Rich Moldat Ritz*

washingtonpost.com

At Ritz Complex, Mold Came to Call On Condo Owners

By Annie Groer

Washington Post Staff Writer

Monday, May 5, 2003; Page A01

The location was perfect, walking distance to Georgetown, downtown, the Kennedy Center. The amenities were sterling. And for venture capitalist Carol Anderson and her attorney husband, Stanton, price was not an issue.

In January of 2001 they moved into a spacious $1 million retreat at the Residences at the Ritz-Carlton in West End. In came an artist to paint a mural in the foyer. Up went the John Singer Sargent watercolor of Venice in the living room. Onto the floor went the $45,000 Persian rug.

Adding to the building's cachet, residents would come to include diplomats, politicians and such Washington luminaries as Kennedy Center director Michael M. Kaiser, soccer star Mia Hamm and basketball legend Michael Jordan.

But for the Andersons and many of their wealthy neighbors, gracious living at the Ritz brought an unwelcome houseguest: mold. Because of plumbing and construction problems, flooding and leaks sent water into lobby areas, hallways and the bowels of the building, creating the perfect environment for the black fungus that grew behind walls and under floors.

When the scope of the problem became evident, numerous owners were relocated to other apartments while their places were torn apart. Some fled entirely, complaining of mold-induced illnesses. To date, four multimillion-dollar lawsuits have been filed by owners and renters against the firms that developed and manage the property. And that does not count a pair of confidential, six-figure settlements.

Lobbyist Tom Korologos said he is a potential litigant. Is he pleased with the $1.9 million condo he shares with his wife, former labor secretary Ann McLaughlin Korologos? "Except for the mold and construction problems, yes," he said. "Other than that, Mrs. Lincoln, how was the play?"

Luxurious Locale

When they went on the market in 1999, the apartments were barely shells, but the sales literature described how splendid the buildings would be. At $500 to $800 per square foot, they set a Washington record.

"Here is an address that is more than mere numbers," boasted one brochure. "It tells the world not where you live, but how you live." Developers promoted high-end amenities -- granite counters, Viking ranges, mahogany floors -- and a staff to walk the dog, water the plants, stock the Sub-Zero refrigerator and gas up the Porsche.

The two attached apartment houses are part of a $300 million complex that includes the 300-room Ritz-Carlton Hotel and the Sports Club/L.A. Collectively they occupy an entire block bounded by 22nd and 23rd and L and M streets NW.

From the outset, the complex had prestige. President Bush's family stayed at the hotel during his inauguration festivities. Famous athletes and celebrities worked out at the health club.

But also from the outset, the buildings were plagued by plumbing and construction problems resulting in numerous leaks, flooding and water "intrusion." They came from faulty plumbing and improperly installed flashing and venting, said Matthew Hall, corporate communications director for Millennium Partners LLC in New York, which manages the condos.

"It's not unusual for a new building to experience a number of leaks before all the plumbing gets a stabilization plan," Hall said. It wasn't until early in 2002 that management realized the scope of the mold infestation, he said. "There is always mold somewhere. There is no bench mark to say this is normal mold and this is big mold."

In this case, it was big mold.

There are 161 Ritz condos. Hall would not say how many of the 127 units already "remediated" for water damage had mold. Last November, when 60 had been cleaned up and repaired, "a substantial number, a lot of them," were found to have the fungus, he said. Most of them? "Yeah. Almost none have had visible mold. You wouldn't walk in and say, 'Oh wow, mold.' "

That is because it was growing under floors, behind walls and baseboards, and inside ventilation shafts.Condo board member Jerilyn Epstein noticed a bowed-out baseboard. A "foul and moldy odor engulfed the unit" belonging to Lucy Labson, according to her lawsuit. Korologos, who had a bulging wall and musty closet, ultimately hired an expert to find his fungi.

Some owners accuse Millennium of stonewalling their complaints, ignoring requests for information and failing to disclose problems.

Hall said management discussed mold with individual owners early last year and in subsequent months gave them three separate plans to rid the building of mold and water damage. A $10 million performance bond was posted with the District to guarantee the repairs, said Epstein.

"We are going to spend whatever it takes," said Hall, estimating that $6 million had been paid out by mid-December. The final figure could hit $20 million, according to a court filing by TIG Insurance Co., one of five carriers that wrote liability policies for Millennium.

"We are going into every single apartment. We leave nothing to chance," Hall said. "We have hired the best moving company, the best art-moving company. If you have custom wall finishes, we hire your contractors, your decorators, to make sure it is returned as you left it. It is a huge undertaking."

Corinne Bronfman, a financial economist and condo board member, said the company has been as good as its word. "In all honesty, I am pretty impressed," she said. "Within 18 hours of moving in I had a leak. They literally are opening every wall."

Mold's Many Matters

Scientists are still studying how dangerous mold is, and to whom.

There are thousands of strains, and some can cause allergic reactions, sinus infections and asthma symptoms. Inhaled mold mycotoxins have been known to trigger lung infections, particularly among those with suppressed immune systems. However, the Centers for Disease Control and Prevention says that no "causal link" has been proven with certain rare conditions such as pulmonary hemorrhage or memory loss. Mold can develop within a day or two of water damage, and it finds ready food sources in carpeting, the paper covering drywall and most everything else. Left undisturbed behind walls, it may not cause problems. Once dispersed into the air or ventilation system, it can become a toxic irritant.

