Homeowners Win Settlement on Defects

A 152-unit condominium association in Laguna Beach has agreed to a $3-million settlement in a lawsuit accusing the complex’s developer, Kathryn G. Thompson, and builders of construction defects, including leaky roofs, windows and decks.

The Superior Court suit, filed in December 1994, on behalf of the Terraces at Canyon Hills Homeowners Assn., contended that leaks caused extensive rot, drywall damage, and wiring, plumbing and mechanical problems.

The settlement, reached last week in mediation sessions with insurance company lawyers, ends liability claims against Thompson and some of her related firms. Secondary claims remain against the roofers on the project, which was built during a burst of construction in Orange County in the late 1980s.

Delight Lucas, president of the homeowners’ association, said mushrooms began growing on her bathroom wall even before the last of the condos was finished more than 10 years ago.

The builders used “quick fixes” to take care of that and many other early problems one at a time, she said, but only years later did the association decide the continuing problems were serious enough to warrant a comprehensive suit. “We had people telling us we could get by with minor repairs and there was no structural damage,” Lucas said.

Thompson couldn’t be reached for comment. The association’s lawyer, Thomas E. Miller, said the settlement “means these people will finally be able to enjoy some peace of mind.”

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E. Scott Reckard covers real estate for The Times. He can be reached at (714) 966-7407 and at scott.reckard@latimes.com