A dispute between a Palm Beach condominium association and one of its residents has ended in a settlement after nearly a year of litigation over an air conditioning project and questions about $15 million in special assessment funds.
According to court records, the Halcyon of Palm Beach Condominium Association resolved the lawsuit filed by Dr. Michael Montanaro, an orthodontist who owns a unit at the property. Montanaro sued last October, alleging that the association had not allowed owners to vote on a $2.5 million air conditioning project. The lawsuit requested that a court-appointed receiver take control of the association and oversee its finances.
Earlier this month, Judge Maxine Cheesman from Palm Beach Circuit Court approved appointing a receiver for the case. However, as part of the settlement agreement, the association will instead hire a forensic auditor to review how $15 million in special assessments was spent. This information was confirmed by Montanaro’s attorney, Bill Pincus.
“Having a receiver would be much worse for them than having an accountant, as a receiver is in control of the association,” Pincus said. “Instead, the association will have a forensic accountant, agreeable to us, look through these books and figure out what happened with this money.”
The disputed funds were collected through two special assessments in 2021: one for $6 million and another for $9 million. A previous investigation found problems with the association’s accounting practices.
“The main issue was that the association was simply unable to account for all of the $15 million it spent. Its effort to show what happened to all of that money was insufficient,” said David Glickman, another attorney representing Montanaro.
“There wasn’t necessarily evidence of nefarious activity,” Glickman added, but it “raises a lot of questions,” given how much money was involved.
A spokesperson for Halcyon said they expect to hire an auditor by early September.
Halcyon is located at 3440 South Ocean Boulevard on Palm Beach’s South End and consists of two oceanfront buildings constructed in 1980 with 104 units. Dr. Montanaro has owned his unit since purchasing it for $87,000 in 1980. The building is among many older condos on Palm Beach now dealing with new state safety laws affecting condominiums.
Other recent lawsuits involving area condos include La Clara owners’ February suit against developer Great Gulf over alleged misrepresentation and construction defects.
Under terms of Halcyon’s settlement agreement, Montanaro’s legal fees totaling $250,000 will be paid by the association; he will also be excused from any special assessments related either to his or the association’s legal fees connected with this case. The agreement further calls for condo owners to vote on whether or not to proceed with the air conditioning project—something previously approved without their input.
“My client is very glad,” Pincus said. “I think ecstatic is a proper word.”
