Written Testimony Submitted by Jordan Fogal
To
The Subcommittee on Commercial and
Administrative Law
“Mandatory Binding Arbitration
Agreements: Are They Fair For
Consumers?”
Tuesday, June 12, 2007, 10:30 a.m.
I would like to humbly thank you for your
invitation to speak on the subject of
defective housing and arbitration clauses.
Those two terms have become tantamount.
There are a lot of people depending on me
today, because I am a writer, to find the
right words and to speak for them. I am
charged with communicating their frustration,
hopelessness, and the abandonment that they
feel. They are not here; but I am, for all of
them. There are hundreds of thousands of us,
and we are in every state. We realize that
everyone thinks their issue is the most
important; but when an issue, that affects
hundreds of thousands, maybe millions of
Americans, goes unmentioned, we feel like
subjects instead of citizens.
Since your invitation, I have realized
something about you and myself. I could not
do your job. The responsibility I feel just
being here is overwhelming. To handle the
mental anguish of people's pain and
suffering, and have to live and work under
the constant stress of trying to figure out
how to make things right is an unimaginable
burden. I would not make a good politician. I
have only been doing this for four years and
sometimes I become absolutely ill listening
to peoples' stories day after day. However, I
have not felt responsible for them, other
than being someone to talk to who understood,
someone who would listen, and tell them they
were not alone. By your invitation, you have
make me feel that now, I am also personally
charged with that responsibility of making
things right. My words must convey the
feelings of so many families –
families living in motel rooms (some in only
one room) with children and sick elderly
parents, even their pets.
Veterans, even those totally disabled, living
in deplorable conditions in new houses; young
married couples suffering in shock; senior
citizens... all have lost their homes, their
savings, their credit, and their lives as
they have known them (or ever dreamed they
would be). Their futures are ruined, and
their families are destroyed. Most will never
recover. Some are at the end of their ropes
and have even said they wanted to die. It is
one thing to be made homeless by an act of
God, like Katrina; but it is totally
different when it is caused by an
unconscionable act of greed.
I listened to Hispanics and African Americans
saying they were being targeted at the State
Affairs Committee in Texas, where hundreds of
us testified for over twelve hours...
Different ethic groups are not being
targeted. These builders only see one color,
green. We have houses that cost over a
million dollars, compliments of my builder
with $300,000 dollars in foundation damage;
and we have patio homes starting at $120,000
with numerous defects. These are
equal-opportunity crooks. They have awakened
a sleeping lion called arbitration. They
figured out a way to use it to build homes
that are shameful and will never make the
historical register. Arbitration is their
get-out-of-jail free card; greedy builders
play it every time they build a substandard,
defective house. As Thomas Jefferson said, he
will cheat without scruples, who can cheat
without fear.
The pain that builders create for American
families goes beyond the obvious. Foreclosure
rates escalate, and no one mentions the two
reasons that we know: bad builders and
arbitration clauses. In Texas, we have had
over 156,876 foreclosures, and these figures
are not accurate. They do not count those who
lost their homes but chose to make deals with
scumbag investors. Investors, for the price
of your power of attorney, will save your
credit. Many have accepted these offers,
since they have been posted for foreclosure
and are going to lose their home and money.
These investors then go our mortgage
companies and negotiate deals to buy these
defective houses (deals that the mortgage
companies will not make with us). These
investors then cover up defects and dump them
on other consumers. They do not have to
disclose defects on foreclosed properties. My
builder says he does not have to disclose
defects on new properties. When he was asked
- he said, "Why would I?"
Only the sub-primes are ever mentioned. If
the figures are correct, over 2.4 million
more people will lose their homes this year.
In 2005, there were 1.2 million. The states
with the highest foreclosure rates were:
Georgia, Colorado, Florida, California,
Michigan, Indiana, Ohio, Utah, Tennessee, and
Nevada.
Foreclosure rates are in the news almost
every day, but bad builders and
arbitration clauses don't make the news.
