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


Legal Analysis

"Why may not that be the skull of a lawyer? Where
be his quiddities now, his quillets, his cases,
his tenures, and his tricks?"
Shakespeare, Hamlet
This chapter gives my perspective of the legal defense and of our position immediately after trial; it was drafted well before the Judge's decision was handed down. Every civil case has its own twists and turns. The same defective home built in another area, with a different set of players, would no doubt evolve differently from ours. Nonetheless, some analysis of our particular case should help prepare anyone involved in a lawsuit against irresponsible people. The sort of tactics used by the defendants and their attorneys in our case we are frequently reminded by lawyers and other plaintiffs are near universal.

* * *

With the end of trial came a feeling of relief. We had so far experienced almost the entire gamut of a civil lawsuit. All that remained was the Judge's decision and then either resolution or appeals. Before this suit neither of us had ever sued anyone or been sued, either personally or professionally. It was our first involvement in a legal system that, for all its touted merits, continually oppressed us. As innocent plaintiffs in a clear cut, open-and-shut civil suit we had to suffer the mandatory ritual of pleas for settlement, attorney posturing, depositions, multiple pretrial hearings and the trial. In truth, the legal system could not help us without inflicting severe financial and emotional harm. We had contracted and paid for a first class dwelling and received the construction equivalent of garbage. Nonetheless, even after the damage became manifest we had no personal agenda against the builder, architect or developer and were certainly not looking for a lawsuit. All we wanted was the house fixed or bought back, and a legal remedy was the only way out. As events unfolded, there proved to be no alternative.

The lawsuit only added to our pain. These men had defiled our home and we had to pay tens of thousands in legal fees to win redress. `Why did this happen to us?' was a question we often asked each other. Because these men were so obviously culpable we expected swift justice. In the beginning, in the spring of 1987, we asked Baxter about an injunction against Murdock to stop him from building more houses until ours was fixed. We asked about an immediate hearing or trial. The evidence was plain for anyone to see. As victims of crime know all too well, our legal system doesn't work quickly. The aggrieved party has to have a lawyer, the defendant has to respond with his own legal counsel and then the plaintiff has to prove his case. Nothing wrong with that, of course, except that the time it takes to litigate works mightily against the victim. Even when your case is obvious there is no swift justice; the term is an oxymoron.

Being inherently slow, the legal process is also inherently expensive. People criticize the cost of medical care, with much justification. But consider the amazing, stupefying cost of litigation, for which there is no third party insurance. We paid our attorney more money for this one case than most patients pay all their doctors in a lifetime. And he earned it, every dollar. In fact he reduced his bill considerably from what it would have been without the contingency arrangement. In reality, the cost of legal redress is often out of sight, certainly beyond most budgets. That is why virtually all personal injury cases are handled on a contingency basis. Our case wasn't a personal injury case and all we could reasonably expect was restoration of our home's value, if that.

To pursue legal redress we had to pay an hourly rate, plus all expenses as the case proceeded. We used our savings with no expectation of ever recouping the money. But if we did not pay and fight we would have forfeited every dollar of home equity and appreciation, well over $200,000. Pity the homeowners who put their last dollar into a defective new home; if they must sue they will need a rather large loan. A scrupulous, fair-minded lawyer like Baxter will do everything possible to settle a case and avoid the vast expense of litigation. He certainly tried his best. From the time he accepted our case in March 1987, until the lawsuit was filed that July, Baxter wrote letters, arranged meetings and pleaded to have the house fixed. During these few months we kept reminding him what sleaze he was up against but he insisted on trying for settlement. In the end he gave up and filed suit.

Our cost to pursue the case would have been considerably less had the defendants honestly investigated the house and repaired it. The total cost to litigate our case four principal attorneys, two assistant attorneys, 40 hours of depositions, eight paid experts, eight pre-trial hearings and a five-day trial surely exceeded the cost to fix our house! After the suit was filed the defendants practiced denial, mini-mization, distortion and delay. There seemed to be no coherent strategy on their part, no attempt to prove our experts wrong, no expenditure of effort to counter our claims. In fact at the February 1988 meeting their experts agreed with ours!

