negligence, conspiracy, infliction of emotional distress, and violations of Hawaii's condominium laws and the federal Racketeer Influenced and Corrupt Organizations Act (RICO) - jurors supported all 11 of the Bevills' claims.
Millions for couple who sued condo association
Nearly $3.9M award from jury over ‘campaign of intimidation’
by Ilima Loomis - Staff Writer
reprinted courtesy Maui News 3/29/12
WAILUKU - A Molokai couple was awarded nearly $3.9 million in damages last week
after a Maui jury found they had been subjected to threats, harassment and
intimidation in a dispute with their condo association.
Jim and Nancy Bevill had sued the association, its board of directors, the resident manager and a handyman for what attorney Terry Revere described as a "campaign of intimidation" that lasted at least six years. The Bevills said that they received death threats, had their car vandalized and experienced other forms of retaliation after speaking up about abuses at the Ke Nani Kai Condominium in Maunaloa.
Revere described the Bevills' experience as "the west Molokai version of 'Lord of the Flies,' or the equivalent of a John Ford western, where an isolated town is run by a villain and his collection of thugs."
Following an eight-week trial in the 2nd Circuit courtroom of Judge Rhonda Loo, jurors supported all 11 of the Bevills' claims, including negligence, conspiracy, infliction of emotional distress, and violations of Hawaii's condominium laws and the federal Racketeer Influenced and Corrupt Organizations Act.
The verdict included $500,000 in general damages and more than $3 million in punitive damages to be paid by the board of directors and condo association, as well as by three members of the board individually, the former resident manager and the handyman.
Former 2nd Circuit Judge Joel August, who heard an early part of the case but did not preside over the eventual trial, said the outcome should serve as a strong example of why condo associations should resolve their disputes early and avoid a protracted legal fight if possible.
August was speaking Wednesday at the Condominium Council of Maui's annual meeting and legal seminar at the King Kamehameha Golf Club.
He noted that the case eventually lasted for four years, involved an eight-week trial, racked up an estimated $1.5 million in combined attorneys fees and ultimately resulted in a $3.9 million verdict against the condo association and other defendants.
The Bevills had apparently made an offer to settle the case before it went to trial, August said, but it was rejected. The offer ended up being less than 10 percent of what the jury ultimately ordered the defendants to pay, he said.
"This case, if nothing else, should be the poster child for the idea that alternative dispute resolution is the way to go," he said.
Attorney John Zalewski, who represented the association and owners, declined to comment on the case, but did say August's statement about the settlement was "inaccurate."
Revere said August was correct.
According to the Bevills' complaint, Ke Nani Kai was run by a board of directors including Phil Schutte, Bruce "Skip" Blough, Mike Preiss, Connie Schnitker and Pete Hill, and condo association "librarian" Beverly Schutte, who treated the condo complex as their own "personal fiefdom." They worked in concert with two "thugs," resident manager Darrel Borling and an unlicensed handyman, Frank Maurizio, who had a criminal record and boasted of having ties to organized crime, the complaint says.
Homeowners who ran afoul of the board experienced harassment including verbal threats, vandalism to their property and the killing of their pets, Revere said.
In court filings, Revere said the Bevills' troubles began shortly after they moved to Molokai from California in 2004 and hired an outside contractor to complete renovations on their unit.
After Blough tried unsuccessfully to convince them to use Maurizio for the job, the Bevills' "found themselves at odds with Maurizio, labeled 'troublemakers' and essentially marginalized and made to feel unsafe in their own home," Revere wrote.
Maurizio went on to perform sloppy construction work in a unit above the Bevills', which resulted in water flooding their unit and causing damage, according to the filing.
The Bevills also observed Maurizio violating the rules of their condo association, but when they complained about it, board members "circled their bandwagons around Borling and Maurizio."
The situation began to deteriorate, with Maurizio verbally attacking and threatening the Bevills, singling out Jim Bevill for harassment and "making rude gestures with his genitalia to Mrs. Bevill when he knew she was alone at the apartment," according to the filing.
The Bevills also found their vehicle had been damaged, with the sides scraped and the tires punctured, Revere wrote.
The Bevills and other frustrated couples at the complex eventually banded together and sent a letter to the other
Ke Nani Kai homeowners complaining about the situation and asking for help in changing the leadership of the condo association, but that only increased the retaliation, according to the court filing.
In response to the letter, the board members filed a defamation lawsuit against the Bevills, using condo association funds to pay their legal bills in what Revere called a "gross misuse of the board's discretion." August heard the case and dismissed it as being without legal merit.
When the Bevills filed their lawsuit in 2004, the harassment only continued to escalate, Revere said.
"To this day, defendants continuously trivialize plaintiffs' concerns and claim they are paranoid, etc.," Revere wrote. "Such accusations, however, do not explain why numerous other homeowners had similar complaints."
In the verdict handed down March 21, the jury ordered that the board of directors pay $1.3 million in punitive damages and the condo association pay $700,000. Schutte and Blough were ordered to pay $300,000 each; Preiss $200,000; Borling $190,000; and Maurizio $380,000.
The jury also awarded the Bevills $500,000 in general damages.
Revere called the verdict a "strong message" for condo associations.
"If you abuse your owners and engage in anything close to the outrageous conduct that happened here, juries aren't going to stand for it," he said in a statement.
Speaking before the Condominium Council on Wednesday, Maui attorney Ray Wimberly said that the case should be a "cautionary tale."
"If it does go on appeal, it will set precedent and affect all of us down the road," said Wimberly, who was not involved in the case.
August said both he and another judge tried to help the two sides in the case resolve their issues, but attempts at mediation were unsuccessful.
The total amount of time and money that the case ended up costing is "nuts," he said.
Resolving the dispute through mediation or arbitration would have been a "much smarter" choice, he said, and would almost certainly have resulted in a settlement much lower than the $3.9 million verdict against the defendants.
He said the amount awarded to the Bevills was likely higher because jurors were "completely ticked off" with the defendants after hearing how badly the couple had been mistreated.
"What happened is, they ended up with an inflamed jury," August said. "It's almost impossible to inflame an arbitrator," who would have likely been less emotional in deciding a settlement.
In addition, since most of the award was for punitive damages, the payments will probably not be covered by insurance, he noted.
"They're going to be able to go after the individual assets of these people, including the board members," August said. "This is why you go through mediation, and/or arbitration."
* Ilima Loomis can be reached at iloomis@mauinews.com.
reprinted courtesy Maui News 3/29/12, original link www mauinews com/page/content.detail/id/559599/Millions-for-couple-who-sued-condo-association.html?nav=10
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