“We’ve had some very significant developments in this matter,” County Attorney Al Hadeed told the County Commission this morning. Stunning, is more like it.
Hadeed was referring to the nearly three-year-old struggle to secure easements that would allow the U.S. Army Corps of Engineers to rebuild 2.6 miles of beach on a critically eroded stretch south of the Flagler Beach pier.
The county during that span secured easements from some 150 property owners, for every single parcel but two. Both belong to Cynthia d’Angiolini, at 2538 and 2540 South Ocean Shore Boulevard (one almost across the street from the Beachfront Grill restaurant, the other about a block south, across the street from her small home). By holding out, d’Angiolini was holding the Corps project hostage and exposing that stretch of shore to further damaging erosion, as in fact happened during Hurricane Nicole’s lashing. Stretches of A1A were again demolished.
On Monday, Hadeed revealed that d’Angiolini had filed for bankruptcy in 2019. That in itself was not the the most significant issue. The county had known about the filing for a while, but was not focused on it. It’s a separate, federal matter. What the county had not detected until last week was this: d’Angiolini was required to disclose all her real estate holdings. She had not. The two small parcels at the heart of the dispute with the county were never listed in the filing. She only disclosed the $300,000 value of her home.
On Nov. 15, the bankruptcy court discharged d’Angiolini of her obligations. The case isn’t closed. But the discharge meant she had met her obligations. With the revelation that–intentionally or not–the value of the two parcels were hidden from the filings, she must now correct the error through the court, reveal the value of those two parcels, and pay creditors what they were shorted.
That now gives the county a huge opening to finally get d’Angiolini to sign off on the easements. The county can offer d’Angiolini to pay whatever amount creditors would be owed following the corrected filing. In exchange, d’Angiolini would have to sign the easements. Put another way: Flagler County is suddenly in a position to bail out d’Angiolini, who may have no choice but to accept.
“So we’ve had some dramatic developments and we’re still working on them. The short story is,” Hadeed told commissioners, “that we’re going to be acquiring our land rights to these properties through a bankruptcy proceeding.” Hadeed worked on the matter over the weekend with Flagler Beach attorney Scott Spradley, who specializes in bankruptcy law and had been following the dune renourishment matter closely over the years. (He was at the meeting this morning.)
The technicalities of the case sound more complicated than they are.
D’Angiolini filed Chapter 13 bankruptcy on Oct 3, 2019. Under Chapter 13, the debtor proposes a three- or five-year plan to repay creditors. The approach takes earnings and assets, including real estate holdings, into account and, based on a formula, yields a regular payment plan. The more real estate a debtor owes, the higher the payments. The debtor doesn’t have to repay every penny. But the approach relies on the debtor’s good faith that what can be repaid will be, and of course that all assets and earnings are disclosed. At the end of the three years, the plan is over and the debtor is discharged.
D’Angiolini’s plan called for a monthly payment of $150 ($50 of it for the attorney) plus $2,500 in administrative fees.
By failing to disclose the value of the two beachfront parcels, d’Angiolini gained an undue advantage over her creditors. In other words, she did not pay them what she should have. The two parcels are very small, but they’re not without a value of many thousands of dollars. The county has conducted two appraisals but has not disclosed those values. The values are protected from disclosure by ongoing negotiations. (Once the negotiations are over, the values will be disclosed, though that’s now a moot point as d’Angiolini must disclose them in her bankruptcy filing.)
“She has had a payment plan to make the creditors whole but still, they were short significantly,” Hadeed said, referring to a “five-figure amount.” In December 2020, a filing showed $36,631 as total money owed, and monthly income of $5,013.
Whether the non-disclosure was intentional or not is irrelevant: the computations were based on incomplete disclosures. Now that must be fixed.
D’Angiolini’s lawyer, Ann Rogers of Ormond Beach, will be filing an amendment to the Chapter 13 filing, very possibly this week. Hadeed said Rogers had also been kept in the dark about the two parcels. “No lawyer would have put their license in jeopardy for a client where there potentially could be a fraudulent failure to disclose on required federal court matters,” he said. “So we don’t have any doubt in our mind that she does not know about this situation, and that she is probably as we’re speaking, talking about this with her client, probably as we’re speaking, preparing an amended schedule, putting those properties into the bankruptcy estate.”
D’Angiolini may not have the means to pay what she owed. So the county can pay the amount for her, getting the easements in exchange.
If she refuses, the county has yet another weapon at its disposal. It hired Spradley, who can now put bankruptcy law to work in the county’s favor, at great discomfort to d’Angiolini.
The county is not seeking to acquire the two small parcels. Nor is it seeking to change their use. Nothing may be build on them anyway, other than a beach walkover. All the county wants is the easement that allows the Corps to essentially trespass on the property while it’s constructing the dunes, and to rebuild the dune structure, which will protect d’Angiolini’s property from being washed away. “The only thing we have ever sought from any of these owners is permission,” Hadeed said, “permission to perform our work that protects and restores their land, protects their property, including their property across the street and all of their neighbors’ rights, and essentially actually adds value to their property.”
The next steps are unfolding: on Sunday, Spradley filed a notice of appearance on behalf of Flagler County in the federal bankruptcy case. “We’re obviously very much on top of it,” Hadeed said. Further developments are expected soon.
“I’m kind of troubled by this whole thing,” Commission Chairman Greg Hansen said. “We have operated in good faith throughout. And we’ve tried to meet all her demands. So whether she knew or didn’t know about this issue, she did file bankruptcy, was she scamming us all along? Because it was clear to me as it got closer and closer, all she wanted was cash, our money. Was she trying to use this to get out of bankruptcy here?”
Hadeed paused. “I can understand how you could come to that conclusion,” he said. He was uneasy with the question, because he is barred from discussing anything related to ongoing discussions with d’Angiolini’s eminent domain attorney, separely from the bankruptcy proceedings. “Of course I cannot know and do not know her intent. What we do know is that there was a course of action to delay resolution in whatever form. One could think that the reason for delay was to avoid any funds received going for the benefit of creditors.” The record indicates that the creditors were shorted the five-figure amount, which was not specified. Referring to Rogers, d’Angiolini’s bankruptcy attorney, he continued: “I am of the belief, and Mr. Spradley shares this view, that the bankruptcy attorney is going to do everything to make this right because this has implications beyond just the formalities of the bankruptcy. This affects the entire safety of the public, and in ways I do not need to describe to you.”
d’Angiolini hired the eminent domain attorney to handle the dispute with the county. The county has been threatening eminent domain for over two years. Hadeed said he had contact with that attorney, with whom he’d been negotiating. That attorney also had not been aware of the undisclosed assets in the bankruptcy filing. “He understood what our concerns were, and that this might take our negotiations off the table,” Hadeed said.
Hadeed would not go so far as to characterize the issue as good or bad news. “But definitely,” he said, “this will facilitate securing those rights to be able to use those parcels for the project, I think considerably.”