Governor Signs Bill Aimed at Aiding Homeowners in Insurance Dispute

Gov. George Deukmejian has signed legislation making it easier for homeowners with crumbling foundations to sue their insurance companies. But legislators say it is unlikely that he will approve a measure setting aside $350,000 for a geological study of the problem.

The foundations of several hundred homes in Cypress, La Palma and Lakewood are disintegrating because of a mysterious problem believed to be related to high concentrations of sulfates in the soil. Residents, many locked in legal battles with their insurance companies and the three cities, have looked to the state for an investigation of the problem.

On Tuesday, for the second year in a row, the Legislature passed a measure that calls for a state study of the crumbling foundations. It directs the state Department of Conservation to contract with a university or college to review water quality, water tables, soil composition and other geological factors that may be causing the deterioration.

The bill was authored by Sen. Cecil Green (D-Norwalk) and co-sponsorsed by Assemblywoman Doris Allen (R-Cypress) and Sen. Marian Bergeson (R-Newport Beach).

A spokeswoman for Deukmejian said the governor had not made a decision about the measure. But he vetoed similar legislation last year and has indicated previously that he views the crumbling foundations as a local problem that does not necessarily require state involvement.

On Wednesday, Deukmejian signed a related bill, also authored by Green, that protects homeowners from losing their rights to sue insurance companies over claims involving the crumbling foundations. The legislation requires insurance companies to notify policyholders 30 days before their rights to sue expire under their policies.

Green said the measure was prompted by homeowners’ complaints that some insurance companies have intentionally responded to claims after the expiration dates to prevent policyholders from taking them to court.

“Because of the expense involved in paying these claims, some insurance companies are using every legal tactic their lawyers can invent to prevent future lawsuits,” Green said in a written statement.

Officials said the crumbling foundations first appeared about five years ago in the Landmark tract in La Palma. They then became prevalent in several housing developments in Lakewood and Cypress. Homeowners have since reported similar deterioration in an area extending from Artesia to Mission Viejo.