Who Broke Church Street South?

Paul Bass PhotoA Superior Court judge Thursday began to peel the onion of who owns the Church Street South apartment complex and ultimately who will be held responsible for the dilapidation that drove out its tenants and allegedly caused them severe health problems.

She ended up assigning both sides a lot of homework — because getting to the bottom in court of New Haven’s biggest housing/health crisis of the decade will apparently take a while.

That was the upshot of a pretrial hearing in the state courthouse on Church Street Thursday in a suit filed by former tenants of the now being-demolished 301-unit federally subsidized apartment complex across from Union Station. The tenants are awaiting the judge’s decision about whether their lawsuit will attain class-action status.

Judge Linda K. Lager told attorneys representing Massachusetts-based Northland Investment Corp, which owns Church Street South, and the former tenants of the complex that she had to create a chart for herself to keep up with all the entities that are named in a lawsuit.

“It took me a long time to sort this out,” Lager told the attorneys. “I’ve gotta tell you it wasn’t easy.”

There’s a lot to keep up with, as the judge pointed out, beginning with who should be put on trial in the first place: Church Street New Haven LLC, which was created by Northland Investment Corp., holds the title to the Church Street South apartment complex, Northland Fund II LP is the general partner of Northland Fund II Partners LLC, where the sole partner is Northland Investment Corp. And Northland Investment Corp. Chairman and CEO Larry Gottesdiener is technically in charge of it all.

Did you catch all that?

It matters. Because the two sides’ attorneys were in court in part to argue about whether Gottesdiener himself as the head of the broader Northland company and other entities under that umbrella should be defendants in the case. That would mean they could be held liable for damages. The tenants’ attorneys, David Rosen and Alex Taubes, said yes. Gottesdiener and Northland say no.

No matter how many corporate names it goes by, the owner is all the same company, Northland Investment Corp., said Rosen and Alex Taubes, and are all run by the same person, Gottesdiener, and therefore responsible for the complex’s demise and ultimately its redevelopment.

Northland Investment Corp. attorneys Marc Kurzman and David S. Hardy said: Not so fast. They argued that Church Street South tenants have no grounds to cast such a wide net and sue anyone other than the deeded owner of the property. To that end, they asked the court to remove Gottesdiener, Fund II, and Fund II Partners from the suit.

Part of the decision on whether to remove those three entities from the lawsuit will hinge on whether it ultimately meets the conditions for the court to “pierce the corporate veil,” that is created by operating as a limited liability corporation to hold those entities and Gottesdiener personally liable.

Lager said that before she can rule on that question, the attorneys need to provide her with a lot more information.

Needs More Work

Markeshia Ricks PhotoLager laid out for the attorneys several problems she found while trying to parse all the parts of the case.

On one hand, no evidence presented so far necessarily proves that Gottesdiener had a direct hand in the alleged condition of the complex and its ultimate demise.

Attorney Taubes told her that the lawsuit is attempting to make the case that the alleged actions, or inaction, of all the named entities, led to what happened at the complex. Lager was clearly skeptical of the argument that the named entities were part of the structure that controlled the ground-level, day-to-day decision making at the complex.

“Control is the key to determining liability,” she said. “An owner may not be in control.”

That might have sounded like good news for Northland. But then Lager turned her questions on their attorneys.

She asked the attorneys directly if they plan to argue that Northland Investment Corp. can’t be held liable for what allegedly happened to the complex because that entity technically doesn’t own it. Attorney Hardy said that is a possibility. Judge Lager pointed out if only the limited liability corporation that holds the deed to Church Street South — its only asset is the soon-to-be-demolished complex — a separate court action might have to be pressed to enforce any judgment should the former tenants win.

“I haven’t considered that part as a procedural possibility,” Hardy said.

Her biggest concern for both sides was that they had each made their arguments for and against piercing the veil based on Connecticut law. In fact, the state might not have legal jurisdiction, at least when it comes to piercing the veil, over an out-of-state LLC. She cited case law that mandates that LLCs incorporated in another state be governed by the laws of that state. Her concern came up because Gottesdiener is based in Massachusetts, and the Fund II LLC, the Fund II LP, and even the LLC that owns Church Street South, are based in Delaware.

“Nobody picked up on that,” Lager said. Instead of making a decision on whether to remove the entities from the lawsuit, she assigned everyone homework. Briefs on the elements for piercing the veil in Massachusetts and Delaware are due June 15. Simultaneous responses from both sides to those briefs are due July 13.

