Seahaus owners sue builders

By KELLY BENNETT

Voice of San Diego

Homeowners who paid in some cases more than a million dollars for condos in a pricey La Jolla enclave five years ago want their money back.

So do a lot of people who bought new houses in 2005.

But the denizens of Seahaus, a sleek coastal condo and town house development in Bird Rock, say this is more than just wishful thinking. They’re suing the builders of their homes, alleging that their complex was poorly constructed and developers concealed water damage on the inner beams. They’re demanding developers pay to fix it or else undo their entire purchases.

When it was built, the seaside luxury development had all of the pieces of San Diego boom-time opulence. Slick brochures. An interest list of 5,000 names. Jazzy advertisements prophesying its future as the jewel of Bird Rock. An invitation-only sales event that proved such a lucrative ticket that attendees color-photocopied their friends’ invitations and snuck in.

The project had pushed La Jolla over the top in the competition to be the California ZIP code with the most million-dollar homes sold in 2005.

Now, Seahaus’ boom-time bliss has become downturn disappointment. There’s hardly a house in the county that hasn’t lost some value in the downturn, yet coastal La Jolla residents hoped for protection from some of the ickier effects of the housing bust.

But Seahaus is now showing the problems that plague new home communities built at the market peak from Chula Vista to inland North County. Prices have fallen. Foreclosures have risen. And blocks from the ocean, the complex is home to jarring drama and politics.

A central point: Homeowners assert that while the complex was being constructed, the beams used to frame the buildings were exposed to the winter rain and got wetter than recommended, but weren’t thoroughly examined before the building’s walls went up.

A smaller group of homeowners filed another lawsuit last month piggybacking on the homeowners’ association’s claims, saying the developers and construction companies fraudulently concealed interior water damage from homeowners to compel them to pay top dollar for the ocean front units.

Around the complex right now, there are no obvious gaping holes or walls falling down. But inspectors for the homeowners have opened the walls and found splintering and deteriorating wood beams. Now some parts of the building have been temporarily buttressed with extra supports and painted over.

Osama Alkasabi, a plaintiff in the most recent suit, said he wants to regain what he remembers being promised.

“I thought Seahaus was going to be the Beverly Hills of La Jolla,” he said.

Alkasabi paid $1.6 million for one Seahaus condo in 2005 and $1.567 million for another in 2006. He planned to sell the second, or rent it out. But he’d have to tell buyers and tenants that he’s seen cracks and slumping patios, that the extent of the wood beam damage is unknown but could be reaching throughout the entire complex, he said.

Not exactly the kind of detail that instills confidence and security into the hearts of wary buyers in this market.

It’s not unusual for new condo owners to sue their developers for construction defects like leaky windows and electrical wiring issues. Seahaus owners make those allegations here, too. But what makes this litigation unusual is that these homeowners are talking about the safety and soundness of their homes’ skeleton.

And the questions about that safety and soundness aren’t easily answered. Finding the answers involves opening the walls of the complex.

Instead of sawn wood or steel beams, Seahaus’ skeleton is made of “parallel strand lumber” beams — long strands of wood from small trees glued together to make beams. The homeowners’ lawsuits allege that the developers knew the rainy winter of 2005 was exposing the buildings’ frames to rain, that they knew the beams could become an unglued mushy mess.

“They told me everything was going to be top-of-the-line, it was going to be nice, it was going to be great,” Alkasabi said. “But this place is full of nightmares.”

Alkasabi said he was told before he bought that the structure would be framed with steel beams, not the strand lumber. The condos would be soundproof and top-of-the-line, he said.

Alkasabi said he’s seen mushrooms grow out of stucco because of moisture inside. He refuses to walk under certain corridors. Inspectors found three colors of mold growing in his living room wall, he said.

When he complained about a construction issue in one of his units, he said, the developers quickly planted a palm tree squarely in front of his view.

After reviewing a few beams in 2005, an engineer found some of the beams had expanded due to the rain and were “delaminated” — bending and splintering. The engineer recommended a few beams be replaced in a March 2005 memo, according to documents filed in court.

But the homeowners want to know: What about the rest of the beams the engineer didn’t look at?

“They came out, reviewed a few, but they did not look and inspect the hundreds that were out there,” said Mia Severson, attorney with Aguirre, Morris and Severson, which is representing the homeowners on the more recent suit. “The question becomes now, how structurally intact are the beams now?”

The developers named in the suits deny the entire structure has been compromised. Representatives for many of the companies named in the suit each said their company stood by their product and performance.

“The sky is not falling; the building is not going to fall down,” said Andy Schreck, project director at Webcor Builders, the general contractor responsible for construction of Seahaus.

Schreck did say said he has seen some damage in certain portions of the project, and the company won’t walk away from them.

Paul Delmore, an attorney for the limited liability company created to build and sell Seahaus said “any claims of fraud or negligent misrepresentation are without foundation and are baseless.”

The project has some claims to fame aside from the buzz it garnered during construction.

This is the project in Bird Rock many residents credit (or deride, depending) with changing the face of the neighborhood. As part of the deal, the developers had to build the first two roundabout traffic circles that now characterize La Jolla Boulevard.

Seahaus, which took the place of two rundown motels, ultimately became one of the most-cited successes for Barratt American’s new urban division, finished a couple of years before the developer went out of business and into bankruptcy.

Now, the stakes are high for the homeowners living there.

Some can’t hold on for the lawsuits to be resolved. There are eight units scheduled for foreclosure auctions in the next few months.

Getting a mortgage to buy one of the Seahaus condos right now is nearly impossible. Lenders steer clear of making mortgages for complexes in litigation.

One condo sold in April for $657,000, a reduction of 24 percent from the $870,000 its previous owner paid in 2006. Another sold in February for $595,000, down 36 percent from the previous owners’ $929,000 purchase price in 2005.

Contact Kelly Bennett at kelly.bennett@voiceofsandiego.org. Follow her on Twitter: @kellyrbennett.