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Two shareholders feud in lawsuit over control of Skydive City in Zephyrhills

Skydive City was established in Zephyrhills in 1990 and has grown into a skydiving destination with worldwide popularity. About 68,000 people jump from its planes each year.

BILLY PORTER | Special to the Times (2007)

Skydive City was established in Zephyrhills in 1990 and has grown into a skydiving destination with worldwide popularity. About 68,000 people jump from its planes each year.

ZEPHYRHILLS — Planes take off daily, loaded with brave souls on a one-way flight.

They plunge into the clouds, faces frozen, in a free fall, until their chutes open and they flutter to the well-worn ground at Skydive City.

But this place where tens of thousands of thrill-seekers venture throughout the year to taste the rush of skydiving has become ground zero in a bitter court battle over corporate control and, ultimately, money.

• • •

Bill Richards was part of the original venture in 1990 that set up the skydiving destination at Zephyrhills Municipal Airport. A resident of Gardiner, N.Y., Richards operates a skydiving facility there and was looking to pick up business during the slow winter months up north.

Skydive City, his lawsuit says, was always meant to buttress the businesses he and his partners already operated. Richards' Freefall Express Inc. provided the planes to fly the skydivers. Another partner sold the skydiving gear.

The business bloomed into a skydiving destination with worldwide popularity and developed its own bohemian character — one that was at first shunned by most Zephyrhills residents, then embraced.

"That's why we put (a skydiver) on the city seal back in 1998," said City Manager Steve Spina. "I think that and the water has kind of put us on the map."

Now some 68,000 people jump from planes at Skydive City each year, and 40 or so live at the permanent RV slips year-round.

And for the last 20 years, Richards got a cut of every jumper's fees, plus distributions as a shareholder in the corporation.

But in January, Skydive City General Manager David "T.K." Hayes wrote a letter to Richards cutting Freefall Express out of the operation. Citing a non-negotiable rate hike being imposed by Richards, Hayes wrote, "We are severing all ties with Freefall Express Inc."

Hayes, in a recent interview, said Richards' proposal would have cost Skydive City an extra $150,000 a year.

"Please vacate the premises immediately and as reasonably feasible. We thank you for your many years of service," he concluded in the letter to Richards.

Richards, who owns 32 percent of Skydive City, quickly went to court. He says in his lawsuit he's being squeezed out of the company he helped start and still owns a portion of, and he alleges other transgressions that long predate the January breakup.

"Mr. Hayes has taken over this company (and is) freezing out Mr. Richards," said one of Richards' attorneys, Andrew Beatty.

In court filings, Richards says he stopped receiving monthly shareholder distributions last August. The money, he learned, was instead being used to pay for a new building at Skydive City. Although he is a director in the corporation, Richards said he was never consulted about that decision.

The income is significant. In January 2009, the suit says, Richards' distribution totaled more than $16,000.

Richards also accuses Hayes, who was hired at Skydive City in 1995 and owns 4 percent of the shares, of illegally finagling to get himself elected president of the company. In July 2008, Richards' suit says, Hayes and two other directors held a meeting in which Hayes was elected president and secretary. The position of vice president, which had been held by Richards, was left vacant.

"We're taking orders from a 4 percent restricted shareholder," Beatty said.

Without a quorum of the five directors, Richards argues the election wasn't valid.

Hayes insists these arguments are red herrings, that Richards is just unhappy about the lost revenue.

"He's not going to take losing a million dollars a year lightly," Hayes said. "He's absurd. It's whatever can stick."

Unlicensed flying

On this, the two sides agree: After Freefall Express and Skydive City parted ways in January, Hayes began flying skydivers himself — without the proper pilots' licenses.

Hayes has acknowledged the "oversight." He estimated he flew about 20 flights with skydivers while lacking the right aircraft certification and medical clearance. His own log books show the number might be closer to 50.

Hayes corrected the problem, telling a Federal Aviation Administration investigator that while he did fly a plane he wasn't certified to operate, he was in training under an instructor's supervision to earn the rating. He has also hired a new vendor to fly.

"It was an administrative lapse on my part, not some 'stupid aerial stunt' that could have or would have resulted in an accident or injury to any person or persons," Hayes wrote to the FAA, which is still investigating the matter.

That explanation did not satisfy Richards. He hired an expert witness who called Hayes' conduct "outrageous" and who, after reviewing Hayes' records, concluded Hayes may have falsified some of his flight logs to obtain the pilot rating.

"This guy may not have any licenses at all legitimately," David Plante, one of Richards' attorneys, told a judge recently.

Hayes' response to those allegations: "It's just bogus, is all it is."

In a recent court hearing, he asked Circuit Judge Susan Gardner to bar Richards from even coming on the Skydive City property. Richards wanted the judge to restore Freefall Express as the flight vendor and Richards as an officer. He also seeks to dissolve the corporation, arguing that Hayes' tactics are jeopardizing Skydive City's lease, considered the company's biggest asset.

But Spina, the city manager, and Trina Sweet, the airport manager, both testified that the lease is in good standing, even with Hayes under investigation by the FAA.

Gardner decided that with the lease intact, no emergency exists. She denied both sides' requests for now.

The judge told both sides' attorneys she thinks they have years of work ahead of them to resolve their differences.

Business as usual

In the meantime, Hayes said, skydivers keep jumping from planes in big numbers.

With the sour economy, he said the demographics have changed some. Not everyone who could afford to skydive can anymore. Other people who previously enjoyed more expensive hobbies now have turned to skydiving. The weak dollar, he said, keeps Europeans coming reliably.

The dispute between him and Richards has found its way through the tight-knit skydiving culture. Hayes said he's trying to be open about it, so when people ask what's going on, he tells them.

"There's rumors floating around, but the rumors don't last long," he said.

And the new building is about to open, which should pave the way for a 20-year lease with the city.

"So we're in great shape," he said. "We're just going to move ahead."

Molly Moorhead can be reached at moorhead@sptimes.com or (727) 869-6245.

Two shareholders feud in lawsuit over control of Skydive City in Zephyrhills 06/19/10 [Last modified: Saturday, June 19, 2010 12:49pm]

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