The majority of us have no voice. We are
threatened with arbitration, and most are
confused and afraid. Some homeowners patch up
their new houses and dump them on the next
unsuspecting buyer. Some houses in my
neighborhood have had as many as five owners.
Previous owners are being sued by new owners.
We can sue each other for non-disclosure, but
the builders are above the law.
Arbitration is an atrocity; and until you
experience it or see the aftermath of its
devastation, you cannot even imagine. Yet,
some people still believe the
"spin" that arbitration is as fair,
cheaper, and faster than going to court.
Arbitration is not fair; it is not cheaper;
but sometimes, it is a whole lot faster. I
have known people who were filed on by their
builder, shoved through "fast
track" arbitration; and came out the
other side in less than 90 days owing the
builder money!
Arbitration companies will tell you don't
need to have a lawyer, but the builders have
a stable of them. In our case, our builder's
law firm has an arbitrator as a partner.
Would you like to have the partner of my
builder's henchman arbitrate your case?
Builders already have a contractual agreement
with the arbitration company. Our builder has
chosen AAA, the American Arbitration
Association. This is a conflict of interest
because they have already established a
partnership, a symbiotic relationship.
Arbitrators' salaries depend on pleasing
their repeat customers - the builders.
Homeowners who go through arbitration will
probably never be able to own another home.
Many of them end up in foreclosure,
bankruptcy, homeless, and living with family
members. Why does no one mention this crisis?
Why aren't we all outraged? Homeowners
are trapped by arbitration. They cannot
afford the astronomical repairs to their new
homes. Even more distressing is, they cannot
afford arbitration either.
Arms interest rates are expected to reach at
least 10 %. Peoples' house payments are going
to grow out of their reach. Many times, you
have big builders with ties to their own
mortgage companies. Imagine what effect this
is going to have on the US economy.
Only the FBI has addressed one of the growing
problems in Houston - Mortgage fraud. It is
so rampant, they have had to set up a special
task force.
On April 15, 2002, we moved into what was to
be our final home. It had all of the eye
candy, even an elevator. The grandchildren
told everybody at school their grandmother's
house had an elevator. They were all so
excited, we took them over before we moved in
to give them a ride.
We are senior citizens; we had an elevator,
in case our knees went; we were near the
medical center and three blocks from a
funeral home. We had a 30-year mortgage, 6%
interest rate, and could afford our payments.
We thought we had all our bases covered. We
were not a sub-prime. Nevertheless, we were
forced to let our house go into foreclosure.
The foreclosure rate in our neighborhood of
44 homes is nearing 25%. Our house has been
empty for almost three years.
The first night in our new home, my husband
decided to try out his new Jacuzzi tub on the
third floor. When he pulled the plug, one
hundred gallons of water crashed through our
dining room ceiling. My husband tried to calm
me by saying, connecting the plumbing drains
was probably just one slipup the builder had
overlooked. We sopped up water that ran down
the columns and through the hardwood floors,
even into the garage below; water pooled in
the chandelier. Our builder's salesman, not a
licensed realtor, laughingly commented
later..."that was just new construction;
it happened all the time."
Well, this was not one overlooked
plumbing connection, as my husband so
desperately wanted to believe. It was a
preview of coming attractions. Rainwater,
from outside, sprayed us at the kitchen
table. – The windows were
installed upside down (our builder finally
admitted this after three years). Our floors
buckled and black spider-webs of mold crawled
up our walls; the smell grew worse; then
shower wall fell out and little puffballs
grew out of the carpet. All the while, we had
begged our builder to please fix our house.
We had the mold tested by an accredited
laboratory, and they said they had never seen
toxic readings that high in an inhabited
dwelling. Prior to this, we had not mentioned
the nosebleeds, headaches, the swollen eyes,
and the sinus infections because we had seen
how people were treated. Their defects were
dismissed because the homebuyers were crazy
hypochondriacs. My builder said everyone has
mold and it doesn't bother anybody. Yet, he
takes allergy shots. People have told me, and
I have heard testimony, of children's
eardrums bursting, babies vomiting up blood,
and even the family cat suddenly dying.
