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Cory Lake Isles Feud Makes It Into Budget

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By LAURA KINSLER

The Tampa Tribune

Published: July 30, 2008

CORY LAKE ISLES - The ongoing legal battle between developer Gene Thomason and 20 homeowners suing him and his company for fraud got uglier Thursday, when the community development district tacked $500,000 for "extraordinary" legal costs onto an already-swelling budget.

If the CDD board approves the new budget in August, homeowners would be faced with a $1,106 increase in next year's assessments.

About 30 residents, several of whom are plaintiffs in the lawsuit, attended the emergency budget meeting. Shiraz Irani spoke to Thomason directly after the board voted for the 70 percent increase.

"Gene, is this the 'Get ready for a ride' you so kindly put out there a few months ago?" she asked, referring to Thomason's comment during a previous meeting.

The lawsuit accuses Thomason of using homeowner assessments to pay personal expenses and subsidize his other companies. Thomason controls the property owners association and chairs the CDD board. He also owns Cory Lakes Limited, which provides landscaping services to the 1,072-home neighborhood.

The CDD is not named as a defendant, but board Supervisors Jane Taggart and Suzanne Manzi are named individually because of their roles with the property owners association.

CDD lawyer Mark Straley said Thomason notified him that Cory Lakes Limited would make a demand for indemnification from the district against any legal costs or damages related to the lawsuit. He advised the chairman to abstain from the discussion and vote because of his conflict of interest.

"Ms. Manzi and Ms. Taggart are parties to the litigation, but that has nothing to do with their actions as supervisors of the CDD," Straley said. "So in my opinion, they do not have a voting conflict."

The plaintiffs' attorney, Mark Basurto, disagreed. "They should not have been voting on this," he said. "They are named as co-conspirators with Cory Lakes Limited. That's a direct conflict of interest."

The district's contract with Cory Lakes Limited contains an indemnification clause protecting the company and its employees from any losses or legal fees. The contract, however, was signed in 2007. It contains no language granting retroactive indemnity.

Before that, Cory Lakes Limited never had a written contract with either the property owners association or the community development district. The allegations set forth in the lawsuit occurred before 2007.

Still, Straley said he could not determine whether Cory Lakes Limited's claim would have merit. The case is complex, and the district's exposure could range from $75,000 to $500,000, he said.

"At minimum, the district will have to retain trial counsel to defend itself against the demand for indemnification," Straley said. "Even if you prevail in court, there are costs."

Board Supervisor Madeline Backes made a motion to include a line item in the budget for the maximum amount. The board can reduce the budget after the Aug. 26 public hearing, but it cannot legally increase the budget after it's been published and distributed to homeowners. By then, members should have a better idea of what the costs will be.

"We can always go down, but we can't go up," Backes said.
Basurto said Thomason's company has no grounds for indemnity and accused Thomason of making the claim "to turn the community against us."

Each homeowner would be billed $466 for the developer's legal defense if the budget is approved.

"It's just crazy," Irani said. "Now we're paying for Gene's defense. I am not a plaintiff, but I have supported the lawsuit. The one positive thing about this is the camaraderie it has brought to the neighborhood."
Thomason declined to comment.

CDD Supervisor Roger Brown voted to add the $500,000, but he said that doesn't mean he would support keeping it in the budget when it comes to a final vote in August.

"I'm not happy at all about doing it," he said. "We have to prepare, and it was the correct thing to do. I'm not voting to say this is what we should do."

Reporter Laura Kinsler can be reached at (813) 865-4844 or lkinsler@tampatrib.com.

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