The estates of two former Citadel Village East residents in St. Albert are taking the seniors’ complex to court over allegations of breach of contract due to the companies involved failing to return mortgage-sized sums of money that the former residents paid as part of their life lease agreements.
The two separate statements of claim, filed earlier this summer by the estate of Mary Soltis and the estate of Gloria Runck, both name Citadel Mews Ltd. and Devonshire Security Corporation as defendants, both of which operate under the Christenson Group of Companies. Greg Christenson directly or indirectly owns, controls, and is the controlling mind of the companies within the Christenson Group, according to the statement of claim.
Greg Christenson is also named directly as a defendant in the case of Mary Soltis.
None of the allegations in the claims have been proven in court.
The Soltis statement of claim states that Mary and her husband Edward entered into a life lease agreement in the spring of 2014 when they paid $418,500. The money was transferred to Devonshire Security Corporation, the funds’ designated trustee.
The life lease contract, the statement of claim explains, was only in effect until three months after both Mary and Edward passed, or three months after the Soltises delivered a notice of termination.
Edward passed away in 2018, and Mary continued to live in the building until her death in May of 2022.
The delay — as explained in both the statement of claim, and the statement of defence subsequently filed by the defendants — was a result of Citadel Village East reaching a six per cent threshold of residents who had served termination notices. Under the life lease agreement, Citadel Mews Ltd. and Devonshire are permitted to delay repayment of life lease funds in these circumstances.
Because the six per cent threshold had been reached by the time the Soltises’ mortgage became due, Citadel Mews Ltd. created a “pay-out list” that operated on a “first in first out” basis, meaning those who had been waiting for their mortgages to be paid out the longest were to be paid out first.
The statement of claim alleges that the defendants engaged “in a scheme for personal profit … by intentionally refusing to re-life lease available units in Citadel Village East for the purpose of only making those units available for rent, and artificially maintaining the 6 per cent threshold … in an effort to avoid or delay repaying loan funds owed to former life lease residents.”
The alleged "scheme", Mary’s estate claims, has allowed the defendants to “wrongfully [earn] significant rental income from the use of units that ought to have been re-life leased,” as well as “benefit from the use of an estimated $8 million of capital that is owed to and being wrongfully withheld from former residents of Citadel Village East.”
In their statement of defence, the defendants, represented by lawyer Kevin Chapotelle, “deny each and every allegation” made in the statement of claim.
“Given the provisions of the [life lease agreement and the 6 per cent threshold], no amount is currently due and payable to the plaintiff,” the statement of defence reads. “The defendants deny that there has been any bad faith or scheme for unjust profits, as alleged, or at all.”
“The defendants have diligently attempted to re-life lease the unit and continue to do so to reduce the ([payout-list]”), the statement of defence reads.
The other statement of claim filed by the estate of a former Citadel Village East resident, Gloria Runck, which was filed the day after the Soltis’ statement of claim, makes similar allegations, and specifically states that the defendants “changed their business model to the detriment of [Runck] and other life lease and loan holders of the Citadel.”
Unlike Mary Soltis, whose life lease mortgage became due as a result of her passing, Runck’s statement of claim alleges that she submitted a notice of termination in March of 2021, and that summer was to be repaid the $543,060 she and her husband Allan had transferred to Devonshire Security Corporation for their life lease mortgage in 2015.
That July, the Runck statement of claim states, Devonshire returned $52,806, and the following March returned another $400,000, leaving $56,117.05 yet to be repaid.
Gloria died this past May.
The Runck statement of claim alleges that “the defendants have negligently or intentionally made use of their size, complexity of business agreements, lack of transparency, and change of business model to take advantage of Alberta seniors, including Gloria Runck when she was alive.”
In the statement of defence filed in response to the Runck statement of claim, the defendants again “deny each and every allegation.”
The statement of defence also cites the 6 per cent threshold clause in the life lease agreement as the reason why the Runck estate hasn’t been paid the remaining amount due.
“The amount owing to the plaintiff was placed on the unit list as there were notices of termination for over 6 per cent of the units in Citadel Mews East,” the statement of defence reads. “However, despite being under no obligation to do so, a significant portion of the [amount] has already been paid to the plaintiff.”
“The defendants deny that any advantage was taken of Alberta seniors. At all material times, the defendants have acted reasonably in trying to refund amounts owing to seniors and have gone above and beyond the requirements of the [life lease agreement].”
The statement of defence, which was filed on Aug. 16, also states that as of this summer there are only 55 active life leases at Citadel Mews East, a decrease of five compared to the November 2022 pay-out list obtained by the Gazette.
Christenson response
In an interview with the St. Albert Gazette, Greg Christenson said that in his opinion, the lawsuits filed by the estates of former Citadel Mews East residents stem from a “misinterpretation of the lease and loan documents.”
"Typically the structure is … there's a fairly elaborate contract, all of those provisions are in there, and then also the overall guidance is to take it to your lawyer or accountant,” Christenson said. “I guess what I'm saying is we're generally following the letter of the contract.”
“I don't think there's a question we're going to be contrary to the contract [and] one reason is we have 100 people in queues right now across the province,” he said, referring to similar payout lists that exist for former residents of other buildings operated by the Christenson Group, such as Devonshire Village in Edmonton, and the Bedford Village in Sherwood Park.
When asked what the overall estimate is for how much money is owed to former residents of Christenson Group-operated seniors’ homes who are on the payout queue, Christenson said it was “confidential.”
Repayment plan
Christenson said that his company has been considering two ideas to pay back those who are on the payout queue. The first is to have the Christenson Group secure a rental property mortgage, which, he said, would be used to pay back the money owed to those on the Citadel Mews East payout queue first.
“I'm reluctant to say this because every other community is going to say ‘why are you starting in St. Albert’ [but] I would say why we're starting in St. Albert is we've had a long history of goodwill and brand respect in St. Albert,” he said.
“Rather than work on nine of them at once, I'm going to start on the most high probability ones first.”
The second idea Christenson said his organization is thinking through right now is to start making monthly payments to those on the payout-queue based on the rental income the buildings are generating from current tenants.
“There are other situations that we're contemplating and of course, it's in the eye of the beholder [for the families] in the queue, and different people have different perspectives, and I would say that it's always better to have a choice,” he said.
In an interview, the son of Mary and Edward Soltis, Brian, told the Gazette that his family actually feels lucky to be in the position they’re in since his parents have passed away, and aren’t in a position where they’re relying on their life lease mortgage to be returned in order to find other housing.
“We're in a different position from a lot of people,” Brian said, adding, “There hasn't been a lot of stress because my mom and dad passed away, so it's not as if they need the money and we have a loved one that is out of pocket money.”
“For us it's just more of a question of we're really unhappy with the process or scheme, call it what you will, and a developer using that scheme to his benefit at the expense of a lot of vulnerable seniors.”
