Confidential
Settlement – $6,750,000Judge
Court
Orange Superior
Attorneys
Plaintiff
Defendant
Robert C. Carlson
(Koeller, Nebeker, Carlson & Haluk LLP)
Experts
Plaintiff
James T. Frost
(technical)
Sydney J. Friedman
(technical)
Brian Kehoe
(technical)
Robert Pearson
(technical)
Douglas E. Moran
(technical)
William G. Hime
(technical)
Paul G. MacMillin
(technical)
Defendant
C. Darrell Knudsen
(technical)
Darrell Knudson
(technical)
Joseph A. Dobrowolski
(technical)
Bill Hazewinkel
(technical)
Bernard Erlin
(technical)
Erik Klock
(technical)
Joseph Dworkin
(technical)
Hannes H. Richter
(technical)
Gerald Lehmer
(technical)
Facts
The plaintiffs in this case consisted of approximately 250 individuals who owned or who, in a few instances, previously owned 146 of the homes located in a subdivision in San Juan Capistrano, California which consisted of 196 homes. The homes were constructed in the mid to late 1980's and were sold in the late 1980's and early 1990's for between $180,000 and $290,000. The defendants in the case were the developer/seller entities of the homes. The plaintiffs brought this action based on breach of warranty, strict liability and negligence theories of recovery. In addition to their property damage claims, the plaintiffs asserted a claim based on fraudulent concealment and misrepresentation. The developer filed a cross-complaint against the subcontractors, design consultants and suppliers who were involved in different aspects of the design and construction of the residential project. The alleged damage to the homes included sulfate and/or acid attack to the concrete; grout pocket deficiencies in the homes' foundations which house the post-tension cable anchors; deficiencies in the roofs, windows, and other components of the homes; and defects in the exterior stucco/styrofoam boundary line and garden walls. The plaintiffs contended that they were entitled to repair and stigma damages. The plaintiffs also contended that the concrete deterioration was caused by sulfate and/or acid attack. The defendants contended that the problems were insignificant.
Settlement Discussions
The settlement was reached with the assistance of retired Judge Jerrold S. Oliver at J.A.M.S./Endispute after approximately 15 mediation sessions. The plaintiffs' initial settlement demand was $17,000,000. Per the plaintiffs, the defendants initially offered $600,000 which was increased to $6,000,000 on the last day of mediation. Per the defendants, the defendants offered $6,000,000 on November 6, 1995, which was not the last day of mediation.
Damages
The plaintiffs estimated that the costs of repair, rent, and relocation would be $11,000,000.
Other Information
The settlement was reached approximately one year and ten months after the case was filed. The plaintiffs brought a motion for summary adjudication of issues to establish that the defendant bank owed a duty under the strict liability doctrine to develop homes that were free of defects and that the plaintiffs were not required to prove their case based on negligence principles in order to prevail at trial. The motion was opposed on the ground that the defendant bank was not the developer of the project, only its development subsidiary was a developer and that procedurally the motion was defective in attempting to adjudicate an isolated issue of fact or duty that would not entirely dispose of a cause of action. The court agreed with plaintiffs' position, finding that the issue of duty regarding the defendant bank's role as a developer could be summarily adjudicated and that there was no triable issue of fact on that issue. Various other motions were filed by both parties.
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