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ABC Special Report
Investigation: New Home Heartbreak
Trump - NAHB Homebuilders Shoddy Construction and Forced Arbitration
AAA & Tremont Homes poor building practices in the news again
Thursday, 27 January 2005
Houston Chronicle
Owners, builder in standoff over home
Couple wants house bought back, plus cash payment; company says 'no'

When Jordan and Bob Fogal purchased a $360,000 town home in Hyde Park Crescent in April 2002, they thought they were making a sound investment... "The first night we were there, my husband took a bath on the third floor and water leaked all the way down to the first floor," she said.  As the months passed, she said, the home continued to deteriorate. The stucco on the outside walls began to crack, the kitchen leaked badly and the house began to smell...

Tremont is forcing the fogal's into binding arbitration which Jordan describes in this article as: "You've got people blindly walking into arbitration, hoping to get a fair deal, but they're not going to. It's like a drunk driver suing you for denting his car with your head."

Houston Chronicle
Owners, builder in standoff over home
Couple wants house bought back, plus cash payment; company says 'no'
Jan. 25, 2005
By TOM MANNING
Chronicle Correspondent

When Jordan and Bob Fogal purchased a $360,000 town home in Hyde Park Crescent in April 2002, they thought they were making a sound investment

Three years later, Jordan Fogal says, what she invested in was a nightmare, one from which she's spent every minute of her life trying to wake.

Fogal contends the home she and her husband bought from Tremont Homes was flawed. Water leaked, the home's exterior cracked and the house reeked of bad odor.

However, the company that constructed the Fogals' home and its lawyers said they have been willing to work with the Fogals to fix their home's problems, and that the dance the two sides have been doing with each other is the result of Fogal's efforts not to have her home repaired, but have it bought back.

Meanwhile, Jordan Fogal spends her weekends at the 3300 block of Yupon, outside Tremont Tower, holding up signs and handing out leaflets about her situation.

"That street corner is my public forum," she said. "These people have taken away my Seventh Amendment (trial by jury) rights, but they can't take my First. When I hold up those fliers, I feel empowered.

"The next person who drives by, maybe I'll be able to warn them and they'll stop themselves from making the worst decision of their life."

In late 2001, the Fogals were living in a $2,000-a-month condo on Galveston Bay, but most of their business and social contacts were in Houston, so they decided to purchase a home inside the Loop.

"It seemed like everything we had to do was downtown," Fogal said. "We decided to buy this property as an investment, while at the same time getting closer to everything in Houston, where we were spending most of our time."

The couple settled on a unit in Hyde Park Crescent, a freestanding townhome in a gated subdivision at 1515 Hyde Park Drive in the Montrose area. They put a $30,000 down payment on the three-story house and in April 2002, moved into their new home.

Almost immediately, Fogal said, she noticed major problems with her house.

"The first night we were there, my husband took a bath on the third floor and water leaked all the way down to the first floor," she said.

As the months passed, she said, the home continued to deteriorate. The stucco on the outside walls began to crack, the kitchen leaked badly and the house began to smell. Her husband also started having headaches.

"He'd be home for 30 minutes and he'd get a headache every night," she said. "I started to joke with him about being allergic to me."

In October 2002, Fogal said she contacted Stature Construction, her homebuilder, about the problems. Stature fixed the leaks, she said, but soon after, the leaks reappeared.

In December 2004, less than three years after purchasing their home and based on a doctor's diagnosis, the Fogals moved out of that house. They are renting an apartment in the Quarters at Memorial.

Dr. Patricia D. Salvato stated in a letter, dated Sept. 24, that Bob Fogal had a "significantly depressed immune system" consistent with the mold the couple claims had developed throughout their house.

Repairs offered
Tom Thibodeau, president of Tremont Homes and a member of the partnership of Stature Construction, along with Jorge Casimiro and Amad Al-Banna, said when he first arrived at the Fogals' home to assess the situation, he offered to make repairs that initially would have cost between $2,000 and $5,000.

"She called me and I personally visited the house," said Thibodeau, whose developments also include Deerfield Park, The Villas at Lakewood Park and Tremont Tower, among others. "We went through a reasonable scenario and I thought we had reached a solution. Then she came back saying she wanted the house bought back, plus $150,000."

Thibodeau and his lawyers say that it was the request — that Tremont buy back the Fogals' home plus pay an additional cash sum — that's led to the growing dispute between the two sides.

"We're not in the business of buying back houses. We're in the business of fixing them," he said. "When I met with her, she seemed reasonable about getting things fixed. Then overnight it changed."

Things changed, Fogal said, when she started contacting other homeowners who had had issues with Stature. One of those homeowners was Carla Bistrick, who purchased Hyde Park Crescent No. 10 in October 2000.

In a letter dated Oct. 29, 2004, Bistrick wrote, "Our home sustained multiple roof leaks resulting in structural damage. The proper repairs were not made. We incurred heavy water damage that led to mold in our new home. This mold caused health problems to our family.

"After months of expensive legal battles with Tremont Homes/Stature Construction," Bistrick wrote, "I began to protest outside my home. The revenue lost from potential new home sales helped Stature Construction make the right decision to buy back our new home."

Another issue

Stature faced another issue in 2002, when the Memorial Villages Police Commission voted to end its relationship with the company after a $3.2 million police station scheduled to open in May 2001 experienced project delays, as well as a mold problem.

