K&D Group, CEO Doug Price accused of fraud, negligence in trial with Stonebridge condo owners
The Plain Dealer
By James F. McCarty
13 August 2014

About 100 of the 155 units in the Stonebridge Towers on the West Bank of the Flats have experienced damage from water leakage since the condominium complex opened in 2004.        Plain Dealer file photo
 
CLEVELAND, Ohio – "Luxury Living in the Flats" has failed to materialize for 80 condo owners at the Stonebridge Towers, where a decade of water leaks has caused buckling drywall, leaky ceilings and cracking paint.

Three years ago, the condominium association sued The K&D Group and CEO Doug Price, accusing him of negligence, fraud and breach of fiduciary duty. On Wednesday, the civil case went to trial in Cuyahoga County Common Pleas Court.

"My clients are not trying to get rich on this case," said attorney Andrew Kabat, who represents the condo owners, in his opening statements to the jury. "We are simply asking for the money to repair this building."

Kabat said experts hired by the plaintiffs recommended tearing off the entire 12-story building's facade and replacing it at a cost of about $6 million. K&D attorney Thomas Rosenberg said his experts say the building could be fixed without a complete facade replacement for about $1 million.

Kabat displayed dozens of photographs documenting the water damage at Stonebridge, including a shot of a mushroom growing on wet carpeting in a condo, black mold growing behind wall panels, and ice crystals forming on walls, floors and windows.

Since 2005, when the leaking started, more than 100 condo owners in the 155-unit tower have reported water damage, he said. He blamed the cause on improper installation of metal and brick panels, faulty drainage, and fraudulent building plans.

Kabat accused Price of failing to repair his mistakes, opting instead to "put a Band-Aid on it," by paying workers to spread caulk over large cracks in the brick facade.
Rosenberg told the jury that Price wants to fix Stonebridge as much as the condo owners. But the two sides cannot agree on who is responsible for the damage, the scope of repairs needed, and the cost.

The lawyer placed the blame on the condominium association.

"The unit owners complained and wouldn't let us help," Rosenberg said. "They wanted to fight and not solve the problems."

He continued, "Doug Price is dedicated to fixing that building, but he has been thwarted every step of the way by the board."

The Stonebridge Towers are part of a three-building complex that also includes office space and apartments.

Purchase prices of the 117 privately owned condos in the $24 million tower off the Superior Viaduct ranged from $150,000 to $700,000. K&D owns 46 units in the tower, which it leases.

K&D is the largest privately owned property management and development firm in Northeast Ohio.

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The K&D Group, CEO Douglas Price settle lawsuit with Stonebridge condo owners for $12 million and property
The Plain Dealer
By James F. McCarty
August 27, 2014

CLEVELAND, Ohio --  The parties in a contentious lawsuit filed by 80 Stonebridge Towers condominium owners against The K&D Group settled the case for $12 million in cash and other considerations on Wednesday.

K&D agreed to pay the money and surrender some property as the two-week trial over the lawsuit was winding down. Lawyers for both sides were preparing to present closing arguments, then a Cuyahoga County Common Pleas jury was to get the case.

The opposing lawyers signed a confidentiality agreement that binds them to secrecy in disclosing details of the settlement, but the agreement did not apply to the Stonebridge condo owners or the 80 members of the homeowners association who brought the lawsuit.

Unit owner John Del Col, who in 2007 took the company and owner Douglas Price to arbitration over internal damages at his property, said he asked for and received a breakdown of the settlement. Del Col said he was told that the agreement called for:

• K&D to pay the Stonebridge Homeowners Association $12 million in cash within 90 days;

• K&D to turn over to the homeowners association any legal actions pending against sub-contractors involved in the construction of Stonebridge;

• K&D to transfer to the homeowners association its deed for a parking lot adjacent to the Stonebridge building; and

• K&D to transfer to the homeowners association the deeds of 46 housing units it owns in the Stonebridge building that it is leasing.

"Personally, I am quite happy with the settlement," Del Col said. "I think it vindicates all of the owners who voiced concerns over the past nine years. We just want to restore the integrity of the building to what we paid for."

The homeowners association filed the lawsuit three years ago, accusing K&D and Price of negligence, fraud and breach of fiduciary duty. The homeowners complained of a decade of water leaks at the building, which caused buckling drywall, leaky ceilings and cracking paint.

Since 2005, more than 100 condo owners in the tower reported water damage, according to the association's lawyer, Andrew Kabat. He blamed it on improper installation of metal and brick panels, faulty drainage and fraudulent building plans.

Kabat told the jury that experts recommended tearing off the entire 12-story building's façade and replacing it at a cost of about $6 million. K&D attorney Thomas Rosenberg told the jury that his experts said the building could be fixed for about $1 million without a complete façade replacement.

Rosenberg released a copy of a statement written jointly with Kabat that read, in part, that the settlement "provides sufficient money for the Stonebridge Towers building to be fully remediated of its water infiltration problems and to fully restore the building from any damage sustained as a result."

It concluded: "All parties are pleased with the resolution and excited about moving forward."

Stonebridge Towers are part of a three-building complex that also includes office space and apartments.

Purchase prices of the 117 privately owned condos in the $24 million tower off the Superior Viaduct ranged from $150,000 to $700,000. K&D owns 46 units in the tower, which it leases. Those are being transferred to the homeowners association.

K&D is the largest privately owned property management and development firm in Northeast Ohio.


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