196,000 Documents & Question 8b

Paul Bass PhotoIn the more than a year that the lawsuit has been underway, Northland’s attorneys have turned over more than 196,000 of documents and counting.

Attorney Kurzman noted that 15,000 of those documents are hardcopy work and emergency repair orders. He noted that at considerable time and cost, those documents were scanned so that they could be delivered to the tenant legal team electronically.

He charged that the plaintiffs “reneged” on providing responses to a questionnaire that Northland had proposed using as part of the discovery process back in February 2017. Former tenants completed 84 questionnaires, providing responses to all the questions except for question 8b. Question 8a. asks when the tenant notified the landlord of any unsafe, hazardous, or toxic condition and 8b. asks about the landlord’s response.

Kurzman said that in May, attorneys for tenants said that the question would be answered once Northland handed over repair records so that clients could provide an accurate accounting fo what repairs, or lack of them, they could remember.

“We’re now being told they’re not going [to answer that second part of the question] for various reasons,” he said. Some of those reasons include the inability to effectively search the work orders, though now available electronically in some instances are handwritten and illegible. Rosen also pointed out that now that tenants have been moved off-site it is more difficult to run down 84 people for one question with questionable relevance.

Kurzman argued that the answer is relevant because one of the accusations against Northland in the suit is that it allegedly engaged in “demolition by neglect.” He also said it is relevant because after deposing six former tenants it has been discovered that there are people who could attest to speedy and appropriate repairs, which conflicts with the narrative that Northland had allegedly ignored the concerns of its tenants, made repairs only at the behest of city and federal officials, and even then, only made cosmetic repairs.

Rosen argued that he has received thousands of documents and they keep coming in “dribs and drabs over a considerable period of time,” and it is difficult to wade through everything just to answer one question. He also suggested that it’s not important to answer the question fully until the judge had decided to certify the class action.

Kurzman countered that the plaintiffs had the opportunity to object to that question back when the questionnaire was first proposed and even back in March 2017 when they agreed in a status conference to answer the question once they got the records.

“Respectfully, I think we’ve done all that we can be reasonably expected of us,” he said.

Judge Lager said she was disappointed that the two sides were still wrangling over documents.

“I’m saddened that 11 months out and we still have to rehash this issue,” she said. “It’s an equal opportunity sadness.”

So she assigned the attorneys more homework, ordering them to designate up to five more people each to depose. The depositions are to be limited to no more than an hour and focus on the questionnaire, specifically answering question eight.

Previous coverage of Church Street South:
Amid Destruction, Last Tenant Holds On
Survey: 48% Of Complex’s Kids Had Asthma
Families Relocated After Ceiling Collapses
Housing Disaster Spawns 4 Lawsuits
20 Last Families Urged To Move Out
Church St. South Refugees Fight Back
Church St. South Transfers 82 Section 8 Units
Tenants Seek A Ticket Back Home
City Teams With Northland To Rebuild
Church Street South Tenants’ Tickets Have Arrived
Church Street South Demolition Begins
This Time, Harp Gets HUD Face Time
Nightmare In 74B
Surprise! Now HUD Flunks Church St. South
Church St. South Tenants Get A Choice
Home-For-Xmas? Not Happening
Now It’s Christmas, Not Thanksgiving
Pols Enlist In Church Street South Fight
Raze? Preserve? Or Renew?
Church Street South Has A Suitor
Northland Faces Class-Action Lawsuit On Church Street South
First Attempt To Help Tenants Shuts Down
Few Details For Left-Behind Tenants
HUD: Help’s Here. Details To Follow
Mixed Signals For Church Street South Families
Church St. South Families Displaced A 2nd Time — For Yale Family Weekend
Church Street South Getting Cleared Out
200 Apartments Identified For Church Street South Families
Northland Asks Housing Authority For Help
Welcome Home
Shoddy Repairs Raise Alarm — & Northland Offer
Northland Gets Default Order — & A New Offer
HUD, Pike Step In
Northland Ordered To Fix Another 17 Roofs
Church Street South Evacuees Crammed In Hotel
Church Street South Endgame: Raze, Rebuild
Harp Blasts Northland, HUD
Flooding Plagues Once-Condemned Apartment
Church Street South Hit With 30 New Orders
Complaints Mount Against Church Street South
City Cracks Down On Church Street South, Again
Complex Flunks Fed Inspection, Rakes In Fed $$
Welcome Home — To Frozen Pipes
City Spotted Deadly Dangers; Feds Gave OK
No One Called 911 | “Hero” Didn’t Hesitate
“New” Church Street South Goes Nowhere Fast
Church Street South Tenants Organize

