Facts

Plaintiff Ocean Pacific and owner Kenneth Cornell were the developers of high-end condominiums in the Pacific Beach area of San Diego. Ocean Pacific took older apartments and upgraded them with large custom made windows and sliding glass doors that took advantage of ocean views. Ocean Pacific purchased Chinese-manufactured windows and doors from a California supplier, Luxury Windows & Doors Inc.

PLAINTIFF'S CONTENTIONS:
Plaintiff contended that many of the doors and windows were delivered months later than promised, delaying the sales of the homes. In addition, plaintiff contended that many of the doors and windows were manufactured to the incorrect specifications. In many cases, plaintiff alleged that they had to reframe openings in the new condominiums that further delayed the sale of the homes. Plaintiff alleged that some of the windows were delivered without nailing fins. Plaintiff further alleged that some of the windows and doors leaked after installation and had to be ripped out and reinstalled. Plaintiff contended that either Luxury Windows mis-measured openings or that the Chinese manufacturer negligently manufactured the sliding glass doors and windows. Plaintiff also contended that the windows and doors were delivered many months late, which caused loss of profits for the business and pushed the sale of some of the units from a hot real estate market into a slow market.

DEFENDANT'S CONTENTIONS:
Defendants denied the plaintiff's contentions. Defendants argued that plaintiff installed the windows and any improper installation or damage to the product during installation was plaintiff's responsibility. Defendants contended that the windows were manufactured and delivered exactly as specified. Defendants contended that all the deliveries were made within the guaranteed shipping window. Defendants argued that plaintiff's sole witness as to the terms of the oral modifications of critical contracts was a felon who had been convicted of fraud, and therefore his testimony was suspect.

Hartford argued that there was no property damage caused by the undersized windows. In addition, Hartford argued that the alleged loss of value of the condominiums was not a covered loss.

Damages

Plaintiff asked for $6,758,890 in damages, including $548,825.19 for the cost of repair, $1,095,570 for lost rental income, $3,733,795.38 for lost sale income, $1,272,678.66 for interest and carry costs, and $108,072.00 for cost of repairs made by plaintiff to date.

Result

After several mediations before Special Master Merville R. Thompson, the matter settled in the amount of $450,000. In return, defendants received (1) an agreement that plaintiff will defend, indemnify and hold harmless defendants for any future actions brought by the owners of the condominiums as to certain properties; and (2) a 10 year warranty for 114 premium doors and windows installed by plaintiff at the subject properties. The self insured Israeli Window Manufacturing Company - Blinds Aluminum settled out early for between $12,500 - $15,000.

Other Information

FILING DATE: Oct. 26, 2009. Luxury Windows was insolvent but was being defended in the case by Hartford Insurance under a reservation of rights. The following LLCs signed the settlement agreement: Ocean Pacific XII; Ocean Pacific XI; Ocean Pacific X; Ocean Pacific Jamaica; Ocean Pacific Rockaway; Ocean Pacific Townhouse; and Ocean Pacific Triplex. Ken Cornell was the manager of each entity. The entities assigned their rights to the umbrella entity (plaintiff) in Jan. 2011.