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Golden Rule No. 1: He Who Has the Gold Makes the Rules

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In a stressful economic time were homes are being foreclosed on every block this story cuts to the quick. The story of Bob and Jane Cull described by NPR Weekend Saturday will bring you to tears and make you question your faith in the entrepreneur.

As the story goes, the Culls were an upper middle class couple who had decided to build their dream home, a story that sounds familiar to everyone whether we build or buy. They were fortunate to have the time and money to have five years to search for the perfect lot to build on. They found the plans they wanted and hired a builder. They moved into their home and were very happy with it for six weeks. Then the foundation problems began. When a main structural beam weakened, they hired an engineer, who then told them the bad news.

This began their 13-year odyssey. The Culls hired a lawyer and started legal proceedings against their former builder, Perry Homes. Now in Texas, the legal system is never for the average person. Texas is renowned to forgo legal protection to ensure a healthy business climate. In this case, the Culls went to arbitration as the law demanded. They won and the builder was instructed to pay the Culls a settlement of $800,000, remarkable by Texas standards. However, the builder just happened to be the richest and most politically connected builder in the state. Rather than pay the settlement he spent his money stalling. He abused the legal process by appealing, and appealing, and appealing. At the same time he was contributing to the campaign funds of Governor Perry (no connection to the builder), State Supreme Court candidates, George W. Bush, and was the largest single contributor to Swift Boat Veterans for "Truth."

The case finally ended up before the Texas State Supreme Court, whose membership did not have the temerity to recuse themselves due to a conflict of interest. It doesn't stop there. The owner of Perry Homes was able to lobby for and obtain passage by the Texas Legislature of a law to ensure more protection for homebuilders. Yes, you heard it right — for the builder not the owner. And it gets better, the attorney for the Culls' home builder who continued to appeal this case and abused the legal system is now the head of the new agency created to ensure the protection of homebuilders.

Meanwhile, the Texas Supreme Court in a phenomenal miscarriage of justice voted 5 to 4 to throw out the $800,000 Cull judgment, stating that the case should not have gone to arbitration and sent the case back to court. Hence, after 13 years of court challenges, the Culls now have to start all over again, possibly with the same state agency just created and headed by the attorney hired by Perry Homes to appeal their case.

At a time when America continues to measure the ramifications of the mortgage crisis, this incident just cries out for justice. The Culls went through the entire process as prescribed by law at the time and 13 years later they can't sell their home because it would not pass inspection. In addition, they cannot afford the hundreds of thousands of dollars to fix their dream home. All is not completely lost. They do get to begin their case again. Hopefully, they will obtain their judgement and all the money it took to appeal the case and the cost the opposition put in appealing the case. Perry Homes knew they were wrong, yet they continually appealed their case to stall and prevent paying the judgment.

Talk about frivolous lawsuits. This is not only frivolous, it's ridiculous. I wonder how much Perry Homes paid in legal fees to appeal. I bet it would have been cheaper to pay the judgment. Meanwhile, the Culls' home is falling down around them. What can you expect out of a state that follows the golden rule: "He who has the gold makes the rules."

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About Georges Clark

  • http://www.joannehuspek.wordpress.com/ Joanne Huspek

    So true. Those with the money rule. Sad but so true.

  • Doug Hunter

    What could go wrong with a $200K house that would warrant an $800K judgement? At most they should get their money back plus a few bucks for a lawyer. These douches thought they won the lawsuit lottery but Perry stood by his guns. Good on him and the state of Texas.

    And for the dipshits cheering these asses on I can only hope you end up on the wrong end of one of these moneygrubbing lawyers’ cases. (although I doubt you have the resources to warrant anyone doing such)

  • Cindy

    I am trying to turn over a new leaf and learn to suffer fools gladly. Therefore, rather than respond to Doug Hunter’s comment. I’ll just celebrate it with a photo.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Is that your cat?

