And They Built A Crooked House, by Ruth S. Martin



The Builder's Insurer Passes the Buck

A little integrity is better than any lawsuit.
Ralph Waldo Emerson

Everyone invited came to the May 12, 1987 meeting at our house except Cooper and his lawyer. At that point Cooper had no lawyer. Cooper simply chose not to respond, directly or indirectly. He made no attempt to see the house, to deny the problems, or to explain himself, and he ignored all letters from us and our lawyers (Baxter and Schroeder). Cooper had received the letters, of course, and knew the meeting at our house would include both Murdock's insurance agent and personal lawyer. Someone (Cooper?) had conveniently arranged for the same people to meet next door one hour earlier. The purpose? To arrange for repair of his son's leaky basement, which also had cracks and a water problem.

At Tom Baxter's insistence we were not home for the May 12 meeting. Minutes were taken (by our engineer Bill Sloan) and sent to all the participants, including the builder and architect and their representatives, and our experts. Portions of the minutes (as kept by our engineer Sloan) seemed to suggest a solution was at hand.

The meeting was held to review the problems found in the residence...and reach an agreement as to the extent and repair of the problems. It was agreed the meeting would concentrate on the structural problems, avoid where possible, cosmetic or finish problems. The problems in the basement, consisting of undersized beams in the unfinished portion and missing beams in the finished area, were resolved. Mr. Nelson agreed to provide design, obtain pricing and pay for these repairs. The repairs consist of adding columns and footings under the undersized beams and adding beams where they are missing. Still to be resolved is the bearing wall on slab, adjacent to the stairs, if there is a problem. The remaining discussion centered on the joist sizing supporting the second floor. Messrs Sloan and Russell felt the joists are undersized since they also support roof loads. Me. Nelson stated in his review the joists are marginally acceptable when a "Select Structural" grade lumber is used...Due to safety factors used in design, and conservative building code mandated design loads, there is no immediate danger. Mr. Sloan did state long term deflections are possible. Mr. Nelson did agree to review again the calculations for this framing, leaving this area unresolved... ...The meeting then proceeded to walk through the house, observing different deflected areas. Various one on one discussions were held. At this point the meeting broke up. Please review these minutes, Please submit any additions or modifications for inclusion. Respectfully submitted, Bill Sloan, P.E.

Despite the apparent optimism in these minutes nothing was resolved at the May 12 meeting. No "additions or modifications" or response of any kind came from anyone. Hearing nothing, on May 22 Baxter sent out a letter to all participants:

Gentlemen: I would like to thank you for your reception to my invitation to view the Martins' dwelling on May 12, 1987 and discussing the construction problems. Even though Mr. Cooper saw fit to avoid the meeting, I am confident that he has been informed of our discussions. I believe that the consensus was that all of the construction items listed in my prior correspondence had to be corrected, repaired and/or completed, as the case may be. With respect to the structural problems, upon reflection, Messrs. Sloan and Russell are still of the opinion that the second floor structural problems are significant and any suggestions that the Martins accept a design that may be "marginally acceptable" is totally unacceptable. Accordingly, we must insist upon adequate compensation to place the dwelling in the condition which was bargained for -- a first class dwelling. In this connection, I enclose a copy of [our consulting contractor's] estimate. To this estimate must be added: 1. $20,000 for basement 2. Three months living expense for the Martins during repairs. 3. Professional fees -- architectural, structural, and legal. I look forward to hearing from you. [Signed, Thomas J. Baxter.]

The response to Baxter's letter was zero. Don Henderson, the builder's insurance agent, had promised Baxter a response after the meeting. He did not respond then or afterwards, and also did not respond to Baxter's letter. And what about Nelson? The minutes reflected his admission of design inadequacy but there was no followup with a specific proposal or offer of any kind. Instead, total, absolute silence.

Meanwhile, structural engineer Sloan finalized his report into a lengthy document complete with figures and structural calculations. Copies were sent to everyone. The next month was one of those infernal spaces in litigation when nothing happens and only the plaintiffs suffer. Forget Nelson. He had no insurance and was not about to pay his fair share. He talked responsibility at the May 12 meeting but never made a formal or written repair offer of any kind. (Notwithstanding this fact, Nelson's May 12 `proposal', as reflected in the minutes, would later be characterized as his formal "offer" to fix the house.)

As for Cooper, he too was a lost cause. But what about Murdock's insurance company? Did the company assume any re- sponsibility at this point? Sadly, no. Since a lawsuit had not been filed the company apparently felt it had no legal obligation. What about a moral or ethical obligation, especially considering Baxter's efforts to arrange a meeting and a settlement, and Henderson's promise to respond? Again, zero. What about our contract? Didn't that mean something? As Cooper had already taught us, without a formal lawsuit our contract was just something to be ignored.

