Confidential
Settlement – $6,460,000Court
San Mateo Superior
Attorneys
Plaintiff
Tyler P. Berding
(Berding & Weil LLP)
Defendant
Robert Staley
(Epstein, Englert, Staley & Coffey)
Facts
From 1985 to 1988, Defendant developer and general contractor constructed 300 townhouse condominiums. The last 18 units were built on an old quarry site which had been filled to a depth of as much as 100 feet by Defendant. Beginning in 1988, the quarry fill began to settle. This settlement reached as much as 18 inches in portions of the quarry. Two of the 18 quarry units were extensively damaged and rendered uninhabitable. The Plaintiff homeowners association filed suit against Defendant for damage to the quarry units and for numerous claimed construction defects throughout the 300 units of the project. The purchase price per unit was approximately $300,000.
Settlement Discussions
Defendant contends that the offers and demands were too numerous to mention here.
Damages
Soil movement resulting in extensive damage to some quarry units; claimed construction defects throughout the 300 units of the project, including structural, roofing, acoustical, siding, building code and design problems; all initially estimated to be valued at $18,000,000 (per Defendant); $12,000,000 (per Plaintiff).
Other Information
This case was complicated by the fact that the architect filed bankruptcy and had other claims against its E&O policy; the structural engineer was underinsured, the soils engineering company no longer existed and had no insurance; the acoustical engineer had left the United States and had no insurance, and the project was built in 13 different phases, so that different phases had different mixes of subcontractors. Defendant tendered defense to its subcontractors, design professionals, and materials suppliers. All declined to defend. Defendant then filed a separate action against the subcontractors' insurance carriers by which it was named as an additional insured, claiming breach of contract and bad faith for failure to defend. This suit was settled as those carriers made payments on behalf of their primary insureds in settling the construction defects case. The quarry settlement portion of the case was resolved by the creation of a sub-homeowners association. The Plaintiff homeowners' association initially sought a multi-million dollar reserve against future earth settlement problems in the quarry area. Defendant responded by repurchasing the 18 units and creating a separate sub-homeowners' association for the 18 quarry units to take over responsibility for any future quarry soil maintenance or settlement liability. Defendant's insurance carriers paid it $2,265,000 on account of its first party claims. The grading subcontractors for the quarry paid Defendant an additional $550,000. Plaintiffs received $6,460,000 as settlement for the construction defects portion of this case. This settlement was assigned to Special Master John Griffiths.
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