Texas Newlyweds sue Bad Builder

From: http://xxxxxxxxxxxxxxxxxxxx.blogspot.com, 3/28/2010 [See 4/1/10 update below]

This is a story about how we got defrauded by “Bad Builder” during our newlywed year of marriage...and what we are doing to make sure this never happens to anyone else again. [HOT: Gag orders, builder threats during lawsuits, and restrictive settlement terms too often keep the details of builder abuse from public scrutiny, but this couple let us publish their story with all identifying details removed.]

Because we are in litigation with Bad Builder, I cannot disclose all that I know or all that will help potential new homeowners YET. BUT, I can post the facts that were included in our lawsuit. Read here for background info on what has transpired (and keep in mind this is only the icing on the cake)...and stay tuned for juicier details. Prepare to be shocked.

The following basically lays out 2 MAJOR ISSUES: (1) Major Defects (which resulted in a 43-page inspection report of defects less than 1 year after Closing), and (2) a lack of City of Houston inspections. Having just one of these issues would have prompted us to sue, but being as how we're so lucky, we've got both! As you can imagine, having just one of these issues makes our house completely unmarketable.

xxxxx and xxxxxxxx xxxxxx [the newlyweds] signed a contract to purchase their home located in xxxx xxxxxxxx in Houston, Texas (herein referred to as the “House” or the “Home”) in April 2008; this was the first-ever home purchase for the newly-married couple. The xxxxxxs [newlyweds'] primary contact in Spring 2008 was Bad Builder’s exclusive real estate brokers, xxxxxx xxx and xxx xxxx (the “xxxxxx”) of xxxxx xxxx Realtors. The xxxxx, as the agents of Bad Builder, represented to Plaintiffs that Bad Builder was a custom homebuilder that paid great attention to detail. Bad Builder’s website, which the xxxxxxs [newlyweds] consulted, made similar representations.

The earnest money contract dated April 24, 2008 required that the House be substantially complete by June 10, 2008, and the Closing would be on June 30, 2008. The Contract defined “Substantial Completion” as follows:

"The improvements will be substantially completed in accordance with the Construction Documents and ready for occupancy not later than June 10, 2008. The improvements will be deemed substantially completed in accordance with the Construction Documents upon the final inspection and approval by all applicable governmental authorities or any lender (Substantial Completion Date)….However, in no event may the time for substantial completion extend beyond the Closing Date."

On July 1, 2008, the xxxxxxs [newlyweds] went to the offices of Bad Builder and closed on the sale of their first home together. The parties acknowledged that there were some punch list items, such as unacceptable color of stain on the kitchen cabinets and a missing mailbox and house numbers that would need to be completed. Bad Builder accepted these punch list items and agreed to complete them in short order, but well within the one-year warranty period.

The xxxxxxs [newlyweds] moved in and were living in the House for about two months when they began to receive notices on their door from the City of Houston (the “City” of “COH”). The notices would be hanging from the door knob or stuck to the window of the House when the xxxxxxs [newlyweds'] returned home from work, and they were difficult to understand. For example, one of the notices indicated that their “temporary gas” would be shut off. All of the notices were addressed to Bad Builder at the address for the House. They forwarded all of these notices to Bad Builder representative, xxxxxxx xxxxxx (“Mr. xxxxxx”), directly.

Sometime in October 2008, the xxxxxxs [newlyweds] made a key for the House for Mr. xxxxxx so that various punch list items could be completed. Mr. xxxxxx would only sometimes let the xxxxxxs [newlyweds] know when he was coming to the House, or that he had been there. He would also sometimes inform them that he took tags off the door. Beginning with the first notices in September, the xxxxxxs [newlyweds] asked Mr. xxxxxx to explain the notices. Mr. xxxxxx told the xxxxxxs [newlyweds] in multiple ways and on multiple occasions that the notices were of no consequence. No one at Bad Builder ever informed the xxxxxxs [newlyweds] that the House lacked a final City inspection or several other key inspections. Bad Builder continually minimized the significance of the notices received from the City.

In early May 2009, Plaintiffs received red inspection notices on their door and notices in the mail – again addressed to Bad Builder at the address for the Home. The red notices stated that a permit would expire unless some action was taken. Uncertain of what these notices meant, the xxxxxxs [newlyweds] gave all of this correspondence and the door tag notices to Mr. xxxx xxxx (“Mr. xxxx”), who became the Bad Builder point of contact in late March. Mr. xxxx again assured the xxxxxxs [newlyweds] that Bad Builder had taken care of it and not to worry.

On May 26, 2009, Mr. xxxx showed up at the House – unannounced -- while Mr. xxxxxx [husband] was home. Mr. xxxx told Mr. xxxxxx [newlyweds] that he needed to fix some item in the attic so that it would “pass inspection”. On his way out of the House, Mr. xxxx said that Bad Builder might also need to fix the stair railing. This was the first that either Mr. xxxxxx [husband] or Mrs. xxxxxx [wife] had heard regarding any problems with the stair railing.

Two days later, on May 28, 2009, Bad Builder’s office manager e-mailed Mrs. xxxxxx [wife] and asked for a time that Bad Builder could schedule a “final inspection”. [HOT: Final inspection? They closed on the home on July 1, 2008!] When Mrs. xxxxxx [wife] questioned the office manager regarding what exactly she meant by a “final inspection” and questioned the safety of the House, the office manager represented to Mrs. xxxxxx [wife] that “the house is safe” and that Bad Builder had passed “all of the finals (including electrical, plumbing, and structural). The ‘final final’ is for things such as tempered windows, self closing garage door, handrails, etc.” The office manager also informed Mrs. xxxxxx [wife] that Bad Builder could not schedule the “inspection” yet, however, because Bad Builder had to get a “permit for the porch”.

