Seismic Shift

Quake Changed Litigation of Construction Defect Cases

B.J. Palermo

The Steeplechase case had been in court nearly two years when the Northridge earthquake left dozens of families from the Calabasas condominiums homeless.

The 100-building complex, with its red- and yellow-tagged units, has become one of the more dramatic examples of the way attorneys say the quake has changed the practice of construction defect law.

"It's changed the awareness," said Universal City attorney Alexander Robertson, who represents the Steeplechase Homeowners Association. "The issues in structural defect cases went from theory to fact on Jan. 17."

The Steeplechase case was in discovery when the 6.7 magnitude quake rendered much of the condominium project uninhabitable.

"The construction industry had been ignoring the claims that construction defects pose a huge threat, unless you can see the damage. Now they're saying maybe we were right," Robertson said.

In a case that was re-configured drastically after the quake, the Steeplechase Homeowners Association is suing Oxford RCS Joint Venture and its partner, Currey-Riach Co., alleging more than $20 million in construction defects.

While the earthquake gave plaintiffs' attorneys a chance to say "we told you so," it also brought more complicated lawsuits--construction defect cases involving deaths and injuries.

Robertson, for example, also represents the families of the Sherman Oaks couple who were killed when the quake collapsed the foundation of their house and sent it tumbling down a steep hillside. The plaintiffs allege a real estate attorney and several partners were informed of extensive construction defects before they sold the home to the victims Marc Yobs and Karen Osterholt.

Personal Injury Introduced

Typically, construction defect lawyers say, their lawsuits have involved only property damage, typically leaking condominium roofs or faulty plumbing. The earthquake introduce person injury.

"We've had lots of wood-frame structures with defects but none that were this extensive. And this is the first time I have seen actual deaths," said Santa Monica attorney Joel B. Castro, the lead plaintiffs' lawyer in the Northridge Meadows case.

In fact, property damage claims are not included in the consolidated case. Two such cases representing 21 former tenants of Northridge Meadows and the adjacent Northridge Apartments have been filed by Northridge attorney Edward Morrison.

"The parameters of my case are more narrow," Morrison said. "Our case is about people who lost everything but the shirts on their backs."

In the Northridge Meadows case, Cerone v. S.J. Four Properties, Castro and a dozen other lawyers are representing the families of the 16 tenants who were killed and those who were injured when part of the three-story Northridge Meadows apartment complex collapsed and crushed the first-floor units.

"The Northridge Meadows case is a hybrid," said Robert M. Freedman, who represents owners Shashikant and Renuka Jogani. "Construction defect litigation traditionally is based on a developer building something with flaws and then being sued for an amount of money."

Defense lawyers such as Freedman, however, note that it is yet to be determined whether construction defects actually caused the damage, deaths and injuries. But the combination complicates the larger cases, such as Steeplechase and Northridge Meadows, to the point where they require intensive pretrial care.

Construction defect specialists say massive lawsuits involving complex evidence and numerous plaintiffs, lawyers, experts and subcontractors would be logistical nightmares if they were bound by the Code of Civil Procedure.

More and more, those lawyers are depending on case management orders to minimize court appearances, paperwork and duplication. The custom-designed orders constitute a contract among attorneys and the court, an agenda for pretrial activities.

"These are reasonable, sensible rules we have seen in complex litigation, class actions and federal law," Castro said. "They contain things that look and smell like typical discovery rules, then there are some unusual things you never see at all."

In August, lawyers in the Northridge Meadows case crafted their own case management order, compensating for the shortcomings of the civil code in handling complex litigation, Castro said. "We literally created our own civil code."

The order signed by Superior Court Judge William A. MacLaughlin permits attorneys to designate experts a month before the March 20 trial, serve notices by fax and make some court appearances by conference call. Three of the lawyers for a liaison committee, representing all other attorneys on the case.

"Case management orders usually are used in federal court, because federal rules give the judge a lot more control over the conduct of the case," Judge MacLaughlin said. "But they are used in state courts for complex matters. The bar recognizes that such an order really serves everyone's interest in the orderly progression of a case."

The orders also are used in expert-laden environmental cases and in lawsuits involving multiple claims stemming from a single disaster. Although some specialists, such as Castro, Freedman and Robertson, have used case management orders for years, the procedure still is not widely known.

"I finished the largest construction defect case in Ventura County two months ago. We got a case management order, but the judge had never heard of them before," Robertson said. For mediation in the Steeplechase case, attorneys sought out Orange County retired Judge Gerald R. Oliver, an expert in case management orders.

Robertson's firm, Negele, Knopfler, Pierson & Robertson, has about 600 construction defect cases and has been using case management orders for 10 years.

"We first stay all written discovery--no interrogatories or requests for production of documents," he said. "We require all parties to deposit their entire job file, and everyone has access to everyone else's documents," he said. "We require all parties to deposit their entire job file, and everyone has access to everyone else's documents."

While case management orders are tailored for each case, typical elements include deadlines and rules for such matters as continuances, the handling of evidence, discovery and an early mediation date.

"It's way faster than fast track," Castro said. Case management order "bring order out of disorder. But once they're established, they are a court order. You've created your own monster, and you have to live with it. Can you imagine me going to the judge and asking to be released from my own order?"

A provision in some orders allows experts to communicate directly with each other, an exchange of information that can save three or four months. In the Northridge Meadows case, defense attorneys were appeased by a clause that allows participants to be released from any provision in the order.

"In this case the order has been a significant factor, in terms of saving time and money and paper," Freedman said. "We would have had three or four times the amount of paper and would have spent twice as much money."

Although defense attorneys usually reject some provisions plaintiff's lawyers want to include, Robertson said most of the resistance comes from lawyers for subcontractors.

"Sometimes a little guy on a case will make a lot of trouble, bombarding everyone with discovery, in order to be let out of the case," he said. "The big boys, representing the plaintiffs and the developer, generally are for CMOs."

A case management order does not preclude the filing of traditional motions, and the judges still hold regular status conferences. "More than anything else, what it does is get everyone focused on the logistics of handling a complicated case with a lot of parties, rather than waiting for the court to send out conference notices," said William Downey III, a plaintiffs' attorney in the Northridge Meadows case. "Otherwise, everyone would be cross-noticing depositions and every other darned thing. We would be nowhere near as far as we are.

"It's amazing the way a bunch of plaintiffs' attorneys with big egos can work together for a group goal."