El Escorial Homeowners' Association v. Santa Barbara Villas
Published: May 25, 2004 | Result Date: Jan. 29, 2003 | Filing Date: Jan. 1, 1900 |Case number: 01003147 Bench Decision – $8,600,000
Judge
Court
Santa Barbara Superior
Attorneys
Plaintiff
Dennis Neil Jones
(Myers, Widders, Gibson, Jones & Feingold LLP)
A. Barry Cappello
(Cappello & Noel LLP)
Matthew Clarke
(Christman Kelley & Clarke PC)
Experts
Plaintiff
David F. Jolly
(technical)
Michael D. Shotwell
(technical)
Raymond J. Shreenan
(technical)
A. James Montgomery
(technical)
David Hedman
(technical)
Bart Mendel
(technical)
James Craner
(medical)
Alan Forbess
(technical)
Sharon Harney
(technical)
Daniel J. McNichol
(technical)
Tom Marsh
(technical)
Stephen D. Olsen
(technical)
James M. Hansen
(technical)
Dean G. White
(technical)
Defendant
John Parkhurst
(technical)
Peter Cruz
(technical)
Brian Kramer
(technical)
Stephen J. Cullen
(technical)
Michael S. Roberts
(technical)
West Harrington
(technical)
Brian M. Grossman
(technical)
J. Michael Byrne
(technical)
Facts
The defendant, Santa Barbara Villas purchased a hotel/apartment complex in Santa Barbara consisting of more than 260 units. The developer began converting the hotel rooms and apartments to luxury condominiums. The conversion affected all aspects of the buildings and grounds and lasted many years. The developer employed more than 40 subcontractors and formed its own general contracting company after discharging the original general contractor. The conversion proceeded in four phases. Once the conversion was completed, homeowners discovered that cast iron waste pipes had longitudinal cracks which leaked effluent into the wall cavities. The effluent encouraged mold and bacteria to grow. El Escorial, the plaintiff, paid to have all of the cast iron waste pipes replaced from the slab to the roof and to have the mold removed. While remediating the mold in the wall cavities, El Escorial discovered that exterior facades were leaking, the wood members were rotting and mold was growing in those cavities as well. El Escorial found a number of other deficient conditions. After the condominium owners gained control of the condominium association, negotiations under Civil Code section 1375 (Calderon Act) were exhausted. The plaintiff filed suit against the developer, general contractor and 35 subcontractors. Prior to trial, the plaintiff achieved settlements with the developer, general contractor and nearly all of the 35 subcontractors of approximately $10 million. The case went to trial with six subcontractors on the issues of defective stucco work, deficient framing, improper use of elastomeric paint, improper application of deck coatings and improperly installed tile on Roman tubs. The parties waived jury and the bench trial lasted 11 months. El Escorial asserted construction defect claims against the six subcontractors and asserted express indemnity claims which had been assigned by the settling general contractor.
Settlement Discussions
The parties mediated on nearly a dozen occasions with various mediators with varying success. Ross Hart was able to push the general contractor and developer to settlement. At the last mediation before trial, the six remaining defendants against whom the case was tried, collectively offered less than $1 million.
Damages
The plaintiff alleged that all of the defects required repairs; that the homeowners had to leave their condominiums for a substantial amount of time, and that mold required abatement in all of the buildings. At trial, the plaintiff requested an award of over $54 million, exclusive of attorney fees. The claim included the cost of moving the unit owners into rental housing for nearly two years, while mold remediation and construction repairs took place.
Result
The court wrote a 90-page decision in which each of the claims and each of the defects alleged was discussed in great detail. The court specifically found that defendants Pyramid Tile, Midcal Painting, Coastline Painting, and Brooks Coatings were not negligent, and awarded them a defense judgment. The court also found that certain claims had been released during the Calderon process. The court found that two of the subcontractors Alderman Construction and DLC Plastering were negligent. The total judgment against defendant DLC Plastering was $2,645,195 ($2,086,495 for negligence; $377,500 for DLC's express indemnity liability and $181,200 for "Type I" express indemnity liability for the negligence of cross-complainant Investec Construction Inc.). The total judgment against defendant Alderman Construction was $519,750 ($375,000 for negligence damages; $94,750 for express indemnity and $50,000 for "Stearman" damages). The court found that the plaintiff failed to meet its burden of proof on the issue of toxic mold as an element of consequential damages, or that mold is a hazard to health at the complex. The court also found that defendants Pyramid Tile, Midcal Painting and Coastline Painting obtained a more favorable judgment than their pretrial statutory offers to the plaintiff.
Other Information
According to the plaintiff: The developer's insurance company refused to defend the developer in the case. As part of the plaintiff's settlement with the developer, the developer assigned its insurance rights to plaintiff and agreed that plaintiff's claim could be liquidated via an uncontested prove-up hearing. That hearing before retired Justice Jack Goertzen, resulted in a $65 million award, which plaintiff is now litigating to recover against Republic Western Insurance Company and others. All parties moved for attorney fees and costs and various other post-trial motions. The court awarded attorney fees and costs to El Escorial as well as to the defendants that prevailed. El Escorial, Alderman Construction and DLC Plastering have filed notices of appeal.
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