And mold is an equal opportunity pest. Schools, office buildings, low-cost housing and mega-mansions have all been infested. Anti-pollution activist Erin Brockovich claimed $600,000 in mold damage to her California home. At one Park Avenue building in New York, where condos start at $8 million, an owner has filed a $400 million suit alleging mold made his wife and child grievously ill and ruined priceless antiques.

In 2002, mold was estimated to be "a $2.5 billion problem nationally," with 70 percent in Texas owing to its weather and water hazards, said P.J. Crowley, the spokesman for the Insurance Information Institute in New York. "The issue didn't really exist before 2000. There is nothing new in the way we are building houses, the weather patterns. It's all about anxiety driven by lawsuits or the threat of litigation."Some experts say the problem is greatly overstated and that the current mold rush is merely a bonanza for lawyers and plaintiffs.

But others take it quite seriously. Carol Anderson, for example, said she felt as if she were coming down with the flu every time she stayed at her condo on trips up from the family home in Palm Beach, Fla.

After a week-long visit last July, Anderson, 56, and now separated from her husband, complained of severe headaches, breathing difficulties, short-term memory loss, blurred vision, vomiting and diarrhea. Her doctor diagnosed her acute allergic reaction to Stachybotrys mold, which had permeated the walls of the apartment after a washing machine flood and other leaks, according to her lawsuit. He told her to move out, leaving everything behind, including her toothbrush. She said she can no longer work.

In November, she sued for more than $10 million in U.S. District Court here, alleging that "piecemeal repairs" to recurring plumbing problems and water damage left her elegant apartment "in worse shape, contaminated her personal property and severely impacted her health."

The first suit, for $10 million, was filed in July in D.C. Superior Court by Pauline Johnson-Brown, a Berkeley, Calif., real estate investor and her daughter, who own a $515,000 condo at the Ritz. Remediation began five months later -- on a schedule set by Millennium -- and Johnson-Brown came east several times to monitor progress.

She followed a routine: unlock the condo, slip a white protective jumpsuit over her clothes and a respirator over her face, survey the scene. One February afternoon, the bathtub was adrift in the living room and large clear plastic bags containing damp drywall and pieces of baseboard -- some bearing tell-tale dark splotches -- lay on the laundry closet and bathroom floors.

"I can't sell it, I can't convey it, I can't transfer it, I can't rent it, I can't live in it. I am carrying $5,000 a month on that albatross," she lamented. At one point, when she still had tenants, Johnson-Brown alleged in her lawsuit, "excrement was seeping out around the toilet base."

Once she realized there was a problem, she said, Millennium management refused to give her reports on mold elsewhere in the building. Because of this, she said in court papers, those "who might otherwise have chosen to abandon the premises if they had known of the health threat, instead remained and became ill."

She was referring to her tenants: Alyson Gannon, 31, and Gannon's son, Andrew, 7.

The Gannons have sued Millennium and the two environmental companies involved in mold testing and cleanup for $15 million. After seven months in the apartment, mother and son moved out. "Our exposure to mold toxins has left us with headaches, dizziness, numbness, fatigue, tremors and difficulty breathing," Gannon wrote in an e-mail. "It is absolutely devastating to watch your child struggle, twitching and tremoring."

Millennium lawyers, in court papers, blamed the family's health problems on "defendants other than Millennium over whom Millennium had no control, and by forces of nature . . ." Hall would not elaborate.

To the dismay of onetime neighbors, Alyson Gannon has come to the building wearing a face mask, and donned a yellow plastic biohazard "moon suit," when entering Johnson-Brown's unit to check on repairs.

Containing the Damage

Even as Millennium executives grapple with the problems in West End, including 65 unsold units and legal wrangling with their own contractors and insurance companies over who should pay for repairs, they are marketing an even more grandiose hotel-apartment complex at the site of the old Georgetown Incinerator under the Whitehurst Freeway.

Hall said a different plumbing company was used on this project and "every plumbing joint" was checked and rechecked.

Last July, after the first lawsuit was filed, Millennium hired public relations executive and former White House press secretary Jody Powell, who owns a $1.5 million Ritz condo, to help with damage control. Powell praised Millennium's attempts to deal with leaks and mold "once they realized they had a big problem, not a bunch of small problems." He called those who sued last year "malcontents."

Millennium may face future hurdles, however. Other owners have hired environmental experts and lawyers; if they cannot settle, they too may sue.

Some owners are deeply worried about property value. In February, Lucy Labson filed a $10 million lawsuit in U.S. District Court alleging that Millennium failed to disclose the building's structural defects before she bought her $1.46 million unit in August 2001. She said she was "deceived" into paying top dollar for a unit Millennium marketed "as the height of quality, construction and luxury."

Millennium has denied allegations of fraud and deception. And Hall has made one thing clear: 2200 M Street LLC, the developer, will not buy back any apartments.

Other owners are not so concerned. Late last August, before remediation began in her $1.7 million unit -- and saying she did not fear possible effects of mold on the health of guests or family -- ABC Sunday night anchor Carole Simpson, 62, hosted a luncheon for a dear friend battling cancer. The elegant meal was prepared, delivered and cleaned up by the Ritz-Carlton's catering service. A hotel official even sang to the ailing honoree.

It is this level of cosseting that owners believe will trump the current unpleasantness. Simpson hopes her condo will need no further work. But she was effusive about how every single object -- from paintings to pancake mix was photographed in place, packed up and installed in the same spot in a vacant unit. The six-week exile she and her husband endured was sweetened by several nights in a Ritz hotel suite, a $150 daily stipend for meals and some free upgrades in their unit.

"It's great, better than it was before. We started feeling again like we were at the Ritz," Simpson said. "Everything is hunky-dory."

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