Confidential
Settlement – $8,000,000Judge
Court
Orange Superior
Attorneys
Plaintiff
Jason G. Weiss
(Federal Bureau of Investigation)
Defendant
Experts
Plaintiff
Walter Pruter
(technical)
Neil Matsui
(technical)
Defendant
Bing C. Yen
(technical)
Christopher A. Allen
(technical)
Facts
In 1986, the plaintiff, a large realty and development company, retained the defendant construction companies to construct 169 single-family homes in Dana Point. The defendants delivered the completed homes between 1988 and 1990. Upon completion, the plaintiff began receiving minor complaints from the homeowners. The defendants performed warranty repairs through 1992, when one defendant informed the plaintiff that it was ceasing operations and could not continue. The other defendant continued to perform warranty repairs until February 1993. In March 1993, the plaintiff hired a general contractor to respond to homeowner complaints on an as-needed basis. From March to August 1993, approximately $160,000 in repairs were completed. In August, the plaintiff brought this action against the defendant construction companies based on breach of contract, negligence, breach of warranties and indemnification theories of recovery. With the heavy rains in the winters of 1993-1994 and 1994-1995, the plaintiff began to receive a significant number of additional complaints from homeowners experiencing water leaks. Eventually, the plaintiff hired a licensed general contractor and a job superintendent to oversee the repairs. Ultimately, the plaintiff conducted visual and destructive investigations of the homes involved, including investigations of defects that could not be seen by homeowners, such as rotting front-entry decks. The plaintiff retained numerous repair subcontractors to effect massive repairs of the homes. Between 1995 and 1998, 162 of the 169 homes were repaired, at a cost of over $7 million. The defendant construction companies cross-complained against many of its subcontractors for indemnity, but the court ultimately dismissed the claims.
Settlement Discussions
The plaintiffs made a settlement demand for $7.5 million. The defendants made their first settlement offer of $2,450,000 almost five years after the case was filed.
Damages
The plaintiffs claimed $7.1 million in compensatory damages, plus $1.6 million in prejudgment interest and $1.5 million in attorney fees and costs.
Result
ACCORDING TO INFORMATION SUPPLIED BY CHRISTOPHER A. ALLEN. The lead technical expert designated originally be the plaintiff was Robert Denk, a licensed general contractor. A motion was filed by the defendant's attorneys to have Denk disqualified as an expert for the project. The main technical expert for the defendant was Dean Colin of Dean Colin Associates, Pasadena. Designated along with Colin was Hal Woody and Susan Lunnenfeld, also of Dean Colin Associates. The plaintiffs attorneys made a motion to have Colin disqualified based on Colin purporting to have a professional background in civil engineering. This motion was granted by the court based on factual information that Colin did not have civil engineering education or experience. The roll of the architect designated by the defense, was to review and testify to the quality of the plans prepared by the design professionals for the plaintiff. He was also designated to give testimony on the need for adequate standards, programming and plans to affect project-wide repairs. It was Colin's responsibility to testify to the cost and the methodology of repair. At no time, were there any problems with the services performed by my firm or the geotechnical firm, Bing C. Yen & Associates.
Other Information
MEDIATION: Mediation sessions were held over a three-year period, before John R. Griffiths of Griffiths & Castle, resulting in the reported settlement. POST-TRIAL MOTIONS: Hearings on cost bills filed by the subcontractors, as prevailing parties, are ongoing. The cost bills range from $40,000 to $707,000, and some include attorney fees. The defendants' appeal is pending. The court dismissed the defendants' contractual indemnity claims against its subcontractors on the ground that the Type I indemnity clauses in the contracts were void as against public policy. The cross-complaints against the subcontractors were dismissed, as the five years had run on the cross-complaint. The court ruled that there was no tolling on the cross-complaint, and that the original judge's ruling of impossibility of trying the case within the five-year deadline did not include the cross-complaints. The defendants twice moved for a mistrial or continuance, due to problems with their main expert, but the motions were denied. The case was settled the next day. The defendants have appealed the dismissal of the cross-complaints. The settlement was reached approximately five years and ten months after the case was filed.
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