Gurney’s Inn Has a New Owner

George Filopoulos, now a daily presence at resort, plans to sell it in 2018
Hampton Pix

    Quietly, with an absence of fanfare or formal announcement, Gurney’s Inn has changed hands.

    On May 29, 290 Old Montauk Highway Associates, headed by George Filopoulos, a New Jersey developer, assumed ownership and management of the 11-acre oceanfront resort, a Montauk landmark since 1956, when Nick Monte bought a modest 20-room summer getaway and transformed it into a 15-building year-round complex with an indoor seawater pool. Mr. Filopoulos, the president of Metrovest Equities in Manhattan, paid a total of $25 million for the property, half of it to a trust controlled by the Monte family and half set aside for the inn’s time-share owners.

    Mr. Filopoulos, who has a house in Montauk, has by all accounts become a frequent presence at the hotel since the sale, taking full charge of day-to-day decisions. “He was never allowed to do an inspection or due diligence,” said Pat Boffa, the time-share owners’ president. “The trust said, ‘Take it or leave it.’ He couldn’t go through documents, he didn’t know how it was run. He is overwhelmed right now.” The day after the sale, she said, the new owner also became a new father, “and he is a hands-on father.”

    Gurney’s had been run before the sale by a three-member board of directors: Thomas Carusona, an attorney for members of the controlling family trust (“Class B”); John Kearney, a C.P.A., also representing the trust, and Linda Benjamin, who was elected to the board in 2010 by the time-share owners (“Class A”) at the start of a rancorous lawsuit. The plaintiff, Ms. Benjamin, cited high maintenance costs, special assessments including a $21 million one in 2008 (“People were just freaking,” said Ms. Boffa); “sweetheart” contracts for certain persons including Lola Cooper-Monte, Nick Monte’s second wife, and, as Ms. Boffa put it in February, “our general discontent at having the Monte-Cooper family running our Gurney’s.”

    As the lawsuit wound through the courts, a number of discouraged time-share owners, unable to sell their units, surrendered them. “We started 2011 with 260,000 billable shares,” Ms. Benjamin told those who remained in a June 2012 e-mail. “We are starting 2012 with 243,000, a reduction of 17,500 shares.” There was apparently little or no effort on the part of the Monte family trust to sell the forfeited units/weeks. Instead, Ms. Benjamin angrily told the Class A members last June, referencing new lines of bakery and spa products, Gurney’s “sells cakes and conditioner.”

    The lawsuit was still ongoing earlier this year when Mr. Filopoulos informed the 1,800 or so remaining time-share owners (5,700 at their height) that the family trust had agreed to sell him its shares. He promised to  “regularize the finances” of the hotel and spa and offered to roll back the maintenance charges and see that the lawsuit was concluded if 51 percent of them agreed to his terms.

    He gave time-share owners three options: Turn in their shares in December tions: Turn in their shares in December in exchange for a 20-percent maintenance reduction for 2012; turn over their share and keep their units until the end of 2017, with no maintenance or assessments during that time, or keep their units until the end of 2017 and take their chances that the inn will be resold at a profit after that point.

    An overwhelming 87 percent accepted his terms.

    Among the holdouts, said Ms. Boffa, were “some disgruntled people who don’t want to give up their Gurney’s time-shares no matter what,” including “people who don’t want to give up their cottages on the beach. They want to be permanent. They still write nasty letters.” It was Ms. Boffa, a former bankruptcy lawyer, who in the year 2000 first organized Class A owners (“So many had no idea that they owned Gurney’s, not Nick Monte”) and in 2008 formed Gurney’s Timeshare Owners Inc. “The whole thing weighed on my life,” she said. “Now I am free. I don’t have to fight the powers that be.”

    The closing was to have taken place in early April, but it was postponed time and again. “After George had his deal there were other offers,” said Ms. Boffa, among them one from HFZ Capital Group, a real estate and development company in New York City that did not offer to buy the time shares but to purchase, according to its prospectus, “substantially all of the assets owned by Gurney’s.” “Substantially all” was not defined.

    Immediately before the closing, Mr. Carusona resigned as a director and president of the board of directors and Mr. Kearney resigned as a director. Mr. Filopoulos is now president of the board with Donald Olenick, an attorney representing the 290 Old Montauk Highway corporation, as vice president and treasurer and Ms. Benjamin as secretary. Ms. Boffa will attend board meetings as a nonvoting member.

    It was reported, but could not be confirmed, that several of the contractual agreements targeted by the time-share owners have been extended for five years by the new management.

    Lola Cooper-Monte, who had a long-term consulting agreement with the trust, had been a particular target of the time-sharers’ irritation. In May 2012, with the acrimonious lawsuit showing no sign of ending, Ms. Benjamin wrote the group that “no one at Gurney’s has yet ever been able to explain to me exactly what Ms. Monte does. I have always viewed the arrangement as a sort of pension. Unfortunately, it is a pension that we, the time-share owners, cannot afford to pay.”
    Gurney’s new owner, known as a risk-taker who buys and rejuvenates troubled properties with an eye to reselling them, has said he will put the property on the block in early 2018, if not before. Meanwhile, he must not only begin a new set of closings with those time-sharers who elected to take a 20-percent maintenance reduction in return for surrendering their shares at the end of this year, but worry about remodeling and repairing rooms, decks, the parking lot, the dining facilities, the lobby, and more.

    The resort was the subject last fall of a Travel Channel episode of “Hotel Impossible,” on which the host, Anthony Melchiorri, worked with the then-owners to “overhaul the property’s flat service and find a solution to their management woes,” according to the channel’s Web site.

    Mr. Filopoulos is already said to be “tearing his hair out over the phone service,” according to one employee, a repairman. He also said Gurney’s staff members seem happy with the new order. “It is calmer and certainly much nicer,” the worker said. And a time-share owner, Susan Taylor of Florida, e-mailed that she was “extremely happy with how things turned out.” Mr. Filopoulos, she said, had “actually called me from California to answer my concerns. I sense sincere change for the better is already happening.”