A La Jolla homeowners' association has won a $22.4-million jury verdict against a Newport Beach development firm to repair construction defects at a 419-unit condominium project.
The verdict, returned Monday in San Diego Superior Court, found that the foundations of condominiums at La Jolla Village Southpointe near Gilman Drive were not built to adequately resist high winds or earthquakes, as required by the city's building code.
The jury also found other defects, such as untested fireplaces, as well as unstable soils and drainage systems, that caused the partial landslide of an adjacent hillside onto nearby Interstate 5 in 1983, according to a lawyer for the homeowners' association.
"This is an engineering question," Mickey McGuire, attorney for the homeowners, said. "Every time we looked at something in depth with those condominiums, we found problems of things that didn't meet design restrictions.
"We found that their design assumptions just didn't work on paper. The buildings weren't designed to resist the lateral forces exerted by anticipated natural events, such as high winds or earthquakes."
Meanwhile, an engineer hired by the homeowners' association termed the condominiums unsafe.
"They're dangerous, there's no doubt about it," said engineer Richard Pearson. "And they'll stay that way until someone goes in and fixes them."
Daren Groth, senior vice president and San Diego division manager for the builder, Donald L. Bren Co., said in a prepared statement that the company has never denied that there were problems with the condos.
"We believe the decision is disappointing," he said. "In our judgment, it seeks to impose a penalty far beyond the actual responsibility that is properly ours.
"The Bren Co. has always acknowledged that some repairs were necessary. Our structural engineers contends that the homeowners' association demands were based on very different approaches to a solution and inflated cost estimates."
He said the company probably will appeal.
At the center of the disagreement, Groth said, is whether construction of the condominiums adheres to the uniform building code, which he called a complex document that, among other things, sets the standard for a building's resistance to natural events such as high winds or earthquakes.
"Different structural engineers have different approaches to designing a building to withstand an earthquake," he said. "Their (homeowners') qualified experts said the buildings were not structurally sound.
"But we had equally qualified experts who looked at those buildings and found them to be structurally sound. We couldn't resolve the differences."
Bren, 58, is considered one of the most influential developers in Southern California, one who has raised millions for Republicans in state races. He is also chairman of the Irvine Co., the biggest land development company in Orange County.
The Bren Co. has built more than 2 dozen projects in the San Diego area over the past 15 years, Groth said.
The 40-acre La Jolla Southpointe Village project was built in four phases between 1974 and 1979. The one, two and three-story condominiums have a market value beginning at more than $200,000.
The ruling allows for slightly more than $50,000 for structural repairs needed at each of the 419 units, McGuire said. Meanwhile, construction industry spokesmen termed the verdict a stiff penalty but said they were confident the decision would be overturned on appeal.
"That's a pretty large figure, even in today's market," said Bill Burke, executive director of the Associated General Contractors in San Diego.
"Frankly, the verdict surprised me," said Robert Morris, executive vice president of the Building Industry Assn, "because those buildings have to be built to code and there are inspectors involved throughout the whole process.
"When a building inspector signs off on a project, he's charged to make sure that the structure meets the code. It's confusing, to say the least, that the plaintiffs didn't intend to show the city's responsibility."
McGuire said the city's inspectors are often overworked. "It's a function of how busy they are," he said. "They don't see everything. And a good number of code violations are never caught."
Nonetheless, he said, the verdict was a message from the jury that a homeowner has the right to rely first on a builder's ethics.
"It says people have a right to expect code minimums to be met whether the city catches the violations or not," he said. "The city didn't catch them breaking the code, so it's supposed to be all right. Well, it's not all right.
"And, when the builder gets caught, his hands should be slapped but good."
Problems with the condos came to light in 1983 when the complex's storm drainage system overloaded after a rainstorm.
"The overflow caused a mudslide," McGuire said. "Hundreds of tons of dirt and material poured onto I-5 near the Gilman Drive on-ramp. Caltrans sent the homeowners' association a letter saying that their faulty drainage system had caused a road hazard."
Caltrans cleaned up the mess, he said, but told the homeowners, "We're going to send you a bill unless you do something about the problem."
McGuire said engineers hired by the law firm later found many construction defects at the complex, including structural cracks, faulty roadway construction and fireplaces "that were built with non-conforming parts."
"That's a no-no when it comes to insurance purposes. They used replacement parts for the fireplaces so they were virtually untested as a whole," he said.
"But the major problem was the buildings meeting the earthquake code. The complex sits within a quarter-mile of the Rose Canyon fault line, so it's a realistic concern. Because, if an earthquake hits, it's too late."
Despite the ruling, McGuire said, it will be years before homeowners can feel secure about their homes again.