Tags: , , ,

Post a Comment

Commenting has closed for this entry

Comments

posted by: Ryn111 on May 17, 2018  7:26pm

Too late to ponder this enigma. Tear it down.

posted by: Kevin McCarthy on May 17, 2018  8:54pm

Ryn111, as the story notes, the complex is being torn down - the court case won’t slow the demolition. What it will do is determine who is responsible for creating the conditions that led to the demolition.

posted by: new havener on May 18, 2018  12:03am

I’m guessing whomever put the graffiti on the wall, along with the other tenants that pee’d in the open garage parking spots, broke the doors, bent the windows frames, yanked out hand-rails, punched holes in walls, etc, had nothing to do with creating the conditions and dilapidation? Give it a break…I’ve been in that complex scores of times, and since the mid-eighties, it was never safe, never nice…thank God, let it go, it’s being demolished.

posted by: theNEWnewhaven on May 18, 2018  12:34am

Wasn’t it only recently FULLY renovated? 

(cough)

......Similar to the G?

Which is being redeveloped / renovated AGAIN? For over 200k a UNIT…..

I feel like the horror stories of baths being left on for hours / the mold overwhelming entire portions of units,...

The TERRIBLE crime that existed there for generations…..

That is the real heartbreak.

The management of that complex sucked, I’m sorry this complex ended up the way it did for the community that existed there. It breaks my heart to think of lifelong neighbors forever separating due to mismanagement / a corporation in general.

Still,  I am VERY happy to see such a crucial location get redeveloped as a mixed income/ mixed use space!

Hopefully those that want to move back after the reconstruction of the space are offered units FIRST. That location, when completed, will hopefully be AMAZING!

 


Regardless, I hope the best for the families that were relocated, that had to deal with the failures of that complex.

That Voucher is a true BLESSING, consider this the MESSAGE you’ve been asking for!

Best of luck to all of you! <3

posted by: SparkJames on May 18, 2018  1:07am

How about “poverty”?

posted by: Andrew Giering on May 18, 2018  1:55am

Too little, too late, is right.  Let’s build something better, connect the train station to the city, and truly include the Community in the process.

posted by: Ryn111 on May 18, 2018  8:20am

Thanks Kevin I can read. The project is being partially torn down - as noted in a recent article, it is still occupied. The court case would likely slow the redevelopment if not resolved soon. No bank will lend to an owner under litigation with this type of potential liability.

What this story highlights is the legal quagmire that has been opened. 200,000 documents!? That is a lot of billable hours. There is some blame on both sides but a lot will fall on Northland. Naming their CEO… that the move of an ambulance chaser.

Does anyone know when northland purchased the complex? 2008?

posted by: JCFremont on May 18, 2018  9:19am

How could that place ever be kept up or even make a profit for its “investors” when the rents are paid mostly through Section 8 funds with minimum from tenets. All payment funds are restricted the expenses to repair and replace the property and appliances never have the costs control. The problem with stagnate wages is not going to change with when New Haven policy is to continue the same doubling down on failed projects.

posted by: THREEFIFTHS on May 18, 2018  9:33am

posted by: new havener on May 18, 2018 12:03am

I’m guessing whomever put the graffiti on the wall, along with the other tenants that pee’d in the open garage parking spots, broke the doors, bent the windows frames, yanked out hand-rails, punched holes in walls, etc, had nothing to do with creating the conditions and dilapidation? Give it a break…I’ve been in that complex scores of times, and since the mid-eighties, it was never safe, never nice…thank God, let it go, it’s being demolished.

And I guess who let mold built up on the walls. had nothing to do with creating the conditions and dilapidation?

posted by: wendy1 on May 18, 2018  10:20am

This court case is a good example of justice always leaning on the side of the rich like Northland.  It is already obvious that Mr, G and Northland are GUILTY but Lager will drag this out until G. is dead of old age and Northland is sold to some other rich crooks.  The real guilty here is the judge and court system.

posted by: Jonathan Hopkins on May 18, 2018  11:40am

It’s a difficult question, but I’ll take a crack at it.

