A group of condominium owners in Reston has won $1.325 million in compensatory and punitive damages from Donatelli and Klein Inc. for water damage in their Lake Anne Plaza condominiums.
In a verdict handed down last week in Fairfax Circuit Court, a 10-member jury gave the Lake Anne of Reston Condominium Unit Owners Association $1.25 million in compensatory damages and $75,000 in punitive damages. Lake Anne Properties Associates, a limited partnership set up by Donatelli and Klein Inc. to handle the conversion of the property into condominiums, is liable for its share of both segments of the award, as are the company and Louis T. Donatelli, who acted as a general partner in the limited partnership.
Donatelli's partner, Roger W. Klein, died several years ago and, under Virginia law, his estate cannot be required to pay punitive damages. His estate is liable, however, for the compensatory damages, according to John Fisher, a lawyer with Odin, Feldman & Pittleman, who represented the condominium association.
Lake Anne Plaza, the keystone of Reston's original development, is more than 20 years old, and owners of some of the units in the mixed-use complex had struggled with water leakage for many years, Fisher said. The complex was built by Reston's original developer, Robert E. Simon, and later turned over to Gulf Reston Inc., which took management control of Reston from Simon in 1967.
Gulf Reston tried to patch the water leaks at Lake Anne, but was unsuccessful, Fisher said. Gulf later sold the complex to Donatelli and Klein, who, in turn, sold the 130-unit complex as condominiums in 1981.
"The unit owners have gone through a long period of negotiation on this suit, and to arrive at the doorstep of a jury award is very satisfying," said Howard Green, president of the association. "We are still a long way from recovery of the money, however. If they elect to appeal, it could prolong the case , and meanwhile we continue to suffer in a state of disrepair."
No appeal has been filed as yet.
Pricilla Ames, one of the condominium owners in the association, said, "We are delighted with the decision. We didn't get everything we wanted, but this will go a long way towards helping us make the repairs. It sends a message to developers that they can't do this to people without it coming back to them."
In the suit, the condominium owners asked for $1.9 million in damages on the grounds that Donatelli and Klein fraudulently misled the purchasers of the units about the condition of a waterproofing system on some of the roofs.
Fisher said the problem with the condominiums is that a waterproofing material sandwiched between two concrete slabs that form the roof of some of the units has deteriorated, leading to leakage and water damage.
During the trial, Donatelli and Klein's attorney tried to convince the jury that it would be too costly to tear up the slabs to replace the waterproofing membrane and that the problem did not amount to a structural defect as defined in the state's condominium law. Instead, they asked the jury to agree to let them fix the problem with a cheaper system of drip pans and pipes that would catch the water and funnel it into the storm drainage system.
"Our postion, however, was that it was not the policy of Fairfax County to allow a developer to fix a leaky roof by hanging buckets from the ceiling," Fisher said.
The unit owners charged Donatelli and Klein with intentionally deleting comments about the condition of the waterproofing system from an engineering report filed with the Virginia Real Estate Commission as part of the company's public offering statement.
Neither Donatelli nor the company's lawyers could be reached for comment, but Donatelli denied the fraud allegations in court records. He also filed a malpractice suit against his lawyers and engineers working with the conversion project, on the grounds that, even if he did defraud the public, it was with their advice. This case has not yet been tried.