Even if the defendants disagreed with all the reports they never wrote `This is our assessment of what is wrong with your house, we will fix it to acceptable building codes and guarantee it is structurally sound.' Why not? Basically no one wanted to accept responsibility for what had happened to our house, so by default everyone adopted a `distort-or-deny' position. This position was not a defense strategy as much as a bumbling along, a manifestation of ignorance, sloppiness and (in Cooper's case) sheer vindictive greed.

Denial and Minimization. In the beginning Murdock's insurance company did not want to admit the damage was caused by Murdock even though he had built the house. They had already paid to repair Cooper Jr.'s basement next door. By blaming Nelson, even though he was paid by Murdock, the insurer forced us to proceed with liti-gation; they probably assumed that our experts would find most of the problems stemmed from Nelson's design and this information could be used to defend Murdock. Contractually, Murdock's legal responsibility was to Cooper, since there was a construction contract between them; we had no contract with Murdock (except for finishing the basement). But since Cooper didn't give a damn about us and never displayed any effort to get Murdock and Nelson to fix the house, the insurer probably felt no obligation to do anything.

Litigation brought out the weaknesses of our construction con-tract. As Pierce hammered home throughout the trial, we had no legal claim against Murdock or Nelson; we could only get at them through Cooper. As for Cooper, our contract did not provide for arbitration of major disputes, nor it did provide for recovery of legal costs in the event of litigation. The contract made the only person legally responsible to us a man who substituted vindictiveness for integrity, a man who actually had nothing to do with the house's construction. How, oh how did we end up with such a poor document?

"A contract is only as good as the people who sign it," we were repeatedly reminded. Had Cooper been an honorable businessman he could have pressured the builder's insurer and Nelson to fix the house in early 1987 and avoided the lawsuit. He was the missing link. Cooper could have been instrumental in resolving the dispute but he didn't care, and his total denial of responsibility put us in a legal conundrum. It is still odd that a multi-billion dollar insurance company did not hire an expert to write a report backing up their contention that `90% of the problems are the architect's.' Their original expert, Mitch Anderson, did several `walk-throughs' of the house but never filed a written report and by the time of the fifth pretrial his observations were discredited. (He said "I saw no sloping" at his deposition, but Frank Noble's subsequent investigation proved the obvious.)

Initially Cooper also felt no incentive to investigate the truth of our assertions. After all, he had sold us the house and was now being sued to buy it back at full market value. To him, doing nothing was the best approach. Maybe Murdock's insurer would settle and then he would be off the hook. Or maybe we would grow discouraged and quit the suit. What about the lawyers? Why did the defending attorneys not seek a professional survey of the house? Inertia? Incompetence? Simply to delay litigation? A year's litigation could have been avoided if Pierce had hired an architect or engineer to prepare a detailed, written report on the house. Even after Mitch Anderson's testimony was discredited by Noble's survey Pierce sought no other expert opinion about the house.

Bill Nelson hired a competent engineer, Mr. Rabin, but then provided him with limited information so as to generate a meaning-less structural assessment. It took hours of testimony and thousands of dollars in legal fees to show that Mr. Rabin's calculations were based on a type and grade of lumber not used in our house. Rabin never checked the lumber himself, so his testimony was honest but not germane to the case. As we approached the original trial date (April 1988) Cooper finally hired Frank Noble, but only to ascertain if the floors sloped, not to check other details of our complaint the walls, the joists, the sloppy construction. (Perhaps the real purpose of this survey was not to answer our complaint but to obtain evidence against Murdock should Cooper have to take back the house.) Mr. Noble found the floors all sloped, just as we had been telling everyone for over 18 months!

In summary, despite over a year's litigation none of the defendants hired an expert to systematically survey the entire house and write a report. Instead, the architect and builder hired people to give half-way testimony: partial facts, white lies, unsubstantiated opinions. It seemed an amateurish approach whose only purpose was to delay any settlement and, perhaps, build legal fees.

Distortion of the facts. The defendants distorted the facts or hid from the truth because that was their manifest nature in our case unethical or incompetent men who knew not how to develop, design, and construct an honest house or investigate a defective one. But in litigation one must also be prepared for the defense attorneys to distort the truth. This twisting of facts to make black white and white black all in the name of duty to client is one reason the public is so wary of lawyers as a professional group. For many lawyers distortion, deception and ad hominem attacks are acceptable if they justify the end result. But to the average citizen such needless adversarial posturing is repulsive. Consider the actions and words of the defense attorneys even before the trial began.

