Attorneys Contend Shoddy Work Makes Lawsuits Necessary
Construction defect litigation is under fire as a primary reason for the meteoric rise in housing prices in San Diego and across the state.
Taking shots at the practice are the standard building industry foes, but they are joined by state lawmakers and organizations such as the San Diego Regional Chamber of Commerce in their assertion that nonsense lawsuits by homeowners against builders are pushing housing prices sky-high, and simultaneously stifling the construction of affordable housing.
“This is a major issue in California and it has especially hit home in San Diego because the construction of condos in San Diego has definitely slowed in the past 10 years,” said Tony Fiori, the chamber’s policy adviser. “The main reason for that is construction defect litigation.”
Thomas Miller, who pioneered the field two decades ago representing homeowners as an attorney in San Diego, defended the practice by saying that demand has driven up housing prices and shoddy home building is the true culprit in the lawsuits.
“If you do a good enough job supervising these products, you won’t have these lawsuits,” said Miller, who has since moved his Miller Law Firm to Orange County.
“The homebuilders create homes with inherent defects in them,” he added. “Where is the homeowner supposed to turn?”
Miller has never lost a case.
Many involved say the litigation is the hottest issue in Sacramento save for the energy crisis.
The Assembly Judiciary Committee is schedule to hear a bill on May 8 that would create state-sanctioned, 10-year warranties on new homes.
Supporters of the bill hope to put an end to what they call costly and time-consuming litigation by removing lawyers and having the homeowner go straight to the builder with complaints. They also hope to solve disputes through an arbitrator or mediator, while opponents charge the bill strips homeowners of the right to a trial by jury and say that warranties are already available.
Multimillion-Dollar Settlements
Construction defect law exploded in the early 1980s when home construction swelled in the outer reaches of the county.
As homes and condos were hurriedly mass-produced to meet demand, builders began cutting corners and defects were abundant, Miller said , side effects of rapid expansion that continue today.
Construction defect law has become a formidable business. Miller’s firm has won more than $400 million for homeowners since 1981, $41 million of which has been awarded in San Diego County.
Sometimes the cases are as simple as waterproofing problems, while the more extreme ones deal with severe structural problems. Because cases are common within planned communities and condo developments, the lawyers often team with homeowners’ associations to gain a settlement for an entire group of owners.
While most developers admit that some houses were lemons, they believe that defect litigation goes too far.
“Construction defect litigation has dramatically changed the way homebuilders do business in San Diego,” said Steve Doyle, president of Brookfield Homes in Del Mar. “It is almost impossible to meet the demanding requirements of our standards and specifications manuals.”
Condos A Complex Issue
The California Building Industry Association argues that multimillion-dollar settlements , and ballooning insurance costs that resulted , are a driving force behind the state’s skyrocketing home prices. They say too much money goes to the lawyers, and that even after settlements are reached, the money doesn’t go toward fixing the home.
CBIA general counsel Nick Cammarota said most developers and insurance companies no longer touch condo developments.
It’s something industry officials say is stifling the building of affordable housing and “smart growth.”
“As a chamber, we’re concerned that there is not enough housing in the area and condos are a necessary part of that,” Fiori said, adding concerns that it could prevent businesses from moving to the area.
“It’s tough to bring in a software engineer and pay them $50,000 to $60,000 a year and expect them to be able to afford a home,” he said. “I think the market demand has a lot to do with the prices, but bar none, the No. 1 reason condos are not getting built in the area is because of construction defect litigation.”
Defenders of the litigation say the economic boom of the last decade has made single-family homes much more desirable.
Kelly Hayes-Raitt, director of the Santa Monica-based HomeSAFE Campaign, said the field of law is just the latest in a line of industry scapegoats.
“In the past they blamed (high prices) on environmental standards, or labor standards, but the reality is they don’t want to spend the money to make a decent home,” she said. The campaign is a coalition of homeowners, affordable housing activists and environmental activists.