Stature Construction is no longer actively building homes, Thibodeau said, but the company remains in business.

"Buying back (Bistrick's home) was a business decision," said William S. Chesney, III, a lawyer for Tremont. "None of the problems in (Fogal's) house are big enough to warrant us buying back the house instead of fixing the problems. And we cannot set a precedent that says anytime someone has any type of complaint with their home, that we'll just buy it back, instead of fixing it."

Fogal said that as she learned more about the problems others were having with Stature, she did not want the company to make repairs to her home.

"They're going to say I didn't let them fix it, but if I let them fix it, it would have been just the way it was," she said.

State laws

Janet Ahmad, president of the San Antonio-based Homeowners for Better Building, or HOBB, said once a dispute arises between a homeowner and a builder over defects to a home, state laws heavily favor builders.

A statute in Chapter 27 of the Texas Property Code — known as the Residential Construction Liability Act, or RCLA — allows homebuilders to make a "reasonable" monetary offer for repairs.

"If you don't take that offer, you get nothing," Ahmad said, "and you go to binding arbitration."

"Under RCLA, if we go in to fix something and find more that needs to be fixed, we would be under obligation to fix that as well," countered Charles Turet, another lawyer for Stature and Tremont. "We were more than willing to do that in this case."

Turet said that under Texas Residential Construction Commission guidelines, Fogal could have had an independent inspector assess the damage to her home, which Stature would have been obliged to fix or pay for.

Turet said that inspection, scheduled for Jan. 7, was canceled by Fogal on Jan. 5.

Facing an impasse
With Stature unwilling to buy back Fogal's home, and Fogal unwilling to accept the repairs the company was offering, the two sides hit an impasse.

Chesney said Stature offered Fogal an opportunity to go to binding arbitration to resolve the matter, and she refused. So Stature filed papers with the American Arbitrators Association, or AAA, instead.

"We filed a claim saying that there are reported to be 'X, Y and Z' problems, and that we think X is a minor problem and that Y and Z don't even exist," Chesney said.

"An arbitrator can allow the home to be fixed or can set a monetary figure for damages," Turet said. "In this instance, it's taken so long ... it's going to be difficult to discover what the actual damages are."

Ahmad said filing for arbitration is precisely what builders want to do from the very beginning.

Arbitration debate
"Any dispute arising out of a contract between a builder and a buyer goes directly to AAA, based on AAA rules," Ahmad said. "That dispute goes to arbitration and you're bound to it. If Tremont said your home damages are $25,000, then the most you can ever get is $25,000.

"AAA gets its money directly from its return customers, which are the construction companies," she said. "In 1994, AAA formed a task force made up of 55 builders in order to allow AAA to 'better serve the needs of homebuilders.' If there's a better example of a process that's geared toward one side over the other, I don't know what it is."

"AAA puts deadlines on me every day," Fogal said. "They're a demented collection agency. Their specialty is in harassing you at the request of the builder. All of the onus of proof is on the homebuyer. If there weren't bad builders, AAA would have no money coming in.

"You've got people blindly walking into arbitration, hoping to get a fair deal, but they're not going to. It's like a drunk driver suing you for denting his car with your head."

Chesney said groups like Ahmad's have a skewed view of the arbitration process and in doing so, convince people like Fogal that what they need to do is force builders into buying back a home instead of getting to the bottom of the problem and fixing it.

"It's customary, if not exclusive, to have arbitration provisions both for homeowners and builders to get quicker and more expedient resolutions to what would otherwise be a 2-3 year court process," Chesney said. "HOBB thinks 12 people on a jury is better than an independent arbitrator. (Fogal) found HOBB, and HOBB said, 'This is the position you need to take,' so she did.

"When she started having some problems, she quickly went to 'buy back my $360,000 house.' "

Said Turett, "HOBB likes the emotion of 12 people who don't have any real knowledge of the situation over an impartial arbitrator who isn't going to be swayed by the emotional argument and is just going to look at facts and determine the best and easiest way to solve the situation."

Turet, who, along with being a lawyer for Tremont and Stature, is also an arbitrator for AAA.

Out of money
After a three-year dispute with Stature Construction and Tremont Homes, Jordan Fogal said she's out of money. She no longer has a lawyer and has said she was on the verge of filing for bankruptcy.

"I'm not scared," she said. "I'm 60 years old. They've ruined my home, made me sick and cost me thousands and thousands of dollars. What else can they do, kill me?

"I couldn't have my children and grandchildren in my home for Christmas, because it was too dangerous. I've had to give up my life to do this already. I don't do anything all day except this."

"We have done the best we could to try and comply with her complaints about construction defects," Turet said. "RCLA provides for remedies in very specific ways. She made a demand, we responded. We offered to fix the leaks. But instead of allowing us to do that, she is putting all of her eggs in one basket. She wants us to buy back her home, and that's not going to happen.

"She's spoken to people who have given her unrealistic expectations about how this situation can be resolved. Now, all we can do is let arbitration decide whether we did the right thing or not."

Said Thibodeau, "Just as a consumer feels it's not fair to go through arbitration, we don't feel it's fair to let this process go on and not let us fix it.

"We feel as helpless as she does, but she's proven that you can't negotiate with her. We want to fix the problems; we want an opportunity to remedy the situation. The longer this drags out, the more it costs everyone."

 
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