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


Motion to Amend The Most Unfair Civil Court Decision in the History of Cleveland

The way our trial evolved we expected to win legally and lose financially. We won a major legal battle by convincing the court to order recision on a $350,000 home. Such judgments aren't made lightly. But the judgment was a huge disappointment because of what was left out. Returning the house only for what we paid meant a major financial loss. There was the immediate loss of $55,000 already spent on legal and experts' fees. Added to that was another $100,000 appreciation on our home over three years' time, plus closing costs incurred in buying another house. As a legal document the Judge's opinion left many questions unanswered. No case law was cited and no mention made of the legal issues regarding interest or experts' fees. Was it just an oversight that he didn't grant us experts' fees, when he had accepted our experts' reports as evidence and cited them extensively in his opinion, and when both he and Murdock's attorney had agreed in court that "investigatory fees" are allowable?

Considering the detail covered in the written opinion, oversight did not seem likely. If not, then why no reimbursement for experts' fees? The testimony of our expert builder testimony Tom had thought important enough to delay the trial for five months ended up solely of benefit to Cooper. Not only did we lose financially but we paid to prosecute Cooper's counterclaim! (The total of $38,890 awarded to Cooper was less than our experts had estimated to fix the house. One explanation for the lower figure is that the Judge did not grant Cooper money to waterproof the basement externally. Another reason, presumably, is that Cooper heads his own construction company and could get the repairs done much cheaper than we would have had to pay. In any case the cost of repairs was no longer our concern since we did not have that option; for us to repair the house and try to sell it, according to the judgment, would be inviting another lawsuit.) The Judge also did not mention exactly when the house should be returned, inviting the possibility of more legal wrangling with Cooper. Would we have to move immediately, or would we have time to look for another house? Could we be evicted by Cooper?

There were also some relatively minor inconsistencies. The opinion mentioned "the defendants' experts" when there was only one, and it listed our capital improvements to the house as $42,218 instead of $43,100, without any explanation for the difference of $882.00. (Tom had no explanation and said that other items were more important to worry about). Most glaring was that the decision meant Cooper could again profit on the house. In effect Cooper would get the house back for about $310,000 ($349,000 minus $39,000 received from Murdock and Nelson). Although defective at that price, the house would be far more valuable when reconstructed to acceptable building codes. It had been appraised in early 1988 (if properly built) at $417,000. By early 1989, when we seriously re-entered the housing market, our house would have been worth at least $450,000 if properly built. (As was soon learned to much dismay, we could not even come close to replacing the house for that amount.)

Although $450,000 might be too high a price for a rebuilt dwelling that had been proven structurally defective, any sale over $349,000 meant another profit for Cooper! The house sits on a beautiful two-acre lot in a very desirable community. We contracted for the house in 1985 and Cooper would be selling it in 1989. It doesn't take a real estate genius to realize the profit potential. If Cooper spent the money to fix the house properly there was no way he could lose, and he stood to make a bundle. We were out the appreciation that he would gain. And we had to buy another house in the same area that had surely increased in value since 1985. It was also interesting to note that Cooper got away with his sociopathic behavior toward us. Nothing was said or done about his attempt to extract another $1700 the day before the closing, his refusal to respond to us or our lawyers over a full seven months, or his inconsistent testimony. What Cooper did to us was not illegal, just "bad bedside manner" according to the Judge. In a contract case such behavior is, apparently, irrelevant even when it causes pain, suffering and huge financial loss.

In a case like ours the law is unfair. A builder or developer can materially breach his contract and not be concerned about conse-quences any more dire than buying back the property at the original selling price. Since prime real estate invariably goes up in value, the longer the developer jerks around the buyer and delays trial, the greater will be his eventual profit. With laws that allow this kind of behavior there appears to be little risk in selling defective real estate. (Unless the design/construction defects lead to physical harm, for then a different set of laws will apply.) Based on all these considerations our attorney filed a lengthy `Motion to Amend the Judgment' and sent it to the Judge, with a copy to the defendants. This Motion, filed December 9, 1988, asked that we be awarded experts' fees, closing costs and, most signi-ficantly, interest on the $349,568. (Since testimony on appreciation had not been allowed in court, Tom argued instead for the interest as a way of our receiving a fair price for the house.)

Because the judgment as it directly pertained to us was against Cooper (we were awarded nothing from Nelson and Murdock except moving costs), Tom directed his arguments only to the developer. It would be up to the Judge to decide if any additional award against Cooper should come via the pockets of Murdock and Nelson. In early January Cooper's lawyer filed an Objection to our Motion, citing reasons why Cooper should not have to pay any more. In such matters the first-filing attorney gets another chance to respond, and in mid-January Tom answered with a strong rebuttal to Cooper's Objection. Based on the Judge's rulings during trial we did not expect much additional award, if any. He had heard all our arguments for experts' fees and interest at trial and had not seen fit to mention either item in his written opinion.

