$9.9 Million Awarded Over Sinking Condos

Homeowners in a city-sponsored Monterey Hills condominium project that which began sinking after it was built atop filled-in canyons were awarded $9.9 million in damages Wednesday by a Superior Court jury.

The verdict brings to a close a six-month trial of a lawsuit filed by 164 members of the Eaton Crest Homeowners Assn. and Security Pacific National Bank, which holds their mortgages.

Still to be determined at a second trial, scheduled to begin in August, is what caused the homes to tilt and crack and who is responsible for paying the damages. Named as defendants in the suit were the Los Angeles Community Redevelopment Agency, the City of Los Angeles and firms involved in constructing the troubled project.

The award amounts to just over $60,000 a unit, but the sums due each homeowner will not be set until after Judge Eli Chernow divides the judgment between the homeowners association and the bank. Then the association will apportion its share among the owners of the damaged units, some of which are town houses and others condominiums in three-story buildings.

More than 20 homeowners gathered in the courtroom to hear the verdict, which came after 5 1/2 days of deliberations.

Attorneys for the property owners had asked for $15 million in damages, while attorneys for the city and other defendants argued that damages should be less than $2 million.

“We’ve cleared the biggest hurdle,” said Joel B. Castro, the attorney for the homeowners. “All along we’ve asked for a buyout, and this is essentially a buyout the jury has awarded. When the homeowners get their money, they can put it in their pocket and leave.”

The jury was asked to determine the loss of value and cost to repair the 164 units in Eaton Crest, one of 21 sections of the 1,600-unit development east of the Pasadena Freeway.

In the verdict, which was reached late Tuesday but not announced until Wednesday, jurors found the market value of the homes to be $8,442,441, about $9.9 million less than they would be worth if they were not damaged.

Tainted Reputation

Even if the homes are fully repaired--work that the jury estimated would cost more than $8 million--the tainted reputation of the development would lower their value by more than $3 million, the panel said.

The suit is the second to go to trial of five brought by homeowners associations since areas of the Monterey Hills development began cracking on improperly compacted fill several years ago. The highly touted, government-backed subdivision was built in the late 1970s to enable middle-class families to gain entry into the expensive Los Angeles housing market. The units originally sold for $65,000 to $160,000.

Because Eaton Crest sits on the same fill as several other sections of the complex, the outcome of the trial was viewed as a yardstick of the damages likely to be won by homeowners in the cases yet to go to trial.

Jury foreman Greg McClain said after the verdict that jurors did not believe attorneys representing the redevelopment agency, who argued that the damage to the town houses and condominiums was cosmetic and would require less than $2 million to repair.

Structural Repairs

As late as February, 1988, agency officials said they would make extensive structural repairs to the complex that would cost more than $10 million. Since the Eaton Crest trial began, however, those plans have been stalled.

“As a homeowner, I’m not that stupid,” McClain said. “When you go to purchase a property and you are confronted with all the problems these people are going to have to disclose, what do you care if it has pretty plantings? You are going to be buying someone else’s problems.”

Property owners in the courtroom said they were anxious to collect their money, then move from the homes, many of which have windows that do not close, doors that jam and walls marred by hair-line cracks.

But with the liability trial still to come and the likelihood that some of the defendants will appeal the decision, it is unclear when the homeowners will receive their settlement money.

“It isn’t over yet,” said Gordon Anderson, an Eaton Crest resident. “People are just really tired. They’re financially drained, and they don’t see any money coming their way any time soon.”

James Wood, board chairman of the redevelopment agency, said in a written statement that no decision has been made on whether to appeal. But attorneys for the city, developer Carley Capital Corp. and other defendants said it is almost certain that one or more of their clients will appeal.

Different Fill

The first suit brought by Monterey Hills homeowners was settled last year when the redevelopment agency agreed to pay the owners of 87 units in the development’s Drake Terrace area a total of $6 million and to spend $3 million to repair their homes. Drake Terrace sits on a different fill than Eaton Crest.

During the Eaton Crest trial, Castro called the Monterey Hills complex “a nightmare” and “an experiment that failed.” He called a battery of soil experts, engineers and real estate appraisers to testify about how much the homes have been damaged.

The two buildings that make up Eaton Crest sit on as much as 120 feet of fill material on top of what was once Pullman Canyon. Plaintiff’s experts testified that they have more than 1,100 cracks and continue to sink rapidly and unevenly on soil that will not stop settling for years.

Attorneys for the defendants conceded that the complex is flawed and that the homeowners are entitled to compensation. But they called their own experts to testify that the damage is much less severe than homeowners claim.

Offers Rejected

The attorney for the redevelopment agency, Laurie D. Zelon, told jurors that the Eaton Crest homeowners have repeatedly turned down the agency’s offers to repair their homes.

In all, the jury considered more than 1,900 exhibits and heard from more than 35 witnesses in fields such as engineering geology and soil settlement.

“I don’t want to hear about another rock in my entire life,” juror McClain said.