The troubled Palm Greens Recreation Association in Delray Beach is now under the control of a court-appointed trustee, Boca Raton attorney Robert Furr, after bankruptcy court Judge Erik Kimball cited the association for “gross mismanagement, dishonesty, and conflicts of interest.”

Built more than 50 years ago, the 55-plus community is located north of Lake Ida Road, between Military Trail and Jog Road. So what happens now to the 1,400-plus homeowners at Palm Greens and who is impacted by the ruling? The unit owners are all affected because they make monthly payments to maintain the recreational amenities, including a new swimming pool and tennis and pickleball courts. At issue who is will be receiving those $80,000-a-month fees? Here are five things to know. Who is now making the decisions?

The Clubhouse built by Lennar to serve Palm Greens and Delray Trails opened earlier this year.

 

Robert Furr, the court-appointed trustee, not the Recreation Association. One of the condo associations, Condo 2, which has long been at odds with the Recreation Association, called for the appointment of a trustee, arguing that it was the only way to protect the Recreation Association’s limited resources.

 

Why did the judge appoint a trustee?

 

Judge Erik Kimball, in a strongly worded opinion, concluded that the Recreation Association, an entity that oversees the recreational complex at Palm Greens, was so mismanaged that the extraordinary relief sought by Condo 2 was justified.

Kimball was concerned that without a trustee, the Recreation Association would continue to pursue lawsuits that it had already lost at the state level. There are about a dozen lawsuits involving the Recreation Association. Litigation expense was the main reason why the Recreation Association sought bankruptcy protection in the first place.

Has the Recreation Association been receiving unauthorized legal advice?

Yes, according to Judge Kimball. He chided the association for listening to Mitchell Stein, who Kimball called a convicted felon and disbarred attorney. Kimball said he should have been informed of Stein’s participation. The Recreation Association’s initial lawyer, Tate Russack, claimed he was fired, in part, because he would not agree to positions advocated by Stein. He alleged Stein threatened him.

Asked to comment, Stein advised a Palm Beach Post reporter to read the court record.

Judge cites Recreation Association for conflicts of interest

One of the conflicts cited by Kimball was the Recreation Association’s decision to pay the legal fees for a defamation lawsuit filed by a board member, Arthur Robins. Kimball questioned whether it was legal for the association to use its funds for the personal use of a board member. The lawsuit was part of the association’s “prohibitively excessive litigation strategy,” according to Kimball.

Robins told The Palm Beach Post that he disagrees with the judge.

"Our bylaws allowed us to do what we did," he said. "We were accused of holding secret meetings. I and the board were defamed and we had a right to file a lawsuit. I have said that if I prevail, whatever damages I recover, will be given to the Recreation Association. I believe that the judge overstepped his bounds."

What’s next?

Following the appointment of the trustee, a decision is expected later this month on whether to accept the development agreement with Lennar, the homebuilder constructing Delray Trails on the former golf course at Palm Greens.

In exchange for building Delray Trails, Lennar agreed to build a new recreational complex for Palm Greens and Delray Trails. The facility opened earlier this year. Lennar contends it is required to manage the new recreational facilities it built until it sells most of the units at Delray Trails.

Then, Lennar will turn over management of the complex to a new recreation association, consisting of members from the two Palm Greens condo associations and Delray Trails. The Recreation Association wanted to reject the development agreement with Lennar. Furr, the trustee, will now make that call.