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Condo Builder, Subs Settle $36M Dispute

Wednesday, October 5, 2016

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After six years of litigation, a large Southeastern U.S. builder and more than a dozen of its subcontractors have agreed to pay $22.5 million to settle a construction defect lawsuit involving a condominium project in West Palm Beach, FL.

The settlement, announced Thursday (Sept. 30), came in the midst of jury selection, the South Florida Business Journal and The Real Deal reported.

The suit against Kolter Signature Homes, brought by the San Matera Condominium Association, was seeking $36 million in damages, claiming that the San Matera garden-style condos were plagued with architecture, engineering and construction defects, including water leaking through roofs, doors and windows, rotting wood and cracked concrete.

jury selection
© iStock.com / feixianhu

The settlement came just two days after the beginning of jury selection in the $36 million trial.

The condo owners alleged that the defective work had been concealed behind the stucco facade. The charges included negligence, violations of Florida building code and breach of warranties.

Kolter, who served as both general contractor and developer for the project, and the subcontractors did not admit to any wrongdoing as a part of the settlement, the reports note.

The Case

The long-running case involved a 676-unit, gated community constructed during the early 2000s, at the peak of the real estate boom.

Reports say the water infiltration problems surfaced at San Matera years before the lawsuit was brought and temporary fixes were made. Through assessments, the association has reportedly already spent $1.5 million on temporary fixes and legal costs.

The settlement will aid the condo association in repairing the damage to the homes, but the plaintiff’s attorney David Haber said it may not be enough to cover the damage, the Business Journal reported.

Kolter’s insurance carriers agreed to pay the largest portion of the settlement, $11.8 million, Haber noted.

San Matera Condominium Association
San Matera Condominium Association

For years, residents alleged that the stucco facade hide construction defects at the San Matera luxury condo community.

“It is discouraging to the homeowners at San Matera that they had to litigate for six years and spend millions of dollars and be in the courtroom, with a potential jury coming upstairs after two days of jury selection, in order to get the money they got,” Haber said. “As my client has been saying [to the developer] all along, all we want is for you to fix the problems."

Kolter has not commented on the settlement.

Turning Point

According to the attorney, a turning point in the case came in July, when Circuit Court Judge Jack Cox ruled that the condo association’s expert witness was permitted to testify. The expert claimed that tests showed a 100 percent failure rate of materials inside the walls of the San Matera, Haber alleged.

Further, three mock trials—held to help the insurance carriers understand the risk of trial—had come back with unfavorable results for the builder and subcontractors, Haber said.

The complex case was one of the largest in Palm Beach County’s history. A makeshift courtroom had been built to hold the massive trial, which at one point had 24 attorneys representing the defendants, reports said.

String of Defects Cases

Kolter isn’t the only builder that has faced construction defect lawsuits in Florida recently.

In May, a jury ordered D.R. Horton, based in Fort Worth, TX, to pony up $9.6 million to remove and replace defective stucco, roofs and windows in a 240-unit complex in Jacksonville.

In February, Los Angeles-based KB Homes paid $23.5 million to the Florida attorney general’s office to settle claims of shoddy work and deceptive practices.

   

Tagged categories: Concrete defects; Condominiums/High-Rise Residential; Construction; General contractors; Laws and litigation; Lawsuits; Residential Construction; Stucco; Subcontractors

Comment from Dick Piper, (10/5/2016, 2:46 PM)

Stucco allows water penetration, and all too often insufficient moisture barrier and flashing are specified and detailed. Stucco requires a good moisture barrier, paper-backed lath, building felts, Tyvec, and the like are not adequate. It also requires a slip sheet over the moisture barrier, something that not all manufacturers require.


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