Slide Risk Angers Hillside Homeowners

Not long after they moved into their hilltop dream home in Laguna Niguel, Steven and Sue Guenther were flabbergasted to see their new neighbors waving picket signs and warning home shoppers of faulty construction by developers.

Fretting over their new $270,000 investment in the latest phase of the Kite Hill subdivision, the Guenthers went to a project salesman to ask what was wrong. Just a crack in a swimming pool, they were assured.

That was nearly 10 years ago.

Today, the Guenthers’ own walls are cracking, their yard is sinking and a geologist predicted the slope behind their house will collapse someday. Until recently, the Guenthers had hoisted their own picket signs as part of a new generation of disgruntled homeowners in Kite Hill, a hummocky Orange County subdivision long troubled by sliding slopes that typifies the risk of building dense, modern communities across California hillsides that bear the scars of ancient landslides.

Developers say such ridges can be stabilized; in fact, many hillside developments never develop slide problems. But in a year that showed how easily California’s coastal slopes can lose their grip on the bedrock below, the Guenthers and six neighbors have sued developer S&S; Construction Co., arguing it knew the area was strafed by old landslides. Claiming fraud, they said S&S; had already had problems with other properties before they bought their houses in the 1980s.

“They’ve clamped down on building in earthquake zones; they’re going to have to do the same with landslides,” Guenther said.

After a neutral, court-appointed geologist filed a report in November agreeing with residents that the slope beneath their property is “at the verge of failure,” the warring parties agreed to court-monitored mediation and have begun possible settlement talks. A gag order is now in effect and residents, for now, have suspended their picketing at Hillcrest Estates, an even newer development going in among hills and ancient landslides along Aliso Creek, where Guenther and others hoped to pass on warnings to yet another generation of buyers.

Yet the problems at Kite Hill, where court records show at least 20 homeowners have sued Beverly Hills-based developer S&S; Construction Co. over slope problems in the past 15 years, are anything but isolated in the coastal hills of California.

Soaked by the withering rains of El Nino, at least 63 inhabited hillsides gave way this year, most along the Pacific shoreline, according to a compilation of reports by the state Division of Mines and Geology. From Big Lagoon in Humboldt County to San Clemente, the failures resulted in the evacuation of more than 1,500 structures, damaging or destroying about 200, according to the agency’s 1998 Landslide Inventory.

“In coastal California, these problems are common,” said Allan Barrows, a state geologist, who points to unpredictable underground rock formations as the culprit.

“These are weak materials. They’re not well-cemented or consolidated. When they get lifted by earthquakes and made into hills, they’re exposed to erosion and other weaknesses,” Barrows said. “You’re asking for problems.”

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Landslide sites are considered the weakest land on which to build. “Once you break something, it tends to be nettlesome from then on,” Barrows said.

Landslides over thousands of years have left many hillsides, otherwise picturesque, scarred and fractured, experts said. Just within the 63-square-mile geologic quadrant around Laguna Niguel, stretching from San Juan Capistrano north to El Toro, there are more than 300 sites of ancient landslides or mudslides, documented by state geologic maps.

“It’s endemic to that whole tract,” Serge Tomassian, attorney for the Guenthers and six other families on Chat Drive and other streets in the Kite Hill development, said before mediation efforts began. “Quite frankly, S&S; should never have built there.”

There are no prohibitions against building on hillsides in Orange County as long as building codes are observed and soil grading and slope safety ratings comply with regulations, builders and state officials say. However, as the Kite Hill case shows, experts can differ over whether slopes are technically safe enough for housing.

A geotechnical firm hired by S&S; had pronounced the 450-foot elevations in Laguna Niguel safe enough to build on. But using some of the very same technical data, court-appointed Geotechnical Professionals Inc. of Cypress last month reported that the hillside contained serious flaws, was well below accepted margins of safety for construction and was “close to failure.”

Christine L. Herdman, general counsel for Shapell Industries in Beverly Hills, parent company of S&S; Construction, could not be reached for comment on the court-ordered report. In the lawsuit, S&S; officials complained they were not kept abreast of the findings by Byron Konstantinidis, the neutral geologist, who they said conducted soil testing without notifying the developer’s experts in advance.

But Herdman has said firm owner Nathan Shapell is concerned about unhappy home buyers.

“This is a family-owned business,” Herdman said. “It is not lost on Nathan Shapell . . . that this is the largest investment for most people.”

In fact, Shapell, forced to submit to a court-ordered deposition by attorneys for the Kite Hill homeowners, said he would buy back the house of any unhappy owner.

“If something goes wrong with the house which is our responsibility, then we fix it,” Shapell said in the September deposition. “And if people are not happy of the fixing (sic) then we buy back the house. . . . We don’t want unhappy people.”

