Condo owners vote to settle suit Club at McDonogh developers, warranty firm to pay $4.2 million

March 04, 1997|By Joan Jacobson | Joan Jacobson,SUN STAFF

The developers and warranty company of a troubled northwestern Baltimore County condominium project have agreed to a $4.2 million settlement on the eve of a jury trial on allegations of consumer law violations and shoddy work. Condo owners say the money is enough to pay legal fees and make structural repairs.

The owners of the Club at McDonogh Township condominiums voted Sunday to accept the settlement offer on the suit, which alleged negligent construction, fraud, breach of warranties and violations of the Maryland Consumer Protection Act.

The development, built 10 years ago, has problems that include water and air leaks, ill-fitting windows and doors, hazardous fireplaces, water-damaged siding and leaking heat pumps.

The settlement will be paid by developers Jim and Terry Rubenstein; their company, Bancroft Homes of Greenspring Valley Inc.; and the warranty company, Residential Warranty Co. of Pennsylvania.

"We're pleased it's resolved," Terry Rubenstein said yesterday. She declined to comment further.

Her lawyer, James P. Ulwick, said, "All parties were interested in a business decision, not litigation."

David D. Freishtat, lawyer for the condominium owners, said: "After so many years of hardship, we are pleased to have played a part in bringing about a resolution of this dispute, which will result in the repair of the condominium units."

The owners agreed to a settlement, said Marty Sitnick, president of the condominium board of directors, because a legal battle could have continued for several years with appeals, leaving the 132 condo units in limbo.

"We would have run the risk of having to spend another three years without having the funds to begin the repairs," said Sitnick.

He said the settlement funds "are adequate to make the buildings safe and watertight and airtight."

Sitnick said the condominium association will use the funds to replace inadequate structural beams and the cedar siding that is water-damaged from leaks.

The owners also hope to correct air and water leaks that have left the community with large utility bills.

The settlement came as Baltimore County Circuit Judge J. Norris Byrnes was about to choose a jury to hear the case, which was expected to run nearly two months.

The owners of the condominiums, at Reisterstown and Greenspring Valley roads, had claimed in their suit that the Rubensteins knowingly sold units that were defective and did not make adequate repairs, even after problems were discovered by their staff architect, consultants and county building inspectors.

It also alleged that the Rubensteins siphoned more than $1 million from their company that should have gone into construction before they closed the business in 1988 for lack of funds and laid off 100 workers.

In court documents, the Rubensteins' lawyers denied the charges and blamed the subcontractors who installed heating, air-conditioning, siding and floors for problems at the Club.

Yesterday, Ulwick noted that before the settlement was completed, the judge had dismissed charges of fraud and negligence because the statute of limitations for filing such charges had run out.

The remaining claims involved alleged violations of the Maryland Consumer Protection Act.

At the time of settlement, condominium owners had paid nearly $2 million in legal fees and repairs that cost each owner $10,000 to $20,000 -- in addition to their mortgages and condominium fees, Sitnick said.

Many of the condominiums, originally priced at $80,000 to $185,000, are owned by retirees.

Pub Date: 3/04/97

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