Defective-construction litigation building rapidly.

Suits over shoddy work on homes jumped 10% last year

The battle between Danny Jeffrey, president of the Chandler Park Village Owners Association, and the subdivision's developer, who is being sued by the group on charges of defective construction and fraud, has gotten so ugly that Jeffrey is getting ulcers, and his fiancee canceled their wedding.

"He (the developer) has been mailing out things about me that were not factual. He said I relish terrorizing young couples and little old ladies," said Jeffrey, who refuses to give up. "I think you can get on the Supreme Court easier than run this complex."

The Chandler Park case, while a little more sordid than most, is only one of a growing number of such lawsuits being filed by homeowner associations against their developers across the state.

According to the state Department of Real Estate, about one-third of California community association dwellings are plagued by major defects in original construction.

The DRE survey reported that only 19 percent of homeowner associations composed of single-family homes reported major defects, but the rate leaped to 32 percent for townhomes and 40 percent for converted apartments.

As shoddy construction increasingly surfaces, more suits are being filed, said attorneys Gary Aguirre and James Eckmann, whose San Diego-based firm specializes in such cases, having handled 71 in the past eight years.

Aguirre helped write the 1979 law allowing for such lawsuits.

The number of such cases filed in California rose 10 percent between fiscal 1990 and 1991, from 28,300 to 31,000. In San Diego County, they rose from five in 1990 to 37 in 1991.

"I would say it is because of poor supervision by the developer, the press for time and the lack of skilled supervisors," said Eckmann.

The Chandler Park Village Owners Association, representing condominium and townhome owners in a 214-unit Sherman Oaks subdivision, is suing E&E Development and Investment Corp. of Van Nuys for $25 million-plus.

The homeowners allege that concrete support columns in the subterranean garage at their new subdivision are cracking, 10-pound tiles are falling off roofs, ceilings and walls are leaking when it rains, electrical work is defective and inadequate, and fire alarms are going off at all hours, among other things, and that the developer won't fix the problems.

Chandler Park, 5420 Sylmar Ave., was built in phases over the past three years, and some homes remain unsold. The homeowners also contend that the developer refuses to disclose these manufacturing defects to potential buyers.

The homeowners are alleging negligence, breach of warranty, fraud and negligent misrepresentation.

Lee Barker of Barker & Richardson, the Pasadena law firm representing the plaintiffs, said the unusual thing about this case is the personal battle being fought outside the courtroom between E&E chief executive Emery Schwartz and association president Jeffrey.

Schwartz is accused of having spread malicious gossip about Jeffrey throughout the subdivision, including arranging to have copies of his credit report mailed to neighbors.

"I've been doing this type of litigation for 14 years and represented probably 70 homeowner associations, but I've never seen anything as bitter as this fight," said Barker. "It's sort of like a Chinese water torture; it's like -- what's going to happen this week?"

Jeffrey said his fiancee, another Chandler Park homeowner, was so embarrassed by the listing of a five-year-old bankruptcy on his credit report that she canceled their wedding plans. The wedding was to have been Aug. 15.

E&E's attorneys did not return phone calls.

Aguirre and Eckmann now recommend that their clients avoid lengthy trials through what they call the "monorail" mediation process. In this type of settlement, the developer and the association agree on an expert, usually an architect, who investigates and decides who is at fault for the various problems and decides on an appropriate resolution.

"The results are binding; no lawsuit is necessary, and the case can be closed in a handful of weeks or months," said Aguirre.

However, he added that often the developers' insurance companies pose in problem in the negotiations, refusing to agree to the arbitration process.