Thursday evening, four of the five partners in Growing Santa Rosa Enterprises, LLC (GSRE) forcibly took control of the Navarre Beach Fishing Pier from managing member Kenneth Fountain in a continuing saga of ownership arguments.
Jonathan Cole, Jerry Rolison and Larry Rolison went to the pier Thursday evening with the intention to take over management from managing member, Ken Fountain. Member Jessika Schelfhout was not present.
Physical control of the pier property was theirs as of Friday, but who legally controls GSRE, the Navarre Beach Pier Management Company, will be for a judge to decide.
Cole said their actions were prompted by a breakdown of negotiations in which Fountain was seeking to buy the other four members out of their stake in the company. He said they felt those negotiations were not proceeding in good faith.
“Our lawyer said it was time to take control of the place,” Cole said. The four dissenting GSRE members have an attorney whose address is San Diego, California.
However, the take over may be in violation of an ex parte motion for temporary injunction ordered and signed by Okaloosa County First Judicial Circuit Judge John Brown on Oct. 16.
GSRE has been the county appointed pier management firm since Nov. 23, 2017. Public argument over the piers control began in October 2018 after the four partners filed an amendment with the Florida Division of Corporations to remove Fountain as managing member of the company.
They drew up a Second Amended Operating Agreement that listed Fountain as a “no authority granted” member.
Fountain argued this move was not allowed under the First Amended Operating Agreement because the other partners did not own enough of a stake in the company to amount to a super-majority.
Fountain holds a 28 percent interest in the company. Each of the Rolison brothers also holds 28 percent. Cole holds 8 percent, and Schelfhout holds 8 percent. Sections 9.01 and 11.01 of the agreement state that a super-majority vote, meaning at least 75 percent of the membership interest, is required to remove a member from the company. Combined, all four dissenting members hold only a 72 percent interest.
Under section 6.01 of the First Amended Agreement, the original contract for GSRE’s operations, Fountain was listed as the managing member with authority over service agreements and contracts for the company, bank accounts and decisions regarding the GSRE’s management and business. This document was signed by all five members of GSRE. Based on these documents Judge Brown issued an order effectively handing control back to Fountain and rendering the second operating agreement null and void, but Cole and Jerry Rolison stated the order was only effective up to Dec. 1.
The order reads “this injunction shall remain in place until further order of this Court or until the case is dismissed,” which indicates the injunction is still in place.
It also states that if the issues raised in the order are not resolved by Dec. 1 “the parties may re-set for an evidentiary hearing the pending motions for temporary injunctive relief at that time.”
Under the order, Fountain remains the company’s managing member.
Cole provided a copy of an amended filing with the Florida Division of Corporations dated Dec. 13 that removed Fountain as managing member. However, this was not a court action and could be accomplished by just unilaterally filing a non-legal and non-binding amendment with SunBiz.
Jerry Rolison, who becomes deputy of the company under the most recent non-binding amendment’s language, said this document gave the four partners controlling ownership, effectively removing Fountain from management.
The filed amendment was done in violation of the standing consent order based on the order’s language. In an email statement, Fountain indicated they will be pursuing charges of contempt of court for the takeover action.
Cole said they are seeking to remove Fountain from the management position because they feel he has not done a good job. He said payments to the county required under contract were not paid on time though they are now up to date, and he said they have not seen a return on their investment in the pier. According to the agreement with Santa Rosa County, all partners are responsible for payments to the county.
“There was too much money going out and not enough coming in,” Cole said.
He also pointed to a cash call issued to the partners requiring roughly $120,000 of additional investment into the pier. That documentation was provided to the Navarre Press. Cole said their initial investment should have been enough.
Fountain said Cole nor Schelfhout turned in their initial investments on time, and the costs turned out to be more than Cole predicted. “Cole was responsible for the cost projection of the initial build out,” said Fountain.
Fountain also stated that Cole represented himself in being an expert in construction management, costing and bidding when the partners first formed to bid for the pier management contract. Fountain said that “most of the cost overruns were in the electrical improvements which the Rolison Brothers were responsible for with their electrical company, BJL Sources, Inc.”
Fountain told the Navarre Press that in addition to the misrepresented initial cost projections, expenses for unexpected repairs had cost the company funds requiring a heftier investment by the partners to meet the pier improvements promised to the county. The improvements included additional structures and a restroom two thirds down the pier.
Pier General Manager Michael Rayborn said since he was hired the pier has been profitable.
“The eight months that y’all ran this place with your managers…you lost money every single month. Since I have been here, the very first month you have turned a profit, and since then this place has been profitable,” Rayborn told Navarre Press recounting what he said to the dissenting partners as they were sitting in the bar Thursday evening.
Rayborn said that Thursday evening the partners (other than Fountain) arrived at the pier and stated they were terminating his employment, the chef and other managers. He said he refused to leave, and the partners seated themselves inside the bar.
At closing time, the partners did not leave the premises he said. Rayborn said they have since removed security cameras from the premises and changed the locks.
While Santa Rosa County sheriff’s deputies were called to the property multiple times by both parties, they took no action to remove anyone from the premises.
Sheriff Bob Johnson said deputies are not authorized to act on the matter because it is a civil dispute between members of a single company.
“I consulted with the County Attorney, and he agrees this is 100 percent a civil issue,” he said. “Until a law is broken, a criminal law, we cannot take action. They are going to have to go through court litigation.”
He went on to say that if a judge specifically orders the sheriff’s office to enforce an order, they would be compelled to do so. The consent order has no such language.
“I understand they want a solution, but we are not a solution. It is a civil matter,” Johnson said.
Fountain concluded that he has been very careful not to disparage any of the partners or the business. He did not want to do anything to devalue GSRE or embarrass the county. “Unfortunately, the other partners continued to plant stories and make false and /or disparaging comments about GSRE and the company publicly. It is very difficult to negotiate a buyout with partners who are sabotaging the company and its value,” said Fountain.
Update: Friday evening at approximately 7:30 p.m., a representative of the disgruntled partners turned the keys back over to Pier General Manager, Michael Rayborn. There is a hearing next Friday, December 21.
Updates to this story will be posted as additional information becomes available.