Soil Suit Sinks Builder

Jury rules for 957 disgruntled homeowners, finds Highlands Ranch developer negligent

Developer negligent in home damage

Jury finds Mission Viejo failed to take precautions against Highlands Ranch swelling soils

By Shelley Gonzales
Rocky Mountain News Staff Writer

CASTLE ROCK- A jury Thursday found Highlands Ranch developer Mission Viejo Co. negligent when it built homes without taking precautions against damaging, swelling soils.

After deliberating nine hours, the jury found in favor of 957 homeowners on four of five points. They said the company had been negligent, had breached an implied warranty and had violated state consumer protection and disclosure laws.

It ruled that the builder did not act maliciously, which means punitive damages are not warranted.

“It’s a home run,” said Scott Sullan, who represented the homeowners. “It’s been 3 ½ years coming, and we’re very pleased.”

But James Brosnahan, lead attorney for Mission Viejo, said it was only a small victory in a long war. He said this phase of the class-action lawsuit dealt only with the issue of negligence, but still to be determined is whether Mission Viejo will be liable for damages and, if so, how much.

The company will appeal.

“We’re not going to stop until it becomes clear that this case is shown for what it is, and that is hollow and empty,” Brosnahan said. “Those basements are in very good shape, for the most part.”

But Rob and Debbie Peterson contend they have suffered $29,000 in damage and have been unable to refinance their house. They brought the initial suit that grew into the largest of its kind in the state.

Metro homebuilders, several of whom face similar lawsuits, closely watched the trial. At least one had an observer in the courtroom throughout the three-week trial.

Sullan, who represents other homeowners in swelling-soils lawsuits, said the ruling will bode well for the outcome in those cases. Suits are pending against three other north Douglas County builders: Richmond Homes, Ryland Homes and U.S. Home.

In the Mission Viejo case, homeowners said the company built concrete-slab basements on highly expansive soils, knowing that wood-floor basements would have prevented future damage.

But the swelling soils, which expand when wet and contract when dry, cracked the basement floors and caused damage to other part of the house.

The six-person Douglas County District Court jury found that the failure to take precautions in swelling soils constituted negligence. It also found the company had breached an implied warranty that the basements were suitable for finishing, as well as violating state soils disclosure laws and the consumer protection act.

A second jury will be assembled to determine what monetary awards should be given to each of the 957 homeowners.

Experts have said suits filed against north Douglas County developers have had an effect on building practices.

Douglas County building department director Wayne Janish said the number of houses being built with wood floors in the county has increased. Wood floors are suspended above the soil, leaving several inches for soil expansion.

In the Mission case, the homeowners said the builder was repeatedly told in soils reports as early as 1978 that wood floors should be used for areas intended to be finished and that if it chose to use concrete slabs, it assumed the risk.

Wood-floor basements add $1,500 to $4,000 to the cost of a new home. But to replace a broken slab with a structural floor can run tens of thousands of dollars.