The developer of the Sentinel of Landmark condominium and his attorneys have paid more than $800,000 in cash to the owners of 26 units in the building and have taken back the apartments, bringing to a close a long-running and complex lawsuit surrounding the Alexandria development.
The cash award was divided among the unit owners according to the amounts they spent on their Sentinel down payments, settlement costs and other expenses, as well as expenses they incurred because of a two-month delay in the court-ordered payments.
Alexandria Circuit Court Judge Donald H. Kent ruled last May that the unit owners had been defrauded and ordered developer John DeLuca, two attorneys working for him and their law firm to pay the damages to the owners by last Nov. 29. Kent also ordered the developer and the lawyers to cancel the sales contracts of 25 unit owners and release them from their mortgages, worth about $1.5 million. An additional lawsuit was dismissed earlier in the trial on a legal technicality, but the defendants paid the unit owner who filed it along with the other 25, apparently to avoid a new suit.
Griffen Garnett Jr., DeLuca's attorney, said a recently formed company, whose partners include Milton Schneiderman and Russell S. Rosenberger, DeLuca's former attorney, now own the Sentinel units, situated at 6300 Stevenson Ave. in Alexandria. Rosenberger now works for Schneiderman's firm, The Milton Co. of Vienna, a major Washington area development company.
Kent found Rosenberger guilty of actual fraud, defined as willful, deliberate fraud, for failing to properly register the Sentinel's condominium documents with the state and for not giving the unit owners correct public offering statements. DeLuca and Rosenberger's law firm, then Bettius, Rosenberger and Carter, were liable for Rosenberger's actions under Virginia law, Kent said. Attorney Ronald C. Proffitt was found guilty of constructive fraud, which state law says is innocent and mistaken representation, in the settlement of one of the unit purchases.
When DeLuca and the lawyers failed to meet the November deadline, the judge imposed sanctions of $5,000 a day against them, ordered them to pay the condominium owners' attorneys fees and cover expenses resulting from the delayed settlement. DeLuca and the attorneys told Kent at the time that the financing they had lined up to pay the judgment had fallen through. The judge increased the sanctions to $10,000 a day in early January.
After the defendants paid the unit owners last week and took back the apartments, Kent said DeLuca and the attorneys did not have to pay the sanctions, Garnett said. The sanctions would have totaled about $400,000.
Part of Kent's decision in favor of the condominium owners was an order to vacate their apartments by the November settlement date. They complied, many buying or renting new homes, expecting to receive the money in time to cover down payments and deposits. The money the unit owners lost this way, plus moving expenses and other costs were covered by the money they received last week, as well as an estimated $25,000 in attorneys' fees and legal costs.
"I'm just so glad it's all over," said Linda J. Desell, whose plan to buy a new home fell through because of the delay. She said she has found another home and expects to complete the purchase soon.
The money arrived "right on time for me," said Terry Corner. He and his wife are living in another Alexandria condominium under a preoccupancy agreement. "I'm ready to settle on the new unit," he said.
The 27 Sentinel owners filed separate lawsuits more than three years ago, charging that, in addition to receiving invalid condominium documents, they were misled when they purchased their apartments. They were assured that 80 percent of the 272 units in the building would be owner-occupied, but learned later that DeLuca sold more than 200 of the apartments to a Boston syndicate. The syndicate, which controls the owners association, rents out the apartments.
In the view of many condominium owners, large numbers of renters in a condominium development lower the resale value of the units. Tenants, who have nothing invested in the building, will not shoulder a fair share of maintenance and management costs, condominium owners have said.
Two of the original lawsuits were dismissed on legal technicalities, and the remaining 25 were tried together. Although one of the two unit owners was included in the settlement payments, the other appealed the dismissal to the Virginia Supreme Court, which has not decided the case, according to the unit owners' attorney, James C. Brincefield Jr.