Yet, in comments made in interviews before the settlement talks got underway, the Guenthers and several other homeowners said that despite making repeated repairs to their walkways and brick fences, S&S; officials denied that there were preexisting problems on their slope and didn’t respond to inquiries about buybacks.

“If we had known, if we had been told what S&S; knew at the time, we never would have bought here,” said Joan Leeb, a resident of Chat Drive and a neighbor of the Guenthers. “They knew what was going on, and we were never told.”

The residents’ lawsuit says Shapell had an obligation to tell them Kite Hill was built in and around former landslide sites and that it was potentially unstable.

“We weren’t too concerned when we bought,” Guenther said. “We recognized that when you build on a hill, there may be some movement. But like 99% of the people, we never went to see the soils report. We weren’t aware of any problems in Kite Hill.”

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The soils reports, which are highly technical, difficult to interpret and rarely on public display in area cities, showed that the developers learned of slope defects discovered in 1984 and corrected them with a massive earthen buttress across the hillside in 1985, before the construction of homes for the Guenthers and their neighbors.

Laguna Niguel did not become a city until 1989, so it did not oversee Kite Hill’s construction. The city now houses files of soils reports, making them available on request. Officials there have inspected five of the Chat Drive houses, but have not recommended action.

Under state law, home sellers must disclose known defects, such as foundation cracks, leaks and other potential problems, state officials and experts say. Buyers must be told of nearby earthquake faults, trash dumps and airports. But state law is less clear on such things as potential soil defects or ancient landslides.

But while advocates of property owners’ rights insist developers have an obligation to disclose, developers have long held that soil imperfections, once corrected, are no longer defects.

It’s a key issue in the Kite Hill case, where the fraud charge is based on information home buyers contend was deliberately misleading. However, company officials said they disclosed the potential for soil movement in documents that instructed home buyers that bedrock can be “highly expansive,” requiring care in watering.

Earlier this year, in response to picketing by the Kite Hill residents, Shapell also began making soils reports available to prospective home buyers who asked to see them.

However, Kite Hill homeowners said they were not told of deep, geological problems in the area when they were considering buying in the 1980s. And they later learned that the homeowners who picketed in the 1980s had filed lawsuits, many of which were settled with home-buyback deals that were sealed under terms of settlement agreements.

Court records show at least 32 lots or houses in earlier Kite Hill phases had experienced soil and slope problems by the time the Guenthers, Leebs and others were moving in around 1986 and 1987. The development contains approximately 635 houses.

“Nobody told us anything about any problems,” said George Leeb, Joan’s husband. “They were buying back houses to settle lawsuits even as we were buying ours.”

At Shapell’s newest development, Hillcrest Estates off Alicia Parkway, records show that new houses are being built on slopes that were buttressed and graded to account for six one-time landslide sites, and the bedrock consists of the same formation found elsewhere on south Orange County slopes. But, as at Kite Hill, technical reports and soils analyses show the Hillcrest slopes are now safe enough for residential construction.

Before calling off picketing actions in late October, residents warned prospective home buyers at Hillcrest Estates to consider potential problems.

“Don’t Be Sorry!” said their picket signs. “Check your soils reports for landslides and buttresses.”

“We’re professional people. We had never picketed before in our lives,” said Joan Leeb, a schoolteacher whose husband is a pharmacist. “It’s hard picketing. But we at least feel like we provide a community service.”

Plaintiffs Bob and Judi Nameth spent the summer checking the water level in the swimming pool. The pool is cracking, and a drop in the water level would signal a big problem.

Judi Nameth, skittish over the defects, wouldn’t permit their grandchildren to use the pool because of uncertainty over what might happen. She won’t walk out on the bedroom balcony, which is pulling away from the house, and avoids the enclosed porch, which leaks.

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At night, they listen to a chorus of pops and snaps in the house, once repaired by S&S;, but cracking again.

“They kept saying it was expansive soil,” Bob Nameth said. “I thought, this is more than expansive soil. When things drop a foot, any homeowner would realize that’s not expansive soil.”

One of the worst-damaged homes belongs to Ann and Roy Brown. They said Shapell’s sales and customer service officials offered to make cosmetic repairs and replace outdoor decking, but assured them over the years that such shifting was normal.

“They kept telling us for 8 1/2 years that you have to expect it, you live on a slope,” said Ann Brown.

Meanwhile, cracks skittered across the walls and porcelain tiles popped off the kitchen walls.

“They kept saying it was going to stop, but that you have to expect some movement,” Ann Brown said. “They said we had no major problems here.”

The last thing any of the Chat Drive homeowners wanted to do was sue; they said it made life even more uncertain and costly, each moment of relaxation or comfort only fleeting.

Judi Nameth compared her plight with that of her neighbors.

“We’re all in the same position,” she said. “We’re middle-class people who worked our way through college and worked our way up to buy these homes and planned to retire in them. Now our equity in these homes is zero.”