Facts

From approximately 2001 through 2006, the developer constructed approximately 250 homes in the Rancho Murieta area, which is southeast of the City of Sacramento. Numerous soil movement problems were encountered by the developer starting with the model homes and developer switched from a four-inch nominal concrete slab on the Ione formation soil to a 10-inch post tension slab. All of these slabs failed to one extent or another.

The developer continued to build homes as the slabs were failing and undertook repairs for approximately half of the 250 homes built. The repairs included enhanced drainage, releveling efforts, and putting metal piers through the slabs into the soil.

In the fall of 2007, the developer halted all repairs because of the failing real estate market. At least one owner who had been moved out of their house in preparation for putting in the steel piers was left with no repairs. Subsequent investigation showed that the repair efforts by the developer were also failing the owners.

PLAINTIFFS' CONTENTIONS:
Plaintiffs contended that architectural defects including roofs, windows, and plumbing were present in the 41 homes, which plaintiffs divided into groups reflecting various soil movement damages and the necessary repairs. Plaintiffs further contended that the developer conducted extensive repairs prior to litigation, but did inadequate investigation and the repairs failed.

Plaintiffs' soils expert contended that four-inch slabs were completely inadequate and that the subsequent mat slabs used by the developer entities also failed. Soils experts for plaintiffs and defendants argued about the presence of Ione formation clay soils in the development and its effect on the single family homes.

DEFENDANTS' CONTENTIONS:
Defendants contended that soil damages had occurred to the homes, but that conditions were stabilizing. Defendants also contended that major drainage improvements would be sufficient to prevent further damages.

Settlement Discussions

Several mandatory settlement conferences with plaintiff homeowners present were held in the special settlement department of the Sacramento Superior Court.

Damages

Plaintiffs' cost of repair was approximately $7 million for the 41 homes.

Result

The award amount was $5 million. The lead Willyoung matter was called for trial after major partial settlements in July 2009, but the last remaining party had filed bankruptcy the night before and trial was delayed. The consolidated matters, consisting of 41 homes, eventually settled for just under $5 million.

Other Information

The matter was mediated on numerous occasions before Bruce Edwards of JAMS from the fall of 2008 until 2010. Over 100 depositions of soils engineers, owners, persons most knowledgeable, experts, and other percipient witnesses supported the mediation efforts. MEDIATOR: Bruce A. Edwards, Esq. DISCOVERY REFEREE: Peter Dekker, Esq. FILING DATE: Jan. 22, 2008.