Source: http://www.lakenewsonline.com, December 18, 2013
By: Amy Wilson
A settlement agreement has been reached in a long-running lawsuit over structural problems with buildings at a lake area condominium complex.
A settlement agreement has been reached in a long-running lawsuit over structural problems with buildings at a lake area condominium complex.
Mid County Fire Protection District condemned the lakeside decks and balconies of two buildings at Plaza Gardens on the Lake near Sunrise Beach in 2009. Two months and a day later, the Plaza Gardens on the Lake Condominium Association filed suit against its developers in Camden County Circuit Court.
The agreement in Plaza Gardens on the Lake Condominium Association vs. Plaza Gardens on the Lake Inc. has been read into the record of the court but details of the agreement were not yet available from the circuit clerk’s office.
The condo association board of directors is under a gag order after signing a confidentiality agreement in the settlement, but residents not on the board speaking individually reported that the association is receiving $11 million.
With the settlement agreement, the homeowners association is now in the process of deciding what to do next, according to residents.
The association is getting bids to repair the structures as well as to demolish them and rebuild. A third option is to sell the buildings as is and walk away, splitting the settlement among the 39 current unit owners.
Michael G. Schlup of Leawood, Kan., Mark Kelly of Camdenton, Plaza Gardens LLC, Schlup Investment Inc. of Kansas City, John D. Lynch of Bloomfield, Iowa and Royale Palms Development LLC were all listed initially as respondents in the suit.
Schlup was Mid County’s developer of record for Plaza Gardens.
The settlement was reached Oct. 4, 2013 after the case was finally set for trial.
On Aug. 21, Judge Ralph Jaynes had issued a judgement in which he allowed the following counts to remain as to the following defendants:
1. Plaza Gardens LLC – Count 1 Assessments, Count IV Misrepresentation, Count V Breach of fiduciary duty, Count VII Breach of warranty, County VIII Missouri Merchandising Act, Count IX Breach of K, Count XII Missouri Uniform Condo Act;
2. Plaza Gardens on the Lake LLC and Michael Schlup – Count II Negligence, Count IV Misrepresentation, Count V Breach of fiduciary duty, County VI Negligent breach of K, Count XII Missouri Uniform Condo Act;
3. Schlup Investment Inc. – Count II Negligence, Count IV, Misrepresentation, County V Breach of fiduciary duty, Count VI Negligent supervision, Count VII Breach of warrant, Count VIII Missouri Merchandising Act, Count XII Missouri breach of fiduciary duty, Count VIII Missouri Merchandising practices, Count XII Missouri Uniform Condo Act.
The condo association filed its case against the developers of Plaza Gardens on Oct. 13, 2009. Mid County Fire Protection District had posted notice of unsafe conditions at the decks and balconies of two of the buildings at the condo complex on Aug. 12.
The notice was posted by the fire marshal after the district was notified of concerns about the buildings two days prior and a subsequent inspection revealed structural issues with the lakeside decks and front walkway or balconies of Building 1 at 248 Plaza Gardens Court and Building 2 at 230 Plaza Gardens Court.
The buildings combined for a total of 47 dwelling units.
The structural issues did not include a third condominium building at the complex, 184 Plaza Gardens Court.
The original call to Mid-County Fire Protection District regarding the issues at Plaza Gardens was about stone falling off of the lake side exterior.
That damage was cosmetic, but ultimately a symptom of a larger problem. The decks were found to be shifting downward, compressing the lower units and causing the decorative stone to pop off the building. District officials found stress cracks as well.
After access to the decks was blocked by Mid County, a follow-up inspection by an engineer confirmed the potential danger for collapse of the decks.
Temporary shoring and structural supports were put in on the front side so owners could continue to occupy their units. Security measures to block use of the deck and balcony areas included temporary boarding and padlocking at entrances.
Mid County continued to monitor the situation over time to ensure security measures were not breached. An engineering firm was hired to monitor the structural integrity of the buildings, and residents’ assessment fees shot up as the association took on the costs to continue to stabilize and shore up the buildings and to pay legal fees.
According to Fire Marshal Chris Bachman, Mid County did not issue a construction permit for Building
1. Its construction occurred in 2003 prior to the district’s adoption of building codes.
Building 2 was constructed in 2004 during the district’s implementation phase of adopting building and fire codes. At that time, Schlup presented resistance in complying with the building permit process, Bachman has said. A permit for Building 2 was ultimately issued about two months after construction had started.
As a developer in the lake area, Schlup has had other issues as well.
In December 2007, Schlup was sentenced on state tax charges after pleading guilty to 12 felony counts of failure to deduct Missouri employer withholding tax, one felony count of failure to file a Missouri employer withholding tax return and one felony count of failure to pay Missouri employer withholding tax.
He was ordered to pay nearly $1 million in fines, penalties and back taxes and was also barred from conducting business in the state of Missouri.
The investigation of Schlup by the Missouri Attorney General’s Office began after several workers were injured and one died from injuries sustained in a fall from a deck at Plaza Gardens. State officials said there was reason to believe as many as 30 undocumented workers may have been working construction at Plaza Gardens.
The charges alleged Schlup paid his workers in cash and deducted no withholdings from the wages. Employees at the site worked 70 hours a week and the undocumented workers were paid approximately $8 an hour, according to the Attorney General’s Office.