Judge grants $52M to Kansas City tenants in case of ‘uninhabitable’ living conditions
Living conditions at the Ruskin Place Apartments in south Kansas City were so deplorable that a mother of four children slept with the lights on each night.
That way, she could swat away invading cockroaches that climbed onto her children’s bed and faces in the middle of the night.
Another apartment resident had refractory epilepsy that is triggered by excessive heat. When his landlord, KM-T.E.H. Realty 8, LLC and Michael Fein, failed to fix the air conditioning in his apartment, the resident experienced as many as eight life-threatening seizures each month, according to court records.
On Tuesday, a Jackson County Circuit Court judge assessed $52 million in damages against the realty company and landlord because of unsuitable living conditions residents were forced to endure.
“They understand the problems at these places, and they don’t give a damn about our neighbors who live there and have to live in this squalor,” said Gregory Leyh, an attorney who represented a group of apartment tenants in their class action lawsuit.
The class action lawsuit was filed on behalf of the residents who signed a lease and lived at the 169-unit apartment complex, located on Blue Ridge Boulevard and Longview Road, between July 2015 to the end of March.
During the civil trial earlier this month, residents testified their apartment units contained mold, were infested with cockroaches and rats. Raw sewage seeped into their bathtubs. Some units lacked electricity or heat, had filthy carpet and moldy dishwashers and refrigerators. Outside the garbage bins overflowed and became breeding grounds for groundhogs and other rodents.
When residents complained, the landlords’ response was, “we’ll get to it,” according to court records.
“The plan was to harm tenants, it is an intentional plan to harm tenants,” Leyh said.
In March, the federal government suspended voucher funding to anyone living in T.E.H. apartments after dozens of complaints of substandard living conditions. Those tenants were given transfer vouchers.
Circuit Court Judge Joel Fahnestock assessed actual damages of $11.8 million against KM-T.E.H. 8 and Fein, as well as punitive damages of $23.4 million against KM-T.E.H. 8 and $16.8 million against Fein.
The class action involves 426 persons, Leyh said.
Pattern of ‘contempt’
In her 23-page order, Fahnestock wrote that the landlord demonstrated a pattern of “contempt and repeatedly failed to provide court-order discovery or appear in hearings.”
“Repeatedly when complaints were made about the unsafe conditions, Defendants refused to fix the problems and retaliate against tenants,” she wrote. “The harms to tenants were physical, emotional, and economic and were aimed at a financially vulnerable Class, adding to the reprehensibility of the conduct of KM 8 and Fein.”
The lawsuit, filed in Jackson County in October, sums up the Israel-based company’s practices as buying distressed properties, targeting lower-middle class housing and avoiding needed repairs to the property to maximize profit “at the expense of tenants’ safety and well-being.”
It’s one of several filed against the company.
Fein, the managing partner of T.E.H. Realty, was charged in federal court in St. Louis last month after an investigation found he misled investors in a multi-million dollar scheme while providing poor living conditions for low income tenants.
Fein, who was responsible for daily operations of T.E.H., was indicted on wire fraud and bank fraud charges as part of a $28 million fraud scheme.
The company has a record of taking advantage of its lower income residents, many of whom use government-subsidized vouchers to assist in paying for rent, and not taking care of its properties.
‘They are sneaky cowards, that is what they are.’
KM-T.E.H. Realty began operating in Missouri in 2013, according to secretary of state records. There are 26 properties in Kansas City and 24 in St. Louis registered in those records.
Fein is no longer manager of KM-T.E.H. Realty 8. A warrant has been issued for his arrest for the fraud charges.
“They had no intention of repairing units when they become unlivable or uninhabitable and then they dump them and walk off with the money. They have these LLCs (limited liability corporations) they think immunizes them from any judgment,” he said.
KM-T.E.H. also used the associate circuit courts to evict tenants who do not owe them money but can’t afford lawyers, Leyh said.
“And they are called to account for their conduct in a circuit court case like ours, they run and hide like the cowards they are,” he said. “They never appear, they don’t defend themselves. They run out of the state, they run out of the country.
“They are sneaky cowards, that is what they are.”
Attorneys representing T.E.H. did not respond to request for comment in time for publication.
KM-T.E.H. 8 no longer owns the apartment complex. Fannie Mae foreclosed on the property and was sold earlier this year to a New Jersey company for $4.2 million.
This story was originally published September 16, 2020 at 5:11 PM.
