The beachfront Hollywood Beach Resort's associations dismissed their lawsuit claiming the former property manager turned a blind eye to improper dealings by board members and helped divert association funds.

The Hollywood Beach Resort has 1,976 timeshares, two commercial units and 360 residential condos that are rented, meaning permanent residents aren't legally allowed, according to a court filing. The resort at 101 N. Ocean Drive is overseen by the master Hollywood Beach Hotel Owners Association Inc. and the Hollywood Beach Resort Condominium Association.

The associations dropped their lawsuit listing a breach of fiduciary duties count and an alternative beach of contract count against KW Property Management LLC, an affiliate of Doral-based KW Property Management & Consulting, after the two sides settled.

The settlement, which was signed by the associations Sept. 5 and by KW on Sept. 11, dictates no payments from either side. Association attorney Leigh Katzman, a founding partner at Katzman Chandler in Fort Lauderdale, filed for dismissal Sept. 12 with a motion saying each side is responsible for its legal fees.

KW was the property manager from April 2011 until it was fired in early 2016. The company returned two months later and left again in late 2016, according to the Dec. 23, 2017, complaint.

The associations alleged KW knew but did nothing about illegal dealings by former board president Michel Jekic, vice president Laura Welliver and another board member. The three secretly met, which is illegal, to discuss business ventures, and Jekic signed a lease on behalf of the associations without the required approval of unit owners for a first-floor commercial unit and a pool and bar area next door before opening a business there, the complaint said.

Jekic and Welliver propped up the struggling business with association funds, while KW cut checks from association accounts and made suspicious transfers to cover misappropriations, according to the complaint. Once, it put more than $708,000 into reserves from the operating account, which created a negative balance, according to the complaint. KW also allegedly didn't speak up about other alleged misdeeds by Jekic and Welliver, including a skipped financial audit.

KW attorney Frank Simone called the lawsuit frivolous.

The lease for the commercial unit and next-door property had nothing to do with KW as it was prepared by the associations' attorney, said Simone of the Frank Simone Law Offices in Miami. Moreover, he said KW disclosed financial discrepancies in its first report to the associations.

“Our financial reporting … had a gigantic disclosure that the associations' prior usage of funds were improper,” Simone said.

KW filed a May 25 motion to dismiss, arguing KW owed no fiduciary duty to the associations. It also served a motion for sanctions.

Katzman returned a request for comment but didn't specifically address Simone's comments or the dismissal motion by deadline.

Katzman replaced an attorney who filed the lawsuit, Gregory Elder of the Law Offices of Gregory R. Elder in Fort Lauderdale, who withdrew from the case May 29.

This case was filed in Miami-Dade Circuit Court because the KW contract said any litigation must be filed in Miami.

The property remains embroiled in other lawsuits in Broward Circuit Court.

The associations have sued Jekic and Welliver separately laying out similar arguments in a third amended complaint last Dec. 18. The complaint said the 15-year, $7.5 million lease was illegal because it gave the commercial unit owner a 41 percent rebate on association assessments.

Jekic and Welliver were board members from November 2010 to February 2015, the complaint said.

Welliver denied the allegations against her, including participation in closed-door meetings. She noted she prevailed in a separate 2014 lawsuit that leveled much the same accusations, according to her Jan. 16 answer and affirmative defenses. She maintained the claims against her were speculative and her actions as a board member were guided by counsel.

Welliver's attorney, Conroy Simberg partner Dale Friedman in Hollywood, declined comment.

Jekic moved to dismiss on Jan. 17. His attorney, Cole, Scott & Kissane associate Stefanie Copelow in West Palm Beach, didn't return a request for comment by deadline.