From the U-T:

The 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.

Located 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.

But 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 as well.

“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.

The 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.

“The 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.

Janopaul, who has left San Diego and moved back to hometown of Modesto, said the financial outcome is somewhat less than the original settlement he and his business partner, Anthony Block, offered at $3.5 million.

“The homeowners association was in a terrible situation,” he said. They had to ask for $27 million so they could get $3 million.”

As for the substance the construction complaints, Janopaul said the problems in his mind were “not a big deal,” but grew to major proportions through battles waged by the attorneys.

Looking to the future, Janopaul still hopes to build an annex on the north side of the block and will seek a three-year extension of the city permit that expires at the end of the year. But when he moves forward with construction is unknown.

“Nobody’s clamoring for condos,” he said.


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