Lawsuit: Christina townhomes infected by structural rot

A Wilmington community that embodied the hope of urban renewal on the southern banks of the Christina River is plagued with structural rot and irate homeowners, according to a lawsuit in Delaware Superior Court.

Due to "systemic concealed defects," water has seeped into the beams holding up second- and third-floor enclosed terraces within dozens of townhomes in the Christina Landing development, the civil complaint claims.

The plaintiffs, Jason and Amanda Jones, originally filed the lawsuit in 2015, just a decade after the homes were constructed with the help of millions of taxpayer dollars.

“The home is in danger of collapse due to the damage," the lawsuit states. "All sixty-three (63) townhouses in the community suffer from the same structural defects and damage." 

Situated prominently near the southern banks of the Christina River just across from the Wilmington train station, many had hoped the Townhomes at Christina Landing would spark an era of urban renewal along the economically struggling side of the waterway.

Their quick sale in 2004 during the buildup to the country’s housing boom was seen as a momentous step forward by state officials, who called the development a "public-private project of great importance to the economic vitality of Wilmington and the state," according to a story in The News Journal at the time.

Yet today, the homes are at the center of a lawsuit that has scooped up a litany of defendants, including two Colorado companies that manage home warranties, four Delaware contractors, and two subsidiaries of the Buccini/Pollin Group, also known as BPG. 

A politically influential Delaware firm, BPG has undertaken a string of redevelopment projects over the last 20 years in downtown Wilmington and along the Riverfront, including the Christina Landing project. The company is Wilmington’s largest private landowner.

While Christina Landing brought new residents into Wilmington a decade ago, many of them are fuming after discovering rotted support beams, and then learning that their warranty companies had refused to fix the decay, according to the lawsuit and residents.

“It’s just poor construction,” said Cory Dunn, an electrical lineman and Christina Landing resident who spoke with The News Journal. “They didn’t have (the homes) sealed properly at the top and water runs in behind the walls and rotted the structures.”

While Dunn’s girlfriend purchased the home new more than a decade ago, the couple isn’t paying to fix the problems, yet, he said.

“We’re still waiting on the lawsuit,” he said last week while walking two dogs in the neighborhood.

Since 2015, claims, counterclaims and motions to dismiss have been written and answered, and the lawsuit, which was filed as a class, now is moving into the deposition phase. The court has yet to rule on whether the case will become a class action, which would bring in all 63 homeowners.

Kevin Guerke, an attorney for the Joneses, called the situation a "nightmare for the homeowners." 

"The beams that provide structural support for the terraces are disintegrating," he said. "The community has been dealing with this defect for more than 3 years.”

Claiming breach of contract, negligent construction, negligent repair, breach of warranty, bad faith and consumer fraud, the plaintiffs are asking for money to fix the structure of the homes, as well as punitive damages from BPG and the two Colorado companies that own the warranty.                                           

Guerke declined to state a specific dollar amount his clients are seeking, but said, “repair costs will be substantial." 

“A contractor has to deconstruct the wall cavity to remove both structural beams, which hold up the terraces, replace them and then rebuild the wall without taking the entire front of the house apart,” he said. “It’s a tricky and complex process."

In response to a News Journal inquiry, a spokesman for BPG, said, “although it is typically not our policy to comment on pending or ongoing litigation, it is important to note that this particular litigation grew from a dispute between the homeowners and the warranty company." 

In its formal answer to the lawsuit, a BPG attorney said the company "lacks sufficient knowledge" to determine whether the Joneses' house is safe.

The attorney also stated that in the event BPG is held liable, it was its contractors, not BPG, who carried out any potentially poor construction.

BPG filed a counter-claim against those contractors, Diamond State Masonry Co., East Coast Siding, Inc., J&B Caulkers, Inc., and Sun Builders, Inc.

Diamond State, in its legal response, denied culpability, stating that if it is found to be liable for damages, it will file a cross-claim against BPG and the warranty companies “on the grounds that the conduct of (those) co-defendants was the primary cause of the injuries and/or damages.”

An attorney for Diamond State declined to comment.

BPG filed a cross-claim against the National Home Insurance Company “for failure to honor its warranty.”

The tangled web of legal claims expanded to federal court where National Home Insurance Company and Home Buyers Warranty Corp. – which together manage the Christina Landing home warranties – filed a suit petitioning the court to force the parties to arbitrate the matter.

The federal court ruled on March 13 that the petition will be held “pending resolution of the claims” in state court.

An attorney for the warranty companies declined to comment for the story.

