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ABC Special Report
Investigation: New Home Heartbreak
Trump - NAHB Homebuilders Shoddy Construction and Forced Arbitration
Tremont Homes - Construction Defects, Mold - Fogal Lobbies Lawmakers
Friday, 18 February 2005

Disgruntled home owner turns to Better Business Bureau
Houston River Oaks Examiner - Jordan Fogal
Since she and her husband purchased a $360,000 town home in Montrose's Hyde Park Crescent community at 1515 Hyde Park Drive, Fogal has been battling with Stature Construction, Inc. to fix repairs she contends are due to substandard construction... Fogal has also turned her energies to consumer advocacy, and has been assisting other distraught homebuyers, consulting with anxious Realtors afraid of being sued for selling faulty buildings, and lobbying state legislators to change housing laws. On Monday, Fogal joined a group of unhappy home owners at the state capitol to lobby lawmakers to make builders more accountable by making proof of expertise and financial responsibility mandatory.

River Oaks Examiner
Disgruntled home owner turns to Better Business Bureau

BATHROOM DAMAGE: Fogal points to the shower that is collapsing in her town home. She is wearing a mask because a report shows three different types of mold growing at the residence.


Hyde Park home owner Jordan Fogal, who has been involved in a prolonged deadlock with a builder over problems in her new home, says she believes her best shot at winning could come by submitting her case to the Houston Area Better Business Bureau’s arbitration process.

Since she and her husband purchased a $360,000 town home in Montrose’s

Hyde Park Crescent community at 1515 Hyde Park Drive, Fogal has been battling with Stature Construction, Inc. to fix repairs she contends are due to substandard construction.

Recently the builder filed a claim against Fogal with the American Arbitration Association, or AAA, requiring her to go through binding arbitration with an organization she believes favors developers and builders.

Although Fogal, 60, a non-fiction author, said she will participate in the arbitration if she must, she would prefer to go through the Better Business Bureau’s arbitration process, which she recently discovered and considers more fair and less costly.0

The Better Business Bureau is waiting for a response from Tremont Homes, the developer of Hyde Park Crescent, on whether they will use the bureau’s arbitration process instead of AAA’s. An attorney for Stature Construction and Tremont Homes, Charles Turet, said he is not familiar with the bureau’s process.

Like many
Texas home builder contracts, the purchase agreement Fogal signed with Stature Construction included a clause stating that she gave up her right to a jury in the event of a dispute and is instead bound to resolve disputes through “arbitration administered by the American Arbitration Association under its construction industry arbitration rules.”

Fogal accused AAA’s alternative dispute resolution process of being biased against consumers, hiring arbitrators who often haul from the housing industry, thereby creating conflicts of interest.

Fogal called AAA “a demented collection agency,” in which consumers should be prepared to pay $100,000 to take part in their arbitration process.

“You have to pay dearly even to file, and in my case the filing fee is $6,000,” she said, adding that she also faces a fee of more than $2,000 per day for an arbitrator, plus hourly fees for prestudy and post-study of her property.

“AAA does not have a maximum limit on costs, so they ask for a credit card authorization. The entire burden of proof is on you, the homebuyers,” she said.

Turet said AAA is a “well-respected” dispute resolution service provider that is economical and consumer-friendly.

On small cases, consumer disputes are less than $1,000 a day — usually $250 a day — he said. Fast-track arbitration, an abbreviated process that occurs in one day, costs less than $7,500, Turet said. On a routine basis, he said, AAA will waive or discount fees for consumers who indicate they can’t afford them.

According to a fee schedule published by AAA, a claim involving a property valued between $300,000 and $500,000 has a filing fee of $4,250, plus a case service fee of $1,750. Not included in the schedule are costs for the arbitrator, stenographer and the rental of a hearing room.

Kursten Norlin, vice president of corporate communications for AAA, said AAA’s panel of arbitrators “consists of the most accomplished and respected experts from the legal and business community.” Candidates for arbitrator positions are screened through a highly selective process, which examines their management skills, substantive expertise, commitment, ethics, training and suitability to the regional caseload, she added.

Norlin said candidates are also screened on their freedom of bias and prejudice. All arbitrators are required to abide by AAA’s code of ethics for arbitrators, which states that they are obligated to disclose interests or relationships that may affect impartiality.

“The American Arbitration Association’s mission statement says, in part, that it is committed to providing ‘exceptional neutrals’ to the users of its dispute resolution services,” she said. “The Association maintains a Commercial Arbitrator Development Curriculum that provides nationally standardized education and training for all commercial arbitrators on our national roster of neutrals.”

Fogal said that since April 2002 she and her husband have had to deal with water intrusion caused by roof-flashing problems and plumbing flaws, which have in turn created mold, cracks in the exterior, sagging floors, a collapsed ceiling and a caving shower wall.

For the past two and a half years, Fogal has amassed correspondence with Stature Construction that includes engineers’ and insurance reports and requests for repairs to the home. Months of back and forth calls, letters and meetings with the construction company have left both parties frustrated beyond compromise. In Fogal’s viewpoint, Stature Construction’s correspondence with her never truly addressed the growing problems with the home that made it “uninhabitable.”

Fogal said Tom Thibodeau, president of Stature Construction, Inc. and Tremont Homes, showed up 29 months after the purchase of her home — when she went to the media about her problems. She said that when he left, he told her he was going to fix her house, as well as other homes she claims were also having problems. “I was so excited,” she said.

