The three corporate owners of a troubled Little Rock apartment complex were each ordered Monday to pay $1,000 in daily fines after Pulaski County Circuit Judge Cara Connors held those behind Big Country Chateau in contempt for failing to turn over financial and ownership documentation to the receiver selected to run the 151-unit complex.
The fines will continue until the documents are provided or the companies' representatives explain to the judge why they cannot fulfill her 7-month-old disclosure order.
The judge noted she has told the defendants more than once to turn over the paperwork.
"This is their third chance to get it right and they haven't," Connors told the lawyers. "I've got to slam the hammer. Maybe it will get their attention. Maybe it won't."
No personal representatives of the corporate owners attended, despite Connors ordering them to appear, an absence that also irked the judge.
"Your clients are in trouble. I've got to figure out how much trouble," Connors told their lawyer. "It would behoove them to show up."
The judge found the corporate defendants in contempt following an hourlong hearing to determine what materials had been turned over and how many were left.
The receiver appointed to manage the property, Sal Thomas of Houston, Texas, said he's barely received any documentation relating to the apartments' finances, taxes or ownership since he was appointed to the position in February.
Thomas said he does not have the necessary access to Big Country's bank account, further telling the judge that out of the almost 100 receiverships he's performed, Big Country Chateau is the "top one or two worst" he's experienced.
State regulators sued Big Country Chateau's owners a year ago, accusing them of violating the state's Deceptive Trade Practices Act by renting out substandard apartments, some barely livable, while not paying tenants' water and electricity bills from the tenants' lease payments as contracted. Each violation of the law proved by authorities carries a fine of up to $10,000.
One of the ownership companies, New York-based Apex Big Chateau AR LLC, has been fined $31,950 already in a separate action by the city of Little Rock for 30 code violations.
With state regulators accusing the owners of deliberately failing to pay utility bills while still collecting rent, the attorney general's office asked in February for a receiver to take over apartment operations to make sure bills are paid and property repairs are completed to bring the grounds in compliance with city housing codes.
The defendants agreed to the receivership order, which included the judge's command that the documentation in question be turned over to the receiver.
Assistant Attorney General Amanda Wentz reported the missing documentation in April and requested sanctions.
She asked the judge on Monday to fine the defendants, saying they have continued to defy her order, having provided only "bits and pieces' " of what they're supposed to turn over.
"This ... falls short of the order of the court," she said. The defendants "have shown disregard for the court's authority over and over again."
Attorney General Tim Griffin said he hopes the apartment owners will now take the steps necessary to resolve the litigation.
"The owners of Big Country Chateau continue to demonstrate a consistent and willful disregard for the court and its authority throughout this litigation. They have refused to provide documents to the receiver, or even to appear in court when ordered. This is the latest in a string of conduct that disrespects the rule of law," the Republican official said in a prepared statement.
"I am hopeful that today's ruling is a step toward a resolution of this matter and will encourage those behind Big Country Chateau to participate in the legal process and make amends for their detestable behavior against Arkansans."
Whether the defendants will pay anything is a question. Sylvester Smith, the companies' attorney, said Apex Big Chateau and Big Country Chateau LLC are defunct and penniless, making it possible that the fines might have to be paid by the receivership.
The third company, Apex Equity Group LLC of New York, is disputing whether the judge has authority over it. Apex Equity is challenging the legality of the proceedings on a claim that Apex Equity was not properly notified of the litigation after the suit was filed in August 2022.
The judge said she'll decide that question in the coming days.
Apex Equity is also disputing the assertion that it has any ownership in the complex on Colonel Glenn Road.
Smith told the judge they've made a good-faith effort to provide the required documentation.
Noting that the 26-acre complex had not been a well-run operation, he suggested some of the documentation might have been stolen if it ever existed.