In Palm Beach Gardens, under the veneer of one luxury community, a battle of homeowner will versus corporate stamina is raging.
A five-year-old lawsuit by San Matera the Gardens Condominium Association against its developer and powerhouse builder Kolter alleges the 676-unit community was rushed to completion during the reckless days of the real estate boom.
Shoddy work iced over with stucco was sold at premium prices, owners complain.
The case, which seeks $40 million in damages for a bevy of problems — leaking roofs, leaning light poles, poorly pitched porches — has picked up dozens of defendants since 2010 as sub-contractors were added like clues accumulated by a detective.
While mediation has settled some of the lesser disputes, owners hope to get a trial date this spring, and maybe a resolution to a drawn-out fight they see ending one of two ways: victory, or a special assessment so high it could force some owners into foreclosure.
“This is a middle-class community,” said Jackie Durham, president of the San Matera condominium association. “Some people are retired, or semi-retired. These are not people sitting on big piles of money.”
Durham bought her two-bedroom unit in San Matera near the top of the housing bubble in 2005 for $375,340. The Palm Beach County Property Appraiser lists its total market value today as $159,500.
Multiple messages left for Kolter were not returned by deadline Friday.
With an estimated 3,000 registered condominiums in Palm Beach County, skirmishes between owners and builders are common.
But, community association lawyers said lawsuits of the San Matera magnitude are less frequent.
“This is the fear of anyone who is involved in construction litigation, on both sides, because there are so many complexities,” said Michael Gelfand, a West Palm Beach-based attorney who focuses on association law and is chair-elect of the Real Property, Probate and Trust Law Section of the Florida Bar. “Down here, these cases are rare because you usually don’t have that many subcontractors.”
The 45-count lawsuit being prosecuted by David Haber of Haber Slade, P.A. in Miami, includes charges of negligence, violations of Florida building code and breach of warranties. The case’s docket file has 2,775 entries.
And when a hearing was held March 12, at least 30 attorneys attended, sitting elbow to elbow on Palm Beach County court benches.
“They are playing the game of delay because they know these are not people of means,” Haber said. “Their tactic is to litigate until the other side surrenders.”
According to the lawsuit, San Matera was built in two phases. The initial phase — originally apartments — was constructed between 2000 and 2004. Building began on the second phase in 2004 as the real estate market, and prices, climbed to untenable levels.
The development consists of 30 residential buildings — a significant number when roofs began leaking.
Durham said problems surfaced at San Matera years before the lawsuit was filed, but piecemeal fixes were made, and owners didn’t put two and two together until after 2009 when the development was turned over to the association.
A property transition report identified some design and construction defects. When association members felt that meaningful repairs weren’t being made, it filed the lawsuit. Haber was hired in 2011 and “destructive testing” was ordered. Destructive testing includes cutting holes in ceilings and stucco to better see what is happening behind the façade.
The pictures that emerged shocked Durahm.
“We became horrified at the extent of the water leaks,” Durham said. “My thought was, how did they find so many people who would do so much poor work?”
In addition to the roof problems, the engineering report from West Palm Beach-based Slider Engineering Group found concrete porches weren’t sloped properly, so water either pools or runs toward unit doors, metal lath and stucco were incorrectly installed, causing water intrusion, windows failed, and areas that required a single truss, instead had two that weren’t connected at the apex. Light poles didn’t have sufficient concrete foundations, and concrete flooring slabs were cracked.
Owner Stanley Kowalski said he discovered a yard full of construction debris under six inches of top soil when he tried to plant a pinneaple plant. When his plumbing backed up, a repairman discovered a tool had inadvertently been swept into a drain pipe during construction.
“We just want it fixed,” said unit owner Michele Marks, who has a leaking window. “It smells like wet in my entryway.”
The association has been paying for the lawsuit and necessary repairs by working the charges into its overall annual budget, including $1.5 million for roof repairs. Monthly association maintenance fees are higher because of it, ranging from $234 to $586 depending on the size of the unit.
But a special assessment levied on every owner to pay for repairs would be even worse, owners said. Haber estimates owners could be charged tens of thousands of dollars each if they have to fund fixes on their own.
“The only way to get this thing resolved is to push for a trial date,” Haber said. “We want this in front of a jury.”
While the San Matera case is unique, it may be the first of many, said Gelfand, the attorney who focuses on association law.
Some boom-time condominium projects that stalled during the real estate downturn are getting to the turnover point when the association will receive an engineering report.
“We’re just finishing all the foreclosure litigation and now we many see more of these,” Gelfand said.