Arbitration case

What is the name of your state? North Carolina
I am in the midst of an arbitration case involving what I consider defects in my house, in particular the hardwood flooring and the brick work. I do have an attorney.

The hardwood flooring has numerous cracks between the 2.25 oak boards which never close. Weep holes were never installed in the brick work and there are insufficient wall ties (according to code). Every area in the brick work that has a 45 degree angle has the mortar falling out.

My contract calls for a one year warranty. Within that year I have emails (several) which state there are problems with the hardwood flooring and the brick work. The contractor's responses were that they would look into the problems after they corrected another major problem they created on my house.

After 18 months I finally sued the contractor and was sent to arbitration. Just before I filed suit I had experts inspect the hardwood flooring and the brick work. The flooring experts said the entire floor would have to be torn out and replaced. The masonary experts said about half the brick work on the house would have to torn out and replaced.

The contractor's attorney is claiming that since I did not hire experts within the one year warranty period and only stated that problems existed with the flooring and the brick work during the warranty period I am not entitled to the remedies recommended by the experts, rather that everything should be 'patched'. Our experts and their own experts have stated that 'patching' will probably not work, but their attorney still says I am not entitled to full compensation because I did not fully qualify the extent of damages prior to the expiration of the warranty. My claim is that for over a year I knew there were problems and was depending upon the contractor correcting the problems within the warranty period, but that when they finally refused I hired the experts who ascertained the extent of the damages.

Second day of arbitration is set for next week, any advise appreciated.

Listen to your attorney.

No one on this forum knows the entire story, has read all of the factual evidence or knows the parties involved. Your attorney has and does.

I am listening to my attorney. Unfortunately he had to leave for Arizona the night the first day of arbitration ended and will not return until the night before the next day of arbitration. So thus far he has not been able to give me his opinion.

The contractor's attorney raised the warranty issue during the arbitration. I am only curious as to whether someone with a claim must fully quality the extent of the claim before the warranty expires.

I will try this another way.

Simply put, if I have documentation that says I have a problem (such as excessive cracks in a hardwood floor) and via email repeatly bring this to the attention of the builder and the builder emails me back stating that they will look into it in the future AND all of this occurs within the one year warranty period BUT the builder never corrects the problem within the one year warranty period AND then I hire an attorney, then we hire an expert (actually two) who says the hardwood flooring cannot be fixed but must be replaced... does the contractor have a valid point that during the one year warranty I never mentioned having to replace the entire hardwood floor?

basspro said:

I will try this another way.

Simply put, if I have documentation that says I have a problem (such as excessive cracks in a hardwood floor) and via email repeatly bring this to the attention of the builder and the builder emails me back stating that they will look into it in the future AND all of this occurs within the one year warranty period BUT the builder never corrects the problem within the one year warranty period AND then I hire an attorney, then we hire an expert (actually two) who says the hardwood flooring cannot be fixed but must be replaced... does the contractor have a valid point that during the one year warranty I never mentioned having to replace the entire hardwood floor?

Click to expand...

The issue is really whether you gave the builder sufficient notice of the defect, not the remedy itself. That will depend on the wording in your contract with the builder, the wording in the warranty itself and the exact wording in your emails to the builder. This is why no one here can give you answer. The arbitrator will decide if you give the builder sufficient notice of the defects alleged within the warranty period.

I sincerely appreciate the reply.

This article might be of interest to you since flooring defects were part of your problem: http://www.jlconline.com/cgi-bin/jlconline.storefront/447baa82002f6c0227177f0000010592/UserTemplate/82?c=c645acaebb64547231993656138f2284&p=1

If I might ask, is the arbitrator from a company the builder specified?

There are three arbitrators. Each side picked an arbitrator and then those two picked a third.

I appreciate the reference to the article. I have come to believe that the NAHB serves no other purpose than to protect inadequate builders.

Arbitration resumes tomorrow. Unsure when ruling will be rendered. Will post results for all who are interested.

