Date of Verdict:

December 26, 2012.

Court and Case No.:

C.P. Philadelphia No. 081104269.

Judge:

Nitza I. Quinones Alejandro.

Type of Action:

Construction defect.

Injuries:

Fraud, negligent misrepresentation.

Plaintiffs Counsel:

Matthew A. Green and Michael V. Phillips, Obermayer Rebmann Maxwell & Hippel, Philadelphia.

Defense Counsel:

Alan Fellheimer, Fellheimer & Eichen, Philadelphia, for 431 Fairmount Avenue Associates, Spector Construction Co., Alexander Spector and Henry Z. Spector; William D. Longo, Jennifer S. Coatsworth, Margolis Edelstein, Philadelphia, for Caparo Real Estate Inc.; Christopher E. Dougherty, Marshall, Dennehey, Warner, Coleman, Goggin, Philadelphia, for the Fairmount Quarters Condominium Association.

Comment:

Three plaintiffs who claimed they were sold “barely habitable” condominium units in Philadelphia have reached a settlement in which they agreed to transfer their units back to the developer in exchange for $1,114,295, which comprises the cost of the units at the time of purchase as well as attorney fees incurred in the ensuing litigation.

Part of the settlement was also paid by the real estate company that sold the units, according to plaintiffs counsel.

Plaintiffs Natalee Felten, Jennifer LaForte and Michael Hurley alleged in their mediation memorandum that since purchasing their condominium units at Fairmount Quarters in 2006 and 2007, they’ve been forced to contend with unforeseen leaks, flooding, cracked and ruptured ceilings, water-damaged and warped floors and mold.

The plaintiffs also alleged in their memorandum that the roof of the condominium was in complete disrepair.

According to the plaintiffs’ memorandum, the property, which had been the old Zimmerman slaughterhouse and meatpacking plant originally built in 1911, was purchased by defendant developer 431 Fairmount Avenue Associates — an entity owned and operated by defendants Alexander Spector and Henry Z. Spector — in June 2005 with plans to renovate and convert the building into a two-story condominium.

Development began in February 2006 and, according to the plaintiffs’ memorandum, 431 Fairmount “rushed to renovate the building, cutting corners along the way and disregarding various material provisions within the Pennsylvania Uniform Condominium Act and the Philadelphia Building Code.”

“Defendants proceeded to fraudulently and wrongfully conceal the numerous substantial defects within the building, including, most significantly, the deteriorating condition of the nearly century-old roof, and made a number of false representations regarding the condition of the building,” the plaintiffs alleged in their memorandum.

The plaintiffs filed suit against 431 Fairmount, Spector Construction Co., and the Spectors as the developers, as well as against the Fairmount Quarters Condominium Association and Caparo Real Estate Inc., which sold the condominium units.

The plaintiffs alleged in their memorandum that 431 Fairmount issued its public offering statement less than nine months after beginning construction on the condominium.

In the property condition report attached to the public offering statement, according to the plaintiffs’ memorandum, 431 Fairmount falsely claimed that the building’s roof consisted of a pre-existing concrete roof with an estimated lifespan of 100 years and a new rubber roof with a lifespan of 25 years.

The report also falsely claimed that the building had new heating and air-conditioning units with lifespans of 10 and five years, respectively, as well as exterior structural components with a lifespan of 100 years.

The plaintiffs claimed in their memorandum that shortly after they purchased their units, they began to experience leaks and resulting water damage, but 431 Fairmount refused to remedy the problems.

The plaintiffs alleged in their memorandum that 431 Fairmount violated the Condominium Act and the Unfair Trade Practices and Consumer Protection Law.

The plaintiffs also brought claims of fraud, negligent misrepresentation, conspiracy, breach of contract and negligence, according to the memorandum.

But while 431 Fairmount did not deny in its own mediation memorandum that the plaintiffs’ units did experience leaks, it claimed it incurred considerable expenses attempting to fix those leaks.

“The declarant has re-sealed and re-caulked all windows and exterior doors in the building, sealed the entire eastern wall of the building with a waterproof elastomeric coating, and has made multiple, major repairs to the roof drainage system,” 431 Fairmount said in its memorandum. “Unfortunately, it was not determined, until recently, that a major cause of water intrusion, at least as to Ms. LaForte’s unit, was not the roof, but, rather, an internal roof drain pipe sealed in the walls of the building, which had cracked. This pipe has now been replaced, and no additional leaking in Ms. LaForte’s unit has occurred since this repair was completed.”

Caparo, meanwhile, contended in its own memorandum that it had no independent knowledge regarding the condition of the property and therefore could not be held accountable.

The Condominium Association, meanwhile, argued that it was “an inchoate organization” of which the plaintiffs were members, so the plaintiffs were essentially bringing a claim against themselves.

Counsel for the plaintiffs, Matthew A. Green of Obermayer Rebmann Maxwell & Hippel, said Caparo ultimately agreed to pay $80,000 of the $1,114,295 settlement, while the 431 Fairmount defendants paid the rest.

Green said it was unclear what, if anything, the Condominium Association contributed because it shared an insurance carrier with the 431 Fairmount defendants.

Green said that while the nearly five-year litigation was contentious at times, he and his clients were pleased with the outcome.

“In the end, I think the defendants stepped up to the plate and did the right thing,” Green said. “The best part for my clients is that they can move on.”

Caparo’s attorney, William D. Longo of Margolis Edelstein in Philadelphia, said his client denies any liability in the case and only settled in order to avoid the uncertainty of a jury trial.

Counsel for the remaining defendants could not be reached at press time.