Confidential
Settlement – $367,500Court
American Arbitration Association
Attorneys
Plaintiff
Robert J. Gilliland
(Guralnick & Gilliland LLP)
Defendant
Catherine A. Gayer
(Winet, Patrick, Gayer, Creighton & Hanes ALC)
Experts
Plaintiff
Curtis G. Odom
(technical)
Robert K. Scott
(Newmeyer & Dillion)
(technical)
Scott Thoeny
(technical)
Ted S. Merrill
(technical)
Defendant
Stanley A. Dunn
(technical)
Facts
In February 2000, the claimants entered into a written construction contract with the respondents for the construction of a one story custom single family home. The cost to construct the home was approximately $290,000. In November 2001, the claimants discovered water seeping through the interior floor of their new home, soaking their carpeting and other floor coverings. The claimants immediately contacted the respondents regarding the water intrusion problem at their home. The respondents retained a leak detection company to determine if any of the water supply lines to the residence were leaking. The leak detection company's representative confirmed that there were no plumbing leaks in the home that would explain the water penetration through the concrete slab. The respondents concluded that the water intrusion was due to over-irrigation and suggested that the claimants cut back on their watering schedule. Twice the claimants complied by reducing the watering schedule, yet the problem persisted. The respondents summarily concluded that the problem was still due to over-irrigation by the claimants and refused to perform any further repairs to the home. As a result of the water intrusion through the interior concrete slab, the claimants incurred out-of-pocket expenses for the removal and the replacement of the damaged underlayment and carpeting in their home as well as substantial mold remediation costs. Thereafter, the claimants retained construction experts who performed concrete coring through the slab as well as other destructive testing. The claimants' experts discovered that the respondents failed to install a moisture barrier as well as failed to install reinforcing steel in the concrete slab. The claimants brought the action against the respondents based on breach of written contract, breach of express warranties, breach of implied warranties, negligence and nuisance theories of recovery. The respondents filed a cross-complaint against the concrete subcontractor, the cross-respondent. The construction contract between the claimants and the respondents contained a binding arbitration provision with the American Arbitration Association as well as a prevailing party attorneys fee provision. The case was arbitrated from Jan. 13-16, 2003. The respondents' liability insurer had previously gone into liquidation and was controlled by the California Insurance Guarantee Association. At the conclusion of the four-day arbitration, the arbitrator ruled that the claimants were the prevailing party and that he would subsequently issue a written award to the claimants. The parties then agreed to mediate the case prior to the final damage award being issued. CIGA's representatives were invited to attend the mediation. CIGA, the respondents and the cross-respondents agreed to attend a mediation and settled the case on Feb. 11, 2003 for a payment of $367,500.
Settlement Discussions
As a result of CIGA's involvement, no settlement discussions occurred prior to the case being arbitrated. Following the completion of the arbitration, the parties agreed to settle for $367,500.
Damages
$340,340 for repairs and relocation expenses plus loss of use, attorney's fees, expert fees, arbitration fees and pre-judgment interest totaling $502,174.
Other Information
An arbitration was held before George D. Calkins.
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