Facts

Plaintiff Palm Desert University Village LLC hired defendant W.L. Butler Construction to construct two commercial buildings at the University Village in Palm Desert. W.L. Butler represented it was a highly competent general contractor, and offered an extensive warranty that would cover any construction issues in the unlikely event such issues arose.

Shortly after construction was completed in 2007, stucco cracking manifested itself on both buildings. W.L. Butler promised to fix the buildings. Despite its promises, W.L. Butler never fixed the buildings. W.L. Butler claimed the stucco cracking resulted from design issues and not defective construction. Plaintiff disagreed and continued to insist that W.L. Butler honor its warranty and fix all issues under its warranty.

In December 2009, W.L. Butler informed Plaintiff that it would not fix the buildings because, according to Plaintiff, W.L. Butler's insurance carrier would not fund the repair costs. W.L. Butler claimed it refused to perform repairs because the majority of defects were design-related and not warranty items.

Plaintiff filed a lawsuit in May 2010. W.L. Butler completed construction without fixing parapet caps that were allegedly installed improperly by a subcontractor. Shortly after a rainstorm, the buildings manifested severe stucco cracking and staining.

Plaintiff's experts identified a myriad of other faulty construction issues and damage, requiring extensive repairs. Defendant's experts, on the other hand, claimed a myriad of design defects were responsible for the problems.

PLAINTIFF'S CONTENTIONS:
Plaintiff sued W.L. Butler for fraud, breach of warranty, and construction defects. Plaintiff alleged that W.L. Butler had a pattern and practice of not honoring its warranty, and instead shifting responsibility to fund warranty claims to its insurance companies and subcontractors. Plaintiff also alleged that W.L. Butler followed this practice as it related to Plaintiff, and did not fund the repairs because "there was no one pay for it."

DEFENDANT'S CONTENTIONS:
Defendant maintained that significant design defects caused most of Plaintiff's alleged damages. Defendant disputed Plaintiff's allegations regarding warranty and its warranty practices and presented evidence of its standard practice of consistently performing warranty repairs for other clients.

Settlement Discussions

Five months after filing the lawsuit, Plaintiff made a statutory offer to compromise for $550,000. The offer lapsed and discovery ensued. The parties participated in several mediation sessions, and finally settled by accepting Judge David Velasquez's mediator proposal during a court-ordered mandatory settlement conference.

Damages

Plaintiff claimed damages in excess of $6.5 million and an unspecified amount of punitive and exemplary damages on a fraud cause of action.

Result

The case settled for $6,175,000.

Other Information

W.L. Butler Construction Inc. sought and received contribution for the settlement from a number of cross-defendants. MEDIATOR: Hon. David Velasquez, retired, Judicate West. FILING DATE: May 6, 2010.