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In early December 1988 we began looking for another house. As we feared, houses in our area had shot up in price since 1985. To replace our house would cost at least $450,000 if we could find it. Three hundred and fifty thousand was the price being paid for houses 20-25 years old and two-thirds the size of ours, with half the land. Unless the Judge accepted our Motion for Amendment and granted us interest, we would lose at least $100,000 in appreciation (plus almost $60,000 in legal and experts' fees, and another $6000 in closing costs). In late December we saw one house we liked on a quiet street, 30 years old but very clean and priced under $350,000. Unfortunately no offer could be made because we had not yet heard about our Motion to Amend. Tom strongly advised against entering into any real estate contract until the Motion was answered and we knew none of the defendants would appeal. Much to our dismay this particular house sold the following week.

The first few weeks of the new year were depressing. All the new real estate listings seemed either incredibly overpriced or the houses were not even close to what we needed or wanted (and we were far from picky at this point). Meanwhile, we heard nothing from the Judge. On Friday, January 20 (Inauguration Day) Tom called with the bad news. The Judge had responded to our Motion with a single-word statement: "Overruled." No explanation, no comment. Just "Overruled." The case was over. We had suffered one of the largest financial losses ever sustained by innocent homeowners on a brand new, fully insured and guaranteed, custom-designed home.

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Our lawyer recommended appeal but we decided it was not worthwhile. Tom estimated appeal would take at least a year and cost around ten to 15 thousand dollars, possibly more. That fact alone deterred us, but there were even more cogent reasons for not appealing. First, we would have to remain in our crooked, torn apart, undecorated house for the duration, and living this way was becoming increasingly painful. Second, the Judge had, in essence, ordered Cooper to turn over something that goes down in value (a fixed sum of money) in ex-change for something from us that only goes up in value (real estate in a prime location). Any further delay could only hurt us and help Cooper. The cost of the house we would eventually have to buy would continue to increase. If the appeals court turned us down on the interest issue one, two or three years later then all we would end up with would be the same $349,568; we would be poorer by an additional one, two or three years' real estate appreciation, plus the cost of appeal. Even if the appeals court granted us interest, the dollar amount would likely be offset by appreciation on the house we would eventually buy. The nature of the Judge's decision therefore made it financially imperative that we give the house back to Cooper as soon as possible. Any further delay, by appeal or whatever, would only be to our detriment.

Third, Cooper might not pay anything at the end of the appeal process, by virtue of bankruptcy or some other contrivance; or, he could die in the interim and our house might be tied up in the probate of his will for years. At least by not appealing we would force the issue and collect the money while Cooper was still active and the case fresh in everyone's mind. Fourth, we felt the law was simply against us. Ohio law does not (apparently) recognize the appreciation value of one's home in recision cases, or the emotional aggravation of a defective new home, or the legal and experts' fees necessary to prove it is defective, or anything else that will recompense homeowners for their losses. It seemed unlikely that an appellate court would rule in our favor on the interest issue. A higher court might rule in our favor on the experts' fees, but appealing on that issue alone made no sense since the cost of appeal would be greater. All things considered, we decided not to throw good money after bad to see if the law is really so stacked against buyers of a defective new home.

From our perspective it seems that laws regarding defective homes must have been written by builders and developers. We wonder what happens in other states, especially in areas where homes double in value every few years. If the developer breaches his contract and loses in court, does he then get to buy the house back at only half its market value? Or one-third? Carried to its logical extreme, a builder or developer who sells a defective home can, if justice is delayed long enough, buy back the property for just what the land is worth!

In summary, since the Judge had ruled so strongly against our arguments for experts' fees, appreciation, closing costs and damages, it seemed highly unlikely an Ohio Appellate court would change the outcome enough to make appeal financially worthwhile. But suppose the Judge had made some legal error? In such a situation the appeals court could conceivably order a new trial! Emotionally and financially, a new trial would have been unbearable.

So we had many reasons not to appeal. From all angles it seemed only a way to lose more money and incur more aggravation. We had already learned the hard way that you can win legally and lose big. We didn't want to be hit over the head with that club again. In truth, after two and a half years of hell we just wanted the nightmare to end. We were tired of playing legal games, tired of delays and disappointments, tired of being jerked around by uncaring defendants and their attorneys, tired of hemorrhaging money, tired of our home being treated like a warehouse. Against incredible odds we had built a new home and lost a fortune. To us, this was, and will always be, the most unfair civil court decision in the history of Cleveland. But what was done was done. It was time to accept our losses and get on with our lives.

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