In the Superior Court filings, Home Buyers Warranty Corp. and National Home Insurance Company denied the Joneses' claims that a structural engineer in 2014 found “severely deteriorated” beams, studs, and framing within the couple's home.  

For Dunn, all of those legal maneuvers amount to an aggravating living situation that has affected home values.

“They’ve come back up a little, but they’re not what they should be,” he said. “They sold everybody here an insurance policy that was no good, that didn’t cover anything.”

'I made a lot of people a lot of money'

It was early in 2004 when the Joneses found themselves among a race of potential buyers for the still-to-be-built Christina Landing townhomes.

Marketed as a place where suburbanites could join the back-to-the-city movement, the homes sold out in just eight weeks.

Many of those then were resold for a quick profit with sale prices well above $400,000.  In one case, an investor made $150,000 by selling the property days after purchasing it, according to a News Journal report from 2006.

“I made a lot of people a lot of money,” BPG partner Robert Buccini said at the time.

City and state leaders cheered. The metric for success, they said, were quick sales, rising prices and increased tax revenues for the city. 

"I wish I would have bought a townhouse," Former Mayor James M. Baker said in 2006. "I'd have flipped that sucker in a minute."

Much was at stake for elected officials who had directed hundreds of millions of taxpayer dollars to the redevelopment of the Riverfront area, which was defined as 139 different tax parcels on both sides of the river.

The area had been a hub of shipbuilding and other industry during the early 20th century. Yet decline set in during the post-World War II era until it was marked by vacant lots in the early 1990s when construction of Frawley Stadium began.

In 1995, then-Gov. Tom Carper predicted the Riverfront would become "an exciting place to be," a sentiment seen by many as far-fetched at the time. Today, the north side of the Christina River in the area features hundreds of banking and other white-collar jobs, as well as residential units, museums, hotels, restaurants and a theater company. 

State and the city officials directed about $25 million to accommodate the construction of the larger Christina Landing development, which included the townhomes, as well as their adjacent high-rise residential buildings.

It included $8.5 million for the reconstruction of A Street, $6.5 million for the Christina Landing parking garage, $2.4 million for a bulkhead along the river, $4.1 million for a Riverwalk and park between the bulkhead and the townhomes, $2 million for environmental cleanup, $1.4 million for new streets and sidewalks, and $500,000 for water and sewer lines

The Delaware Economic Development Office granted $300,000 of state money directly to the construction of the townhomes, themselves.

At the end of March, 2004, the Joneses spent $385,000 for their house on the row of townhomes that do not directly face the river. Two months after the sale, the couple received a certificate of warranty coverage, according to court documents.

In 2005, they moved into their new home.

Just three years later, as the housing bubble nationally was bursting, the roof of the Joneses' still-new home began to leak. And, their house wasn’t the only one with such a problem, according to court documents. 

BPG, in its court filing, acknowledged that at the time it sent workers in to patch the leaks, but denied other portions of the particular claim, specifically that the repairs were “to address widespread leaks and related problems stemming from defective construction.”

The Joneses' claim the contractors carrying out the repairs, described as a “re-flashing program," exacerbated the rot because they directed "additional water into the wood-framed wall."

“Repairs were defective," the lawsuit states. "Which accelerated the deterioration.

The Joneses didn't learn of the allegedly defective repairs until 2014, after siding appeared to peel off, and then fall from, their home. That’s when an engineer inspecting the home found that plywood sheathing within a wall had disintegrated in places, according to the lawsuit.

After removing the remaining plywood and a vapor barrier, the contractor discovered that “load-bearing beams were severely deteriorated.”

“The beams flaked apart and disintegrated to the touch. Both the second and third level beams suffered the same defect,” the complaint stated.

The discovery came after the Joneses' home already had lost significant value because of a broader housing market downturn. Between 2010 and 2014, multiple Christina Landing townhomes sold between $200,000 and $300,000, well below their prices less than a decade earlier.

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Intending to fix the metasticizing rot at its core, the Joneses filed for a warranty claim. In early 2015, National Home Insurance Company acknowledged that restoring the load-bearing beams would be covered under the warranty, according to the lawsuit.

Yet, shortly after the determination, the insurance company changed its position, the lawsuit claims.

“NHIC took no action to make repairs to the home as promised and as required under the warranty,” the lawsuit states.

The National Home Insurance Company denies that claim.

The following year, after further pleading for fixes, the Joneses filed their lawsuit.       

Contact Karl Baker at kbaker@delawareonline.com or (302) 324-2329. Follow him on Twitter @kbaker6.

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