Stachybotrys and Chaetomium will make you
deathly ill. We took the reports to our
family doctor. She told us to move out of the
house immediately. We sent the report to our
builder. He lied under oath, said he never
received it, yet he sent it to his engineer
the same day; and the engineer was sitting
right there in the room with our emails. Some
were hand written, and I noticed them. He was
asked by our attorney to read them and to
read where he had gotten them and the date.
We swore to tell the truth in arbitration.
Are only homebuyers bound by this oath?
When does lying become perjury? When does the
civil become criminal?
We moved out of our home. We had gotten
estimates for repairs, and they were all
$150,000 or more. Our builder kept telling
the media it would only cost about 2 to 5
thousand dollars to fix our house, and that
was all they wanted to do.
In the article in Mother Jones magazine, the
builder's lawyer, Mr. Chesney, tells the
reporter we are the only ones in the
neighborhood with problems. Yet, when we
referred this reporter to the lawyer handling
some of our neighbor's lawsuits, my
neighbors' lawyer called him a liar; and
showed the reporter the papers signed by the
same Mr. Chesney.
This builder had built our home incorrectly
in the first place. They had attempted to
repair it before we ever saw it, and they
said they fixed it twice while we lived
there. They would seal up the windows on the
inside so the water wouldn't come in, and
then they would seal up the cracks in the
outside stucco so the water wouldn't run out.
So, the walls just filled up with water.
The final insult came when we discovered the
builder had filed suit on his own roofer and
used not only my letters, but our house as
their example of the most defective. Their
sworn testimony said that our house was
leaking so badly they had to remove the
insulation in the attic and the shower, and
redo the walls.
They had committed fraud, and we could prove
they were guilty with their own sworn
statements; but we could not go to court. The
other houses did not have arbitration
clauses. Many of my neighbors were able to
sue the builder. Our builder knew how
defective our house was, so they took out
some insurance. They added an arbitration
clause to our earnest money contract.
We did not file on our builder in
arbitration. Most don't, the builders file on
the homeowners. Now that is backwards. The
perpetrator files on the victim. If the
homeowner misses a deadline or doesn't pay up
in arbitration, they are ruled on in
absentia. Moreover, there are constant
deadlines. AAA arbitration does not give you
one comprehensive bill. They nickel and dime
you to death, so you don't really know what
it is actually going to cost. They will bill
you first for filing fees; so you get a
check, go to the post office, and mail it
certified mail. Then you get a bill for case
management fees, and you run to the post
office. Then they bill you for the room, and
you are back at the post office sending these
payments certified because every bill comes
with a deadline for payment. AAA will make
you crazy running to the post office, trying
to meet their deadlines, and keeping up with
all their demands. They will not give you a
direct or straight answer. They say they are
merely the facilitator. Which sounds like,
something out of the Godfather to me.
We knew better than to file against our
builder. We had heard horror stories about
other homeowners, who our builder had
disposed of. We read their stories and saw
the pictures on the Internet. One person had
just spent $100,000; his house was a wreck;
his dog's hair had fallen out; he developed
serious lung problems, and finally moved out
of the state. His wife let me in, when she
was packing, so I could see their house. The
deck and front was off the house. She told
me, "He can't talk to you." He was
under a gag order, or as the arbitration
companies prefer to call it, a secrecy
agreement. Many of the houses in his
subdivision had and have problems.
Our subdivision of 44 units is near downtown
Houston ... 37 are severely defective
according to my builder's sworn testimony. My
builder, Jorge Casimiro said, "project
damages includes roofing systems... resulting
in water damage penetration to interior of
the units. The interior units' damage
includes sheet rock, insulation, wall
studding, electric wiring and boxes,
plumbing, A/C duck work, flooring... both
wood and carpet, and interior painting."
Knowing all these things, this "Hispanic
Man of the Year" and member of the
Harris County Housing Authority, sold us our
house with no disclosure. He patched it so
well that without destructive testing, we
could not have known. Can you imagine asking
a builder of a new home if you can do a
little destructive testing while you check
out the house?
