Novato condo complex owners trapped in legal battle
Updated: Jun 2, 2018
POSTED: 03/17/18, 10:58 AM PDT
Author: Richard Halstead
Publication: Marin Independent Journal
A legal dispute is tying up owners at the Western Oaks Village condominium neighborhood in Novato. Alan Dep — Marin Independent Journal
A legal battle between a construction management firm and a general contractor that involves an accusation of extortion has left 121 members of a condominium complex in Novato unable to sell or refinance their homes for the past three years.
CIDology Inc., a construction management firm based in Pleasanton, has been accused of extortion by the general contractor it selected to complete $4.59 million of repairs at Western Oaks Village, a 322-unit condominium complex along Redwood Boulevard in Novato.
In a cross-complaint filed in 2015 in Marin Superior Court, Del Mar Pacific General Contractors of Solana Beach alleges CIDology sought “to extort a kickback from Del Mar Pacific to ensure CIDology’s cooperation in allowing Del Mar Pacific to perform its work.” The matter is scheduled to go to trial in June.
In February 2015, after CIDology stopped paying Del Mar Pacific, Del Mar filed mechanics’ liens totaling $1.9 million against 121 members of the Western Oaks Village Owners Association. The liens have made the sale or refinance of the condos owned by these 121 members impossible.
According to a legal filing by the association in April 2015 seeking removal of the liens, at least 28 pending sales had been placed in limbo and at least two refinances were canceled outright.
Del Mar Pacific’s attorney, Nowell Lantz, said that Del Mar Pacific’s owner, John McGinnis, has stated under oath in a deposition that Brian Smith, CIDology’s founder and CEO, instructed Del Mar Pacific to increase its initial bid on the Western Oaks Village project by $400,000, if it wanted the job.
“Obviously, that is the opposite of the way it generally works,” Lantz said. “The people at Del Mar Pacific added the money to the bid at the direction of CIDology and were then asked in somewhat roundabout ways at different times during the project to provide that money back to CIDology.”
For example, the complaint asserts that CIDology “extorted Del Mar Pacific into paying a $5,000 ‘tire bounty’ deposit which was not requested by the contracts and not used but never refunded.”
Lantz said that when Del Mar Pacific refused to make the requested payments “the cooperation of CIDology disappeared and roadblocks were put in the path of Del Mar Pacific at every turn to prevent them from doing their work.”
Lantz said CIDology also began to seek payment from Del Mar Pacific for a variety of back charges, including for water damage that preceded Del Mar’s work.
In a legal filing, CIDology’s attorney, Richard Fong, denied Del Mar Pacific’s allegations. CIDology maintains it stopped paying Del Mar Pacific because the work it was doing was defective.
CIDology — the CID stands for common interest development — handles every aspect of special assessments for homeowners associations, including estimating the extent of repairs needed, negotiating contracts with contractors, helping homeowner association boards to get their members to approve the assessment and arranging financing for HOA members who need it.
CIDology is also overseeing a $5.22 million exterior repair project for the 36-unit Pinnacle Condominium Association in San Rafael, where each condo owner is paying a special assessment of $145,000.
Michele Anderson, who purchased her condo at Western Oaks in 1974, said she had redecorated her unit and was about to list it for sale when she got hit with the lien. She had previously used all of her cash to buy half of a duplex in downtown Novato and moved there.
“So I’m stuck between a rock and a hard place,” Anderson said. “I’ve already bought the new place, and I can’t sell the old place.”
The delay in selling her condo means Anderson will end up paying higher property taxes. Under Proposition 60, Californians 55 and older are allowed to transfer the assessed value of their present home to their new home; but the new purchase must be completed within two years of the sale of the original home.
“I’m now paying $6,000 annually in property tax; it could have been $2,400,” Anderson said. “That can never be changed.”
Pete Plumley is in a similar position. Plumley moved out of his condo at Western Oaks Village after his wife died in 2012 and has been living with relatives in Southern California helping to care for his ailing father-in-law.
“So I’ve rented my place, which is OK,” Plumley said. “But I would really like to sell it.”
Nancy Flaxman, who bought her three-bedroom condo at Western Oaks Village for $320,000 in 2008, said she and her partner are both in their 70s.
“The $33,000 special assessment came and we had to go into our retirement savings,” Flaxman said. “When you’re our age, you don’t make up that kind of savings.”
In legal filings, CIDology asserts that negligent roofing by Del Mar Pacific or its subcontractors resulted in water intrusion and repairs costing about $500,000. CIDology also asserts that Del Mar Pacific is responsible for covering rotted structural components with new siding and failing to pay subcontractors and material suppliers despite payment from the association for such work and materials.
In an email, CIDology CEO Smith wrote, “What I can tell you is that CIDology only receives payments from its clients — the HOA. The company does not have any financial relationships with other firms involved with our projects.”
Smith, however, declined to answer a list of questions posed by the Independent Journal.
“As you know, CIDology is not allowed to speak publicly about matters related to pending litigation which is a condition not unique to CIDology,” Smith wrote in an email.
After being hired by Western Oaks Village in 2013, CIDology determined that the roofs and siding of most of the condos needed to be replaced.
Anderson, who is a former Western Oaks Village board member, said CIDology advised the board that before calling for a vote on an assessment to pay for the project the board needed to approve the new Covenants, Conditions and Restrictions (CC&Rs), which mandate how much support is required to authorize a special assessment.
Anderson said she left the board when the association’s former condo manager retired and the board opted to hire Real Manage, a company based in Plano, Texas. Real Manage also manages the Pinnacle Condominium Association in San Rafael, where CIDology is overseeing the assessment. Lawyer Richard Fong was the person to whom CIDology referred Pinnacle condo owners who needed financing to pay their assessments.
The CC&RS at Western Oaks Village were changed, reducing the requirement from a two-thirds majority to 51 percent, Anderson said. Subsequently, an election was held and Anderson said the assessment passed by a single vote.
Anderson said the legal expenses connected with the lawsuits with Del Mar Pacific are mounting; she said the HOA has budgeted $120,000 for legal bills in 2018 alone.
Flaxman said, “We paid the $33,000 assessment but we didn’t get all of the work that was supposed to be done. What we basically paid for we might not ever get.”
Attorney Lantz said, “CIDology did an assessment of the project, came up with a plan of repair, worked to put the financing in place, set up the vote to approve everything and received a hefty payment for its work as a construction manager, and they are out there still collecting fees for playing their part in the litigation.”
John O’Malley, president of the Western Oaks Association board, declined to comment for this story, referring all questions to CIDology CEO Smith.
In an email, Smith wrote, “We have been working with Western Oaks Village Owners Association since 2013 and continue to advise the homeowner association on matters related to major repairs needed at their property.
“For more than three decades, our team has been in the business of helping homeowner associations save their communities. HOAs bring us on to assist them in finding solutions for problems that have significant impact to the safety of a building and its residents. CIDology helps HOAs put together financing and construction solutions that resolve building disrepair and ultimately, protect homeowners’ investments.”
To read original article posting, click here: http://www.marinij.com/article/NO/20180317/NEWS/180319804