  • Mike

    As everyone knows a house that is worth a stated amount is different than what it COSTS to build and rebuild a house. If there is a foundation problem to a house, the fact that a house is sinking and settling is a problem. Don’t believe me ask your home owners insurance agent. Though I doubt some have. If you insure your house for what you paid for it that will not cost the amount to replace that house if it were rebuilt. My parents have a house built in 1881, The house cost $45,000 in 1970 The House is now worth $150,000. However, the cost to rebuild that house in the same condition if something were to happen is around $250,000. I think that the $800,000 judgment was fair given all the guff they have had to go through. In fact they should get an extra $1 million for 13 years of being right. They are not trying to profit from their misfortune. If you ask them they would much rather have their house fixed.

  • http://www.maskedmoviesnobs.com El Bicho

    Right, Doug. It’s much better to be a dipshit commenting on a case without knowing all the factors involved in the judgement

  • Cindy

    Is that your cat ass clown*?

    No, it is not.

    *From the Urban Dictionary:

    2. ass clown (ăs)(kloun)

    One whose stupidity and/or ineptitude exceeds the descriptive potential of both the terms ass and clown in isolation, and in so doing demands to be referred to as the conjugate of the two.

  • Irene Wagner

    Cindy, when a cat does that–the lifting the tail action, even if there’s nothing back there but what Nature intended–it means he likes you, actually. Kittens do it to the mom-cat all the time. (Very cute picture, by the way. Thanks for posting it.)

    There are home builders and there are home builders, I guess. I’ve seen people start to kvetch to the homebuilder/contractor the second they move in. “You left a 3mm speck of colored paint on the ceiling…” Next week, it’s “I noticed there’s a spot on the wall paper in the bathroom where pattern doesn’t line up ‘quite right.'” Perfection doesn’t exist in the real world. Even manufacturers of precision tools are allowed acceptable margins of error.

    On the other hand, I’ve heard of plenty of contractors and subcontractors who screw over workman and don’t pay them, after the work is done. Naturally the workman can’t afford lawyers (or maybe they’re aliens.) “Payment” sometimes has to be extracted in somewhat unconventional and rather brutal ways…I have a hard time feeling sorry for the “victims.”

  • Cindy

    boy did i screw up the whole thread lol

  • Cindy

    Irene,

    I’ll be right back with my magnifying glass, so I can read your comment.

  • HeddaCabbage

    I deserved the unwelcome italics Cindy! I’m cheating on my “being grounded from BC for Lent.”
    You lured me in with that picture.

    I go now.

  • Clavos

    If you ask them they would much rather have their house fixed.

    Oh, do you know them?

  • http://ruvysroost.blogspot.com Ruvy

    Hmmm…. That great proponent of justice from Austin (TX), Mr. Nalle, seems absent from this comment thread. I’ve heard of worse miscarriages of justice here. This stuff comes as no surprise. Welcome to the third world, folks….

  • pablo

    Ruvy,

    Nalle is absent because he is busy with his so called republican liberty group. It seems that the local Texas chapter’s members are great fans of Ron Paul, and he is busy re-educating them.

  • http://ruvysroost.blogspot.com Ruvy

    I reread this nightmare of a story, and you know, where I grew up, folks seeking to get their equity out of a certain piece of property that had gone bad for some reason would simply burn the place down and collect the insurance.

    I would never have gone to court over this. I would have burned the house down and if I couldn’t collect on the insurance, go and break the legs of the builder. Brooklyn boys don’t waste money on lawyers (except criminal attorneys and bribing DA’s).

  • http://drdreadful.blogspot.com Dr Dreadful

    Ruvy, bearing in mind that Mr Perry is worth an alarming number of millions of dollars, I suspect that if you were to try, it wouldn’t be his legs that got broken…

  • Doug Hunter

    “If you ask them they would much rather have their house fixed.

    Oh, do you know them?”