  • It is March 1987. We have suffered through nine months of continual frustration and aggravation with Murdock and have sent four detailed letters documenting our bitter experience. Finally, when all else has failed we ask Murdock to desist from making more damaging repairs. At that point his personal attorney, a man who has never seen the house, writes our attorney:

    "Notwithstanding that your clients are very verbose, we take issue with the facts."

  • It is October 1987. We have spent thousands of dollars on attorneys and consultants and extensively documented the defects. Our house is worth only half its non-defective value. Mr. Pierce, representing all the defendants, proposes that we repair the undisputed items and then proceed with litigation on the disputed defects.

  • It is November 1987. As if rewriting history, Nelson's attorney (Hank Collins) writes our attorney:

    "I resent your denial of an earlier offer that was made last May."

    Nelson's "offer" was only a verbal statement at the May 1987 meeting that his design was defective and that he would make the necessary repairs to some beams. The offer was never put in writing or conveyed to our attorney in any legal fashion. Furthermore, it omitted any responsibility for the second floor problems and did not address repair of secondary damage from correction of the design defects.

  • It is December 1987. Mr. Pierce's absurd proposal to fix only part of the house has been declined. He then writes:

    "It is unbelievable that your clients have done nothing since March 9, 1987 to mitigate the damages claimed against [Murdock]...especially when all of the alleged construction defects could have been remedied within a week."

  • It is March 1988. In front of the Judge the lawyers state it will only take $10,000 to repair the structural damage. They have no written estimate and do not take into account the full cost of jacking the house, leveling the floors, fixing the drywall that will crack as a result, and generally restoring the house to livable condition.
  • It is May 16, 1988, the date of trial. The defendants, through their attorneys, agree to have our house repaired. The trial is postponed and intensive discussions commence among all the lawyers. Five hours later a verbal agreement is reached; the defendants will fix the house and pay over $11,000 for our experts' fees. Yet when the settlement agreement is put in writing it is ignored. What was their intent on May 16? A purposeful charade? A ploy merely to postpone trial?

To what advantage do attorneys write and speak such distortions and display such behavior? We are told to disregard their comments and accusations and actions as `legal posturing,' that they must demonstrate defense of their clients. But why do they have to attack plaintiffs and distort the truth to achieve their purpose? Are these sensible tactics?

Is Murdock's first attorney, who never saw the house, dumb to deny in writing what is plainly obvious to the naked eye? In a lawsuit, where sworn testimony and the written word are everything, is Nelson's lawyer foolish to refer repeatedly to a verbal comment as an "offer" to fix the house? Are attorney Pierce's comments about how much it will cost to fix our house, against a background of detailed experts' reports, really misguided? The answer to all such questions is a painful `no.' The lawyers understand the legal system. It is we, the victims, who are naive. Whatever a lawyer says, writes or claims can never hurt his client prior to trial; it can either help his client or have no effect. On the other hand, it can hurt and demoralize the plaintiffs.

None of the nonsense hurled at us before the trial was admissible in court. The Judge threw out Murdock's first lawyer's letter as irrelevant. Attempts to discuss Pierce's letters were stifled. Efforts to discuss the aborted May Settlement, or the lack of any serious offer to fix the house, or why we had to spend tens of thousands to get to court, were routinely objected to and the objections were almost always sustained. What happens to plaintiffs between the filing of a lawsuit and the trial is legally irrelevant, meaningless, of no consequence. Our trial showed that there are only three items of importance in a civil suit involving breach of contract: the contract, the experts' reports, and the law. Almost everything else is a nothing, a zero, an ether.

Attorneys Pierce, Collins and Webster knew this. Tom Baxter knew and tried to tell us. We learned the hard way. We had hoped the trial would be a complete recounting of our painful experience, that the way we were treated and made to suffer and spend thousands would matter to the court. After all, we were not in court to get a better deal, to seek revenge or to win publicity; we were there because the defendants screwed up our house and refused to properly fix it. To ordinary home owners, to everyday citizens not inured to the realities of civil litigation, our story would matter: `What? The developer never responded? They wouldn't fix your house? They made no offer even after you sued? Even after their own experts agreed with the defects? What? They said you should have fixed the house in a week? Is it true they promised to fix your house and reneged? What? You had to spend over $50,000 to get to trial? What an outrage!!'

