Scrooge Mc Disney?by
To Chick Bernabe, the name "Disney" was gold. He visited Walt Disney World several times a year. And Disney's reputation was a big factor in his decision to buy a condominium six years ago in Country Walk, a development south of Miami built by Arvida Corp., then owned by Walt Disney Co.
Bernabe has changed his tune. Nine months after Hurricane Andrew swept through Dade County, destroying most homes in the 1,300-unit development, Disney is the object of several suits charging that sloppy construction is partly to blame for the storm's destruction.
With the suits has arrived publicity of the sort Disney's careful image makers studiously avoid. Country Walk home owners picketed a "Disney on Ice" show in downtown Miami in early May. A 10-minute video detailing the owners' plight was sent to Disney Chairman Michael D. Eisner via H. Wayne Huizenga, chairman of Blockbuster Entertainment Corp. And M. Anthony Burns, chairman of Ryder Corp., and James K. Batten, chairman of Knight-Ridder Corp., both headquartered in Miami, wrote Eisner on behalf of the condo.
Disney's mess stems from its 1984 acquisition of Arvida. It sold the unit's assets in 1987 to JMB Realty Corp. But Disney retained some liability, which became crucial after Andrew hit. Homeowners contend the damage would have been lighter if not for widespread construction defects--at least some of which they say were Disney's fault. Construction flaws at Country Walk were included in a survey of area damage by an engineering firm hired by Dade County, and Disney's own expert witness, an engineer, testified in a deposition that there were a "small percentage" of building-code violations. Disney denies there were defects, blaming the destruction on the storm's "special intensity." "Deficiencies that may have been there were not the cause of this damage," says Disney attorney William Burd of Kenney, Burd, Knutson & Markowitz.
SHORTFALL. The condo association is seeking $18 million to rebuild. Its insurer so far has paid only $10.8 million, invoking a clause that shields it from liability for construction defects. JMB's Arvida/JMB subsidiary settled for $2.7 million on Apr. 16. But Disney offered only $2 million, shy the remaining $5 million needed. Attorney Burd says "there are still ongoing negotiations." The shortfall has frustrated rebuilding efforts and dismayed local civic leaders. "I'm surpised that a company with a reputation like Disney's would drag it out," says Armando Codina, a Miami developer and a member of We Will Rebuild, a group organized to aid hurricane recovery.
Disney also faces a class action by Country Walk's homeowners. And State Farm Fire & Casualty Co. is pursuing a $75 million claim against Disney, citing poor construction, to recover what it paid out in claims. Not the sort of business the Magic Kingdom has grown up on.