    In my admittedly limited experience on the inside of builder lawsuits… knowing personally of two. In neither case did the plaintiffs want their house fixed and one of them wanted cash and several times what their house was worth. One case was dropped with the builder ‘losing’ as the lawsuit was just a cover to prevent the homeowner from having to pay the last draw on his house. The builder decided it was better to take a loss than have a drawn out court battle where you could end up with ridiculous million dollar judgements from jurors the likes of which comment on this thread.

    The second was over foundation settlement which caused a door to stick in a starter home. Homeowner would not let the builder come adjust the door, hired a lawyer, and moved out of the home into a friends house claiming the house was a safety hazard (the door would be hard to open in a fire). They thought they were going to score big getting rents, triple damages, etc. Instead the arbitration inspector found that the slab was within tolerances and the arbitrator uncovered at least two lies from the plaintiff. The builder took the house back as he had offered from the start but the plaintiff had to pay all arbitration and lawyers fees. The door was adjusted and the house sold at basically full price to another buyer without additional problem (the new buyer was told of the previous issue).

    Again, I do only rub shoulders with small, family builders with good reputations so my experience may be slanted. My anecdotal experience tells me not to trust the plaintiff. The financial setup where the plaintiff’s lawyer is often working on contingency and they risk nothing versus hundreds of thousands or millions of $$$ of risk for the builders tells me not to trust plaintiffs. The fact that builders need to maintain reputation to continue selling houses tells me not to trust plaintiffs.

    The pavlovian response by every left leaning individual to any victimization sob story… however fabricated… tells me to never, ever let a lawsuit make it to trial if I’m ever sued.

  • Dan

    After researching this case, it seems there is a little more to it than that Mr. Perry is a bad man who donates to Republican causes. He also pays warranty companies to insure his work.

    In this case the warranty company agreed to go with arbitration since no major facts of the case were in dispute. The Cull’s though, wanted to go to trial.

    After 14 months of expensive discovery litigation, and with a trial imminent, the Cull’s backed out and instead opted to arbitrate.

    By refusing to arbitrate initially they were contractually obligated to pay the defendents legal fees. Though that was a point of dispute as well.

    The arbitrator was seemingly very generous and awarded $400,000 in exemplary, and mental anguish.
    Along with the legal fees of $110,000 the Cull’s incured by the unnecessary discovery and pre-trial litigation, that delayed the arbitration process.

    To me, it sounds like the Cull’s spent a lot of time figuring out the best way to stick it to the man, and found a like minded arbitrator to help them. They certainly deserve to be made whole, but I can see the other side as well.

    It doesn’t seem like the warranty company was responsible for all the legal maneuvering, since they were prepared to arbitrate initially. And I can’t see where bad Mr. Perry had anything at all to do with the litigation. I assume it’s like insurance. He pays his premiums, let’s the warranty company handle things, and goes about his business.

  • http://www.hadd.com CSCHNACK

    I’ve been through a construction defect case, one that was not quite as bad as the Culls but nevertheless there were serious defects, and expensive damages. It’s entirely possible for a house to need repairs in the tens, even hundreds of thousands of dollars. Catching and fixing mistakes early may not be so costly, but not all builders are competent or ethical enough to do that. Some cover up the mistakes and keep going, and sometimes the ‘mistakes’ are deliberate shortcuts repeated over and over to line the builder’s pockets. Since it’s so hard to hold builders truly accountable, most of the time they get away with defective work, which has made it profitable. Shortcuts allow bad builders to undercut good ones, and a few hundred or thousand dollars per house ‘saved’ goes into the builder’s pocket, it’s not actually a ‘savings’ passed on to customers. In fact, such defects COST the customers much, much more.

    In addition to actual repair costs/estimates, the typical homeowner will have to pay for legal fees, experts fees, and more. If it is headed to court there will be expensive discovery costs such as depositions and interrogatories. The legal fees alone can exceed the estimates for repairs. The builder is often a large company and/or has the backing of trade associations that assist them with legal help. They can afford to drag out the process, stall, and drive up costs, because the homeowner is the financially weaker party who is paying out of their pocket. Forget being a homeowner who finds a lawyer on ‘contingency’ as that usually only happens in personal injury, and class actions, etc. The individual trying to sue in civil court for property related damages usually fronts ALL the legal and expert fees, etc. Few can afford to embark on it, and arbitration in builder contracts or home warranty policies usually prevent suing.