Fantasy. In a civil suit it is only the contract, the experts and the law. Testimony about the way defendants and their lawyers distort, renege, delay, minimize and accuse and your expenses as a direct result is either inadmissable or irrelevant. As a result of the law, or the Judge's rulings on the law, much of our story was of no consequence. Our detailed letters pleading for help, Cooper's non-response and distortions of the truth, Murdock's non-repairs, Nelson's non-investigation, Pierce's unfounded ac-cusations, our enormous aggravation and huge expense, and the constant jerking around we suffered at the hands of these men all was irrelevant.

FOOTNOTE. There is no indication our case would have gone better with a jury. A jury is constrained by the law just like the judge. If the judge tells the jury to ignore something they have to ignore it. If the judge doesn't allow certain testimony to be introduced the jury doesn't hear it. If a jury awards more than the judge thinks the case is worth, he can lower the award.

* * *

So what about the law? After five days of trial it seemed that the law was not on our side. As the defense attorneys constantly reminded the Judge, our house was just another piece of damaged goods that falls under `contract' law. And contract law does not provide for making the buyer "whole" or even close to it. If you buy a defective tractor that the seller refuses to fix or take back, you can sue. If you win two years later or whenever the seller can be made to buy it back but only for what you paid, if that. After all, used tractors don't appreciate in value. And too bad if you spent thousands to prove it was defective, or if the cost of a new tractor is 50% higher than what you paid: the seller is not legally bound to pay you more than you paid him.

The law simply doesn't recognize replacement value, inflation, legal costs, business you lost by owning a defective tractor or any of the aggravation and emotional trauma you experienced because the seller refused to respond. The same law, apparently, also applies to one's home. The absurdity of the law as it regards defective houses should be apparent to any homeowner. In our case we gave the seller every opportunity to either fix the house or buy it back, both of which he repeatedly refused, forcing us to incur enormous legal and expert expenses. The law says these are not recoverable. We suffered untold mental anguish and aggravation. Touch luck, the law says.

In one respect the law might not be so unreasonable if a house depreciated like most tangible items. But your home, the `single biggest investment' you'll ever make? In good neighborhoods homes go up in value, not down. The law, as it was repeatedly demon-strated to us in court, doesn't recognize this simple fact. By the end of trial the Judge, interpreting the law as he saw it, had made several crucial legal rulings against our case.

  • He did not allow testimony regarding the appraised value of the house, barring recision at replacement value (the only other option for receiving anything close to replacement value would be an award of interest on the $350,000).
  • He had ruled we could not recover legal fees because our case did not involve fraud or malice, although Cooper's behavior came very close to planned malice. (Even so, inability to recoup reason-able legal fees when you have no choice but to sue for redress is an unfair law.)
  • He had ruled that we could not recover anything for emotional damages. (On this point, immediately after the ruling, Tom whis-pered to us: "he's wrong!")
Of course the Judge could reverse himself. However, at each step along the way he seemed confident in his rulings, which mostly agreed with the legal arguments put forth by Pierce and Jones. Assuming the Judge did decide in our favor legally, the effect of his trial rulings pointed to one of two maximal awards:

1) Recision, whereby we would sell the house back to Cooper for only what we paid, receiving nothing from Murdock and Nelson, who would instead pay Cooper for cost of repairs. (Webster's argument was actually that recision had to return the property as it had been sold, clearly an absurd position. With $43,000 in capital im-provements there was no way the house could be returned the way Jake had sold it.)
2) Damages, whereby we would receive some amount for repairs from Murdock and Nelson, plus a few thousand to move out; this amount would probably be no more than $75,000. Either decision would leave us in the hole about $150,000. If the Judge awarded us only the funds to fix our house we would lose well over $100,000 if we sold the house to a builder and then bought a comparable dwelling. (I was against fixing the house, considering all the uncertainty and aggravation that would involve.) And of course selling the house back to Cooper for $307,350 would cause us to lose every dollar spent for capital improvements, plus legal and expert fees and every dollar of appreciation. Even returning the house for $350,000 would mean a gigantic loss.

Since either judgment would mean a large financial loss it seemed that, after all, we would win and we would lose. Given our experts' testimony, the manner in which our case evolved, the money we spent to get to trial and the appreciation of single family homes in our area, either award would be unfair no matter how legally correct.

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