FOOTNOTE. When told of our plight, attorneys we meet invariably respond that they see this all the time, where a business contract is ignored and the wronged party has no choice but to file suit. Being neophytes in the legal world, we were stunned when our lengthy construction contract was totally ignored. We had never imagined this could or would happen.

Hearing nothing, Baxter called Henderson in late June. Henderson offered no excuses for not responding but did agree to meet at the house June 23. He would bring Mr. Mitch Anderson, the insurance company's `construction expert' who had also attended the May 12 meeting. Larry and I met Baxter, Henderson, and Anderson at the house on Tuesday, June 23. No other lawyer and no defendant was there. Henderson was the chief spokesman. He impressed us as a nice young man, but apparently not a decision maker in the insurance company's local office. We were gratified to learn that he, too, was appalled at the situation. He admitted there were a lot of problems with the house and gave the impression that he had wanted to respond earlier but was stayed by a higher authority. At one point he said: "I even called all the subcontractors. They told me about some bizarre things when the house was going up." From this offhand comment we inferred that the workmen confessed to shoddy and sloppy construction practices, but Henderson wouldn't elaborate. Henderson talked in very general terms about his company's responsibility but he did not make any offers. Then Larry spoke up.

"Mr. Henderson, we just want our house fixed. The estimate to fix it is $125,000 including the basement, plus another $25,000 or so to move out for three months and store our furniture. If [your company] can't offer that amount or guarantee to otherwise fix the house, don't make us any offer. We're not interested."
To which he responded:
"We feel Murdock is responsible for only about 10% of the problems. Nelson is responsible for the other ninety percent. That is Mr. Anderson's assessment."

Translation. Our company might offer you, as victims of our inept insured, a few thousand dollars. If you want more you have to get it from Mr. Nelson. We insure Murdock, not Nelson. Tough luck. We thought: `What about our contract? We had not hired or paid Nelson. Murdock built the house. He and Cooper took our money and signed the contract! What are they trying to pull?'

We said: "Thank you, Mr. Henderson. Now we know where we stand."

It was painfully evident. The defendants had no intention of getting together to investigate the house and offer an honest solution. Without any real investigation, Murdock's insurer chose to view Nelson's design as the major problem. Even though we had not hired or paid Nelson (Murdock had paid him, as it turned out), the insurer refused to acknowledge any responsibility for the architect.

FOOTNOTE. Anderson's written "report" to the insurance company, we later learned, consisted of putting the letter `A' for architect or `C' for contractor next to each item in consulting architect Sam Russell's April 1, 1988 letter (see Appendix B). Apparently all Anderson was asked to do was walk through the house and assign responsibility to the listed defects; most of the items had `A' beside them. There was no attempt by Murdock's insurer to come to terms with the house's problems and offer a unified solution.

Had Nelson been insured for architectural malpractice there would likely have been some agreement to fix the house. After all, the defects were obvious and someone was responsible. Although Nelson admitted to some design inadequacy at the May 12 meeting he certainly wasn't going to pay for 90% of the repairs. And where was Cooper? Had Cooper felt any responsibility for our defective house he would have become involved. After all, Cooper had hired or chosen both architect and builder, had financed the house, and had signed a contract guaranteeing the structure. Moreover, between the time we entered into the deal (November 1985) and the spring of 1987 Cooper had formed his own residential construction company and started building houses! Thus Cooper was in excellent position to come in, assess our house's problems and coordinate its repair. Without such coordination the architect and builder would just blame each other and never offer a comprehensive solution.

Cooper's absolute refusal to help us, more than any other action to that point (including his last minute demand for more money), showed his utter lack of integrity in this deal. A developer with even a modicum of integrity would have at least helped to mediate a settlement, if for no other reason then to prevent being sued. Not Jake Cooper. He would show us. He would withhold his help no matter what his legal or moral obligation at all costs. One more step was necessary, an important legal strategy according to Baxter: give Cooper a final chance to respond. Baxter would write Cooper a letter demanding recision (buyback) of the property at its full value. This letter would show that we didn't want a lawsuit, only a return of our money. Larry and I knew Cooper wouldn't respond. Baxter's letter went out July 7, 1987

There was no response.

* * *

You must be thinking (as we were at the time): how are these guys going to get away with their behavior? Don't they care about a lawsuit, a public trial, or their reputations? How can they treat new-home owners like this and hope to come out ahead? Won't the law make them sorry for the way they've reneged on contract, avoided responsibility, shifted blame? While you are contemplating these most appropriate questions let me give some hard-earned advice. Don't ever underestimate a legal battle. The more just the cause that you cannot redress without a lawsuit the more difficult will be the opposition. They owe you something but they will deny, deceive, and attack to keep you from winning what is rightfully yours. You will not have a pleasant experience. But these men left us no other choice. None.

-- continued --