Our new home lasted not-even two years. So
many new homes will not live out the term of
their mortgages.
After we had exhausted all other remedies, I
began to protest my builder's new property.
He had warned me that his attorneys would
take care of me in arbitration. Since all the
houses had sold in our neighborhood, it made
more sense for me to protest at the new
property. His new property of condos had 76
units. The same moisture control company was
called in, by my builder, when that property
began to leak ... This was the same man we
had hired for our reports and testing. [When
he drilled a hole in our home, water ran
out.] Mr. Risdon, from moisture control, told
me our builder's new property already had 49
units leaking and over $200,000 in damage.
Only a handful had been sold. So, I decided
to protest there. I felt so foolish and lost,
finding out that standing on the corner
holding up a sign was the only option left to
me. Two weeks after I stepped onto the
corner, we received the arbitration papers.
The builder had filed on us in "Fast
Track" to dispose of us much quicker
than regular arbitration.
What good would it have done us, even if by
some miracle, we won the entire $75,000 (the
maximum allowed in fast track)? We would have
been out the costs for arbitration AND any
judgment {if we could ever collect} would
still not cover even half of the repairs our
house needed. Our house cost $360,000; the
lot was $87 thousand, so we had a 273
thousand dollar home that needed over
$150,000 worth of repairs. Where would we
live while it was being repaired? We would
have to pay for our things to be moved out,
back in, and for storage.
There was nothing left to do but let the
house go. We were never going to be able to
sell it, and I would never want anyone else
to be tricked into living in it. I told my
husband, it made no sense to continue to
throw more money into that money pit.
Our money would be put to better use burned
in the fireplace; at least it would put out
some heat.
We could not afford a lawyer anymore. At that
time, we were paying not only for our new
house; but we were paying: moving costs,
deposits for an apartment, and storage rooms
for our things. We had to keep insurance and
lights and water on in our new house even if
we didn't live there, or the builders would
say we were the cause of the damage. After
some serious soul-searching, we realized our
builder would never be able to be trusted (or
have the competency) to fix our house, if it
indeed was repairable. We also knew that he
was not going to buy it back. He said he sold
houses; he didn't buy them. So, we called the
mortgage company and sent them the reports;
and after never being late with a payment, we
allowed our home to go into foreclosure. We
felt ashamed. At the same time, we were also
having to pay for engineers' reports,
moisture reports, infrared water testing,
mold testing, and air-quality index testing.
All the while, our builder knew this testing
was unnecessary. He knew exactly what was
wrong with our house. Our house had a
terribly defective roof, and flashings were
installed improperly. This caused the water
to be diverted into the walls and not off the
roof. Yet, he said nothing.
All the burden of proof is on the homeowner.
The builder lets you do all the work and pay
for it. He just sits there smugly, knowing
all the while that you will run out of money,
give up, shut up, go away, or he will win in
arbitration. They were going to prepare an
eviction notice, and we told them that was
not necessary. We posted, in the front window
of our home, a statement that we had vacated,
the date; and that our possessions had been
removed. The mortgage company was accustomed
to having to evict people who tried to stay
in their homes while not paying, but we had
already moved out. They waited to foreclose
on us for 6 months because they saw all the
paper work we sent them; and at the time, the
builder had also signed with the Better
Business Bureau that he would go to
arbitration with them. So for a while, I was
doing the paper work for both arbitration at
the BBB as well as AAA. The Better Business
Bureau finally threw out our builder when
they discovered that they had been using
shadow companies under one registration and
denying that they had built the houses that
complaints had been filed on for years.
