Mold-plagued building owner files suit

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June 11, 2003

Mold-plagued building owner files suit

is Muellner

Englewood, Colorado-based real estate investment trust Archstone- (NYSE: ASN), one of the nation's largest apartment owners, has filed a $30 million lawsuit in Miami-Dade County Circuit Court blaming mold and mildew problems at its Harbour House South building on its architect and contractors.

Sued were Miami-based architect Bernard Zyscovich, Orlando-based engineering firm Tilden, Lobnitz & and Penn Refrigeration & Air Conditioning in Pompano Beach. Because of the problems, Archstone has been the focus of two class-action lawsuits and numerous personal injury and property damage claims.

Archstone spent $11.3 million in the second half of 2002 to clean up mold and water damage in the 452-unit Harbour House South. It has spent at least $1.7 million more in legal costs, according to documents filed with the Securities and Exchange Commission.

In a 33-page complaint, Archstone alleges that a renovation plan designed by the contractors failed to provide for dehumidification during an extensive air conditioning system redesign, leaving the occupied building vulnerable to excessive amounts of outside summertime air. That caused already present mold and mildew to spread wildly throughout the building.

But contractors suggested that Archstone knew mold existed in the structure long before they got involved, ignored suggestions for a temporary air conditioning system during renovation because it didn't want to spend the money and is going after subcontractors as a scapegoat.

Archstone said it hired industrial hygienists and technicians, "dozens of remediation specialists," mechanical engineers, generator and refrigeration specialists, and an allergist/immunologist.

Angry tenants filed a class action and individual claims, complaints and litigation in August 2002.

Health problems the Environmental Protection Agency says mold can cause: itchy eyes, runny noses, burning of the skin and lungs, athlete's foot and yeast infections. Tenants in the class have complained of kidney problems, memory loss and coughing up blood.

But in its May 27 suit, Archstone is passing the blame.

"By the time excessive humidity, along with the water damage and subsequent mold growth and resulting property damage, were fully discovered, the demolition and construction had reached the point, that Plaintiff could not abandon or postpone the HVAC renovation," the complaint said.

As for Zyscovich, who has had a 25-year career in architecture and urban planning, a check of court records shows no other professional litigation against him.

"When all the facts are reviewed in this case, we will be seen to have done the right thing in terms of the advice we gave and the solution we proposed," he said. "Unfortunately, the timing was such that our proposed solutions were not taken into account in a way that could have solved the problem.

"What we did is give them the appropriate advice at the appropriate time. We can't manage the client's decisions or means and methods of construction. We can only give advice." © 2003 American City Business Journals Inc.