Yes, please update this thread. I am interested in how it comes out. I agree with you, the NAHB just protects 'inadequate builders!' Membership in that organization means nothing to me except the builder has been brainwashed to believe low standards and canned excuses should be the norm. BTW the NAHB has a legal defense fund for cases that could possibly set a precedent. Good luck with the arbitration, maybe you'll be one of those that actually does get something resolved that way.

basspro said:

There are three arbitrators. Each side picked an arbitrator and then those two picked a third.

I appreciate the reference to the article. I have come to believe that the NAHB serves no other purpose than to protect inadequate builders.

Arbitration resumes tomorrow. Unsure when ruling will be rendered. Will post results for all who are interested.

Click to expand...

Because an interest in this case was expressed I will provide information as it becomes available.

The second day of arbitration was held last week. There were a few surprises... I had been informed (by both my attorney and the mediator) that both parties were to supply all pictures, videos, statements, contracts, repair estimates, expert witness names, and other witness names prior to arbitration.

My attorney did so well in advance of the day of arbitration. The defense attorney presented a booklet to the arbitrators and my attorney on the second day of arbitration. The defense also called witnesses (not experts) who were never identified as potential witnesses prior to the hearing. This may be neither here nor there but I found it somewhat disconcerting.

We allowed our expert witnesses to present their opinions of the problems. The defense countered with the general contractor's personal opinion. They did not present any expert witnesses. The defense repeatedly relied upon the NAHB 'code' (which was modifed in March, 2006 to allow 1/8" gaps in hardwood flooring during installation). We countered with a) the code did not allow such in 2003 when the house was constructed, b) no one but the NAHB allows such gaps.

The defense was allowed to present his case that we had not uncovered all potential defects until after the one year warranty had expired. We countered that we could not ascertain full defects until the warranty had expired and the contractor had not remedied the problems.

The arbitration panel then visited my house, where we spent about an hour inspecting the 'defects'. The panel is supposed to render its verdict on June 12.

Because there was an interest expressed in the outcome of this case I will post such.

The arbitration panel ruled that the contractor was liable for only $12,000 in damages; however, since the company has been 'absorbed' by a new company the second company was not held liable, thus rendering awarded damages to zilch.

Lessons learned...
Never sign contract that has an arbitration clause.

Never sign a contract that uses any language about NAHB.

Withhold at least 10 percent for final closing when building a house, this will give you some leverage if there are problems.

Always put a penalty clause in the contract regarding completion date.

You are better off having the builder sue you than you suing the builder.

reply

I would have to say if you had contact with the contractor and have proof of this matter before the 1-year warranty was up than you have a strong case.Most contractors try to stretch matters out so that they don't have fix the problem.I had small contracting business in Virginia and followed these kind or people around fixing their mistakes,because homeowners didn't look into it before their warranty was up.

I did have a contract. The contract does include a one year warrant.

All items were brought up within the one year warranty period, by emails, phone calls, personal meetings, and registered letters.

The contractor did drag out some repairs for over one year and kept promising to remedy other repairs once the repairs they were working on were completed. This in itself presented a problem, because one really cannot sue for damages while the warranty period is in effect if the contractor states his intention to correct the problems, but then the warranty period expires, you hire a lawyer, and the contractor says the warranty has expired... catch 22.

Basspro,

Sorry to hear the arbitration was a bust. I'm not surprised. Your suggestions sound good for future home buyers except the last one, that it's better to let the builder sue you than the other way round. I do not think one is preferable over the other unless you're talking about the builder's lawsuit potentially meaning he cannot later compel arbitration. Then, yes, that could be advantageous.

Theoretically, if you notified your builder of defects within the warranty period and have proof you did, they should not be able to stonewall you, then just say, oops it expired. That is what your proof is for. But I do realize that in reality this is simply not being enforced, and people generally are hamstrung in trying to GET it enforced, due to arbitration clauses. Also the fact it's hard to find a lawyer who'll take the case when there's so little chance of collecting even if you win.

Thanks for posting the result. I hope your experience convinces anyone reading your tale that they should not do business with companies that have mandatory arbitraiton clauses, period.