FLORENCE (LN) — A federal judge in South Carolina has preliminarily approved a $1 million settlement and certified a settlement class in a construction defect case involving the Barefoot Resort Yacht Club Villas, providing funds to offset repair costs for 145 condominium units.
U.S. District Judge David Norton granted the motion to certify the settlement class and preliminarily approve the agreement with Sto Corp., Jenkins Hancock & Sides Architecture Interiors Engineering, Inc., and Randy L. Sides. The settlement resolves claims related to alleged defects in the property’s exterior cladding system and common-element maintenance.
The proposed settlement provides total proceeds of $1 million, which will be placed in an account controlled by the Association’s property management company. The funds are restricted to repairs of the Property’s common elements and are intended to offset assessments that might otherwise be levied against class members.
Plaintiffs, who are individual unit owners and members of the Barefoot Resort Yacht Club Villas Condominium Association, had asserted damages exceeding $16 million, consisting of repair, inspection, and engineering costs. The Association had produced estimates ranging from approximately $6 million to $12 million.
The court noted that the settlement represents a significant discount damages but highlighted substantial litigation risks. The judge had previously dismissed the plaintiffs’ direct claims against the settling defendants, ruling that the claims were derivative of the Association’s rights and not individually maintainable.
"The Court previously held that Plaintiffs’ direct claims seeking recovery for common-element damage... were derivative of the Association’s rights and were not individually maintainable," Norton wrote. "The Court’s Rule 23 findings below are made only for settlement purposes."
The settlement does not resolve claims against Sundek National Accounts d/b/a CGI Commercial, Thomas E. Sepulveda, and Alfredo Chaparro, among other contractors alleged to have performed repairs to the property in 2014. Those defendants remain subject to the plaintiffs' claims.
Sto and JHS had asserted affirmative defenses, including statute-of-limitations and statute-of-repose defenses, and Sto had asserted a release defense based on an alleged release executed by an Association officer in 2014.
The court certified the settlement class as all persons and entities that own a condominium unit at the Barefoot Resort Yacht Club Villas in North Myrtle Beach as of the date of the order. The class excludes judges, defendants, and anyone who timely requests exclusion.
The court ordered revisions to the class notice, requiring clear disclosure of the amount or maximum amount of attorneys’ fees and costs class counsel intends to request. The notice must also explain that class members who opt out will not receive an offset toward an assessment on their unit for common-element repairs.
A final approval hearing will be scheduled by separate order to determine whether the settlement is fair, reasonable, and adequate. At that hearing, the court will also consider any requested attorneys’ fees and costs.
The case, Dillon et al v. Sundek National Accounts et al, is pending in the U.S. District Court for the District of South Carolina, Florence Division.