While this was all going on... since
Texas is one of the 31
"Right-to-Cure" states...
you cannot file an arbitration proceeding or
a court proceeding without first going
through the Texas Residential Construction
Commission (TRCC), which is mockingly
referred to as tricky. I wrote them and filed
my paperwork as instructed. I was informed
that I had to send all the reports on my
house and the complaint, by certified mail,
to the builder. I went to the Post Office as
directed and mailed the information. It was
received by our builder, signed for, then
placed unopened in an envelope and mailed
back to me. They were proceeding with
conference calls, and bills were pouring in
from AAA. I asked how they could be allowed
to circumvent state law. I asked for help
from the TRCC. My file is over 3-inches thick
trying to get them to help us. They called
our builder in to investigate, but did not
notify us. The builder's lawyer told the
commission they had notified our lawyers, but
we had failed to respond. The builder's word
is golden; the homeowner has to prove
everything.
At first, our own family did not understand.
Friends would look at our pictures and say,
"I bet you sued the hell out of those
creeps." We could only say, "No, we
can't sue them." Our friends would look
at us as if we were demented and say,
"Of course you can; you can sue
anybody." Other people said, "Oh
you should have used a licensed
realtor." Well, we did. Or they would
say, "You should have had your house
inspected; I would just never have bought a
house without an inspection"... And, we
would tell them, we did. Some of our friends
asked us why we didn't sue our realtor and
our inspector. We politely told them,
"Why should we? They did not build or
knowingly sell us a defective property. We
went to our insurance company. We paid $3400
a year to make sure we had coverage for
everything. But, we didn't. We were not in
good hands with Allstate. Substandard
construction and builder defects are not
covered by Homeowner's insurance. Our
learning curve continued. How could this
happen to us? We are good people. Now we have
paid good money for an uninhabitable house,
and we have no recourse.
Then we find out our Homebuyer's warranty
does not cover habitability. While all this
is going on, we are being tormented by the
American Arbitration Association. We found
out that the only way to get out of fast
track was to file a counter claim. So, I
decided to file a counter claim, to pay off
the note on the house, our medical bills, the
upgrades we had done, and the amount of
appreciation our home should have had. Then I
found out it would cost 6,000 dollars to file
a counter claim, and the résumés they
were sending me for arbitrators were between
300 and 475 dollars per hour. We would have
to pay a case service fee of $2500, for room
rent and expert testimony, and even pay for
subpoenas to be served.
We finally got an arbitrator who said she
would graciously give one day's arbitration.
She was assigned. My builder's lawyer had
never turned in anything, even though
deadlines are given by AAA for everything...
not an arbitrator's list, not a witness list,
nothing. Yet, I was jumping through hoops
answering every email, taking each threat
from AAA, and the builder's lawyers
seriously. I also knew when they called each
other by their first names on the conference
calls (Bill and Becky, and I was referred to
as Ms. Fogal) that I was in deep trouble.
After the pro bono arbitrator, Marcy Higbee,
was assigned by AAA; and the deadline for any
more discussion of arbitrators had passed, my
builder's lawyer changed his mind. When he
had me in fast track he said he could dispose
of me in one day. But now, that we were out
of fast track; and I had a pro bono
arbitrator, he said that he would hold us
hostage in arbitration for at least 5 days.
He also wanted three arbitrators. We had
already run through the retainer that we had
for our first attorney, and had to let him
go. We could see that the builder's attorneys
had the game down pat. They would just write
letters and do things that required your
lawyers' time and eat up your retainer. As my
builder said, they had much deeper pockets.
So we were trapped. We could not pay all the
money AAA was demanding, so we offered to
make payments of 200.00 a month, until we
paid it. AAA said they might accept that ...
if we qualified for hardship. Then I had the
indignity of turning over all our bills,
W2's, tax information, everything but our
firstborn child to qualify for hardship.
Afterward, they would not tell us if we had
been granted hardship or not. They just kept
sending me blank credit card authorizations
for us to fill out our credit card
information, so they could just charge
arbitration costs to us as they accrued. When
questioned, they refused to give me an answer
as to how much it would cost. They don't even
know; they don't know how many hours an
arbitrator will bill for pre and post study.
