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January 31, 2006Bay Harbor homeowners file lawsuitCouple alleges conspiracy over contaminationPETOSKEY - A Bay Harbor couple sued the ritzy development on Little Traverse Bay and its financiers, alleging a conspiracy to mislead potential investors in order to sell property fraught with environmental problems.Richard and Robin Franks are suing the Bay Harbor Company, CMS Energy and developer David V. Johnson. They charge that pre-existing contamination near their land was never disclosed when they purchased it in 2001. Richard Franks, whom the suit described as a businessman and resident of both Wayne and Emmet counties, bought a lot on Bay Harbor's Coastal Ridge Drive in August 2001 for $710,000 and built a vacation home. The home is near a buried deposit of cement kiln dust, left behind from days when the land belonged to a cement production plant. In 2004, caustic, bleach-like toxins were discovered leaching from the kiln dust pile into the surrounding area and bay. CMS is funding a cleanup of the site that could cost $50 million. "The Franks are now stuck with a home located on environmentally contaminated land," the lawsuit, filed in Emmet County Circuit Court contends. "Had the Plaintiffs been informed of the history and existence of the hazardous (kiln dust) contamination they never would have purchased" the property. The suit also charges that the defendants acted with "a common design and overall scheme to defraud (the Franks) and other home owners on Coastal Ridge Drive." The Franks charge that Bay Harbor and CMS were negligent, fraudulent and also conspired to conceal environmental concerns from land-buyers. They did not specify an amount of damages, but according to court records the couple "spent substantial savings building and purchasing their dream home and, but for the contamination, the current fair market value ... would be over $3 million." Equalization records show the land was assessed at $190,700 in 2001. The value jumped the next year to $353,000 and subsequently to $650,000 when the Franks built their home. Last year, their property assessment fell slightly to $645,700. Johnson, Bay Harbor and CMS, the energy company that provided Johnson in the mid-1990s with the initial investment necessary to launch the development, each filed responses denying wrongdoing. They've asked that the case be thrown out of court. The Franks purchased the property "in an as-is condition and specifically subject to soil examination by (the Franks)," CMS lawyers wrote in their response to the lawsuit. Johnson's attorneys, in their response, called the lawsuit an "extortionist campaign." At the time of the sale, the Franks were given a "purchase information booklet" that contained disclosures about the kiln dust contamination, said Johnson's lawyers, who also represent Bay Harbor. "It is undeniable that the Plaintiffs were aware of the condition of the property and knowingly decided to (purchase it) in spite of such knowledge," they wrote. A hearing on the defendants' request to dismiss the case is set for March.
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