Owners of Flawed Condos to Be Given $13.3 Million : Construction: Two developers agree in a settlement to pay for extensive repairs at the luxury complex.

Two developers agreed this week to pay $13.3 million to the owners of 125 luxury condominiums near Marina del Rey because of extensive construction defects throughout the 9-year-old complex.

Barclay Industries Inc. of Newport Beach and Watt Industries Inc. of Santa Monica, one of the largest residential builders in the state, agreed to the settlement after nearly a year of negotiations with the Villa Marina East V Homeowners Assn.

“This sends a message to developers that they cannot cut corners,” said Lee Barker, the attorney who represented the homeowners. “When prospective buyers purchase a luxury condominium, they should expect quality behind the walls, not just expensive interiors with fancy faucets.”

Barker said the settlement was one of the largest in Southern California for defective condominium construction. Barker won a $10.8-million jury verdict in a similar case in March, 1990, against developer Don S. Levin and his company, DSL Construction Inc., on behalf of the 187-unit Manitoba West complex in Playa del Rey.

The settlement money will be paid to the homeowners association, which will administer repairs and redecorating. It will also cover the cost of housing the residents elsewhere during the three to six months of construction. Walls, ceilings and floors will be gutted. Work is expected to start this fall.

Any remaining money will be used to reimburse residents for the $10,000-per-unit assessment made in 1989 to replace all balconies and stairways in the complex.

The homeowners filed suit in 1986 contending that the developers had used defective materials in building the condominiums, which are located in Los Angeles between Lincoln Boulevard and Glencoe Avenue. The suit alleges that the developers knew about numerous problems with the units when they were sold, some for as much as $400,000. The case was scheduled to go to trial this week in Santa Monica Superior Court.

Untreated lumber used for the wooden frames rotted, making the units unsafe and necessitating the replacement of the balconies and staircases, according to the suit.

The developers also failed to install the appropriate number of nails, bolts and metal straps to meet code requirements, Barker said. Insufficient steel was used to reinforce concrete slabs in the garage ceiling, causing hairline cracks that have weakened the structure’s foundation, he added.

The suit alleges that the developers used cheap piping throughout the complex and did not separate the plumbing from the building frame, resulting in leaks and excessive noise. Residents said the insulation is so poor that they are constantly bothered by noises from neighboring units. In addition, residents said the bathrooms were not built with proper ventilation, causing mildew on wall coverings. And the system of streams, waterfalls and ponds running through the complex was so deficient that it leaked about 1,900 gallons a day before it was emptied, according to the suit.

“The evidence showed that there was defective construction,” said Cecile Racine, a board member of the homeowners association who helped negotiate the settlement. “These condominiums were built for show, not for longevity. We just want them to give us what we paid for.”

George Calkins, the attorney representing the developers, said that lawyers for the homeowners had overstated problems at the complex. Calkins said experts found no leaks in the pipes leading from the garage into the units above. The only problems with leaks occurred in the garage, he said.

Calkins questioned whether the homeowners association had maintained the complex properly. Attorneys for the developers also questioned whether the amount of the settlement was too high, saying that repairs to the complex could be made for as little as $7 million.

Calkins said the developers recognized that some problems with dry rot did exist at the complex. They paid the homeowners association $700,000 between September and December, 1990, to help replace the balconies and stairs. The money will be credited against the overall settlement.

“My clients believe that this project is fundamentally sound,” he said. “They are satisfied that they produced quality units. Even with full disclosure of the alleged problems, we have continued to make sales at full market value.”

Still, each of the five phases of the Villa Marina East development has been plagued by lawsuits. Three of the suits have been settled for lesser amounts. One suit is pending.

Calkins said it is impossible to lay blame on the developers because different subcontractors have been used in each of the phases.

“You can’t blend together all five developments,” he said. “There has been a competitive bidding process for each one with different companies involved in construction.”