If you stay in the room after a certain time,
they charge more rent; it just keeps adding
up. I would write; and they would say they
had made a determination on our hardship, but
they wouldn't tell me what it was. Over and
over, they demanded money and sent bills by
mail and email, and sent blank credit card
authorizations like some kind of a demented
collections agency. This went on for
months. Finally, after much harangue, they
said I had qualified for hardship. At last,
we thought we had crossed one hurdle.
After all that... what their hardship plan
got us was a payment of $750.00 before
arbitration, and a balloon note for the exact,
entire amount at the close of
arbitration. Where were we supposed to get
that kind of money, that fast? No one cared.
We'd just better have it. When we saw in one
of the arbitrator's disclosures that my
builder had three other cases going on at
that time (one he had managed to take from
arbitration, back to the courts),
we knew it was hopeless. These were big-time
players. We wrote a letter and said we could
not commit to choosing an arbitrator, that we
could not pay. During a conference call with
the builders' lawyer, William S. Chesney III,
Esquire, and Ms. Becky Bays, I was threatened
by Mr. Chesney. He said that, I would chose
an arbitrator or he would go to the
courts and have one appointed outside of AAA.
He said he had done it many times before, and
it most certainly would not be pro bono. I
finally chose an arbitrator because I felt I
had no choice, but wrote to AAA. I told them
that I would not have the money to pay the
arbitrator, as I had told them many times.
Again, I got the credit card authorization
form. All this time, every Saturday and
Sunday, I stood on the corner in front of the
builder's new property. I was harassed by the
employees and taunted. They called the police
on me six times, but the police were always
nice. Once when the builder tried to tow my
car, I was so glad they had also called the
police, because the police stopped them from
towing my car from city property. I could not
stop them; I was just one person. They were a
big builder.
In the meantime, one of the vice presidents
of AAA, Mr. Richard Naimark was in Houston. I
managed to go to a meeting with him with two
members of HADD, Homeowners Against Defective
Dwellings. I showed him all the
correspondence, the pictures, and expert
testing that had been done on my house. I
told him AAA was being used by the builders
as "an out" for unethical and
despicable behavior. I also gave him other
cases where the rulings were horrible
injustices and asked him to read them on his
way back to New York City. Two days later, I
received a dismissal from arbitration.
Neither Mr. Chesney nor I had paid the
arbitrator, so he simply said, "Case
dismissed due to failure to pay arbitration
fees by both parties."
I was so happy. After nearly 8 months of
torment, I thought that I had my rights back.
Now I could go to court. But, it was not to
be. We filed in court, charging the builder
with fraud. His attorneys dragged us through
10 hearings before the judge ordered us to
return to arbitration and said that we must
file a counter claim {which is much more
expensive than a regular claim}. The judge
said no matter what his personal feelings,
the legislature favored arbitration; and he
could not rule from the bench.
Well, here we are again in arbitration. I
wonder how many times they can force us to go
there, against our will. One good thing has
happened; I have met two wonderful young
lawyers, the age of my sons; and they still
believe if they keep on trying, they will
eventually find justice. We have an
agreement. We pay the expenses and they get
40% of whatever we get. This last year,
arbitration cost us over $30,000 dollars.
Three years have passed. We have not had a
Christmas tree; we have not grilled out; we
have no garage; we have not planted a flower;
we have not had company. Our grandchildren
have no place to stay with us; we live in a
small third-story apartment. It was to be a
temporary situation because, surely
justice would come soon.
We have now completed our second stint in
arbitration; it was again a nightmare. Our
lawyers had 187 documents, pictures, a
PowerPoint presentation, expert witnesses,
and a witness who lived in my neighborhood
before I bought my house. She had thought her
house was the only defective one, and they
were living in one room that wasn't flooded
on the first floor. She, therefore, had gone
to the other few houses that were still
available, including my unit, to see if maybe
the builder would just swap houses with her.
She took pictures of my house before I ever
saw it, with mold, the walls torn out, and
the back of the house ripped off. She had
pictures of the defects to my house, which
were irrefutable proof of fraud.
The builders and their lawyers walked in,
joking with one witness and holding a little
white binder of thirty-seven pages.
