Naples couple Craig and Joanne Pillatsch invested $125,000 in a 34-foot slip for their boat at Cedar Bay Yacht Club on Marco Island six years ago.
Edward and Karen White of Marco Island plunked down $95,000 for a slip. Bill Cutillo, a Collier County businessman, bought one for $100,700.
The boat owners who purchased the equity memberships several years ago at the Elkcam Circle marina thought their hefty investments would enable them to boat there for life while paying a monthly maintenance fee of $189-$350, depending on the boat’s size.
But this year, Jim Walker, owner of Walker’s Marine, bought Cedar Bay for $2.5 million, and the boat owners were asked to pay monthly rent — or forfeit their storage slips at the new Walker’s Hideaway Marina. Now, boat owners are suing, saying the sale was illegal.
It’s the latest in sales of marinas that have affected boat owners who fear the changes are transforming a sport once accessible to the middle class into one reserved for the wealthy.
Over the years, Collier County has seen at least eight marinas and storage facilities shut down, purchased by private developers, converted to expensive dockominium ownership or had slips limited to public access. Among them were Boat Haven and Wiggins Pass, which both shut down, and Naples Marina, which was sold and converted into expensive dockominiums.
The Marco Island members, however, banded together and sued Cedar Bay Yacht Club and Nautical Ventures, directors Henry “Hank” Kassigkeit and Robert LaSalvia, and the buyer, Martox Investments LLC, which is operated by Walker, his daughter, Christine, and Michael Raisor.
The lawsuit, filed last month in Collier Circuit Court, says Cedar Bay and Nautical Ventures breached the membership agreements by transferring their memberships as if they were assets — not liabilities — and without a vote by equity members. It points out their agreements say they’re entitled to refunds if the slips are sold.
Gregory Woods, the members’ attorney, called it a “middle of the night” sale and said members first learned of it at a meeting Walker held afterward.
“Mr. Walker announced at that meeting that he purchased the ‘assets only’ of the marina and that he would not be honoring the members’ slip rights or a return of their deposits,” Woods said.
“The transfer from Cedar Bay Yacht Club to the Hideaway Yacht Club appears therefore to be little more than a fraudulent transfer in a ‘veiled’ attempt to escape responsibility for payment of the member’s deposits.”
State records show that on March 14, Walker incorporated the new business, Walker’s Hideaway Marina, then set up Martox Investments, a limited liability corporation, four days later. On April 5, county records show he used the 3.3-acre property, slip leases and rents as collateral for a $2.58 million bank loan, and purchased it the same day for $2.5 million.
Members contend Walker knew the sale was improper and violated their agreements. State law requires that if a corporation sells all its property or assets and its members are entitled to vote on that, the board of directors must adopt and vote on a resolution approving the sale.
The lawsuit contends Kassigkeit and LaSalvia breached their fiduciary duties and members’ contracts by arranging the sale of the club’s assets and their membership contributions without notifying them or giving them an opportunity to vote, resign, acquire the assets or membership interests.
The lawsuit accuses Kassigkeit and LaSalvia of taking the $2.5 million for their own “personal gain and benefit” and alleges Martox interfered with their memberships by soliciting the sale, which violates the state’s Deceptive and Unfair Trade Practices Act.
They’re asking a judge to rule Cedar Bay didn’t have the power to authorize a sale, that Martox is not a bona fide purchaser and to grant an injunction to void the sale.
Walker declined to comment or specify how many rental agreements he’s sold. “It’s doing very well,” Walker said Wednesday.
Last week, Cedar Bay, Nautical Ventures, Kassigkeit and LaSalvia filed a motion to dismiss, halt proceedings and force the plaintiffs to go through arbitration, as required by their agreements. Attempts to reach their attorney for comment were not successful.
Court records show Cedar Bay had been struggling financially over the years. It was hit with a $14.7 million foreclosure in 2008, numerous state tax liens for nonpayment of sales taxes, and was embroiled in legal battles in various courts, including one involving a $1 million loan in 2007 that wasn’t repaid to Cedar Bay’s former president, Robert Fonte.
The sale ended the lengthy foreclosure battle, wiping away that hefty debt in April.
This year, records show, the marina has been under investigation by the state Department of Environmental Protection and Collier County Solid & Hazardous Waste Management due to a collapsed dock, deterioration and possible contamination allegedly caused by leaking fuel. DEP officials said this week they’ve been talking with Walker about his plans, but fuel is not being dispensed and enforcement is on hold for now. Records show the marina is in compliance and plans to replace a seawall.
Tony Disarro, a Naples boat owner, said he got out just in time, selling his membership for pennies on the dollar in January.
“I lost over $125,000,” Disarro said. “I paid $140,000 and sold it for $15,000. Then the audacity of these people, the audacity. They wanted a 5 percent kickback.”
A membership requirement said if a member sold a storage slip, he had to give Cedar Bay 5 percent. Disarro paid it and now uses a trailer for his boat.
“That place was a disaster. It had deteriorated,” he said, noting the forklift used to put boats in the water was often broken and they never sold enough storage, so many were rented. “Here I am paying $300 a month on top of (the membership). I had enough of paying almost $4,000 a year, when someone else is renting the same slip for $400 a month.”
“I had some sleepless nights, second thoughts about the money. Caveat emptor is what we all should be aware of,” he said, referring to the warning, buyer beware. “I didn’t listen to the caveats, the Latin men talking in my head. But I got out. That’s something.”