Allen Stanford’s international “banking” empire is falling apart. How’s his work as a Houston real estate developer holding up?
Stanford Development Corporation still owns a couple of units on the top floor of the Stanford Lofts, the 5-story East Downtown condo building topped with a starred tiara that the company completed in 2002, just a few blocks east of Minute Maid Park. But owning the condos didn’t prevent the condo owners association from filing a construction-defect lawsuit against the Stanford Lofts developers and builders in 2007, charging Stanford Development with “breach of contract, Deceptive Trade Practices, breach of warranty, fraud, and negligent design, construction, and supervision.”
The summary of problems with the building included in the original complaint is 9 pages long, and includes failure to meet building codes, wall cracks and leaks, structural movement, and a series of defects causing continuing problems with water infiltration. The repair estimate: more than $2 million.
The case has dragged on for some time. Attorneys for the Stanford Condo Owners Association complained that Stanford Development was dragging its feet, arguing last year in response to a stay request:
If this stay is granted, SDC will have succeeded in delaying this matter for at least a year, giving the Association the Hobson’s choice of waiting indefinitely for the appeal to play out, and later to complete discovery and have a jury trial, or giving in to SDC’s demand and arbitrate to get a ruling a year sooner. Not only are the problems continuing, but sales of units have essentially shut down. Unit owners cannot sell a unit without disclosing the problems, and no sane buyer would buy into this mess. . . . The building needs to be properly repaired before sales can resume. The delay is really hurting the Association and the unit owners, and the damages are ongoing.
Lawyers for Stanford Development argued that the case had no business in court, because of an arbitration clause contained in all the earnest-money contracts. But a trial court denied Stanford’s motion to compel arbitration.
Late last month, the First District Court of Appeals reversed that ruling. In an opinion penned by Chief Justice Sherry Radack, the court held that the arbitration agreements were binding on the owners association, because it had based its suit in part on the contracts that contained them.
What about owners who didn’t sign contracts with Stanford Development, but bought from previous individual owners? Could anyone buy a condo and then sue? Sorry: The appeals court also ruled that all future buyers will be stuck with arbitration too.
- The Stanford Lofts [Stanford Development Corporation]
- Stanford Condominium Owners Association vs. Stanford Development Corporation [Harris County District Clerk]