Sarasota’s Dolphin Tower residents sue insurer

The countersuit against Great American Insurance Co. of New York comes as the building and its homeowners association are facing an increasing financial strain.

To mitigate potential shortfalls and to pay for repairs in the 117-unit tower, owners are now floating a plan to add as many as three floors of residential units on the building at 101 S. Gulfstream Ave., according to information disseminated at a resident meeting earlier this month.

But it is the countersuit that now represents the most tangible course for owners, who were forced from their homes in June 2010 after a key fourth-floor slab that holds up the tower’s residences suddenly cracked.

Association attorneys maintain that Great American breached it contract, and that the building’s “all risk” insurance policy covers the concrete decay, which will cost an estimated $8.2 million to repair and which will keep residents out of their homes until late 2012 at the earliest.

“Full payment is due and owing under the All Risk policy and is not subject to any exclusion,” association attorney Donna DeVaney wrote in a July 19 filing. “Great American cannot now seek the court’s intervention to re-write terms of its policy.”

Late last month, Great American asked a federal court in Tampa for a declaratory judgment to uphold its rejection. It contends that the 38-year-old condo tower was poorly designed and built using faulty materials.

Officials at the Cincinnati-based company declined Tuesday to comment on the countersuit.

DeVaney said she will ask the court to expedite the lawsuit and set trial for sometime in 2012.

Even then, Great American could appeal if it does not prevail, adding months or years to the litigation. Moreover, any settlement with the insurer might not cover repair costs. DeVaney’s firm is entitled to 30 percent of any settlement because it took the case on a contingency basis.

Residents, though, might have little choice.

In addition to the potential $8.2 million repair cost, Dolphin Tower is now wrestling with dozens of owners who are either unable, or unwilling, to continue paying association dues of more than $500 per month and other special assessments.

Roughly 30 have either stopped paying or are delinquent, totaling nearly $264,000 in unpaid assessments and maintenance fees, according to the internal resident documents circulated earlier this month.

More than two dozen Dolphin Tower units are now listed for sale.

Though the association maintained almost $221,000 in reserves as of July 1, that money will disappear in the coming months.

“Present rate of spending all reserve accounts will be at zero by November 1st,” the internal documents state.

Charlotte Ryan, president of the Dolphin Tower residents’ association, declined in an email to comment.

In response to the pending shortfall, Dolphin Tower has floated a plan to add as many as three floors to the building, which is zoned “Downtown Bayfront” and could go as high as 18 stories.

“Engineers would have to determine if columns could support the addition,” the minutes of the July 12 resident meeting note.

But engineering is not the only issue standing in the way of expansion. Under city residential density rules, multifamily buildings may contain no more than 50 units per acre.

Dolphin Tower, which sits on two acres, currently exceeds that maximum by 17 units, which would make it difficult to expand.

The association also is considering a possible sale. Earlier this month, the group said it plans to get an appraisal of the building — at a cost of $10,000 to $50,000 — as part of a larger effort to possibly sell.

Meanwhile, the group also has been surveying residents on their financial appetite to repair the building.

In a draft questionnaire, residents were asked “what is the maximum EACH owner would be willing to invest?” Answers ranged from “None” to $120,000.

Owners also were questioned about willingness to sell outright, or whether they would support additional payments to repay a bank loan to cover repairs.

“How much are you willing to pay per month, IN ADDITION to our monthly maintenance fee?,” the questionnaire asked. Answers ranged from “None” to $1,300.

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