The Concord Mews condominium unit-owners association, which four years ago filed suit against the developers of their condominium in Arlington for defective construction, won the first jury verdict under the Virginia Condominium Act three weeks ago. But their attorney says it may be impossible to collect on the judgment.
After years of legal maneuvering that resulted in most of the defendants being dropped from the case, owners of the Concord Mews condominium were awarded a $313,058 judgment against the development firm of Douglass Park Associates Inc.
The homeowners said the money would just barely cover the costs of repairing the stucco-type exterior of their development, which began to chip and flake after only a few months. There's only one hitch: Douglass Park Associates Inc. was dissolved years ago, and the condo owners are beginning to despair that they will ever get repaid for the exterior work that needs to be done.
"I feel encouraged that a jury will award substantial damages when they see there is just cause," said H. Bradley Evans, attorney for the condominium-unit owners. "We have a judgment against them. But collectability is still a problem because they don't exist anymore."
Evans said members of his firm, condominium specialists Thomas and Fiske, believe that the Concord Mews case is the first ever to go to a jury trial in Virginia under the Condominium Act, and that the judgment will prove to be a significant development in the interpretation of the act. But unless they can get the payment from the company, the judgment will be worthless, he said.
The condo owners originally filed suit against Richmarr Development Co., which they said controlled Douglass Park, and Richmarr's individual directors. They also sued the manufacturer of the material for the stucco exterior, Kenitex Chemicals Inc. of California; the subcontractor hired by Douglass Park to apply the material, Tex-On Co. of Maryland; and the architectural firm of Cohen and Haft, Kerxton, Holtz, Karabekir Associates of Maryland, which they claimed was responsible for supervising the application of the material.
Judge William L. Winston of the Circuit Court of Arlington ruled that Richmarr, the Richmarr directors, Tex-On Co. and the architects were not liable for Douglass Park's warranties. He did rule, however, that Kenitex Co., which backed its material with a 10-year warranty, should pay a default judgment of $461,000 to the condo owners.
But Kenitex filed for bankruptcy, and efforts to collect on that judgment fell through. Without the funds to do the repairs they were financing themselves, the condo owners decided to take the case to trial against the remaining defendant, Douglass Park.
"It's been a tortured case," said Evans, "And it could go on for a few more years." The only asset of Douglass Park left to collect from is a $1 million insurance policy with the Aetna Casualty and Surety Co., according to Evans. But Aetna has told the condo owners that the policy did not cover claims like theirs.
The suit charged that Douglass Park had no "independent corporate existence" but was controlled by Richmarr. It asserted that Richmarr and the individual directors knew there were warranty claims against Douglass when that company was dissolved. It also claimed that Richmarr and the directors were "beneficiaries of the distribution of assets" of Douglass Park and thus should be responsible under the warranty.
The court, however, ruled otherwise.
Marvin L. Kay, one of Richmarr's directors, said in an interview that "Richmarr was named in error. Richmarr did not set anything up, and Richmarr has nothing to do with this case."
Attorneys for other figures in the case could not be reached for comment.
Evans said that similar problems--where condominium owners were finding it difficult to get repairs because development companies allegedly had been dissolved before the end of the two-year period in the warranty provision--were cropping up in Northern Virginia, and that he couldn't speculate about the ultimate impact of the Concord Mews case until there was a final outcome.
The condo owners are trying to get the payment from Aetna, but apparently Aetna may be able to prove their policy excludes the problem with the Kenitex. "It's going to be impossible to get a payment if the company doesn't have any assets," said Evans. A ruling on the Aetna payment may be made next week, or it could takes years, he added.