Navarre Beach Fishing Pier operations are embroiled in a legal dispute following maneuvers by four of members of management company Growing Santa Rosa Enterprises LLC (GSRE) to remove managing member Kenneth Fountain.
That move was temporarily halted Tuesday under a court order which retained Fountain as sole managing member of the pier.
Fountain filed the injunction in Okaloosa County court Oct. 5 challenging that his partner’s move to remove him was a breach of operating agreement.
GSRE was selected by the Santa Rosa Board of County Commissioners (BOCC) to manage pier operations, including running the pier restaurant and store. The company took over operations Nov. 23, 2017.
GSRE members Larry Rolison, Jerry Rolison, Jonathan Cole and Jessika Schelfhout, through their attorney Richard Mahfouz, presented Fountain with a demand letter Oct. 4.
In the letter, Mahfouz states the four members voted by supermajority to have Fountain removed as a managing member of GSRE and to create a new contract for the company, titled Second Amended Operating Agreement, in which Fountain is made a “no authority granted” member.
Under this proposed agreement, GSRE would still retain Fountain’s $70,000 investment, maintaining him as a member without giving him acting authority.
Fountain said in a prepared statement that he was not made aware of the attempt to remove him from the company or informed of the restructure agreement before Oct. 4, the same day that he received the demand letter from Mahfouz.
The demand letter also offers Fountain the option to buy out the other members of GSRE for $480,000 plus legal fees.
In Fountain’s injunction filing, he argues through attorney Benjamin Gordon that his removal is not lawful under GSRE’s governing document, the First Amended Agreement.
“Only as the manager of the company can I guarantee that the company will fund its commitments to Santa Rosa County and complete the improvements at the Navarre Beach Pier Complex,” Fountain said. “I immediately took action to enforce the terms of the governing documents of the company by filing a lawsuit against the other members of the company to reverse their actions.”
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.
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 supermajority vote, meaning at least 75 percent of the membership interest, is required to remove a member from the company. Combined, all four other members hold only a 72 percent interest.
The Oct. 16 order is an emergency ex parte motion for temporary injunction that effectively sets GSRE’s operations at the status quo of management prior to Oct. 4.
According to the consent order, Fountain is to be restored access, control and custody of all of GSRE’s records and accounts until further action is taken on the case. It also states that the Second Amended Operating Agreement is void and unenforceable.
In the statement, Fountain alleged that the move to remove him from GSRE is an attempt by the other four members to avoid costly investment in pier improvements as outlined to the county when the company was selected to manage the pier.
He explained that when the new management company took over the pier, several safety concerns were discovered, including fire hazards such as electrical wiring running through plastic pipes.
“When we took over operations, we soon discovered many unexpected repairs were required to operate the pier facilities and to insure the safety of the public,” Fountain said. “These repairs increased the funds required from me and my partners to complete the improvements that we promised to the people of Santa Rosa County.”
Fountain said additional investments in improvements were expected to begin after the summer season, when the pier is busiest, was complete. That season ended Sept. 30.
“Our members knew that additional funds would be required to make those improvements at the end of the tourist season,” he said. “I was notified that my partners in Growing Santa Rosa Enterprises filed papers with the State of Florida making it appear that I was removed from my role as the manager and as a member of the company. By removing me as the manager, I am unable to force the company and its members to commit the funds necessary to complete the improvements.”
Fountain said he is prepared to make further investment in the pier and is committed to the full performance of the agreement between Growing Santa Rosa Enterprises and Santa Rosa County.
“I am ready, willing and able to make the additional capital contributions of funds to complete the improvements to the Navarre Beach Pier Complex that were promised to the people of Santa Rosa County,” he said.
Calls to the Rolison brothers and Cole were not returned by press time. Schelfhout declined to comment.