The Community Development Corporation, the original contractor who cut corners during construction and abandoned the project before it was completed.
The original MEP specifiers who undersized equipment and infrastructure.
The City engineers who authorized the inadequate construction drawings and prevented the architect from designing more streets through the complex.
The Greater New Haven Jaycees, the inexperienced owner-developers who were not ready to take on such a development.
The Department of Housing and Urban Development for refusing to finance more commercial space, release funds in a timely manner, sign off on the local property tax abatement, and work with the owner-developers, and then foreclosing on the complex and transferring it to a bad property manager.
Some tenants for not remaining actively involved in tenants associations and not maintaining their apartment and grounds.
Those who took advantage of absentee management to commit crimes and terrorize residents.
HRA Realty, Colonial Realty, Harbour Realty, the Community Builders, and Northland Investment Corporation for benefiting from low vacancy rates while extracting reliable Federal Section 8 payments without adequately maintaining, reinvesting, and managing the property, nor looking for creative funding sources for substantial renovation work.
The large scale urban redevelopment model as applied by Northland, which pursues development through wholesale demolition, property consolidation, and reconfiguring the land for new construction; and sees existing buildings and people as expendable barriers in the way of progress; and views this moment in time as an opportunity to erect a real estate investment product that will induce demand through aggressive marketing campaigns aimed at higher-income tenants so that it can extract rent out of the City and State for profit.
All of us for sitting idly by while this went on for five decades.

posted by: Jonathan Hopkins on May 18, 2018  12:07pm

(continued)
HUD for not adequately inspecting the complex prior to 2015.
The City of New Haven for not proactively enforcing the building code and blight ordinances, and for clearing the site under the Church Street Redevelopment Project - funded through the Housing Act of 1954 - without first securing a private developer for the site, which led to needing additional Federal funding through the Housing Act in 1961, and still more Federal recreational funding to create the complex’s open spaces and playgrounds when the builder abandoned the project, and is attempting now to apply for Federal funds through HUD to enable the redevelopment project rather than rehabilitate the existing complex.
There’s plenty of blame to go around, though some parties certainly deserve more blame than others.

posted by: __quinnchionn__ on May 18, 2018  12:10pm

“Goodbye old Church Street South apartments. Hello Union Square Village.”

posted by: Kevin McCarthy on May 18, 2018  1:46pm

Ryn111, I respectfully disagree with you with regard to your first point. One unit in one building (out of a total of 301 units) is currently occupied. The litigation won’t affect the relocation of the one remaining tenant. Similarly, while the redevelopment is very complicated, it is primarily a financing issue that will likely involve public as well as private dollars. I agree that the litigation affects Northland’s access to private capital. But Northland will lose money on the site until it is redeveloped. In that regard, the litigation will encourage Northland to redevelop the site sooner, rather than later. However the litigation turns out, it is essentially a sunk cost with regard to redevelopment.  Whether Northland and its affiliates owe the tenants millions or nothing does not affect the costs and benefits of redevelopment.  But I do agree with you regarding billable hours!

JCFremont, landlords in Section 8 get “fair market rents” based on regional, rather than neighborhood markets. In poorer neighborhoods, these rents (which are primarily paid by the federal government) routinely exceed what the landlord could get in the private market. This is part of the reason why Section 8 units are concentrated in poorer neighborhoods. You may be conflating Section 8 with traditional public housing projects, where the rents and federal subsidies combined are inadequate to properly maintain the buildings.

posted by: Ryn111 on May 18, 2018  2:15pm

Kevin, technically my first point was that I can read. I could disagree with that too.

We are on the same page. Until the property is completely vacant (currently .3% occupied and still open to parking and walking through) and litigation settled it will impact redevelopment.

I hope there is limited public money involved in the redevelopment. There is no bigger waste of money. (see cost of Farnham)

posted by: Kevin McCarthy on May 18, 2018  5:59pm

Ryn111,  thanks. I suspect whatever public money goes into the project will go toward making some of the units affordable to low/moderate income folks. As I suspect you recall, there has been substantial public debate on how many of the units should be affordable and how affordability should be defined.

posted by: challenge on May 19, 2018  2:55pm

I would think blame begins with the people who collected millions of dollars in federal funding and rent payments for decades without taking responsibility for the squalor tenants were living in. Others include LCI for their lack of accountability for making sure landlord provided safe and decent living quarters. No one wants to take responsibility for anything yet had no problem accepting payments. That’s to be expected when you have out of state landlords who have no investment in people,only in making money. Shame on all of them including those who want to place blame on tenants and the mayor who slept through this entire mess.