Owners of Faulty Condos Settle With Builders for $5.17 Million

A construction defects suit against the developer and 25 subcontractors who built a ritzy Monarch Beach condominium complex has ended with the homeowners association receiving a $5.17-million out-of-court settlement.

A nearly identical suit, settled last year for $750,000, was filed against the builders by residents of the first phases of the Tennis Villas complex, said homeowners association attorney Kenneth Kasdan. Those residents, who were represented by a different attorney, are appealing the award and seeking additional compensation, Kasdan said.

The suit settled last week claims that the final phases of the 8-year-old oceanfront development overlooking the Monarch Beach golf course also are fraught with structural and drainage flaws that led to safety hazards, instability and severe water damage.

Developer D.T. Smith, whose general contractor license was suspended last year, will pay $2.5 million of the settlement, while Raymart Framing, a Los Angeles subcontractor, will put up $1 million. The bulk of the settlement will be divided among the 24 other subcontractors named in the suit, which was filed in August, 1992.

Kasdan said water damage in the condominiums was so severe that mushrooms and mold grew in many of the units. Missing fire insulation posed a danger to residents, he said.

The settlement came less than a month before the case was scheduled to be heard in Orange County Superior Court. The suit was brought by an association representing owners of the 92 units located in the third and fourth phases of the complex. The settlement works out to about $56,000 per unit.