State Supreme Court blasts housing contract

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CHARLESTON, W.Va. - The state Supreme Court ruled last week a national housing company can't use fine print to dodge lawsuits alleging it built unsafe homes.The 5-0 ruling is the second time this year the high court has taken issue with companies that try to force consumers to take their cases to private judges instead of the normal court system.Richmond American Homes, a Denver-based company, was trying to avoid being taken to court by people living in homes it built in the Eastern Panhandle.Forty adults and children claim they were exposed to cancer-causing radon gas because of Richmond American's improper workmanship.But Richmond American argued the residents couldn't take the company to court.That's because some of the residents signed purchase agreements that supposedly required them to pursue any claims against the company in front of a private arbitration judge. That means the residents couldn't get a jury trial.Because the decision of the private judge is binding, consumers also can't appeal adverse outcomes.Supporters say arbitration is a way to avoid long and costly trials. Critics of the arbitration process argue the private judges are often beholden to the companies that give them their business.The Supreme Court, for the second time this year, firmly agreed with the critics.This summer, the court ruled nursing homes shouldn't be able to insert fine print into contracts that prevents them from being taken to court if they are accused of harming residents.The ruling in the Richmond American case, like the nursing home ruling, was a 5-0 decision written by Justice Menis Ketchum.Ketchum said the court was naturally going to be hostile to any contracts that "rely upon arbitration as an artifice to defraud a weaker party of rights," including Richmond American's purchase agreement."Richmond's Purchase Agreement collectively created an arbitration process that either implicitly or explicitly limited the ability of plaintiffs to fairly pursue remedies for injures and damages caused by radon gas in their new homes," Ketchum said.In this case, 17 of the 40 residents suing Richmond American had signed agreements designed to force them into arbitration if they had problems. But 23 didn't sign the agreements. Of those, 18 were close family members, mainly children, and five bought their homes from someone else who had signed the purchase agreement.The residents' attorneys argued the agreements were vague and gave too much advantage to the company at the expense of the residents. Attorneys also argued the agreements shouldn't apply to people who didn't sign them.In his ruling, Ketchum dismissed Richmond American's argument that the homebuyers were savvy purchasers of expensive homes. Instead, he said Richmond American is a national corporation with in-house lawyers who buy and sell homes all the time. Ketchum also noted Richmond American would have charged homebuyers an extra $7,500 per house if they used an attorney of their own.The recent case involving 40 people was not the first time the state Supreme Court has heard about Richmond American. The company faces a series of lawsuits over radon exposure in its homes. All told, its work on 45 homes in the Eastern Panhandle is the subject of lawsuits by 190 residents.Parts of the Eastern Panhandle are labeled a "high radon area" by environmental regulators, but the residents claim Richmond didn't take required steps to minimize radon build-up in their homes. The suits allege Richmond American incorrectly installed radon mitigation systems, didn't install them at all or actually installed fake systems.In June 2010, the high court ruled 5-0 that a circuit court judge needed to reconsider punishments he levied against Richmond American because of legal misconduct by the company.While the court technically sided with Richmond American, Justice Robin Davis slammed the company for legal misconduct in a concurring opinion.Among other things, Richmond American offered to hire one of the attorneys for the residents.It's not clear if the offer was sincere, in which case the company could be seen as trying to buy off its opposition. The attorney, Andrew Skinner, seems to have thought otherwise. He said he thought Richmond American made the offer to "create a conflict between me and my clients and to conflict me out of future radon cases."Davis' opinion indicates Richmond American didn't stop trying to create conflicts."When Richmond American failed in its attempt to 'buy-off' plaintiffs' counsel, it made a tactical decision to drive a wedge between the plaintiffs and their counsel," she wrote. "When this effort failed, Richmond American took the deliberate and calculated step of going directly to the plaintiffs with a malicious letter that was designed to interfere with, and sabotage, the attorney-client relationship between the plaintiffs and their counsel."The letter to residents said "your attorney chose not to send this letter to you; therefore I am making the offer directly to you." A circuit court found Richmond America's letter was designed to "sow discord" between Skinner and the people he represented.Contact writer Ry Rivard at ry.rivard@dailymail.com or 304-348-1796. Follow him at www.twitter.com/ryrivard.

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