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HomeMy WebLinkAbout03-0284QUALITY BUILDERS WARRANTY CORPORATION, Plaintiff VS, HERMANSON HOMES, INC. Defendant : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, : PENNSYLVANIA : CIVIL ACTION - EQUITY : DOCKET NO. NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the Court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHER YOU CAN GET LEGAL HELP. CUMBERLAND COUNTY BAR ASSOCIATION 2 Liberty Avenue Carlisle, PA 17013 (717) 249-3166 QUALITY BUILDERS WARRANTY CORPORATION, Plaintiff VS. HERMANSON HOMES, INC. Defendant IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - EQUITY DOCKET NO. d~ _ ~ COMPLAINT AND NOW, this 17th day of January, 2003 comes the Plaintiff, Quality Builders Warranty Corporation (QBW) and files the within Complaint against the above named Defendant and avers in support hereof the following: 1. Plaintiff is Quality Builders Warranty Corporation, a Pennsylvania corporation engaged in the Ten Year New Home Warranty business with its principal place of business situate at 325 North Second Street, Wormleyburg, Cumberland County, Pennsylvania, 17043. 2. Defendant, Hermanson Homes, Inc. (Hermanson) is a Minnesota corporation engaged in the new home building business with its principal place of business situate 36134 Polk Street, Stanchfield, Isanti County, Minnesota 55080. 3. On February 27, 2002, Hem-~nson executed a Builder Agreement in which Hermanson agreed to become a member in the QBW Ten Year Limited Warranty Program. A copy of said Agreement is attached hereto incorporated herein and marked as "Exhibit 1". 4. In connection with its membership Hermanson executed an Amendment to the Builder Agreement dated April 03, 2002 in which Hermanson agreed to maintain its membership in the QBW Ten Year Limited Warranty Program for five years to commence on April 03, 2002. A copy of said document is attached hereto incorporated herein and marked as "Exhibit 2". 5. On December 19, 2002 Hermanson indicated that they intend to breach their Agreement by applying for and maintaining their membership with another warranty program. 6. Section B 1 of the Builder Agreement executed by Hermanson states, "Builder agrees to enroll in the program every home Builder, Builder's Principals, or any entity under Builders or Builder's Principals common control constructs." (See Exhibit 1). 7. The Builder Agreement states in Section B 5, "If Builder fails to enroll any eligible homes as required by this Agreement, QBW may seek specific performance or other appropriate relief in legal or equitable proceedings." (See Exhibit 1). 8. Hemtanson's notification that they wish to terminate their membership in the QBW Program is a violation of the Builder Agreement as amended and QBW seeks to specifically enforce the obligation of the Builder Agreement, as amended to compel Hermanson to enroll all homes they construct in accordance with QBW's membership requirements for the period April 02, 2002 to April 02, 2007. 9. In the alternative, QBW seeks damages from Hermanson for homes, which the Builder would be required to place warranties on during that period of time, which damages exceed the sum of $35,000. 10. QBW also seeks attorney's fees as authorized by Section B 5 of the Builder Agreement. 11. Jurisdiction is proper in the Pennsylvania courts since Section E 5 of the Builder Agreement indicates, "This Agreement shall be interpreted and enforced in accordance with the laws of the Commonwealth of Pennsylvania. All suits instituted trader this Agreement shall be AGREEMENT made this 27th BUILDER AGREEMENT day of February ,2002 between Q,U~L,.ITY BUILDERS WARRAjNz,TY CORPORATION, a Pennsylvania corporation, herein referred to as "QBW," and ./-~ ¢, /'~q 6'1"~ (.,. ~/ "J~ ~,.~ , / I~' C , Name of Builder: (indicate'whether a corporation, partnership, individual or other) ,of _~ ~,i/,~ ~' ' (~ . /'~'~/~-/ herein referred to as "Builder." ~ State Zip SECTION A. MEMBERSHIP AND TERM: 1. QBW administers a program whereby home builders registered with QBW enroll homes they construct in the program and purchasers of those homes are protected by a warranty against certain specified defects. 2. In order to develop and maintain a good reputation for providing protection to purchasers of well-built homes, QBW protects and promotes its good-will by careful selection of builders to participate in its warranty program. 