WEST PALM BEACH - A Miami-based real estate investor is
suing over a pesky problem at a recently purchased West Palm Beach
apartment complex - bedbugs.
According to a lawyer who filed the Nov. 23 lawsuit in Palm
Beach County Circuit Court, about 25 percent of the units at the
Palo Verde apartments off Forest Hill Boulevard were infested with
the blood-sucking parasites at the time of the January
Attorney Robert Stok, who is representing Palo Verde Investors,
a subsidiary of the Aztec Group, Inc., said the units were badly
"The property manager said it looked like a war zone with blood
spots everywhere," said Stok, who added that the apartments have
since been rendered bedbug free. "The exterminator said it was the
worst infestation they'd ever seen."
Palo Verde Investors purchased the note to the apartments for
$11.25 million while the complex off Forest Hill Boulevard was
going through a foreclosure, Stok said.
Built in 1973, it had extensive renovations completed in 2005
and 2006, according to a news release written after the
acquisition. Investors expected "both higher occupancy and growth
in rental income" from the 276-unit complex, the release says.
Instead, they were blindsided by bedbugs, according to the
lawsuit filed against Nationwide Life Insurance Company.
Nationwide, an Ohio-based organization, has an affiliated
investment group that deals in real estate. Palm Beach County Clerk
of Court records show that Nationwide won a final foreclosure
judgment against Palo Verde's former owner, Fairfield Forest Hill
Garden, LLC, in September 2010.
Nationwide spokesman Dace Dalaforet said his company just
learned of the lawsuit and couldn't comment.
Specific charges in the suit include fraudulent and negligent
misrepresentation, breach of fiduciary duty, constructive fraud and
violation of the Florida Deceptive and Unfair Trade Practices
The complaint claims that Nationwide and its property manager
knew about the bedbug infestation before the sale but hid it from
Palo Verde Investors.
"We asked for maintenance records, and they didn't supply
anything that mentioned bedbugs," Stok said.
Stok said it cost his client more than $63,000 to get rid of the
bugs. One treatment, which was used at the apartments, is to heat
rooms to up to 120-degrees.
"It's very expensive," Stok said. "We don't want out of the
sale, and we're not trying to renegotiate the deal, but we want
There was also the added frustration of moving tenants into new
apartments, the loss of rental income during treatment, and costs
for painting and cleaning the units.
Bedbugs bite mostly at night, leaving itchy mosquito-like welts.
Once mostly non-existent in the United States, they have reappeared
because people are more mobile, international travel has increased
and there is less knowledge about how to exterminate them,
according to the Centers for Disease Control and Prevention.
They're also easy to accidentally bring home. People can pick up
the flat insects, which can grow to a quarter of an inch long as
adults, from plane and movie theater seats and hotel beds.
"There was due diligence on our part but you can't expect us to
go through every apartment with a microscope and slides," Stok said
about inspecting the Palo Verde complex. "The tenants said it was a
problem before. It's not something that just happened