Three Little Rock low-income housing properties filed a federal lawsuit Wednesday against a Texas development firm that used to manage them, according to federal court documents.
ITEX, based in Houston, managed the Homes at Granite Mountain and two Madison Heights complexes under a two-year contract for each that expired in June. The Metropolitan Housing Alliance Board of Commissioners decided in July not to renew the contracts, which stated that ITEX must "maintain the Project in good repair ... and in a condition at all times acceptable to the Owner including but not limited to cleaning, painting, decorating, plumbing, carpentry, grounds care, and such other maintenance and repair work as may be necessary."
The Central Arkansas Housing Corp., the nonprofit arm of Little Rock's federally funded public housing authority, owns and now manages the three properties.
Attorney Sylvester Smith of The Firm in Little Rock represents the three plaintiffs, and he said in October that ITEX would face a breach-of-contract lawsuit.
Housing authority board members said repeatedly at public meetings that tenants told them ITEX did not respond to requests to fix fire damage, mold buildup, plumbing problems and other quality-of-life issues at the three properties the firm managed.
"ITEX neglected and abused hardworking Arkansans who needed a helping hand in obtaining quality housing," Smith said Friday in an email. "We will make sure they are held to account for their actions."
He previously told the Arkansas Democrat-Gazette that ITEX had no excuse not to take care of the property and ensure all units were occupied and livable, since revenue from tenants' monthly rent is supposed to fund repairs and maintenance. Sixty units at one of the Madison Heights complexes were unoccupied when ITEX stopped managing the property, and 18 of those units could be ready for new tenants after some basic cleaning, Smith said.
The suit was originally filed in Pulaski County Circuit Court in November, but ITEX requested its move to the U.S. District Court for the Eastern District of Arkansas.
Smith also said in October that some tenants' rent, security deposits and emergency rental assistance payments were "unaccounted for," and some appliances disappeared from the properties after ITEX left at the end of August.
The complaint alleges embezzlement of rent and security deposits by ITEX employees as well as theft of a variety of objects, including refrigerators, laundry machines, tools and outdoor furniture.
In August, ITEX demanded $544,000 in compensation after the housing authority did not renew the management contracts. Smith previously said the corporation and the housing authority will not comply with the demand, especially since the contracts ended on their own, not by a board vote.
The lawsuit seeks a "declaratory judgment that plaintiffs do not owe the defendant any money," according to court documents.
The suit also seeks punitive damages of more than $75,000, and a jury to determine the exact amount.
Smith said Friday that ITEX requested to move the case from circuit court to district court "because they do not want to fight this matter before an elected local judge."
John Keeling Baker, one of ITEX's attorneys, declined to comment on pending litigation.
Baker works for the Mitchell, Williams, Selig, Gates & Woodyard firm in Little Rock.