Developer Settles With Homeowners Over Workmanship

A group of 90 Laguna Niguel homeowners plagued with leaky roofs and rotting floors has reached a $7.1-million settlement in a lawsuit over faulty construction of their homes, attorneys for both sides said Monday.

The settlement, one of the region’s largest for individual homeowners, came out of a $20-million lawsuit by the residents against developer D.T. Smith Inc. and a host of subcontractors associated with the project.

“There’s probably 50 different insurance companies contributing to the settlement,” said the homeowners’ attorney, Ken Kasdan.

The homes in the hilly Vista Monte and Vista Mar neighborhoods of Laguna Niguel have suffered from a variety of construction problems that resulted in water leaking from roofs and windows and seeping in through walls and flooring, Kasdan said. In some cases, residents said their floors have rotted and had to be replaced.

The residents, who will get $30,000 to $42,000 after litigation costs, said they were looking forward to repairing their homes before the winter rains hit.

“It’s really truly an outrage,” Kasdan said.

But Thomas J. Lincoln, a San Diego attorney who represented the developer, said Kasdan is exaggerating the construction problems. The fact that the homeowners initially said they needed more than $20 million for repairs and then settled for $7.1 million is evidence that the problems have been overblown, he said.

“I don’t think they will even use $7 million for the repairs,” he said. “In any project there are always examples of poor workmanship, and in this project there were such instances. The plaintiffs’ team of experts tried to find those and then apply them throughout the project by extrapolating.”

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Homeowner Kelly Gonis said she bought her two-story home in the Vista Mar tract in 1988 and has had trouble every year since.

“I can’t leave the house if it rains,” she said. “I’ve got pots and pans and those huge kitchen trash cans all over the place.”

Gonis said she expects to net $30,000 from the settlement to make her repairs.

Gene Bloom, who paid about $300,000 for his house in 1991, already has replaced his kitchen floor once and each year has repainted a rear wall in his home to cover leak marks. He said he and his neighbors are happy to have the case settled.

With weather forecasters predicting that Southern California may be facing a rain-soaked winter, the residents are eager to get going with the repairs.

“Everybody’s really happy with it,” Bloom said. “I think it really was a fair settlement all the way around.”

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Kasdan said problems were rampant in the community. In some cases, he said, newspapers were stuffed in joints where mortar was required, ceramic roof tiles were improperly nailed and inferior-quality concrete was used for the slabs.

Because of the porous concrete, seepage from the slabs caused the lower portion of some cabinets to rot, he said.

Kasdan blamed the problems in part on sloppy workmanship and inadequate supervision on the part of the builder. He said such problems are more common during lively construction periods, such as the late 1980s, when these houses were built.

“I do not agree with his characterization of how this particular project was built,” said Lincoln, “specifically concerning the supervision and workmanship.”

Kasdan said problems with construction defects are not associated only with those South County housing tracts.

“We were going through a boom cycle, just like it is now,” he said. “I see jobs being built today with the same defects, which is really distressing.”