Posted on Thu, May. 08, 2003


Developer faces mold suit


dhanks@herald.com

The developer of Miami's mammoth Four Seasons tower is facing millions of dollars in lawsuits over a mold outbreak at a similar high-end condominium complex in Washington, D.C.

Millennium Partners is wrapping up an extensive clean-up and relocation effort at its new Ritz-Carlton project in Washington, where it says faulty plumbing spawned an outbreak of mold. Residents sued the New York-based developer, saying the black, inky fungus caused health problems and forced them to abandon their luxury units.

In turn, Millennium has sued the builder, Bovis Lend Lease, which is also building the 70-story Four Seasons Hotel & Tower on downtown Miami's Brickell Avenue. Millennium spokesman Matthew Hall said that Bovis used different plumbing contractors for the two projects and that engineers hired in the aftermath of the Washington problems found no mold in the Miami building.

''This is a unique situation we believe has been caused by one contractor who did not do the plumbing properly,'' Hall said.

The Washington Post detailed the Ritz-Carlton mold saga in a front-page story this week. Sales have been slow at the luxury complex despite luring diplomats, politicians and Michael Jordan as residents. After three years of sales, about 70 of the 161 condominiums are still available.

INSPECTING THE UNITS

Hall said the mold outbreak, discovered in early 2002, prompted Millennium to back off its sales efforts there. The company has been moving residents out of their units in order to inspect and gut the interiors. In court papers filed in December, Millennium said it had spent $6 million on the problem, and the Post reported one insurer estimated the tab might run as high as $20 million.

Millennium has asked a New York judge to order its insurance companies to cover all the clean-up costs, and Hall said the Ritz-Carlton problems won't have a significant impact on the national developer's balance sheet. But disclosure of Millennium's struggles in Washington does shed light on the kind of stress the company faced last year in the midst of setbacks in Miami.

Last spring, Millennium announced 25 percent price cuts at the Four Seasons, saying it had miscalculated the premier hotel's ability to drive condominium sales in South Florida. The company dispatched partner Brian Collins to revive the sales operation, which Millennium had shuttered the previous fall in the face of weak demand.

MOUNTING PROBLEMS

The reckoning in Miami would have coincided with the start of Millennium's mold worries in Washington, a problem that would ultimately lead to at least four multimillion-dollar lawsuits from buyers. Those problems came on the heels of the Sept. 11 terrorist attacks, which occurred within a month of Millennium's completion of three other luxury hotel-condominium hybrids across the country -- including one in New York's Battery Park City, within walking distance of the former Twin Towers site.

Miami's Four Seasons is scheduled to open in October, and Hall said sales have picked up considerably now that people can tour the soaring tower, the largest in Florida.

Mold insurance claims and lawsuits have risen sharply in the last several years, and there is considerable dispute as to how serious a problem it represents.

Homeowner advocates and mold litigators say mold causes serious health problems, but insurers and builders say opportunistic lawyers are driving most of the claims.

In December, Millennium filed suit in New York against six insurance carriers to force them to pay for the Washington mold clean-up. The suit names Bovis as a defendant as well, accusing the contractor of violating contractual obligations by allowing the plumbing problems to occur.

Hall said the clean-up will finish in July, but the bad publicity comes as Millennium is marketing another Ritz-Carlton project in Washington's exclusive Georgetown neighborhood.

''They've got a lot of money to lose,'' said Jonathan Tycko, a lawyer for one of the Ritz-Carlton residents.





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