As I said, we are once again free of
arbitration process. We have our award. Why
do they call it that? It is just a piece of
paper that means nothing. Award - like a
surprise or something wonderful. It is just a
piece of paper. It says that our builder
committed common fraud, but we are supposed
to pay their attorneys' fees for trying to
get into court because we knew they committed
fraud. It says we were in breach of contract
by filing a lawsuit so we have to pay $14,
597.50 in attorney fees and $146.10 in
expenses to the builder.
Arbitrator's Determination:
- Residential Construction
Litigation Act (RCLA): Stature /
Tremont's offers of repair were
unreasonable and even admitted by the
builder
- Fogals were not granted statutory
fraud, only common fraud.
- Deceptive Trade Practices Act
(DTPA): Fogals' claim is
denied.
- Fogals' request for
attorney's fees under
the Texas Residential Construction
and Liability Act (RCLA): is
denied as there was a prior order
in the first arbitration that stated
expenses... would be incurred by each
party.
- Claim of alter-ego is denied
(even though proven by the Better
Business Bureau) Stature Construction
Company dba Tremont Homes.
Fogals are awarded $40,832.00; the net
result is that Stature shall pay to the
Fogals $26,088.40.
It is so ordered on this thirtieth day of
October 2006, by the most Honorable Vickie L.
Pinak.
This amount will not even cover the cost of
arbitration; this amount will not cover the
down payment on my house; this amount is an
insult after this arbitrator admitted they
committed fraud.
We also were billed (and had to pay) $1687.50
for post study after arbitration was over,
before the arbitrator would issue her award.
Arbitrators do not have to face you when they
render their verdict. They don't have to look
you in the eye. Our arbitrator had 30 days to
issue her "award"; she took every
one of them, while we waited. After all this
time, we have this absurd "award".
This was neither a gift nor was it a
surprise. This is what happens everyday in
this land of pay and play, called
arbitration. In a way, I guess we should
consider ourselves lucky; so many people come
out of arbitration owing their builders. I
will never understand that.
We should quit, get on with our lives, and
salvage what we can. We should forget what
was done to us. We should forget all the
other people who have lived through this
nightmare; but we cannot! When someone does
this to you, it is as if they have robbed
you, which they have; and shamed and
ridiculed you, which they do. It is something
you never forget, and you never get over.
Most days you can't even believe it could
happen in this county. You just want to wake
up in your beautiful new home and have this
all just to have been a terribly bad dream.
These builders have wounded the American
public in a sinister way; they have destroyed
the American Dream. These builders should
have to wear a sign on their backs, like a
Surgeon General's warning on a pack of
cigarettes, saying Buyer Beware. We
have been treated worse than dogs and forced
to chase our tails in a circuitous route to
nowhere. Arbitration is the most
disheartening, disgusting, and disillusioning
thing we have ever been through; and we were
forced to participate in this farce, not once
but twice. Arbitration is like a
metastasizing cancer, spreading throughout
this county, infecting our lives and our
families.
I have received two phone calls while I
worked on this testimony - one from
Mississippi and the other from Marietta, Ga.
How can so many people be affected, and there
is no central number they can all
call? They call Homeowners Against
Defective Dwellings (HADD) and HomeOwners
for Better Building (HOBB). These two
grassroots organizations, each with one woman
at the helm, are overwhelmed by the numbers
of people being preyed upon, reaching out to
them in desperation; but these two courageous
women still keep trying to do the impossible.
Why can't our government just have a toll
free number, with no red tape, no convoluted
paperwork, just a place that people could
call, and at least be counted? I once thought
that there were hundreds of us, then hundreds
of thousands, and now I am afraid there are
more than I ever imagined.
I wanted to understand. I even went to the
university here and met with a professor of
ethics. I asked her how these people could
live in their own skins. She said, "That
is why you see them donating money to
charities and worthy causes, to somehow
justify their transgressions and make
themselves appear to be pillars of the
community and good people."
