Homeowners Win Defects Lawsuit

A jury on Tuesday found that some of Orange County’s biggest developers and contractors sold homes with defective foundations but awarded a group of Yorba Linda homeowners less than a quarter of the $8 million they had requested.

The $1.7-million verdict is being closely watched because there are several other construction-defect cases pending in Orange County involving similar concrete foundations. This is the first such case to go to court.

The claims are based on a construction defect called “sulfate attack,” which occurs when naturally occurring salts in the ground water seep into concrete foundations that are improperly constructed. The concrete crumbles as a result.

Sulfate-rich soil is pervasive throughout southern Orange County and the Yorba Linda region, where thousands of homes were built in the area during the 1980s, said Jiann-Wen “Woody’ Ju, chairman of UCLA’s Department of Civil and Environmental Engineering.

“It’s bad news. These problems will not go away,” Ju said. “Once the concrete has degraded, it will never recover.”

Developers and contractors can formulate concrete slabs to be resistant to sulfate attack--something required by state law in areas with high sulfate levels.

The 27 Yorba Linda homeowners sued the developer and contractors who built their Brighton Estates homes, alleging that sulfate-resistant concrete was not used as required.

After a 15-week trial that included testimony from more than 70 witnesses, a 12-member jury agreed. The jurors’ award applies to 24 of those homeowners, who will receive an average of $72,000 apiece. The jury did not award monetary damages for the three homeowners who were not the original purchasers.

They found that Brighton Homes and its affiliated development firms controlled in large part by Orange County developer George Argyros were negligent and breached the implied warranty on the homes.

The jury also found that subcontractors were negligent, including concrete companies Owl Rock Products, Transit Mixed Concrete and James Mock Inc.

The reaction among the plaintiffs was mixed, with some declining to comment and others saying they were happy with the verdict.

They were hoping for damages closer to $350,000 apiece, the amount needed to jack up their homes and replace the entire foundation.

“I think it’s reasonable,” said Jon Georgie, who was awarded $81,770 in damages. “It’s not everything we wanted, but it’s enough to fix the house.”

Lead defense attorney Robert Carlson of San Diego dismissed the jury’s verdict as an “emotional” response and nowhere near the amount requested.

“I think it went really well for us. [Plaintiffs] asked for $8 1/2 million from our clients and got less than $1.7 million,” he said.

Irvine attorney Kenneth Kasdan, who represented the Yorba Linda homeowners, has already landed million-dollar settlements for homeowners in Yorba Linda and Dana Point in construction-defective lawsuits that also included sulfate attack damage.

The Yorba Linda homeowners still have pending lawsuits against the roofing and plumbing firms who built the homes. The contractor who graded the land already settled for $350,000, Kasdan said.

Kasdan said settlement discussions with the architect on the development are close to being complete, a characterization Carlson refuted.

Carlson also said much of the $1.7 million in damages the homeowners received will be eaten by legal expenses and attorneys’ fees. Kasdan said that was false, and that the homeowners will receive a “significant” portion of their settlements. The exact amount is confidential, he said.

Homeowner David Pena, who was awarded $63,505, said he was happy to win the case but is worried that the money might not be enough to fix his home’s foundation.

Pena said he won’t be able to replace the foundation with the money--which will be less than the $63,505 because 30% to 40% will be gobbled up by attorney’s fees. He said he be able to repair it somewhat by hiring a contractor who will inject material into the cracks, however.