Home builder settles suits: Colonnade agrees to pay $11.4 million construction claims

By John Accola
News Staff Writer

A home builder for one of Arapahoe County’s most exclusive subdivisions - The Preserve at Greenwood Village - has shelled out more than $11.4 million to settle homeowner claims alleging shoddy construction and heaving foundations .

Colonnade Homes Inc. agreed to the out-of-court payouts, some more than $300,000, to resolve four lawsuits brought by scores of homeowners who bought houses in the tony development between 1993 and 1995.

According to Colonnade’s liability insurer, the claims involved as many as 36 residences in a 120-plus, single-family-home enclave called the Bate’Leur neighborhood, of Belleview Road, just west of South Holly Street.

Colonnade, a Denver firm whose backers include prominent local developer Walter “Buz” Koelbel, acknowledges problems with some homes having cracked basement floors. But Colonnade President Keith Neale said any defects were cosmetic, not the serious structural or foundation problems alleged in the lawsuits.

“There were no leaking windows or structural damage, and no cracked stucco,” said Neale, whose company marketed the homes for $400,000 and up.

“The important thing here is that we took care of our customers. Nobody lost any property value out of this. You can find those same homes selling for $800,000 today.”

Neale said the home builder’s insurer - Assurance Company of America - insisted on the settlements instead of taking the cases to trial. Plaintiff attorneys also held out for settlements, and advised their clients not to let the home builder make the necessary repairs, he said.

“We wanted to litigate, and Assurance wanted settle,” Neale said.

The Greenwood Village official who oversees building inspections and permits said he had heard “secondhand” that some homeowners at The Preserve were plagued by foundation problems caused by expanding soils. But Community Development director George Weaver said his department was not notified of the litigation.

“We were left out of the loop in this one,” he said.

Settling homeowners were required to sign confidentiality agreements.

But in a strange legal twist, Assurance disclosed the total settlement cost in a lawsuit that it filed last week in Denver federal court.

Assurance, which initially agreed to cover the settlements under Colonnade’s general liability policy, is now asking Colonnade to reimburse the insurer for the total amount, including attorney fees.

The insurer’s Denver attorney, Laurence McHeffey, said Assurance reserved its right to seek reimbursement from Colonnade.

“This is a business suit… over who owes the money,” he said.

The Assurance complaint alleges “property damage” was not covered under Colonnade’s liability policy.

Also named as defendants are Colonnade’s former president, Al Feld, and two other ex-Colonnade executives. Feld, a former partner with Koelbel who sold his stake in the company in 1995, could not be reached for comment.

“I’ve got to tell you, we are shocked,” said Colannade’s attorney Dennis Polk of the latest lawsuit.

As of Friday, Polk said he had yet to see a cop of the complaint and could not comment to specific allegations.