Long Trial Over Sinking Homes in Monterey Hills Nears End

With four days of closing arguments scheduled to conclude on Friday, a seven-month trial in a multimillion-dollar lawsuit over damage to a sinking Monterey Hills housing complex neared a close this week.

The Eaton Crest Homeowners Assn. is suing the Community Redevelopment Agency and the firms involved in building the troubled project.

The suit is the second to go to trial of five brought by homeowner associations since homes in the development began tilting and cracking several years ago.

In closing arguments three years after homeowners first sued for money to repair their damaged homes and nine months after jury selection began in the case, a Community Redevelopment Agency attorney said the Eaton Crest homeowners have repeatedly turned down the agency’s offers to repair their homes.

Agency counsel Laurie D. Zelon told jurors in the Los Angeles Superior Court trial Tuesday that the agency offered as early as 1986 and as late as last March to repair the homes by injecting a cement-like substance into the soil underneath them. But now the agency says such work is not necessary.

Claims Study Flawed

Zelon said that a 1986 agency study calling for the injection process is flawed. According to a study completed this spring, she said, the complex is sinking at a fraction of the rate previously believed and can be fixed for much less than the $15 million in damages the homeowners are seeking.

The trial is to determine the loss of value and cost to repair 164 townhouses and condominiums, which the association contends are built on improperly compacted fill. Jurors will have the unenviable task in their deliberations of sorting out conflicting testimony from a battery of experts in professions such as engineering geology, soil settlement and real estate appraisal.

Since Eaton Crest sits on the same fill as several other sections of the complex where homeowners also have filed suit, its outcome may affect the course of other suits yet to be tried.

The first suit brought by Monterey Hills homeowners against the CRA was settled last year when the agency agreed to pay Drake Terrace homeowners $6 million and to spend $3 million to repair their damaged homes. Drake Terrace is built on a different fill than Eaton Crest.

The homeowners’ case rests in large part on whether their attorneys can persuade the jury that land underneath the subdivision continues to settle. Witnesses for the homeowners have testified that it will. The seven defendants in the trial contend that further settling will be negligible.

Zelon and other attorneys for the defendants have conceded in the trial that the Monterey Hills complex is damaged and that the homeowners are entitled to compensation, but said they have proved that the damage is cosmetic and requires less than $2 million in repairs.

“Eaton Crest needs fixing, but it can be fixed,” Zelon said in the first of five different closing arguments scheduled by lawyers for defendants in the case. “Those problems stopped happening years ago. The past is over, it’s old news. What the new news is . . . is that Eaton Crest can be repaired simply and effectively.”

In his closing arguments, Joel B. Castro, the homeowners’ attorney, said the defendants were wrong to blame homeowners for not approving repairs proposed by the redevelopment agency. The planned repairs, he said, were inadequate to fix improperly compacted soil that he said was so porous it could be compared to Swiss cheese.

Castro said more than $15 million is needed to stabilize soil that is more than 100 feet deep in places and to repair the townhouses and condominiums built on top of the fill. The homes, experts testified, are marred by more than 1,100 cracks, and continue to sink rapidly and unevenly on soil they say won’t stop settling for years.

The continuing problems, Castro argued, has made it virtually impossible for Eaton Crest owners to sell their homes since 1985, and has completely eroded market confidence in the Monterey Hills project.

“At Eaton Crest, if you are an owner, you are saddled with the knowledge that you may be the only owners in Southern California who have lost money on real estate,” Castro told the jury. “The owners thought they were buying into the American dream. They never once thought for one single second that they were buying into a nightmare.”

Castro said the defendants have offered only cosmetic repairs to the complex.

“The repair proposal suggested by the defense for ignoring the soil is like someone saying they’ll fix your wrecked car by putting in new windows,” Castro said. “The soils are not going to get better if we ignore them.”

The courtroom of Superior Court Judge Eli Chernow in which the case is being heard was packed every day this week, with more than 30 homeowners standing outside Monday hoping to get in. Inside, opposite a wide aisle from the homeowners, the heads of some of the private corporations being sued sat quietly behind the phalanx of lawyers who have worked nine months on their defense.

The courtroom scene more resembled that of a celebrated murder trial than a civil suit whose most lively exhibits have been charts and graphs and that has been attended almost solely by the 13 lawyers arguing the case for months.

When Zelon said in her remarks to the jury that homeowners had blocked repair plans in hopes of reaping a windfall from the lawsuit, several sitting in the back row of the courtroom shook their heads in disbelief and one stormed out.

More than 35 witnesses were called by attorneys in the trial, in which the homeowners are co-plaintiffs with Security Pacific National Bank, the bond trustee on their mortgages. Closing arguments are expected to conclude by Friday. The jury is scheduled to begin deliberations next week.