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Palm Coast Friday, May 17, 2019 4 months ago

County notifies former Sears building owners, inspector and broker of potential litigation

Damage to the building was unmistakably longstanding, according to county attorney Al Hadeed.
by: Jonathan Simmons News Editor

Flagler County has notified the former owners of the Sears building on Palm Coast Parkway, as well as the real estate broker and inspector involved with the sale of that property to the county, that the county is preparing to sue them due to water and mold damage to the building that was not disclosed before the sale. 

The building, located at 4888 Palm Coast Parkway Northwest, had been slated to become the FCSO's new Palm Coast precinct office, and would have also provided space for some employees who were evacuated from the Sheriff's Operations Center on State Road 100 in June of last year due to mold at that building. Currently, those displaced employees are divided between the jail administrative building and the county courthouse. The broker and inspection firm that handled the Sears building purchase had also handled the county's purchase of the evacuated building that became the Operations Center on S.R. 100.

County employees discovered the damage at the Sears building on Tuesday, May 14, when they saw water pouring down an interior wall during a rainstorm. The county considers the damage too extensive to remediate, and the sheriff has said he will not place his employees in the building. 

County Attorney Al Hadeed sent letters to the former owner, broker and inspection company branch manager on May 16, notifying them that the county intends to pursue claims. 

In a letter to Margaret Sheehan-Jones, the real estate broker who handled the sale, Hadeed noted the context of the county's interest in the Sears building.

"The County does not know whether you knew of these conditions. If you did not, the County believes it was your duty under the circumstances to be aware of the suitability of the building for public governmental purposes," Hadeed wrote. "You sold the County the former hospital in Bunnell. The County constructed a new Sheriffs Operations Center on that site. Dominating the news for at least two years are the media accounts and public hearings delving into the influence of water intrusion on the health of individuals who worked in the building. ...  It is inconceivable to the County that this context would have escaped your attention. It should have alerted you to the need to present only properties to the County, including this one, which are suitable for consideration for public use. By your providing the County with an unsuitable property, the County is exposed to the considerable expense and time of evaluating it for purchase."

Sheehan-Jones said she was unaware of the damage. 

"When I visited the property with several representatives of the County prior to the sale of the Sears store, the store was still operating and the space was full of inventory," she wrote in an email to the Palm Coast Observer. "I had no knowledge of any issues with water intrusion at the property and the seller did not disclose anything to me that would have raised any concerns.  If there was any sign of water damage on the walls or other areas, those were not visible to me or any of the County staff members that were present at that time. It is unreasonable to suggest I had a duty to disclose facts that I did not know about or had any way to discover.  The County has staff with construction experience and hired an independent inspector to determine the condition of the property, which is standard practice in commercial real estate transactions. Neither the County staff nor the independent inspector found anything that was cause for concern at the time. The information that has been released shows that the County had to remove walls from the building to discover the issue.  I look forward to receiving all of the information the County has regarding this issue and am confident the truth will be shown."

In a letter addressed to Universal Engineering Sciences Branch Manager Brian Pohl, who'd signed Universal's report, Hadeed noted that the county had specifically sought out information on any possible water intrusion.

"Per the instruction of the County Administrator of Flagler County, the County is placing you on notice that it will be pursuing claims based on your report dated December 12, 2018, for failing to disclose obvious evidence of water intrusion into the building structure located at 4888 Palm Coast Parkway NW," Hadeed wrote. "Had you identified what was plainly evident, the County Commission would have chosen other alternatives to the purchase. ... The County emphasized in its engagement of your services that its primary interest was to obtain an assessment of any water intrusion. The revised report of December 12, 2018 was in response to the County’s emphasis, yet it did not identify or address in any fashion the evidence plainly evident to the County’s employees."

The county had rejected an initial inspection report by Universal because it did not include an assessment of moisture intrusion. County land manager Tim Telfer, the county employee who'd been tasked with communicating with Universal about the inspection, wrote to Universal on Nov. 28 that the county was not satisfied with the initial inspection report.

"Further investigation and reporting of the roof condition is necessary. Any moisture issues should be noted, or it should be stated there are no moisture issues observed," Telfer wrote. "The report as submitted does not meet the scope provided in the executed work authorization and thus I cannot recommend payment on the supplied invoice in the full amount of $5,300."

The revised report Universal sent to the county stated: "There is no evidence of moisture intrusion or physical damage to the roof." Noting that there was damage to the exterior wall, the report continued: "There is no evidence of moisture penetrations but repairs are necessary to prevent further deterioration. The steel sheathing areas are in stable condition with no evidence of moisture infiltration or deterioration."

Hadeed's letter to James and Andre'a McIntyre, the Sears building's previous owners, states that the water intrusion was longstanding.

"The water intrusion damaged the sheet rock and rusted metal parts within the building and in some places rusted through," he wrote. "The degree of water intrusion, its volume and repetition, have created substantial, hazardous black mold. The building is unsuitable for occupation. There is evidence that you or those under your direction concealed these conditions. The County has collected this evidence, including video and photographs in addition to onsite inspection of the conditions. The County will be seeking rescission of the agreement plus an amount representing its consequential damages for having proceeded into the due diligence, acquisition, and occupancy phases of its activities. We also will consider seeking punitive damages because the concealment appears to be intentional."

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