A 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
Lager 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
In 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