For anyone who closely follows real estate litigation in South Florida and Miami, the ongoing saga of the Vizcayne condos on Biscayne Boulevard has proved to be one of the most drama- and twist-filled narratives in the field. The latest turn took place in May 2018, with two settlements to the tune of roughly$3,069,000 and $646,700 awarded to the Vizcayne North Tower Association and Vizcayne Master Association, respectively, by construction companies.

Originally known as Everglades on the Bay, the two towers that comprise the Vizcayne luxury high-rises were first developed by the Aventura-based Cabi Developers. The company, founded by Mexican developers Elias and Abraham Cababie, worked on the project from 2007 to November 2010, at which point they filed for bankruptcy. The buildings were then sold to a partnership including real estate investor Rockwood Capital out of California as well as the South Florida-based companies Duncan Hillsley Capital and Fortune Capital Management Services in Coral Gables, who renamed the project Vizcayne. It was one of the largest deals to emerge as a result of the recession and accompanying South Florida real estate bust.

But despite the change in name and ownership, trouble has continued to plague the property.

In the last few years, David Haber, founding partner at Haber Slade, has become intimately familiar with Vizcayne, as he has overseen several lawsuits filed by the condo associations against other parties. In 2014 the associations and Haber filed suit against several parties, including Thomas W. Duncan of Duncan Hillsley Capital, accusing them of shirking on construction costs and unlawfully sticking the associations with the multimillion-dollar bills including interest.

The settlement of that case — which preserved the plaintiff's right to file suit against other parties involved in the Vizcayne's construction — enabled the associations to next go after property developers for a litany of issues in November 2016.

The immense 184-page complaint lists a number of structural issues existing within the Vizcayne condos, including “malfunctioning plumbing, substandard roofing, compromised balcony railings, cracked stucco, water leaks, deteriorating pipes, up to 15,000 improper post-tension cable encapsulations, faulty bathroom installations and other defects,” as listed in a 2016 Daily Business Review story on the suit.

Additionally, the complaint includes 99 listed counts against the numerous defendants, including several individualized charges of negligence and breach of contract.

Here's the full 184-page complaint filed against property developers who worked on the Vizcayne condos:

According to Haber, construction suits like the one filed by the Vizcayne condo associations against developers can quite often become a “a war of attrition.”

“The practical reality is … insurance carriers are not interested in paying right up front; they're not interested in fixing right up front; they're interested in grinding down the associations,” Haber explained, citing several reasons for this strategy. “The first one is there's never been an insurance company that made money by paying money; they make money by investing in real estate and other property, and then paying out based on a portion of the dollar.”

Haber added that insurers and developers often like to appeal and keep cases in litigation in the hopes of wearing down the opposing parties and counsel.

“There's a chance — after two three four years — that you get a new board of directors that gets tired of it and says 'Forget it! We'll settle for pennies on the dollar, we're tired of this,'” Haber said. “Or you get a board that just has no appetite to continue to fight. So it's in the insurance company's best interest typically to continue these things … and so they hire many, many, many lawyers for these many, many, many defendants and they file hundreds and hundreds of motions.”

In Haber's words, the settlement reached in this case only came about because “the boards had the courage and the stomach to go through it and see it through to the end,” noting that it isn't as though members of the condo association are receiving a financial windfall for their involvement.

“Remember these are volunteer unit owners serving as board members, and they're not getting paid, but lawyers get paid, the accountants get paid, the engineers get paid … Everybody gets paid except the volunteer board members who have to spend hundreds and hundreds of hours on these things,” Haber said.

Two years on from the initial filing, the settlements were reached shortly before going to trial. Haber says that this is because once a trial has been granted, there are a number of challenges posing construction companies and their companies in attaining a ruling in their favor.

Read the multi-million dollar settlement:

“Ultimately it's in everybody's best interest to try to settle the case because you're talking about a potentially monthslong trial before six jurors who don't understand construction, and who can really get tired of hearing the technical details,” Haber said. “You also have the risk not just of winning or losing, but if you lose as the defense, the insurance carrier is going to take an appeal and that could take another year or two. And then when that's done, then they go to a federal court and they say 'Well, we had a reservation of rights and we want a declaration from the Federal Court that this was not within our coverage.'”

Haber says the prospect of a federal court case that can take three to four years to litigate and the possibility of further lawsuits often compels insurance carriers and construction companies to settle. In these particular cases, the parties agreed to settle only six weeks before the trial was set to take place.

“All of these motions were due to determine whether the experts would be allowed to testify and what they'd be allowed to testify. Everybody understood that if we didn't get the case resolved, there was a risk that the experts could testify to either more or less, which could hurt one side or the other,” Haber said. “It was a critical juncture in the case, because if the court rules in your favor or against you, it changes the balance of power; if you're on a seesaw it puts weight on one side of the seesaw.”

Although he couldn't speak on the specific process on the numbers behind the settlements, Haber did explain that that Master Association building had fewer defects due to its smaller size, and haggling over how much of the building is experiencing defects.

“It becomes a battle of the experts, and then the insurance carriers get involved with respect to what's covered versus what's not covered from the insurance policies,” Haber said. “It becomes a tug of war, and ultimately in this case, it got resolved.”

Even with this particular case getting resolved in an amicable fashion, Haber expects a steady stream of similar lawsuits in South Florida and Miami in the near-future.

“You have the salt air, you have the sliding glass doors, a corrosive environment, which is a recipe for water intrusion; you have concrete, which is a recipe for corrosion and you have people moving as quickly as they can to get these things done. And I think that's a formula for continued litigation on high-rise construction,” Haber said. “Every developer is aware that they're going to get sued; every contractor is aware they're going to get sued, and it's part of the process of building condos and apartment buildings. Although in the apartment buildings it's the developer suing the contractor, in this case it's the condo association suing the developer, the contractor, the design parties. The construction industry is very sluggish; it's thriving in South Florida, and so is the construction legal community.”

Case: Vizcayne North Condominium Association Association Inc., v. W.G. Yates & Son & Construction, et al.

Case No.: 2016-28905 CA 44

Description: Construction defect lawsuit

Filing date: Nov. 8, 2016

Settlement date: May 2018

Judge: William Thomas

Plaintiffs attorneys: David B. Haber & Franchesco Soto

Settlement amount: $3,069,250.66