WL Homes trustee inks $4.18 million condo defects lawsuit settlement

By Caroline Salls

Pittsburgh, April 5 - WL Homes, LLC's Chapter 7 trustee requested court approval of a $4.18 million settlement of a lawsuit alleging design and construction defects at the Indigo condominium complex in Marina Del Rey, Calif., according to an April 5 filing with the U.S. Bankruptcy Court for the District of Delaware.

The trustee said WL Homes non-debtor subsidiary WL Indigo Associates, LLC and non-debtor Weyerhauser Realty Investors, Inc. constructed and sold individual condominium units at the Indigo complex.

The Indigo Community Association filed a lawsuit in California against WL Indigo and other companies, looking to recover damages stemming from alleged design, construction and other defects at the complex.

Under the proposed settlement, the association will receive a $4.18 million payment.

In exchange, the association will release WL Indigo and the other settlement parties from the association's claims.

The trustee said $1 million of the settlement payment will come from an escrow account related to an asset sale distribution agreement with Weyerhauser. The balance will be paid by Steadfast Insurance Co.

A hearing is scheduled for May 3.

WL Homes, an Irvine, Calif.-based homebuilder, filed for bankruptcy on Feb. 19, 2009. Its Chapter 11 case number is 09-10571.

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