However, before these repairs were started, Fogal said she became even more upset when she learned from a former
Hyde Park Crescent
resident that Stature Construction has been aware of problems with her home when she bought it.

Carla Bistrick, who had complaints about her own home at unit #10, purchased in 2000, contacted Fogal to share her own experience, said Fogal. Bistrick contended that leaks and growing mold propelled her to protest with signs outside the complex, until Stature Construction bought back her house from her. Before she left the complex, however, Bistrick told Fogal she took pictures of another unit that appeared to have leaks and mold damage being repaired, unit #24, the town home Fogal bought months later.

Fogal was furious, she said, when she saw pictures of her unit taken months before she purchased it, showing mold growing in the pantry and kitchen, and walls being ripped out. “There was no mold remediation. They put new sheet rock over mold, sealing it up and painting over it,” she charged.

There was no disclosure of any problems with the home when she bought it, she said. She contacted Thibodeau again, mentioning her meeting with Bistrick, and told him she wanted her unit bought back.

Thibodeau told her the company would be taking her to binding arbitration, she said, and continued communication with her through Stature’s attorneys.

“I didn’t become unreasonable — I had had enough,” Fogal said.

Turet told the Examiner that Stature is unwilling to discuss the pending case with Fogal until a resolution for the AAA proceedings is determined. He indicated he is not pleased with the way Stature Construction has been presented in media coverage.

Representatives for Stature Construction have told reporters Fogal’s demands are unwarranted, and adequate reparations for problems in her unit had already been offered to her. Stature previously offered to repair Fogal’s unit for $2,000 to $5,000, while Fogal’s inspection reports estimated repairs would cost more than $50,000.

Fogal said she felt overpowered by the expense of arbitration through AAA, but recently discovered a few weeks ago that she may have the opportunity to seek arbitration through the Better Business Bureau, which is less expensive to both consumers and companies, and in her perspective, more consumer-friendly.

Fogal had initially filed a complaint against Stature through the bureau, but her complaint was denied, she said, as a bureau agent told her Stature was no longer in business and therefore could not have a complaint filed against it.

But a check of records with the
Texas Secretary of State’s Office shows that Stature is still an existing business.

Although Turet said that Fogal has a dispute with Stature Construction, and not the developer Tremont Homes, Fogal and the Better Business Bureau’s alternative dispute resolution coordinator, Kim Lawrence, said that Tremont Homes is an umbrella company for the construction company.

Turet said the contract for the home was only between Stature Construction and the Fogals.

According to
Lawrence, Tremont Homes is a registered member with the bureau and is precommitted by member agreement to use the bureau’s dispute resolution services. Although the purchase agreement between Fogal and the builder may specify a provision that arbitration be used under rules, this provision does not supersede the builder’s obligation to use the bureau as its arbitration service provider, said a letter from Lawrence addressed to Tremont’s lawyers.

The situation is complicated by Fogal’s communication with Tremont Homes, which has been handling the complaints against Stature Construction after Fogal said Tremont sent her letters saying Stature was no longer in business.

Turet said Stature Construction is not obligated to use the Better Business Bureau as an arbitration service provider. He added that alternative dispute resolution will be conducted in accordance with the Tremont’s member standing with the bureau and arbitration rules.

Tremont Homes’ membership with the Better Business Bureau can be revoked if they refuse to use the bureau’s arbitration process,
Lawrence said.

The Better Business Bureau offers consumers and companies the opportunity for fair and equitable treatment without incurring the expenses of litigation or AAA, said
Lawrence. The first four hours of arbitration are free, and subsequent hours are affordable — compared to AAA — she said.

Lawrence agreed with Turet that the AAA is recognized as a respectable arbitration service provider with a solid history. However, she said that AAA was founded on the principal of serving large, complex litigations within business, and believes that consumers are better served using the bureau’s arbitration services.

The Better Business Bureau will not recommend arbitrators with conflicts of interest and all arbitrators are given training on ethics and proper protocols of alternative dispute resolution,
Lawrence said. Parties can also choose to have a panel of arbitrators, rather than a single arbitrator. Any fees charged do not usually exceed $500, she said.

Records from the Secretary of State’s office show that Stature President Tom Thibodeau and Secretary Jorge Casimiro are listed as agents, members or officers of more than 25 other builders and housing developing business organizations. Eight of these listed companies have forfeited existences, a term the Secretary of State says refers to an inactive status due to a company’s failure to turn in or pay its taxes.

Stature Construction Inc. originally filed as a business with the Secretary of State in 1988, and records show that the company continues to exist. Casimiro and Thibodeau are also listed as officers of a company called Stature Commercial Company Inc., opened in 1996.

It is not illegal for individuals to be listed as agents or members of multiple organizations, or to continue to open businesses if they have been associated with previously forfeited companies. Still, Fogal said that Thibodeau’s and Casimiro’s association with these multiple companies raise questions of accountability for individual homes with problems, such as hers.

Fogal has also turned her energies to consumer advocacy, and has been assisting other distraught homebuyers, consulting with anxious Realtors afraid of being sued for selling faulty buildings, and lobbying state legislators to change housing laws.

On Monday, Fogal joined a group of unhappy home owners at the state capitol to lobby lawmakers to make builders more accountable by making proof of expertise and financial responsibility mandatory.

Fogal has taken on the job of advocacy and battling Stature Construction full-time, and is not ready to give up — whether Stature agrees to seek arbitration through the Better Business Bureau or not. Apparently, Stature is also ready to stand firm.

“It’s the game-playing that eventually makes you nuts,” Fogal said.

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