Naples, American Holdings sign contract

By Dawn De Busk

Staff Writer

NAPLES — The long-going court battle, American Holdings, Inc. versus the Town of Naples, has come to an end.

It has ended at least on the pieces of paper being processed in the court system.

“No one won. It was a costly, totally unnecessary lawsuit for both sides,” said the owner of American Holdings, Inc.

A consent agreement has been drafted and filed with the Maine Court, Naples Town Manager Ephrem Paraschak announced recently; and the owners of American Holdings confirmed it.

This outcome comes after more than 18 months of court appearances and communication between the lawyers for both parties.

American Holdings is the company that operates Sunnyside Village, located on Long Lake. Khris and Barbara Klimek purchased the property in 1999 through their corporation, American Holdings, Inc.

On Tuesday, Barbara Klimek commented on why they decided to drop the lawsuit.

“We got what we wanted. We only dropped the (recouping of) legal fees to end this thing. One and a half years is enough,” she said.

“We are done fighting the town. We wanted to sell the remaining cottages and retire that part of the business,” she said.

Klimek said the past two years have been robbed from her and her husband, and the ordeal has taken a toll on his health.

“Khris is now on high blood pressure medication and carries nitro glycerin around with him for chest pain,” Klimek said. “I don’t understand how the town benefited from this mess,” she said.

There were two court cases.

In the first, which appeared in Maine Business and Consumer Court, American Holdings claimed the Shoreland Zoning Ordinance violation(s) for which the Town of Naples had cited them were not valid. During that court process, it was determined by a judge that American Holdings was in compliance on several counts.

In the second court case, American Holdings sued the town for reimbursement of legal fees.

A few weeks ago, the town agreed to drop the accumulated fines stemming from land use ordinance infractions, according to Paraschak.

Likewise, the owners of American Holdings have agreed to not pursue suing the town for legal fees incurred when the town appealed a judge’s decision, Paraschak said.

According to court documents from American Holdings versus the Town of Naples, which appeared in Maine Business and Consumer Court, the town appealed the judgement five times since March. That court case began in 2014. A judge’s statement was issued in March 2015, which cleared the Klimeks of violations regarding the condominium ownership conversion.

During those appeals, the town continued the rack up the daily fines for the condo ownership conversion — although the judge had declared it legal.

Sometime this summer, American Holdings, Inc. filed a separate suit against the Town of Naples to be reimbursed for a percentage of the legal fees that the corporation had paid during the town’s appeal process. At one point, lawyers for the two parties entered into the mediation process.

The consent agreement was wrapped up about three weeks ago — on a Monday, Paraschak said.

In an email, Barbara Klimek highlighted some of the details of the consent agreement.

“Our condo conversion is legal. They agreed to withdraw the sixth appeal. The upstairs apartment is legal after we agreed to have a licensed subsurface waste disposal inspector check out our septic systems and okay them. He found them to be adequate and working fine,” she said.
“The mobile home is allowed to be year-round, which it always was. The garage is able to be used for a garage, storage or overflow sleeping quarters for the unit it sells with,” Klimek wrote.
During a Sept. 21 Naples Board of Selectmen meeting, Paraschak also gave a summary of some of the conditions of the consent agreement.

“It allows the sale of the condos, and the year-round use of the cottage (mobile home) they asked for. They have to prove they are up to code on the septic system,” Paraschak said.

“The counter claims have been addressed,” he said.

There is no money exchanged” between the parties, he said.

During the September selectmen’s meeting, Selectman Rich Cebra spoke about past public comments regarding the court case.

“We have heard several times from people that the town would pay tens of thousands of dollars in legal fees,” Cebra said.

The outcome did not result in the town re-paying American Holdings those legal fees associated with the town’s appeal process, he said.

Cebra directed a question to the town manager about money spent in that manner.

“Beyond what was paid prior (to lawyers), zero dollars” is what the town owes the other party, American Holdings, Paraschak said.

After Cebra’s comment, resident Jim Turpin spoke to the board.

“It is not like we have not spent money on it, close to $100,000,” he said.

Turpin was rounding up the $90,000-plus spent in legal fees during the American Holdings court case. That was prior to July 1, the beginning of the town’s fiscal year.

Nobody commented on what was owed in legal fees from July 1 through September.

The legal tug-of-war was particularly costly for the town since it had to hire another law firm than the one it typically engages. That is because there was a conflict of interest since the law firm usually used by the municipality was already representing some of the homeowners involved in the lawsuit. Twice the town could not use the law firm they had hired because of conflict of interests with the plaintiff.

Cebra said that the public had been in an uproar over the amount of money the town had spent on this court case. Some Naples residents have said the town would have to pay the legal fees twice — the cost of its lawyers’ services plus reimbursement of legal fees to the other party.

Basically, he said the outcome was a win-win for the parties involved.

“Who brought it to court?” Cebra asked.

Chairman Bob Caron II responded.

The Klimeks brought it to court, Caron said. A request made by the Klimeks had been denied by the Naples Planning Board, he said. The next step would have been to come before the Board of Appeals, he said.

“It is too bad there wasn’t a mechanism to avoid this, and (avoid) spending money” in court,” Turpin said.

“There is,” Caron responded, “but, they skipped the board of appeals.”

Barbara Klimek explained why that route was taken.

The lawsuit happened after coming before the Naples Planning Board whose chairman referred to the cottages as a hotel and a promised plan-of-action from the planning board never materialized, she said. The lawsuit also followed the Klimeks receiving a letter from the Naples Code Enforcement Officer (CEO) Renee Carter citing them with Shoreland Zoning Ordinance violations, and demanding that they buy back the cottages from the people who had purchased those dwellings, she said.

“The reason that we did that (took the town to court) is no one would write up what we needed to do. The time had expired,” for the planning board to respond with a written remedy for the alleged violations.

“There was no option other than to sue,” Klimek said.

“We were being forced to buy back the three cottages we already sold. You could imagine the lawsuit that would have incurred,” she said, adding that the other owners’ title insurance company had already hired a partner in Verrill Dana, of Boston, to litigate their case.

“Had the town been open to hearing us and our two attorneys in the first place, we could have avoided this expense for all involved,” she said.

“We pay taxes in this town. Why would we want to spend our tax money fighting ourselves?” she said.

“A lawsuit was the last thing we wanted to do,” she said.

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