January 15, 1998

Woodland Community Association
c/o Ms. Chris Amick
Manager, Woodlands Community Assn.
Association Management Company
235 Main St. Suite H
Pleasanton, CA 94566

Re: Woodlands Community Assn. v. Standard Pacific, et al.

Dear Members:

I am writing to provide you with an update on the referenced matter.

You may provide this letter to any real estate agent or lender in connection with any potential sale or refinancing of your home.

1. Summary of Issues and Status of Each.

This office represents the Woodlands Community Association in a lawsuit that was filed in December, 1995 against the Developer of the complex, Standard Pacific. The lawsuit seeks funds to repair various defective conditions and resulting property damage at the complex.

The Association has engaged a number of highly-qualified professional consultants, including Glenn Taylor of Glenn Taylor Associates, a licensed contractor; Wulf Clemmons of Jax Kneppers Associates, a licensed structural engineer; Ted Splitter of Levine-Fricke-Recon, Inc., a civil engineer with significant experience and expertise in soils engineering; Bo Mierseck of Cypress Roofing, an experienced roofer; and Greg Gershkovich of Baltes-Valentino, Inc., an experienced mechanical engineer. The consultants have performed visual inspections; have performed limited destructive testing; and have reviewed the plans, specifications and other construction documents. Based upon these reviews, the consultants have provided written recommendations for correcting the defective conditions and resulting property damage at the complex.

Defendants, in turn, have engaged their own consultants to review the reports of the Association's technical experts and to make recommendations to defense attorneys.

The Court has assigned the matter to a neutral Special Master, Thomas Castle, Esq. of Pleasant Hill, California, in an effort to streamline settlement discussions and pretrial preparation, and to attempt to settle the matter out of court. Mr. Castle has conducted several settlement conferences with the parties and their attorneys.

At the present time, the issues have been fully investigated, and there is significant agreement among the parties on many issues; there is still disagreement on some issues. Here is a brief summary:

1. Architectural and construction issues: Glenn Taylor has investigated various architectural and construction issues, and has prepared a detailed scope of work to correct the problems he has observed. Standard Pacific has agreed to correct nearly every one of the problems identified by Mr. Taylor, with the exceptions of squeaky floors and of some of the wood trim. Standard Pacific contends these items are maintenance issues, and/or that the applicable statute of limitations concerning these issues expired before the lawsuit was filed.

2. Structural Design Issues: All structural design issues have been resolved except for the issue of whether or not holddowns are required at the front garages. The Association's consultant, Wulf Clemmons, believes that the design should have included holddowns, which are intended to resist the tendency of buildings to be pushed up or overturn in a severe earthquake. Standard Pacific has engaged two structural engineers, John Clinton of Interactive Resources and Daniel Shapiro of Shapiro-Okino-Hom, Inc. These engineers have reviewed the design and have concluded that holddowns were not needed, because the overturning forces are resisted by straps at the front elevation of the garages. The Building Department reviewed the design before approving construction, and did not require holddowns be added at that time. The dispute has been reviewed by Richard Holm of Cecil Wells Associates of San Mateo, California, a Neutral Structural Engineer agreed upon by the parties. Mr. Holm has reviewed the plans, calculations, and the reports of Messrs. Clemmons, Clinton and Shapiro, and has met with the three consulting engineers. He is expected to issue a written advisory opinion shortly. This advisory opinion may result in resolution of this claim.

3. Heating-Ventilating-Air Conditioning (HVAC) issues: Many homeowners have complained that the homes are too hot in Summer and too cold in Winter, and that the air conditioning and heating systems do not function properly. Inspections of the systems revealed that the main cause of the problems is improper installation of many components of the systems. For example, some ducts are undersized, plenums are unsealed, etc. Asco, the design-build contractor, has investigated the HVAC systems and has engaged a consultant to prepare a scope of work to mitigate the problems. The Association's mechanical engineering consultant, Greg Gershkovich, has approved of the scope of work prepared by Asco's consultant, and has also requested additional repairs not agreed to by Asco. Asco is obtaining a bid from a qualified mechanical contractor on its scope of work. The parties have not agreed on a resolution of the HVAC issues; however, the issues are now well-defined, as are the areas of agreement and disagreement.

4. Roofing Issues: The Association's roofing consultant has prepared a scope of work for remedial repairs that must be performed to correct factors that have caused roof leaks in the past. The original roofer, Alcal, has agreed to perform these repairs to the Association's satisfaction, and has agreed to provide an extended warranty on the roofs. The Association has also demanded that Alcal reimburse the Association for certain past repair costs and has demanded that Asco pay a Neutral Roofing Expert to check the repairs once they have been completed and to verify that they have been done properly. To date, Alcal has not agreed to these last two demands, but is still considering them.

5. Soils Issues: The Association's soils consultant has recommended some repairs to some of the buildings that are out of level and to some units where moisture is discoloring the kitchen linoleum, as well as repairs to concrete flatwork. Standard Pacific has agreed to repair the flatwork, but not to perform the other items requested. The soils engineers for Standard Pacific, for the Association, and for one of the homeowners who has a separate lawsuit against Standard Pacific will conduct a final walkthough in January, 1998 in an attempt to secure agreement on these issues.

6. Reimbursement of Past Expenses: The Association has demanded full reimbursement of its attorneys' fees and consultants' costs incurred in the litigation. Standard Pacific has not responded to this demand, except to state that even if the Association went to trial and won, the attorneys' fees would not be recoverable, as a matter of law. This is correct; however, the Association's responses are: the expenses would not have been incurred had Standard Pacific and its subcontractors performed their work properly to begin with; and if the case proceeds to trial rather than settling, Standard Pacific will itself incur significant additional expenses, and may be required to pay more money as the result of a judgment than it would cost Standard Pacific to perform the requested repairs through an out-of-court settlement.

2. Settlement Conference and Trial Dates.

The case is set for a Final Settlement Conference before Mr. Castle on February 9, 1998. If the case does not settle at that time, the parties will prepare for trial. It is possible that the case will settle at that time in its entirety, or that some issues but not others will be settled, or that none of the issues will be settled.

The case has been set for trial on August 7, 1998 at 9:00 a.m. in Department 30 of Alameda County Superior Court in Hayward. If the case does not settle before that date, the following things are possible: the case could settle on the courthouse steps; the case could "trail" on the trial calendar, which means that no courtroom would be available on August 7 but we would receive the next available courtroom; the trial could be postponed; or the trial could start on time.

The Board members and the Association Manager, Chris Amick, have devoted a huge amount of time to studying reports and providing information to me and to the consultants. We would not have made the significant progress that we have made to date without their help. We will continue to keep you informed of developments.

Very truly yours,


Ann Rankin

cc: Terry Wilkens, Esq.
     Ms. Kathleen Vinci