle.
Many residents are paying $671, but some pay lower rent due to a dispute over rent increases, which they also sued over. Attorneys successfully argued Friday to consolidate that lawsuit with the MHC dispute.