A Palm Beach condo association reached a settlement with a resident nearly a year into litigation regarding an allegedly unsanctioned air conditioning project and $15 million in unaccounted special assessment funds.
Court records show the Halcyon of Palm Beach Condominium Association settled the case brought by resident Dr. Michael Montanaro, a local orthodontist. Montanaro filed suit in October, alleging that the association had violated owners’ right to vote on a $2.5 million air conditioning project. The complaint sought a court-appointed receiver to assume control of the association and its finances.
Earlier this month, Palm Beach Circuit Court Judge Maxine Cheesman approved the appointment of a receiver. As part of the settlement, the association will instead hire a forensic auditor to determine how the $15 million was spent, according to 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,” he 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 unaccounted $15 million was raised in two separate special assessments in 2021, one for $6 million and one for $9 million. A previous investigation into the funds described the association’s accounting as in “shambles,” court records show.
“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 for Montanaro.
“There wasn’t necessarily evidence of nefarious activity,” he said, but it “raises a lot of questions,” given the amount of money involved.
A spokesperson for the association said it expects to hire the auditor in early September.
The Halcyon is a 104-unit, two-building oceanfront condo at 3440 South Ocean Boulevard on the South End of Palm Beach. The six-story and seven-story buildings were built in 1980, the same year Montanaro bought his two-bedroom unit for $87,000, property records show. It is one of dozens of older condo buildings on the island navigating the state’s new condo safety laws. Among other recent condo lawsuits in the area, the owners of La Clara in West Palm Beach filed suit in February against developer Great Gulf, alleging misrepresentation and defective construction.
As part of the Halcyon settlement, the association also agreed to pay Montanaro’s $250,000 in legal fees, and he is excused from special assessments related to paying his fees, as well as the association’s legal fees connected with the case, Pincus confirmed. Other terms of the settlement include a vote on the air conditioning project, which was previously greenlit by the association without a vote by the owners.
“My client is very glad,” Pincus said. “I think ecstatic is a proper word.”
