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$________ Subcontractor liability - Indemnification - Waterproofing - Homeowners association brought suit against general contractor - Deck and balcony defects - Contractor seeks indemnification from waterproofing subcontractor for with homeowner's association.

San Diego County, California

General contractor seeks indemnification from waterproofing subcontractor on settlement monies paid for underlying construction defect litigation. Defendant subcontractor alleged statute of limitations, estoppel and standing arguments in defense of claims.

This litigation arose out of construction of a ________-unit project in Rancho Bernardo, California. This project was built over two phases between ________ and ________. Battle Mountain, L.P., was the owner and developer of the project. Battle Mountain contracted with the plaintiff Douglas E. Barnhart, Inc. as the general contractor, responsible for construction of both phases of the project. The plaintiff then entered into numerous subcontracts for the actual construction of the project. Defendant Sahara Waterproofing was the waterproofing subcontractor for both phases.

The buildings were originally constructed as apartments and later converted by a subsequent owner into condominiums. The homeowners’ association filed its lawsuit on September 26, ________.

The issues alleged in this matter included: cracked concrete and ponding on concrete slabs, cracked stucco, rusted weep screeds, various roof defects, improper waterproofing at balconies, decks and stair landings, water intrusion at windows and doors (including mold growth around windows), cracked concrete floor fill at second story units, minor landscaping defects, and extensive plumbing/HVAC issues. There was also a substantial claim for relocation necessitated by the deck/balcony repairs. By far the single largest issue in this case was the deck/balcony issue. There was no dispute among the association’s experts, defense experts and subcontractor experts concerning the nature of the deck/balcony defects and the need for repair of these conditions.

Trial for the underlying action began in January ________. After three days of pre-trial hearings, a settlement was reached between the homeowners’ association and the plaintiff herein together with most of the other subcontractors. The plaintiff, general contractor then brought this suit against the defendant subcontractor waterproofing company for breach of contract and indemnification to recover the monies paid to the association in settlement of that action for the specific failures of the waterproofing membrane used on the condo project’s second-level balconies and entry decks.

The plaintiff argued during trial that a large portion of the general contractor’s liability was a direct result of the failure of the sub-contractor’s installation of the waterproofing product.

The defendant Sahara argued that while the application of the waterproofing membrane was improper there were other contributing factors that caused the failure of the deck and balcony systems.

The defendant also raised a statute of limitations argument contending that recovery must be barred on that basis since they had performed some repairs to the decks and balconies during ________ through ________. The defendant contended that after those repairs were completed there was not further evidence of damage to the decks and balconies until just before the homeowners’ association filed its complaint. The defendant also argued issues of estoppel and standing since there was an intervening sale to an entity that converted the project from apartments to condominiums. This issue raised some complications since neither side was able to produce any legal authority to support their position on this particular issue. The trial court ruled that in light of the settlement of the underlying action, the defendant’s statute of limitations defense could not be a complete bar to plaintiff’s recovery.

The trial continued for seven days and the jury deliberated for one day before rendering its unanimous verdict in favor of the plaintiff and against the defendant. There are post trial motions for fees and costs pending before the trial court.

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