Kentucky Condo Owners Await Ruling Over Poor Construction

A group of condominium owners in northern Kentucky is hoping a judge’s ruling will give them an opportunity to collect several million dollars from a defunct construction company they say did shoddy work on their homes.

Campbell Circuit Judge Julie Reinhardt Ward declined to reconsider a $3.8 million judgment against Erpenbeck Co., insurance carriers, Ohio Casualty and West American.

The ruling, handed down March 3, impacts about 132 Wellington Place owners. They sued the insurance companies over what they described as cracking and crumbling foundations caused by bad drainage, improperly installed windows, and bricks and facades not properly secured to the buildings.

The insurance carriers’ attorney, John Dunn, declined to tell The Kentucky Enquirer if his clients would appeal. A spokeswoman for the carriers, which are affiliated, didn’t return messages.

Condo owner Tina Hehman moved into Wellington Place four years ago, thinking it was her dream home. Instead, she watched her dream literally sink.

“I just want someone to shore up this place, so I don’t have to worry about my walls falling in on me,” said Hehman, who paid $81,000 for her home only to have it appraised at tens of thousands of dollars less because of the structural problems that have since surfaced.

Because the homeowners association has been using the condominium fees to pay for the litigation, Hehman said routine maintenance at the 132 condominiums with a clubhouse, pool and lake has not been done.

“When your buildings are in bad repair, and there is nothing that can be done about it, it is very distressing,” Hehman said. “I just try not to look at all the damage when I come home from work every evening.”

Court records indicate that Erpenbeck Co. cut corners building Wellington Place as it teetered on financial collapse in the early 2000s. While construction on the condominium project started in 1997, court records indicate the type of shortcuts made didn’t start causing widespread structural problems until 2006.

The condominium’s homeowners association ultimately received a $3.8 million judgment against Erpenbeck Co., but by that time, the builder was bankrupt and owner Bill Erpenbeck was in prison for bank fraud.

The homeowners association then got lawyers Mark Arnzen and Aaron VanderLaan to sue the builder’s insurance carriers to try to collect. The lawyers for the homeowner’s association successfully argued that the insurance carriers could not deny coverage based on a contractor’s faulty workmanship.

The insurance companies had already paid a $170,000 claim in 2006 to repair shoddy construction before learning the problems were widespread in all the units. It then paid for Erpenbeck Co.’s lawyers when the homeowners association originally sued the builder.

The insurance companies never claimed the policy didn’t cover faulty workmanship until after the $3.8 million judgment against the builder.

Ward ruled that if the insurance companies were to argue the damage wasn’t covered under the policy, they had to make the claim at the beginning of the litigation.

” … neither insurance company told Erpenbeck or the homeowners association that there was no coverage until about 17 months after the lawsuit was filed,” Arnzen wrote in a court filing.