Brickell Key condo owners are accusing developer Swire Properties of scheming to illegally saddle them with the financial burden for seawall replacement on the triangular island off Miami’s Brickell, according to a lawsuit.
Five residential condo associations sued Miami-based Swire over its $32.3 million assessment, including to repair and re-build the island’s seawall and for repairs to the baywalk, alleging that they shouldn’t be on the hook to pay for work on property they neither own nor are financially responsible for because it’s not Brickell Key common property, according to the complaint. Swire, its affiliates and the city of Miami own the majority of the seawall, the suit says.
The Brickell Key One, Brickell Key Two, Isola, Courvoisier Courts and Carbonell condominium associations filed the complaint in Miami-Dade Circuit Court on Friday.
The suit marks the culmination of a dispute between Swire, which developed Brickell Key’s existing condos and plans a new Mandarin Oriental project, and unit owners, some of whom raised concerns last year over the Brickell Key Shoreline Resiliency Initiative that will be funded with the $32.3 million assessment.
Brickell Key is a man-made island that was developed in the 1980s by a Swire-Cheezem joint venture that had bought a majority of the 44-acre island in the 1970s, according to the complaint. Originally called Claughton Island and dredged in the 1970s, Brickell Key is now home to about 11 condo buildings, each with its own association, as well as retail and the Courvoisier Centre office complex.
It also has a master association, which has been under Swire’s control for 44 years, or since 1982, the complaint says.
By now, Swire is violating state law that mandates turnover of the master association to unit owners once the majority of parcels on the island have been sold or otherwise transferred, including the sale of the majority of the condo units. This threshold was met over a decade ago after Swire completed and sold out the last existing condo building, the suit claims.
Instead, Swire has over the years continued to appoint its own employees or representatives to the master board of directors and used its authority in a “calculated scheme” to saddle unit owners with the cost for the seawall.
Swire, led by Dave Martin, said in a statement it hasn’t been served with the complaint and “received no substantive notice of the claims,” adding this makes it “impossible” for the firm to respond to the allegations. It also pointed out the timing of the filing.
“It appears that on the Friday before the Memorial Day weekend, a group of Condominium Associations on Brickell Key filed a lawsuit against Swire Properties Inc regarding the Brickell Key Master Association,” Swire said in the statement. The firm and the master association “have always complied with all laws and have worked diligently to serve the interests of all Brickell Key Residents.”
When Brickell Key residents raised a stir over the assessment in October, a Swire spokesperson told The Real Deal that the firm plans to pay much more than its required pro-rata share of the seawall replacement cost.
In 1982, the JV that developed Brickell Key hammered out the master declaration that, among other things, identified what’s common property on Brickell Key, said Jason M. Rodgers-da Cruz, the attorney who filed the suit on behalf of the five associations. The majority of the seawall wasn’t included as common property.
Yet, in 2006, the Swire-controlled master board executed a covenant with the city of Miami improperly burdening the master association to maintain the seawall, the suit says.
“Generally speaking, the way the master association works is unit owners are assessed for common property, not property that is outside of common property,” said Rodgers-da Cruz, of Siegfried Rivera. “By Swire obligating the master to maintain the seawall that is not even master property but rather Swire and its affiliate’s property, they are obligating the unit owners to pay for the seawall.”
Moreover, the $32.3 million assessment was improperly imposed by the master association without the required approval by a majority of unit owners, the suit says.
The suit came on the heels of Swire imploding last month what used to be the Mandarin Oriental Hotel to make way for a planned two-tower luxury condo and hotel project, which also will be Mandarin branded. Total sales volume for the project has topped $1.3 billion, including a pair of penthouses that each sold for nearly $50 million.
But this project is likely what requires the planned replacement and reinforcement of the seawall, and construction of the buildings also could damage the existing seawall, the suit says.
The condo associations’ lawsuit raised violation of turnover requirements under state law, injunction requiring turnover, declaratory judgment of turnover, injunction invalidating the seawall assessment, unjust enrichment and other counts.