Kings Point Condominium Associations Sue WCI Communities, Inc.

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Kings Point Condominium Associations Sue WCI Communities, Inc.
By Melody Jameson melody@observernews.net
Jan 6, 2006, 22:19

SUN CITY CENTER - With control of multi-million dollar recreational facilities at stake, residents of the Kings Point condominium community here have fired the first litigation salvo at their prominent developer.

The class action lawsuit, naming WCI Communities, Inc., (WCI) and Sun City Center Golf Properties, Inc., (SCCGP) as defendants, was filed November 30, 2005, in Hillsborough County.

In a 16-page complaint, the 72 plaintiff condominium owner associations (COAs) in KP allege WCI violated Florida’s well settled condominium law on multiple major counts.

The civil action – the remedy in U.S. jurisprudence designed to compensate for damages with dollar awards — seeks injunctions and judgments on various counts for yet-to-be-determined damages and pertinent interest at an unspecified rate. In addition, the plaintiffs ask for the customary reimbursement of costs and attorney fees plus "such other relief this Court deems appropriate."

While Florida’s Rules of Civil Procedure require the defendants to respond to the complaint’s charges within 20 days, the Carlton Fields law firm representing WCI and SCCGP requested extension of the allowed time, according to Allen Levine, Esq. Levine is a condominium law specialist with Becker and Poliakoff, P.A., a Ft. Lauderdale-based firm representing the KP condo associations.

In a not uncommon move, the defendants’ response deadline was extended to January 16, 2006, Levine added. No hearing dates have been scheduled.

The legal controversy centers on the KP recreational facilities lease agreement between WCI (the lessor) and KP residents’ COAs (lessees) which covers use of various amenities. The monthly fees condo owners pay for some security services as well as for access to the community’s two clubhouses, including competition-sized swimming pools, numerous club headquarters and other amenities, have been subject to increases on a regular basis.

And last spring, when the litigation was being discussed within the federation of COAs, the group projected that annual 10 percent increases would double the fees every seven years. The individual household fee had reached $100 per month or $1,200 per year from each of thousands of condo units. Residents also questioned why they were given so little information concerning how their fees were applied and spent.

The lack of information and expectation of routine annual increases fueled interest in resident acquisition of the facilities. Federation leaders stated at the time that funds to buy certain facilities could be obtained, thereby ending the lease arrangement. Also, they stated, even with the resulting mortgage the monthly fees could be better controlled.

For legal foundation underpinning its allegations, the complaint cites Florida Statute 718, Florida’s Condominium Act, first made law in 1974. The law gives the lessees in recreational lease agreements the option of purchasing the covered facilities on any anniversary of the arrangement after the 10th anniversary – a specific right to acquire and own once-leased amenities.

Additionally, the statute provides that the lessor receiving a bona fide offer to purchase such amenities from another possible buyer is obligated to give each condo owner a copy of such an offer, including proposed terms of the sale. Residents then have the option for 90 days of giving notice of intent to purchase their leased facilities under the same terms or of declining to purchase – the right of first refusal.

WCI and SCCGP violated both provisions of the statute, the complaint alleges, when portions of the leased facilities were sold by the developer to its separate corporate subsidiary nearly seven years ago. A fee simple deed dated July 1, 1999, transferred the property and without any notice to residents, the lawsuit asserts.

The corporate creation known as SCCGP is described as a "wholly owned subsidiary of WCI." Under Florida law, corporations are distinct entities and, viewed from a legal perspective, treated much like individual litigants.

The complaint goes on to allege added violation when WCI rejected the COAs’ proposal to exercise their option to purchase in August, 2004. Pursuant to the law, the organizations had advised the developer of the intent to use their option the previous month. The litigation is styled as a class action on behalf of the multiple COAs in KP under provisions of Rule 1.221 in Florida’s Rules of Civil Procedure which applies exclusively to condo associations, Levine explained. The rule makes it less difficult to establish and certify a legal class of litigants, he said.

WCI, headquartered in Bonita Springs, Florida, is a multi-faceted company engaged in various types of real estate services as well as in developing and building large-scale residential communities and amenities. The company operates in several states along the eastern seaboard and has been involved in some 50 projects in Florida.

WCI representatives could not be reached for comment this week on the class action filing. However, when contacted last spring as the potential litigation was being discussed, the developer expressed surprise at the prospect. In a prepared statement, the company said "Since 1987, WCI has enjoyed an excellent relationship with the residents of Kings Point. Through this relationship, we have delivered high quality recreational facilities and services at an affordable cost. With this current arrangement, we would be shocked if Kings Point residents filed a lawsuit."