El Cortez settles defects suit for $6.4 million
Five-year battle aimed at fixing construction flaws
Originally published March 28, 2011 at 11:40 a.m., updated March 28, 2011 at 1:11 p.m.
neon sign atop El Cortez Hotel has been a landmark for decades. The
downtown building, opened in 1927, was converted to residential use in
A 12-story annex would be built just north of the El Cortez tower under a plan approved by the city.
condo owners in the landmark El Cortez Hotel building in downtown San
Diego have received a $6.4 million settlement in a construction-defect
lawsuit and are moving to fix the many water leaks that were detected
even before they moved in.
"I believe this construction defect
settlement will improve our situation financially," said homeowners
president Barry Bruins. "I believe lenders will be interested in the
building again -- as well as the fact that the real estate market seems
to be coming back in general. All things are coming together to help our
values come up a little, and I think they will continue to improve."
There are currently three units for sale, ranging from $214,340 to $225,000, according to the San Diego Condo Mania website.
at 702 Ash Street, El Cortez opened in 1927 and achieved its pinnacle
of popularity in the 1950s after the addition of a glass elevator and
Sky Room cocktail lounge on the roof of the 17-story building.
the building eventually lost its attraction, fell into disrepair went
through a series of ownerships and uses before developers Peter Janopaul
and Anthony Block bought it in the 1990s, restored it to its original
look and reopened it as an apartment building in 2000 and converted it
to condos in 2004.
However, in the restoration process, plumbing
problems were not adequately handled and the developers sued their
contractor and subcontractors and the condo buyers sued the developers
"I've been doing complex business litigation and
construction defect litigation for 20 years and I have never seen a case
like this before," said the owners' attorney, Andrew Berman.
He said five years of litigation involved six lawsuits, 200 depositions and multiple construction tests.
settlement, reached earlier this month, will net the homeowners
association just over $3 million, some of which will be used to repay a
$200,000 loan taken out earlier to fix the worst problems.
board will be very careful about spending money that will save us money
in the long run in the maintenance of the building," Bruins said.
who has left San Diego, could not be reached, and his business partner
on the project, Anthony Block, declined to comment.
is a 78-unit, 12-story tower proposed by Janopaul on the north side of
the block. Residents opposed it but the city approved it.
"Due to the real estate market, we don't think anything will be built," Bruins said.
A spokeswoman for the Centre City Development Corp. said Janopaul is expected to request an extension of the permit to build.
for consumers, Berman said they cannot count on construction defects
being caught by either city inspectors or developers, and state
guidelines do not require adequate reserves for high rises.
"There are protections that should be there and they aren't," he said.
he said buyers of old buildings, whether a house in Mission Hills or a
historic high rise downtown, should be prepared to face higher costs
than initially projected.
"It's a shame," Berman said. "I feel
terrible for the people who bought into this project. They truly
believed in the project -- they loved the iconic nature of the El
Cortez. Not until several winters and rainy seasons did they realize
what they had bought is different from what they thought they had
bought. A lot have suffered in the last five years of the project.
Hopefully, they have turned the corner."
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