– I call it simply trying to buy
your way out of hell. These builders have
nothing but contempt for the homeowners. This
is a clear case of the haves and the
have-nots; those who matter and those who do
not.
Please don't tell us that houses would cost
more money, if they were built correctly and
did not have arbitration clauses. I actually
heard a man from a homebuilder's association
selling this theory that home prices would
rise. He gave statistics that an unbelievable
number of people who would be robbed of
homeownership. – We are already
being robbed. All I could think of, was a
line from Shakespeare, "the devil can
cite Scripture for his purpose."
Conversely, it is our contention that homes
could cost much LESS:
- We propose that the time
builders spend in "Kangaroo
Courts" could be better used
supervising their projects.
- The increase in the prices
of homes could be nullified if the
builders would not expend money on
arbitration fees and their gang of
high-priced lawyers.
These wealthy builders are into winning, at
any cost.
Please don't tell us how arbitrations works
so well, not tying up our court system. If
things are allowed to continue status quo,
soon we will have no need for a court system.
In some way, we are all bound by arbitration
already. Consumer confidence is already at an
all-time low. Arbitration is a contract of
adhesion. If you do not give up your rights,
you are denied the services. You cannot buy a
home, a car, have a credit card, bank
account, or even a cell phone. All the big
businesses have adopted this cursed clause.
The arbitration companies have more power
over us than the Supreme Court. How did it
come to this? – Spins and
incomplete information.
Huge awards, given by juries, have always
made the headlines. Unfortunately, the
amounts these people actually collect are
never mentioned. There is no big headline,
following up on the previous 'story'. It is
just onto the next story. This is what I call
drive-by journalism; it is not good
investigative journalism.
Remember the McDonald's lady who spilled
coffee on herself (you know that poor woman
that everyone's heard about, and refers to as
the prime example of frivolous lawsuits)? Do
you recall her name? It was Stella Liebeck.
This woman suffered third degree burns, was
hospitalized for 8 days, had skin grafting
and permanent scaring, and was disabled for
more than two years. How frivolous does that
really sound? No one reported that McDonald's
sold their coffee at 180 to 190 degrees, and
had caused over 700 burns since 1982. The
jury awarded Ms. Liebeck $2.7 million, the
amount of coffee sales for two days at
McDonald's. Some of the arrogance and
shocking testimony given at that trial was
unbelievable.
The jury system has numerous safeguards to
overturn any verdict, including this one, if
it is excessive. In arbitration, there are no
safeguards. This case was a boon to
arbitration. What was wrong with having
corporate responsibility? Big companies
rarely pay awarded damages. Our builders are
not worried for the same reasons. Their
lawyers told me, if we to get a judgment,
then they would have fun showing us the power
of negotiations. These lawyers are arrogant,
rude, hateful, and intimidating; and they are
paid to be.
We have always voted and taught our children
to take this privilege seriously. My husband
has served on jury duty and even grand
juries. Would you believe, after being denied
our right to a trial by jury and being in the
middle of arbitration, we both received jury
summons. We are good enough to serve on the
juries but not good enough to get a trial of
our own.
The effects of arbitration clauses are proven
to be a failed system. Consumer Reports
reported in Jan 2004, 15% of the new homes
built each year were defective. Two years
later, they raised that percentage to 17%
with two or more serious defects. Houses are
constantly being built more poorly, because
arbitration clauses make it so profitable.
"All truth passes through three phases: First,
it is ridiculed. Second, it is
violently opposed; and third, it is
accepted as self-evident."
Arthur Schopenhauer
Those of us who have lived through
arbitration feel as if we have become
characters in some sort of a John Gresham
novel except – unfortunately for
us, this is not fiction.
"Representative government and Trial by
Jury are the heart and lungs of liberty.
Without them, we have no other fortification
against being ridden like horses, fleeced
like sheep, worked like cattle, and fed and
clothed like swine."
John Adams
Mr. Adams must have had a premonition of the
arbitration atrocity to come. As an American,
I believe liberty, freedom, and patriotism
still ring in our hearts, but no longer in
our laws.
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