Fayette County

Shifting balconies, water damage: Condo owners near UK sue to recover millions spent on repairs

A lawsuit pits condominium owners in the downtown Lexington CenterCourt complex against a company in which Lexington attorney Bill Lear is an investor and a Versailles construction firm owned by Mayor Jim Gray’s family.

The condo owners allege that poor construction, negligence and building code violations in the complex near the University of Kentucky have cost them millions in repairs, rental income from tenants who had to move, and a loss in the value of their apartments.

In a class-action suit filed in July, members of the CenterCourt Condominium Owners Association seek unspecified damages for the money they’ve spent repairing balconies and other remediation that has been done and remains to be done on the complex that opened 10 years ago.

The association’s lawsuit says a company called CenterCourt I developed the property that fronts South Upper Street, and that CenterCourt I and other defendants have “failed or refused” to pay for damages suffered by the condo owners.

CenterCourt I is a subsidiary of another company called South Hill Group. Lear, the registered agent of CenterCourt I, declined to be interviewed.

“I’ve spent a lifetime advising clients not to comment on matters involving litigation,” Lear said, “and so I’m going to take my own advice and not comment unless the lawyers representing our company want to comment.”

Woodford Steel, doing business as WS Construction of Versailles, was the contractor that built CenterCourt. The company is owned by Gray Construction, the international design, engineering and construction firm run by Jim Gray’s brother Stephen Gray. Mayor Gray, the former CEO of Gray Construction, was listed as a director of Woodford Steel between 2005 and 2012, according to the Kentucky Secretary of State’s website. The mayor, who is not named as a defendant in the condo suit, had no comment.

The condo dispute is headed to mediation as the parties seek an out-of-court settlement. Greg Parsons, an attorney for WS Construction, said, “We respect and have confidence in the mediation process that is part of our contract.”

The first problems in the condos were reported about four years ago. Residents noticed that exterior doors to balconies wouldn’t open and that balconies were settling, said Darren Duzyk, a construction attorney who represents the condo owners.

One court document alleges that the problems are “due to water penetration of the building’s exterior membrane attributable to poor workmanship by the general contractor or the subcontractor and design defect attributable to poor design.”

Casey Weesner, a Lexington Realtor and former president of the condo association, said a former tenant of his condo discovered “water coming in from electrical outlets and switches and smoke detectors, and then another client of mine reported that his balcony had shifted.”

Another condo owner, Dr. Barry Hardison of Muhlenberg County, said he received notice several years ago that a balcony had shifted. Investigation by an architect and structural engineer hired by the condo association found structural problems and rotted wood, he said.

“It was way beyond the balconies,” Hardison said. “It was just a mess. And it wasn’t just a couple; it was a bunch of them. … You shouldn’t have structural problems in a 10-year-old building.”

The balcony problem alarmed condo owners, particularly when a fifth-story balcony collapsed in Berkeley, Calif., in 2015. Seven students from Ireland were killed and six people were injured.

CenterCourt Condominiums at the west end of Euclid Avenue opened in two phases. The first phase of about 70 units opened in 2007, and a second phase of 80 units opened in 2009. The construction contracts for the two phases totaled more than $24 million, according to court documents. The complex is bordered by South Upper, Bolivar, South Mill and Cedar streets.

Most of the damage and repair has been on the west side and two courtyards that border South Mill Street, Weesner said.

“I mean, we had to rip off the whole face of the back side,” he said. “We had to take off all the balconies and rebuild them.”

“The balconies had to be structurally shored before they could do anything,” Duzyk said. “Then before they could remove the balconies, they had to install interior shoring walls and then remove the balconies and the exterior components of the building.”

Some residents, including a tenant who rented from Hardison, had to move out because they couldn’t remain in the condos during that work.

In addition to their monthly dues, condo residents were billed two special assessments, $800,000 and $1.3 million, Weesner said. Each assessment was divided among the condo owners based on the square footage of their units.

Hardison said he has paid about $30,000 for his share of the special assessments to pay for building repairs. Hardison owns two CenterCourt condos and is part-owner with his daughter in a third.

More structural problems have been found in the CenterCourt parking garage, but members of the condo association voted against a third special assessment, Weesner said.

“The owners are tired of forking out the money,” he said. “All these people are tired of dealing with it.”

Depending on the square footage, the condos have a fair cash value ranging from $160,000 to more than $300,000, according to the Fayette County Property Valuation Administrator’s office. But Weesner and others say the value of the condos has declined as word about the building’s problems has spread.

A one-bedroom, one-bath unit that Weesner owns might have fetched $195,000 at one time. Today, he estimated that he’d be lucky to get $165,000.

In answer to the suit, developer CenterCourt I contends that the condo owners’ complaint should be dismissed because they weren’t parties to the construction contracts.

And in a cross-claim, CenterCourt I says the construction company and architects had the responsibility to see that the building was designed and built “to prevent outside water penetration and deterioration of interior structural elements,” and a responsibility to see that everything conformed to “state and local building standards, regulations, rules, codes and ordinances.”

David Furman Architecture of Charlotte, N.C., an awarding-winning firm that designed the complex, also is named in the suit. In a written response to a summons, Furman said he didn’t hire or direct the contractor and isn’t responsible for the contractor’s actions. Furman also said his architectural firm is dormant: It exists on paper, but it “has no resources, no income and no insurance policies.”

“I am very sorry the CenterCourt home owners have experienced these incredible construction deficiencies that have impacted their ability to enjoy living in this project,” Furman wrote. “But this is not the fault of the architect of record, as we deny all complaints” registered against the architectural firm.

Nevertheless, in a Jan. 31 order, Fayette Circuit Judge Pamela Goodwine ordered Furman to get an attorney.

(Goodwine took over as presiding judge in the case after Fayette Circuit Judge Ernesto Scorsone recused himself because he knew a member of the condo association board. Scorsone and Lear also served together in the state House of Representatives from the mid-1980s to the mid-1990s. Lear decided not to run for re-election in 1994, and Scorsone became a state senator and then a circuit judge.)

Goodwine ordered the parties to try mediation. If that isn’t successful, the matter will return to court for a resolution.

In the meantime, Hardison, the Muhlenberg County doctor, said he hopes to recover some money.

“I think I ought to recover all of it,” he said. “But even if I recover all of it, I’m still damaged by my renter being out, the reputation of the building, so on and so forth.”

Hardison owns other condos at 499 East High Street in Lexington and has property in Powderly and Greenville in Muhlenberg County. But he said he has “never, ever” experienced problems as he has with CenterCourt.

“I hope I never do again. I mean, it made me nervous about investing in anything.”

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