Costa Mesa : Insurance Firms Sued by Plaza-Area Residents

More than two dozen residents near South Coast Plaza, whose homes have been damaged by land movement, have sued their insurance companies for refusing to pay for repairs.

Among the insurance companies named in the suits, which charge breach of contract, bad faith, fraud, negligence and conspiracy, are State Farm, Safeco, American Eagle, Foresters Indemnity, 20th Century, Providencia and Canadian Indemnity.

San Francisco attorney Patrick E. Catalano, hired by 80 residents of the Mesa Woods tract, said Tuesday he expects to file additional suits against other companies.

Catalano said homeowners had filed their insurance claims several months ago, “but there has been no commitment to pay them. . . . I believe our clients have valid claims, and the insurance companies have had reasonable time to investigate them.”

Damages, including cracks in walls, patios and swimming pools, have been reported at 147 homes since September in an area bordered by Sunflower Avenue, Fairview Road, South Coast Drive and Bear Street.

A geological study commissioned by the Costa Mesa City Council has found that construction of a South Coast Plaza annex at Sunflower Avenue and Bear Street is responsible for damage to at least 15 of the homes.

Residents contend that the damage to their homes was caused by the removal of thousands of gallons of water from the excavation site for an underground garage.

The city’s study, however, concluded that with the exception of damage caused by a dirt berm which serves as noise buffer between the homes and the construction site, most of the cracking was caused by the area’s naturally expansive clay soil.