BRADENTON -- A group of about 30 homeowners in Lakewood Ranch filed a $5 million lawsuit Friday against Schroeder-Manatee Ranch Inc. because the company approved a developer who later went belly-up, leaving the homeowners with unfinished homes.
The homeowners filed the lawsuit against the Lakewood Ranch company after trying for two months to negotiate a settlement with Schroeder-Manatee Ranch after Paradise Homes, the developer SMR approved as a builder, "walked away from 30 unfinished homes and filed bankruptcy," said Alan Tannenbaum, a Sarasota attorney and realty litigation specialist.
But Daniel J. Perka, senior vice president and general counsel for Schroeder-Manatee Ranch Inc., said his company should not be held responsible for one bad builder. Home builders in Lakewood Ranch have successfully constructed an estimated 8,000 homes and condominiums since 1995, he said.
"The recent bankruptcy of Paradise Homes is unprecedented, and SMR sympathizes with all of the parties who have been impacted by the mismanagement and bankruptcy of Paradise Homes," Perka said in a statement released Friday afternoon. "SMR has not received a copy of the lawsuit filed by customers of Paradise Homes and thus cannot comment on it specifically. However, it is important to stress that Jim Butler and the other executives of Paradise Homes are responsible for the mismanagement and bankruptcy of that company, not SMR."
Tannenbaum said SMR had no reason to approve
Butler or the now-bankrupt Paradise Homes, which no longer appears on SMR's marketing website as an approved builder.
"This guy never built a custom home in his life previously," he said.
Tannenbaum's clients take offense to SMR marketing material that states in bold type that " 'Builders must meet rigorous standards,' in order to be invited to build at Lakewood Ranch. Each approved builder has been selected for the quality of their construction and the superior customer service they provide."
Perka said that Paradise Homes was successful in deceiving many before the company went bankrupt.
"Clearly, Paradise Homes continually misled and deceived many people -- their own customers, subcontractors, financial institutions -- as well as SMR," Perka said. "For example, both local and national lenders periodically evaluated the financial condition of Paradise Homes and continued to fund ongoing projects and to lend to new Paradise customers.
It is obvious that Paradise was providing misleading and inaccurate information to everyone.
"It is also important to note that these customers entered into contracts with Paradise Homes, not with SMR," he added.
"SMR has had discussions with Paradise customers to determine if there are ways that SMR can assist them. But SMR is not financially responsible for the contracts between Paradise Homes and its customers."
Tannenbaum, along with his Tampa-based lawyer-brother Marc Tannen, represents "about 30" disgruntled homeowners who purchased homes from the now-bankrupt Paradise Homes of Sarasota which had two-affiliated corporate entities now also in bankruptcy; Extreme Remodelers of Sarasota LLC, and Paradise Lifestyle Center LLC.
When the Butler-controlled companies filed for federal protection, they listed assets of between $1 million and $10 million. Paradise president James Butler was trying to fend off a list of 233 creditors -- including 1st Manatee Bank, Manatee County, the Manatee County Tax Collector, the City of Sarasota, Bright House Networks, Florida Power and Light, the Sarasota Chamber of Commerce and Turner Tree and Landscape -- to whom his companies owed millions, according to the docket of federal bankruptcy court in Tampa.
At the time of the bankruptcy filing, 30 homes sold by Paradise were unfinished, including more than a dozen where construction had not even begun.
Some of the homeowners have since "paid to have their homes completed," said Tannenbaum.
Stephen Frater, senior business reporter, can be reached at 941-745-7095.