Builders Settle $20-Million Condo Lawsuit : Courts: Nearly 500 Stanton residents alleged faulty construction by the William Lyon Co. and its subcontractors.

A federal bankruptcy judge signed off Tuesday on the settlement of a $20-million lawsuit filed against William Lyon Co. by nearly 500 Stanton condominium owners.

The suit, filed in 1990 by the Crosspointe Village Condominium Owners Assn., alleged poor construction of the condo complex and sought to force Lyon and dozens of its subcontractors to pay for repairs.

Under terms of the agreement, the amount to be paid to the condo owners is not to be made public. In a similar case last December, however, the Newport Beach home builder paid $8.7 million to settle a faulty construction lawsuit filed by homeowners at the 350-unit Whispering Hills condo complex in Lake Forest.

Lawyers for both sides said last week that they had reached an agreement. It could not be finalized then because a subcontractor involved in the case had filed for bankruptcy the week before, so the pact required approval from U.S. Bankruptcy Judge John J. Wilson.

Gary Aguirre, the homeowners’ attorney, said Tuesday: “The only condition keeping this from complete and final settlement was approval from the bankruptcy judge, and today we got that.”

Aguirre said 495 condominium owners involved in the case were being informed of the final settlement and its terms.

The suit alleged that the condos were built without proper supervision by William Lyon Co., the general contractor. Among the flaws alleged in the suit were improperly installed wiring; missing waterproofing paper; roofs that were not properly attached, and missing or improperly built fire walls.

William Lyon Co. is one of California’s largest home builders, having constructed more than 60,000 homes and apartments since it was founded in 1954.

Southern California’s rapid growth in the late 1980s and the prolonged economic slump of the 1990s have contributed to an increasing number of faulty construction lawsuits against builders, said Boyd Martin, chairman of Market Profiles, a real estate consulting firm in Newport Beach.

“Part of the problem is that in the late 1980s the building boom was so out of control that labor, especially trained labor, was not readily available,” Martin said.

“In a declining market, people are looking to say it’s something you did that caused my house to lose value, when in actuality it was the market.”