Residents flee toxic mold as buyer, sellers bicker

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Residents flee toxic mold as buyer, sellers bicker

Apartments empty as lawyers align

By MARIE ROHDE

mrohde@...

Posted: May 8, 2005

South Milwaukee - The hulking 37-unit Lake Ridge Apartments is a

ghostly building that sits empty on the bluff over Lake Michigan

because of a mold problem that promises to play out in court.

http://www.jsonline.com/news/metro/may05/324612.asp

Toxic Mold

Photo/Jack Orton

Rick Michalski was attracted to the 37-unit apartment complex at

3303-05 Marina Road, South Milwaukee. He bought thinking it would be

a good investment. It turns out the apartment complex was loaded

with toxic mold, the result of poor construction practices, and he's

filed suit against the former owners.

Just before Christmas 2004, Rick Michalski, a pharmacist who bought

the building at 3303-05 Marina Road for $2.1 million in October

2003, told all the tenants to get out because toxic mold permeated

the structure. Although the last tenants didn't leave until March,

Michalski said he hasn't collected any rent since November, had to

return security deposits and pay property taxes on the building.

" I'm on the verge of bankruptcy, but I'm keeping afloat, " Michalski

said. " If it only cost a nickel to go around the world, I couldn't

get out of town. "

The building can't be safely occupied until the mold is removed and

the conditions that permitted it to grow are corrected, a cost

estimated at nearly $4 million, Michalski said.

Michalski filed a lawsuit against the former owners of the building

and the real estate firm that sold him the property. He claims the

owners, Henry Zeni and Eugene , were aware of the mold and

did superficial repairs to hide it.

He also is suing West Bend Mutual Insurance for denying his claims

regarding the property.

Today a motion to dismiss from the suit is scheduled to be

heard by Milwaukee County Circuit Judge Foley.

Zeni's wife, DeAnn, was the Shorewest Realtors agent who listed the

property for sale, and Henry Zeni, also a Shorewest employee, was

the agent who showed Michalski the property.

LaFleur, a lawyer representing the Zenis and , said

her clients had no knowledge of any problems with the building at

the time of the sale. She said the problems are the result of

Michalski's failure to maintain the building properly.

Michalski's lawyer, Halloin, cites an inspection report done

by the Wisconsin Department of Health and Family Services that found

evidence of long-term water damage to the building. The state

finding mirrored findings of a private inspector hired by Michalski.

Halloin also said he has found former tenants who said they moved

from the building because the mold was causing their infant's

illness.

Michalski, a non-practicing lawyer, was an experienced landlord. He

owned six buildings in Milwaukee's Merrill Park neighborhood when he

learned about the South Milwaukee building in late July 2003. Zeni,

a former advertising executive, was sentenced to 13 months in prison

and fined $350,000 after pleading guilty in 1998 to federal price

fixing charges in the brewery promotion businesses. He also was once

the vice president and general manager of Everbrite, a neon sign

factory in South Milwaukee.

Constructed in the 1970s

Michalski offered $2.1 million for the three-story, pseudo Tudor

building. The building was constructed in the 1970s. Michalski's

offer was contingent on the sale of his six Merrill Park properties.

He said he was told that his offer was accepted secondary to that of

another prospective buyer but that if he lifted the contingency, his

would be accepted. He lifted the contingency and made the deal.

On Nov. 1, 2003 - just three days after the closing - Michalski

began collecting rent from the tenants and found that some units

were vacant that were supposed to have been rented and other tenants

were months behind in payments.

Months later, a tenant complained about mold on a kitchen cabinet.

Then Michalski found out that during a storm a couple of years

earlier, water had gushed through a light switch and into a light

fixture in another apartment. It was then that he began to worry

about widespread mold problems.

Michalski hired a private environmental firm, GZA GeoEnvironmental

Inc., to inspect the building. In November 2004, his worst fears

were confirmed. " All but three occupied units have mold levels that

may pose a health risk to tenants, " GZA concluded.

Only three units had levels of mold that GZA considered safe; the

others needed to be vacated immediately. Michalski delivered the bad

news to his tenants. He said he did not charge anyone rent for

December and returned their security deposits. Michalski contacted

the South Milwaukee Health Department, asking that it also inspect

the building. The department deferred to the state's Bureau of

Environmental Health, an agency that has far more expertise in

investigating mold problems.

Mark Chamberlain, an environmental health specialist with the

bureau, inspected the building and reported in January that he found

evidence of " long-term water intrusion and damage. " He said some of

the problems were caused by leaky plumbing, while others were caused

by poor construction practices.

" The damage is so widespread that I recommend an architect or

structural engineer evaluate the ability of the rafters to support

the roof, " Chamberlain reported.

LaFleur, the lawyer for Zeni and , said Michalski should have

had the building inspected before closing on the property. Michalski

counters that several inspection times were delayed by Zeni and

until just days before the closing on Oct. 29, 2003. He saw

only a couple of the units, Michalski said, and paint and other

superficial repairs covered exterior damage.

The City of South Milwaukee does not require that properties be

inspected for code compliance prior to sales, according to City

Assessor Dan .

" No one prevented (Michalski) from going up on the roof, into the

attic or through the basement, " LaFleur countered. " He went in

almost every unit in the building. " One of the most damaging

documents found by Michalski's lawyer was a fire inspection report

from January 1994 that revealed eight code violations. Among the

violations noted were the large amount of condensation and moisture

that resulted in mold and mildew along floors and walls, around

exterior windows and doors and in the carpeting. The report also

noted that attic insulation blocked the vents and that bathroom fans

vented to the attic rather than the exterior of the building.

South Milwaukee Building Inspector Jac Zader acknowledged that he

met recently with Michalski but said he did not intend to issue a

condemnation order for the building because he believes the damage

could be repaired for less than the estimates. The law, he said,

allows for the demolition if repairs exceed half the value of a

property.

Zader also noted that there are no state health standards for mold.

From the May 9, 2005, editions of the Milwaukee Journal Sentinel

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