An Alexandria judge has ordered a developer and his attorneys to start paying $5,000 a day in sanctions until they comply with an earlier order to pay more than $750,000 in damages to 25 condominium owners who won a suit against them and another $1.5 million to buy back their units.
Circuit Court Judge Donald H. Kent imposed the sanctions this week after developer John DeLuca and his attorneys failed to make the damage payments to the condominium owners by a week ago yesterday, as Kent had ordered them to do.
In addition to the sanctions, Kent ordered DeLuca and his attorneys to pay the condominium owners' attorneys' fees and other damages to cover expenses they incur because of the delay in the settlement of the lawsuit.
Last May, Kent ordered DeLuca, developer of the Sentinel of Landmark condominium project, and his lawyers to return the 25 owners' money, cancel their sales contracts and release them from their mortgages.
But shortly before Thanksgiving, DeLuca, attorneys Russell S. Rosenberger and Ronald C. Proffitt and their law firm, then Bettius, Rosenberger and Carter, told the judge their financing had fallen through and they could not make the payment.
Kent, in deciding the case in favor of the condominium owners, ordered DeLuca and his attorneys to pay the $750,000 in damages, to be divided among the owners to cover their Sentinel down payments, settlement costs and other expenses. In addition, the judge ordered the developer and the attorneys to buy back the 25 units, which are worth about $1.5 million.
Rosenberger told Kent during a hearing this week that a private investor who was expected to be a large contributor to the buyout of the units had withdrawn from the deal. Although the law firm's insurance company can contribute $350,000 to the settlement, the defendants do not have enough money to cover the full award, the judge was told.
The condominium owners' attorney, James C. Brincefield, asked Kent during a hearing in early October to require DeLuca and the attorneys to post a bond or provide evidence of their ability to comply with the settlement order. The defendants replied that they would have enough funds by the settlement date, and the judge did not order a bond or other proof that they would meet the settlement terms.
Kent ruled earlier this year that DeLuca and Rosenberger violated Virginia law covering the handling of condominium documents for the building, located at 6300 Stevenson Ave. The judge found Rosenberger was guilty of fraud for failing to properly register the condominium and not giving the unit owners correct public offering statements. Proffitt was found guilty of "constructive fraud," which Kent said was "innocent and mistaken representation" in settlement of one purchase. Under Virginia law, other partners in the attorneys' firm are liable although they are innocent of participation in the fraud.
While the judge ruled in favor of the condominium owners, he also ordered them to vacate their apartments by the settlement date last week. They complied with the order and, as a result, several of them said, nearly all of the 25 owners now either have no new home or are in severe financial difficulty.
Brenda Dobbs, whose Sentinel apartment was the first home she has owned, said, "I won. I proved fraud and I'm on the street while they the defendants go home to their comfortable homes every night. It doesn't make sense. It seems that justice will never be done."
Dobbs, like several other owners, had signed a contract to buy a new home, expecting to cover the costs of settling the purchase of her town house with proceeds from the Sentinel award. Dobbs moved into the town house two days before she was scheduled to receive the Sentinel proceeds, planning to pay rent until she received the money and completed the new purchase.
Later on the same day she learned of the snag in the Sentinel award. Now her belongings are still in the town house while she stays with a friend. She said she will have to move back into the Sentinel by this weekend because she cannot complete the home purchase.
She said she expects to lose nearly $10,000 she had already paid for upgraded amenities in the town house, moving expenses and costs and fees connected with obtaining her mortgage and closing the sale of the new home.
Terry and Cynthia Moore Corner were counting on their share of the Sentinel award to cover the down payment and closing costs for another Alexandria condominium unit they planned to buy, and have signed a $1,000 pre-occupancy agreement on the new apartment so they could move in time to comply with the Sentinel court order.
"We won't be able to buy here if they the defendants don't settle with us. We would have to pay for a second move and forfeit our deposits," Terry Corner said.
Linda J. Desell also has moved to a new home, but is still living in the Sentinel apartment with a cot, one suitcase, and her dog, she said. Like Kathryn Zuba and other owners, she said she cannot carry a new mortgage and continue paying on her Sentinel unit.
The latest twist in the Sentinel saga comes more than three years after owners of 27 units filed separate suits, which then were tried together. Kent dismissed two cases on legal technicalities.
In addition to receiving invalid condominium documents, the Sentinel owners said they were told when they bought their apartments that 80 percent of the 272 units in the building would be owner-occupied. DeLuca, however, sold more than 200 of the apartments to a Boston syndicate that operates them as rental units.
Condominium owners often fear that large numbers of renters in their buildings will lower the resale value of their units, because tenants, who have nothing invested in the building, will not shoulder a fair share of maintenance and management costs.
During the trial, DeLuca said he did not deceive anyone, and that "altering the condominium documents was my attorney's responsibility." Rosenberger, who surrendered his license to practice law in Virginia last year, acknowledged during the trial that he failed to follow state law in preparing and recording the documents.