An Alexandria judge has doubled the daily penalties against a Northern Virginia developer, his attorneys and their law firm for their failure to comply with a court order to pay $750,000 in damages and buy back the units of 25 Sentinel of Landmark condominium owners.
Circuit Court Judge Donald H. Kent ruled this week that developer John DeLuca, lawyers Russell S. Rosenberger and Ronald C. Proffitt and the firm of Bettius, Rosenberger and Carter must now pay $10,000 a day in sanctions. The unit owners won a lawsuit against DeLuca and the attorneys for violating Virginia law by failing to register the condominiums properly and by not giving the owners correct public offering statements.
In early December, Kent ordered DeLuca, the lawyers and their firm to start paying sanctions of $5,000 a day when they did not meet the Nov. 29 deadline for paying the damages and buying back the units at an estimated cost of $1.5 million. Kent also told the defendants to pay the condominium owners' attorneys' fees and cover expenses they incur because of the delay.
Shortly before the November settlement date, the developer and the lawyers told Kent the financing they had arranged to pay the judgment had fallen through and they could not make the payment.
In another move to enforce compliance with his orders, Kent authorized levies against the defendants' properties. Eventually, the properties could be sold to cover the damages, if the developer and the attorneys do not pay them. The unit owners' attorney, James C. Brincefield, said he also has asked that the defendants be told to appear for "debtor interrogatories," where they would be questioned about assets they have that could be used to pay the settlement.
When the judge increased the sanctions this week, he also ordered the defendants to appear in court Monday for another hearing.
Kent has not yet ruled on a request by Brincefield that the defendants be required to make December and January mortgage payments for the 25 condominium owners and pay their condominium fees. Because the judge ordered the defendants to take back the units by the late November settlement date, DeLuca and the attorneys should be responsible for the mortgage and condo fees that come due after November, Brincefield argued.
After a long and complex trial, the judge ruled in May 1985 that Rosenberger and DeLuca were guilty of fraud for mishandling the condominium documents given to the unit owners who sued. The judge said Proffitt was guilty of "constructive" fraud, described by Kent as "innocent and mistaken representation," in the settlement of one purchase. Other partners in Rosenberg's law firm are liable under Virginia law although they did not take part in the fraud.
Lawyers for DeLuca, Rosenberger, Proffitt and the law firm did not return a reporter's telephone calls about Kent's latest ruling.
Owners of 27 units in the Sentinel complex, at 6300 Stevenson Ave. in Alexandria, filed separate suits more than three years ago. Kent dismissed two cases on legal technicalities, and the other 25 cases were tried together over a period of nearly a year.
The Sentinel owners said that in addition to receiving invalid documents, they were misled when when they bought their units. They said they were assured 80 percent of the 272 condos in the building would be owner-occupied, a big selling point for condominium purchasers who fear that a large number of tenants in a building will lower the units' value. Instead of selling most of the condominiums to individuals, however, DeLuca sold more than 200 of them to a Boston syndicate, which controls the owners' association and rents out the apartments.
DeLuca denied during the trial that he deceived the purchasers.