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 Jury Trial Ends Suddenly; Bacara Resort & Spa Owners
 Reach Settlement Over Alleged Building Defects

By Frank Nelson, Santa Barbara News-Press, Calif.
Knight Ridder/Tribune Business News

Jan. 10, 2006 - A long-running dispute over alleged building defects at the upscale Bacara Resort & Spa has been settled, cutting short a Santa Barbara Superior Court jury trial that was scheduled to run for several more weeks.

Jurors who began hearing the case on Dec. 12 were told last week that a settlement had been agreed to between the resort owners, ADCO, and the TIG Insurance Company. No details of the settlement have been made public by the court.

Los Angeles attorney Patricia Glaser, representing the resort near Goleta, said the terms are confidential but ADCO is "extremely pleased with the process in Santa Barbara," a process in which she praised the parts played by Judge James Brown and the jury.

Ms. Glaser commended the thoughtful and even-handed approach of Judge Brown and said this case represented a "ringing endorsement" of the jury system.

Attorneys from the Los Angeles office of Robins, Kaplan, Miller & Ciresi, who represented TIG, did not return calls asking for comment.

The jury trial that ended suddenly had its origins in 2002 when the Bacara first filed actions against the contractors, subcontractors, engineers, architects and insurers involved during construction of the luxury cliff-top retreat.

The owners alleged virtually every building at the 78-acre resort, which includes 360 guest rooms and suites, a 42,000-square-foot spa, three restaurants, four bars and a main lobby, was suffering from water intrusion.

Bacara's attorneys claimed the resort was rotting, cracking and crumbling away from the inside out because buildings still at the framing stage were exposed to heavy rain during construction in early 2000 and had not been allowed to dry out properly before being enclosed.

As they listed the evidence -- cracked Saltillo tiles and marble floors, warped and pitted concrete balconies, uneven guest room floors, leaking door and window frames, buckled maple flooring in the exclusive Miro restaurant -- the attorneys originally drew a bead on almost everyone who had a hand in the project.

However, a series of settlements and withdrawals gradually whittled down a long list of defendants until, on the eve of the trial, only three insurance carriers were still standing their ground over which, if any of them, was financially responsible for Bacara's woes.

At the last minute Travelers and Allianz both settled with ADCO so when the civil trial finally got under way, TIG was the only party left, defending itself against charges of breach of contract and bad faith.

In brief opening remarks that day, TIG argued that the damage was significantly less extensive and costly to repair than Bacara's owners claimed; at the same time, TIG maintained that the damage began, and was known about, before the 12-month period covered by its policy.

Though no specific amounts were being claimed, Ms. Glaser included some figures in her opening remarks -- $152 million to repair the damage, $55 million for interruption to the business during repairs, $39 million for past and projected expenses, and another $30 million for miscellaneous items.

From that $276 million, she deducted the $75 million received in settlement from the general contractors who built the resort, Colorado-based Hensel Phelps, and another $1.65 million from the project architects, Hill Glazier, of Santa Clara.

That left a bottom line of just under $200 million, though TIG disputed that figure, saying it excluded some other payments to ADCO and included costs that had nothing to do with TIG.

On Monday Ms. Glaser refused to give any indication of the settlement amount.


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Copyright (c) 2006, Santa Barbara News-Press, Calif.

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