The xxxxxxs [newlyweds] then contacted the COH on June 6, 2009 to determine the status of the House they had been sold. The City advised Mrs. xxxxxx [wife] that she and her husband never should have been permitted to move into the Residence and that the City could choose to fine the xxxxxxs [newlyweds] for this action. The City representative, xxxxxxx xxxxxxx (“Mr. xxxxxxx”), also informed Mrs. xxxxxx [wife] that the permit for the deck had been applied for in May 2009 and again in June 2009, and had just the day before been issued on June 5, 2009. The deck was never part of the original plans. Mr. xxxxxxx explained that several inspections were completed or attempted in October, November and December 2008, after the Closing Date. Mr. xxxxxxx also informed Mrs. xxxxxx [wife] that the COH would still require a post-tension letter certified by an engineer, as well as a welding and bolts letter certified by an engineer before a final inspection could be issued.

Furthermore, it was also discovered that the plans on file with the City do not match the House as built. In addition, some of the plans were switched with the plans for the house next door, according to the City’s records. As a result of the changes to the House during construction and the discrepancies with the plans on file, the City is requiring a structural engineer to issue a letter certifying that the House was built according to those as-built plans. Indeed, Bad Builder will be hard pressed to obtain such a document from any legitimate engineer who was not present during the construction of the Home, which began in October of 2007.

According to the City’s records, Bad Builder has failed on two separate occasions one year apart (one week before Closing on June 25, 2008 and on July 2, 2009) to provide adequate engineering certifications (and failed to inform the xxxxxxs [newlyweds] of this). Bad Builder continues to engage in the charade that it has complied with the City’s inspection requirements. xxxx xxxx (“Mr. xxxx”), another agent of Bad Builder, yet again attempted to pass off the same engineering letters that had previously been rejected by the City to Mr. xxxxxxx on August 12, 2009 at the COH inspector offices. On such date, Mr. xxxx misrepresented to the xxxxxxs [newlyweds] that the letters were accepted by the COH as adequate when the City verified that they were not. In fact, the City could not have approved the House at this point because the City determined that the interior stairs in the House do not meet code and will have to be reconstructed.

As for the deck, Bad Builder fraudulently filled out the application for the deck permit in June 2009, listing itself as the “OCCUPANT” on the application, in addition to the “APPLICANT”. The xxxxxxs [newlyweds] are not listed on the application even though they are the owners of the House. Not surprisingly, a final inspection on the deck has not been issued to date because Bad Builder still has not been able to issue an engineer’s certification letter for the deck; it was constructed without properly constructed and engineered support.

Furthermore, Bad Builder delivered an incomplete survey upon Closing, resulting in the front stairs of the house being on City property. These stairs would also have to be reconstructed.

On August 28, 2009, Bad Builder brought an architect to the Home to have as-built plans of the structure completed, as required by the City. However, the architect never walked the House nor drew any portion of the as-built plans while he was there; still, in an email dated November 9, 2009, Bad Builder now claims to have as-built plans.

Bad Builder has been given access into the Home of the xxxxxxs [newlyweds] over forty (40) times over the course of one (1) year. Not once did Bad Builder inform the xxxxxxs [newlyweds] of the lack of a final inspection and what that meant for the xxxxxxs [newlyweds]; nor did Bad Builder inform the xxxxxxs [newlyweds] of its knowledge of the various defects at the House, to include the stairs/railing, patio, and structural integrity. Clearly, significant repairs are required at the House, as has been found by the Texas Residential Construction Commission in September 2009.

In spite of the myriad times that Bad Builder has been to the House since Closing, the Bad Builder has still failed to achieve Substantial Completion as that term is defined in the Contract and as required under the Contract. The House does not meet basic code requirements or industry standards, and accordingly, final certifications and inspections cannot be obtained.

Update (from newlyweds)

Bad Builder is attempting to reduce their liability by:

1. claiming to offer to fix everything the TRCC inspector found (which was only 50% of what OUR inspector found, of course--and OUR inspector wrote the rules inspectors need to follow, so who do you think we're going to believe?) AND
2. getting a final inspection (which we gave them the opportunity to do on several occasions and they have failed repeatedly).

Bad Builder is now claiming WE have prohibited THEM from getting the inspection since they started trying to get one in summer of '09 (yes, 1 year after closing) even though Bad Builder was receiving letters from the city saying that it needed to get the inspections done and Bad Builder ignored all of the letters for one entire year before attempting to do ANYTHING). At this point, we refuse.

Bad Builder will try to argue that we are not mitigating (reducing) our damages, but the law does not give wrongdoers a right to cure fraud, require innocent parties to give up property rights (our right to terminate the contract had we known these things), or require us to mitigate our damages if it would mean unreasonable expense and effort. 

Attorneys for Bad Builder should be ashamed of themselves. They only made the repair offer AFTER being served with a lawsuit -- not once during the 60-day demand letter period, not once within the time periods required by the Residential Construction Liability Act., not once since last June 2009, not until now.

The TRCC threw out our case files before deciding either parties' appeals, thereby stripping us of our rights under the TRCC. What the TRCC says regarding repairs is now effectively null and void.

Meanwhile, we continue to be devastated by this. I lost both parents and was so looking forward to being married and having a family of our own; that is simply not possible at this point. We don't want to have friends over. Everything we hoped for has been stripped from us. Nightmares and emotional breakdowns are a daily occurrence.

And... Bad Builder continues to build houses and make money. Oh, and he doesn't have any insurance that would help cover our claims. That's the great State of Texas for you and it's pathetic and disgusting lack of requirements.