LAKEWOOD RANCH -- A judge has ordered 23 separate trials in a civil case against Lakewood Ranch developer Schroeder-Manatee Ranch Inc.
Nearly two dozen homeowners filed a $5-million lawsuit against SMR in March 2013 after company-approved developer Paradise Homes went bankrupt and walked away from 23 unfinished single family residences.
Judge Gilbert Smith Jr. signed the order June 4 granting separate civil trials.
SMR only allows approved builders in its 8,500-acre master-planned community.
"What they say to the community is 'We get these builders. We make sure they are experienced as custom homebuilders. We continue to check on them while they are building your home,' " said Alan Tannenbaum, a Sarasota real estate attorney representing the homeowners. "And then all of a sudden, Paradise Homes was basically a kitchen-cabinet installer who decided to become a custom homebuilder. They were underfunded and they had no experience as a custom homebuilder."
During the hearing, SMR argued each homeowner circumstance was different and each homeowner must pursue a separate lawsuit, said Daniel Perka, SMR senior vice president and general counsel, in an email to the Herald.
"As we proceed, we are confident that an objective examination of the facts by the court will find that the executives of Paradise Homes bear responsibility for the mismanagement of that company, not SMR,"
Perka said. "SMR has now filed a motion for summary judgment, which requests the court to dismiss permanently the plaintiffs' legal claims against SMR."
James Butler, owner of Paradise Homes, also owned the now-shuttered Viking Culinary Center on Lakewood Ranch Main Street. Main Street is operated by Lakewood Ranch Communities, a subsidiary of SMR.
"SMR has a relationship with this guy but they don't tell any of their prospective customers who are going to the sales office that one, Paradise Homes, who they're touting as a custom homebuilder, is a new builder, and two, they're doing business with them," Tannenbaum said. "That's a substantial conflict of interest."
Tannenbaum said he expects the 23 trials to begin early next year, which will create an enormous amount of work for the court system, attorneys and witnesses.
When Butler filed for Chapter 7 bankruptcy protection in 2012, his companies owed millions to 233 creditors. The bankruptcy is ongoing in federal court in Tampa.
Sabrina Rocco, East Manatee reporter, can be reached at (941) 745-7024.
Follow her on Twitter @sabrinarocco.