Homeowners Win $41 Million From Builders


About 5,000 homeowners in the Santa Clarita Valley won a $41-million settlement Friday against Newhall Land & Farming Co. and other developers for damage caused when cheap, galvanized steel pipes rusted and leaked inside their new homes.

Los Angeles County Superior Court Judge Peter D. Lichtman approved the class-action settlement involving 41 defendants--ranging from the developers and home builders to pipe suppliers and plumbing contractors.

The plaintiffs alleged the homes were built with substandard plumbing materials that leaked, produced rusty tap water and corroded to clog pipes and reduce water pressure.


“When you buy a new house for $400,000, you don’t expect to buy new plumbing eight years out,” said Beverly Hills attorney Paul R. Kiesel, who represented the plaintiffs.

The homeowners will receive up to $9,000 each--enough to replace the bad pipes in their homes and in some cases pay for past repairs.

About 1,000 plaintiffs whose homes are more than 10 years old will get $2,000 each, Kiesel said. Those claims could have been rejected because they were filed too late.

The settlement includes 650 homeowners in the Northbridge subdivision, developed by Newhall Land, and 541 homes in Mountainview, developed by Paragon Homes. It also involves all homeowners in Stevenson Ranch, Shadow Hills, North Bluffs, Evergreen, Saugus Canyon, Ridgeview and Valencia Summit.

The 41 defendants, who all admitted responsibility, include American Beauty Homes, Pacific Bay Homes, Dale Poe Development Corp., Monteverde Development Co., Presley Homes and Larwin Co., Dongbu Steel Co. Ltd., Dongbu USA, Hyundai Pipe of America, Pusan Pipe America and Union Steel.

“It’s another message to builders and developers: If you develop less than a complete product, you are going to have to be responsible,” said Century City attorney Brian Kabateck, who also represented the plaintiffs.

Developers saved up to $500 per house by using the cheaper steel pipes, Kabateck said.

Newhall spokeswoman Marlee Lauffer declined comment on the allegations. She said Newhall Land represented just a small percentage of the total settlement.

“We are pleased that all of the parties--the developers, builders, plumbers, pipe manufacturers, pipe suppliers--got together and came up with a global solution to what was a very extensive problem in the Santa Clarita Valley,” she said.

On Friday afternoon, as the deal was being completed, plaintiff Linda House was at her Stevenson Ranch home as a plumber worked on the latest leak.

She bought the four-bedroom, three-bath house four months ago and has had to summon plumbers four times in two months.

House said she noticed a sewage-like smell in her home and found a leaky pipe in a little-used downstairs bathroom. After the repair is made, she’ll have to replace the carpet.

In nearby Valencia, Jan Bonner and his wife, Keven, thought they were lucky to buy their $243,000 home a dozen years ago.

“It turned into a nightmare,” Bonner said.

Within a few years the pipes in the two-story, four-bedroom, four-bath house began to leak. Water poured from a vent in the bathroom ceiling. It also came out of a fan in the family room.

“It looked like a battleground,” Bonner said, describing a house that its owners took pride in decorating themselves.

After calling in a plumber five times, Bonner, a sergeant with the Los Angeles Police Department, spent $8,000 to outfit his house with copper pipes.

He expects the settlement to cover those costs but not the money he spent to replace drywall and for earlier repairs.

Another plaintiff, Richard Lichten, is waiting for his settlement before he repairs his three-bedroom, 2.5-bathroom house in the Northbridge subdivision.

Over the years, Lichten has replaced leaking pipes throughout the house. Unless water is run regularly, through the pipes, the water it becomes brown from the rust, he said.

Lichten said whenever he leaves town for a few days he turns off the water because of the experiences of neighbors, who have returned home to water-filled walls and ruined carpets.

“Just about everyone I know has these problems,” he said.