WINSTON-SALEM, NORTH CAROLINA (September 18) Kilpatrick Townsend & Stockton announced today that it recently obtained a reversal on appeal of a condominium construction claims case.

Kilpatrick Townsend represents the plaintiffs -- Trillium Ridge Condominium Association (the “Association”), located in Cashiers, North Carolina -- on appeal from dismissal of the Association’s claims related to the defective construction of six high-end condominium buildings built between 2004 and 2006 (during the height of the housing boom), and for which the Association is now responsible for repairing and maintaining.  The condos retailed for up to $900,000 apiece; however, they were built with defects that included failures to install support columns, incorrect installations of roof trusses, windows, and numerous flashing defects that allowed water to penetrate the exterior walls of the buildings, rotting the exterior walls and in at least one instance causing an exterior wall to fail.  All told, by the time the case had reached the summary judgment stage, the Association had spent approximately $3,000,000 to repair the defects, and repairs were ongoing at that time. 

In addition to negligence claims against the general contractor and the developer, the Association also asserted claims for breach of fiduciary duty against the development company that oversaw the construction and sale of the condos, and against the two individual owners of the development company, who had also appointed themselves as the original members of the Association’s board during the construction and sell-out phases, based on evidence that those directors knew or should have known about the construction defects but failed to inform the Association about them when control of the Association was turned over to the unit owners in 2007.  The case was assigned to a specially designated superior court judge, and in September of 2014, summary judgment was entered for the defendants on all of the Association’s claims. 

On Tuesday, September 16, 2014, the North Carolina Court of Appeals issued an unanimous opinion reversing the trial court’s decision, and remanded all claims for trial, including all claims related to two buildings that were completed outside the North Carolina’s six year statute of repose for construction defect claims, finding that the defendants may not be able to invoke the statute of repose because the development company remained in possession or control of the buildings after they were completed, and based on evidence that the construction company may have concealed the defects and prevented the Association from discovering them sooner. 

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