Facts

On Dec. 29, 2004, plaintiffs and defendants entered into a written contract whereby defendants agreed to sell a 10-unit apartment complex in Berkeley to plaintiffs. Escrow closed on Jan. 20, 2005. On Aug. 18, 2006, the Francisco Street property incurred fire damage, which led to the discovery of extensive dry rot in the framing and sheathing which appeared to be the result of defectively installed retrofit windows. Plaintiffs proceeded to file suit entitled Gray, et al. v. Harrison Street Apartments, et al. against the sellers of the property for failure to disclose.

After filing the Gray, et al. v. Harrison Street Apartments, et al. matter it was discovered that defendant Quality Bay Construction Inc., a licensed California contractor, within the time allowed under the applicable statute of limitations, performed repairs, remodeled and/or performed construction at two properties owned by plaintiffs. Plaintiffs then filed suit entitled Gray, et al. v. Quality Bay Construction Inc., against Quality Bay Construction Inc. and its owners Yuval Bobrovitch, Igal Sarfaty, and Avraham Ben-Zaken for negligence and negligence per se.

PLAINTIFF'S CONTENTIONS:
Plaintiffs contended that the construction deficiencies and extensive dry rot to the framing and sheathing at the apartment complexes resulted from the negligent installation of retrofit windows by Quality Bay Construction Inc. Plaintiffs further contended that the sellers of the properties knew of the construction deficiencies and failed to disclose the deficiencies to plaintiffs as part of the real estate transaction.

DEFENDANT'S CONTENTIONS:
The litigation involved two commercial apartment complexes wherein plaintiffs contended that there was a failure to disclose known defects and latent construction deficiency. The defendants were the prior owners of the buildings that also operated a construction company which performed various repairs on both commercial complexes. Defendants contended that plaintiffs had no cause of action for failure to disclose as California law does not require disclosure for commercial properties. Nonetheless, plaintiffs were fully informed of all existing conditions of the apartment complexes as they performed pre-sale inspections, which disclosed numerous deficiencies. In reference to the construction defect claims, defendants contended that the vast majority of all claims were precluded by the applicable statute of limitations and only various issues regarding window leaks remained in reference to both apartment complexes. Defendants denied all claims of liability and damages. An initial mediation was held with a private mediator wherein plaintiffs made a settlement demand of $693,531.37 for costs of repair and consequential damages. Following mediation extensive depositions were conducted wherein defendants contended that the nature and extent of plaintiffs' claimed damages were precluded as a matter of law. Ultimately, the parties reached a settlement agreement so as to preclude defendants from incurring further costs of litigation.

Result

The case settled for $150,000.

Other Information

MEDIATOR: Peter Dekker, Esq., Griffiths, Castle, Goyette & Dekker. FILING DATE: March 21, 2008.