Opening statements in Lake Lawn Lodge lawsuit made

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Andrea Anderson
September 9, 2015

ELKHORN—The Lake Lawn Lodge condominium owners suing Lake Lawn Resort owners, condo association and management are not thankful for the investors who put life back into the previously foreclosed Delavan business, one attorney said in opening statements Wednesday.

“Don't let them punish the people that helped them, that helped the community of Delavan, that put hundreds of individuals back at work and did so because they wanted to keep this beautiful resort open for business,” Joshua Taggatz, attorney for resort owners and management, said in his opening statement.

Seventy-two condo owners filed suit in September 2012 against the resort, management, current and past owners and the Lodges at Lake Lawn Resort Condominium Association over a management agreement, rental payments and other financial matters.

Twenty-three plaintiffs remain in the case after the majority of the plaintiffs settled out of court, according to court records.

Jury selection began Tuesday after three actions were dismissed on top of additional actions dismissed the week prior. The trial is scheduled for nearly three weeks.

Included in the remaining actions are accusations of trespassing, conspiracy and breach of contract.

Documents allege resort employees entered the rooms of seven people who didn't sign a disputed rental agreement and took furniture and personal belongings. The resort and association also are accused of letting people stay in the units without owner consent, documents state.

One of the respondents' attorneys, Ruth McCoy, told the jury no employees entered the units without consent and, if they did enter, it was for maintenance purposes only.

McCoy represents the condo association.

The plaintiffs argue the condo association's board of directors and resort management strong-armed unit owners into signing a rental agreement having them rent their units through management instead of renting their units on their own and avoiding paying the association and management to do it.

“From their point of view, it's really unfair,” said Randall Leece, the attorney of the remaining plaintiffs.

The rental agreement allegedly was pushed through after threats of legal action and repeated reference to a fake city ordinance that wouldn't allow for individual rental.

“We'll show, among other things, it holds the unit owners hostage," Leece said.

The trial will not address an accusation that resort owners illegally held four of the seven seats on the condo association's board of directors. The respondents are appealing that piece of the case.

The resort has 222 condo units in addition to the four commercial units. Association bylaws state there's one seat per commercial unit, which violates state law, the plaintiffs have argued.

Before the foreclosure, rental revenue was split equally between hotel management and condo owners. After the new investors came in, 70 percent went to management with an incremental increase for the condo owners until the third year, when it was back to 50-50, Taggatz said.

Management receives all rental revenue from the units owned by the resort regardless of the split because rental revenue goes to management which serves the resort.

“It's not what's good for one is good for all,” Leece said.

The board's intention was to make sure each condominium owner had the same revenue stream, unlike before the foreclosure, when the amounts differed, Taggatz said.

At the time of negotiations, the board, made up of seven condo owners, presented unit owners with the rental agreements after two months of negotiations, McCoy said. It presented the agreements it thought was best to avoid extraneous costs and establish a good relationship with the owners and management.

“There was no conspiracy,” McCoy said. “The association did the best they could do in looking out for the interest of the guest unit owners.”

Taggatz also told the jury that if the gradual revenue increase weren't set up as it was, the business would have gone under before more occupants even had a chance to visit the re-opened business.

The parties are due back in court at 8:30 a.m., Thursday at the Walworth County Judicial Center.

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