Plaintiffs filed a class action lawsuit against the Vass, N.C., property, blaming the resort for plummeting property values after the state ordered the controlled draining of Lake Surf, the subdivision’s 1,200-acre centerpiece, amid concerns about the stability of its dam in the wake of Hurricane Matthew.
On March 22, Superior Court Judge James Webb awarded more than $160 million to the plaintiffs in a class action lawsuit against the owners of the troubled Woodlake Resort and Country Club in Vass, N.C., the Moore County, N.C., Pilot reported.
The plaintiffs, all property owners in the Woodlake subdivision, were represented by Hope Carmichael of Jordan Price Law Offices in Raleigh. The lawsuit blamed Woodlake CC Corp. for causing property values to plummet in the subdivision. Property values in Woodlake fell sharply after the state ordered the controlled draining of Lake Surf, the subdivision’s 1,200-acre centerpiece, amid concerns about the stability of its dam in the wake of Hurricane Matthew, the Pilot reported.
Woodlake CC Corp. was later sued by the state Attorney General’s Office for repeatedly failing to follow through on promises to repair the dam’s deteriorated spillway, an issue that had been documented in several state-issued safety orders and deficiency notices over the years, the Pilot reported.
A consent agreement to dismantle the spillway was reached last year between the state and Julie Watson, vice president of Woodlake CC Corp., in Moore County Superior Court, but the state was forced to perform the breach itself after the company failed to meet the court-ordered construction deadlines, the Pilot reported.
“The defendant, who entered into a consent order under threat of contempt of court and heavy sanctions, has refused to act,” Carmichael said. “Although they had represented to this court that they were prepared to do so and on multiple occasions had represented to the plaintiffs that they intended to do so.”
llya Steiner, an investor who lives in Germany, is the president of Woodlake CC Corp. He bought the development and its amenities, which include Lake Surf, a pair of golf courses and an antebellum-style clubhouse, at a bankruptcy auction in 2015. Woodlake was previously owned by Ingolf and Gabriele Boex, a German couple with connections to Steiner, the Pilot reported.
Carmichael provided Webb with several statements obtained during a three-hour deposition of Watson, who did not attend the hearing and has not responded interview requests from the Pilot.
“Ms. Watson testified in her deposition that the German funding arm that supports Woodlake CC Corp. has ‘closed the books on Woodlake,’ and she has indicated that there will be no money forthcoming for any repairs to the dam,” Carmichael said.
The deposition was held March 14 at the law offices of William T. Clemons in Southern Pines after a Moore County Sheriff’s deputy served Watson with a subpoena. According to a transcript of the deposition, Watson owns 100 shares in Woodlake CC Corp. and receives an annual salary of $80,000, the Pilot reported.
“Even though I get a paycheck, it goes right back into Woodlake,” Watson said during the deposition. “It’s paying for this, paying for that, making sure the operations—I mean, it’s just—you know, it’s just trying to keep things alive, trying to keep things alive.”
In the transcript, Watson said she has not had contact with Steiner since the class action lawsuit was filed in October. She said she does not know what German city Steiner lives in. “Illya does not communicate with me,” she said.
Webb awarded the plaintiffs more than $40 million in compensatory damages and more than $121 million in punitive damages. But the company’s mounting debts mean the judgement is unlikely to result in payouts for Woodlake residents, the Pilot reported.
Attorney General Josh Stein has said his office will lead the effort to recoup the costs associated with dismantling the Woodlake dam, which are projected to exceed $1.2 million, after a series of inspections have been completed and the final invoice is sent to Woodlake CC Corp, the Pilot reported.
In addition to the forthcoming bill from the state, Woodlake CC Corp. owes money to several businesses, including two engineering firms that claim to be owed more than $367,000 for unpaid services. The company also owes thousands to the county in unpaid property taxes, the Pilot reported.
If Woodlake CC Corp. fails to pay, many of the plaintiffs hope to take control of the development through a foreclosure auction. The plaintiffs want to eventually refill the lake, which they say will raise the value of their property while restoring the amenity that attracted them to the subdivision in the first place, the Pilot reported.
“The behavior and actions of Woodlake were so egregious over such a long period of time that with a competent lawyer, which we certainly had, and good research, which we certainly did, I think we were able to make a compelling case,” said Charlie Jones, one of the lead plaintiffs in the lawsuit. “Judge Webb was able to make an appropriate decision and finding on the amount he awarded in his judgement. Now we’re down to making this thing come true. How do we get the lake back?
“The people in Woodlake and the property owners should have a good day today because this will help lead us to our eventual goal, and that’s reinstatement of Woodlake properties and quality of life.”
About 2,000 people own property in Woodlake. Carmichael said 39 property owners opted out of the lawsuit, the Pilot reported.
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