    Speaking of ‘home warranties,’ I suspect the type mentioned in a comment here was from a third party company. Builders buy the policies which are a type of captive insurance owned by the industry. Warranties are usually a ‘risk retention group’ that falls outside most state insurance regulation. Being there more to protect builders than home buyers, and escaping much regulation, they enjoy a lot of freedom to deny claims. The policies themselves–which the buyer rarely sees until after closing–have so many exclusions their coverage is largely illusory. And if the home buyer wants to dispute a denial of claim, the arbitration clause that the home buyer never technically agreed to since the builder bought the policy, stops them from suing. Without leverage of being ABLE to sue, the builder and warranty co know that they can deny, stall, and then usually win in arbitration if the home buyer enters arbitration w/them. The arbitrator is doing repeat business w/the industry and the chance of bias is great. Even if the home buyer ‘wins,’ they may only be awarded a fraction of their damages by an industry arbitrator. Because all this is private, the results and complaints rarely make it to public records, which is a sweet deal all around for the industry, and a bad deal for consumers doing research before buying.

    I, too, have followed this case. The faults are in the industry and in the lobbying it does to immunize itself from liability. The home buyer didn’t put themself out there as an ‘expert’ builder, and the home buyer didn’t build the house that fell apart. Arbitration is there to shield corporations, otherwise industries would not fight so hard to be able to keep using these clauses. And the TRCC is just a joke–started out a bad joke and has gotten worse. What more can one expect from a system designed by and for home builders, an industry that has chosen to justify poor work and blame the customer, instead of just building houses right and honoring warranties. It’s sad, because some time ago this industry had a much better reputation. If the builders don’t like being painted with a broad brush they have but one solution–clean up their act, and insist all members build with quality and integrity. Consumers are sick of the bull.

  • http://www.hadd.com CSCHNACK

    You can also add to the damages in many construction cases, the cost of alternative living, and loss of value of the house as a resale. Alternative living can be very expensive as it can be months before a house’s major repairs are done, and in the meantime there may be missing parts of the foundation, no toilets, no water, etc. You can’t necessarily live there during repairs. I am sure there are other damages I’m forgetting, but they do add up.

    In addition, in court, damages beyond that can be added if the builder acted with gross negligence or committed fraud; punitive damages are rare to be awarded or collected, but are designed to deter the builder from engaging in fraud/deception again.

  • Dan

    I don’t think that anyone has alleged shoddy workmanship in this case. The problem was in the instability of the ground the home was built upon.

  • TurtleShroom

    i want to sympathize with this couple, but I can’t. Here’s why.

    1. They almost certainly demanded many times more than their house was worth. If they demanded the amount to fix the house, the legal and attorney fees, and a small intrest (and I mean like five thousand dollars), that’d be plenty, and well less that eight hundred thousand.
    They got greedy. If they just asked the worth of repairing the house, they might have gotten it. The demand was absurdly high for a beam failure. It’s not like their house fell in on itself and totally collapsed. What was damaged?

    2. Court? Where’s the insurance on this? Shouldn’t these people have house insurance? When their house allegedly began to “crumble”, they should have demanded insurance pay to fix the beam and nothing else.

    3. Was it REALLY the builder’s fault? What if it was faulty ground? What if something about the wood was unstable? What if they accidently knocked the beam out of place by their own negligence? What if the poop just hit the fan and the beam just didn’t hold? It’s not neccesarily the builder’s fault, or the owners’ fault. There’s a reason the legal world has “Act of God” to award money by insurance.

    4. Again, back to greed. Eight hundred thousand? That’s over three hundred thousand more than MY house. With that kind of settlement, they could build a SECOND house. Greed greed greed. They should have demanded the cost of fixing the error AND NOTHING ELSE.