3. Builder desires to participate in QBW's warranty program and, to that end, agrees to abide by the provisions of this Agreement and to conform its behavior to the standards expressed herein and in the Limited Warranty Agreement. Builder warrants that all information supplied to QBW in connection with its application is true and correct. 4. All registration fees (initial and annual rescreening) are set by QBW at its discretion and are non-refundable. 5. QBW, upon executing this Agreement, has accepted Builder as a member of its warranty program, subject to the Builder's continuing performance of its obligation under this Agreement. 6. Builder's membership shall commence on the date of Execution by QBW and shall continue until terminated by either party in accordance with the terms of this agreement. QBW reserves the right to rescreen Builder annually. If QBW determines that Builder does not meet its approval standards upon rescreening then QBW may terminate Builder's membership and the provisions of Section B, paragraph 6, shall be in effect. SECTION B. HOME ENROLLMENT: 1. Requirements. As part of its participation in QBW's warranty program, subject to QBW's acceptance, Builder agrees to enroll in the program every home, Builder, Builder's Principals, or any entity under Builder's, or Builder's Principals common control constructs in any state in which QBW operates and agrees to pay all fees required by QBW in the enrollment process, which fees shall be non-refundable. 2. Procedures. Builder agrees to enroll its homes according to procedures established by QBW. Builder may enroll homes currently under construction and homes completed but not sold er occupied (as of the date of this Agreement or the date of reacceptance following a period of suspension or non-participation) provided that enrollment is made within 45 days of exe- cution of this Agreement or reacceptance, and QBW has inspected and approved the home. Homes which remain in a Builder's inventory longer than 18 months must be enrolled by the end of the 19th month from construction start date to qualify for enrollment. The warranty will be issued to the Builder and the unexpired portion of the warranty will automatically transfer to the purchaser. When enrolling other than a detached single family dwelling, Builder shall enroll each individual unit of any multiunit dwelling such as but not limited to duplexes, townhouses and condominiums. For each home enrolled, the Builder shall pay a warranty fee as determined by QBW within the time periods estab- lished by QBW. All warranty fees are non-refundable. A minimum warranty fee of $100.00 shall apply. QBW will provide Builder with a copy of the Limited Warranty Agreement and Enrollment form. Builder and purchaser must complete and sign the Enrollment Form at closing, and Builder agrees to furnish QBW with a copy of the signed Enrollment form within ten (10) days of closing. Builder agrees not to charge the purchaser directly for the cost of the enroll- ment fee. A home will not be considered enrolled until QBW receives and approves the fully executed and completed Enrollment Form, payment of all fees, and an approved final inspection. 3. Reservation of Power of Review. QBW reserves the right to reject any home submitted for enrollment in the program if (a) the Builder is not a member in good standing; (b) the home is not constructed in accordance with the Warranty Standards or building codes specified in the Limited Warranty Agreement; (c) the Builder did not observe the enrollment procedures; (d) misstates or misrepresents any information; (e) in any way fails to comply with the terms of this Agreement. 4. Assignment of Rights. If a purchaser files a Complaint pursuant to the Limited Warranty Agreement which the Builder fails to correct, the Builder hereby assigns to QBW or its insurer, as the case may be, any rights which Builder may have against a supplier, manufacturer, subcontractor or other person for work performed or materials supplied in connection with that claim. Builder agrees to cooperate fully with QBW and to provide QBW with all information which it requests pertaining to the claim. If Builder fails to so cooperate, Builder agrees to compensate and indemnify QBW for any damages sustained by such lack of cooperation. 5. Breach and Remedy. If Builder fails to enroll any eligible home as required by this Agreement, QBW may seek specific enforcement or other appropriate relief in legal or equitable proceedings, even if this Agreement has been terminated. Furthermore, Builder agrees to ind6 ,fy and hold harmless QBW and its insur6 ,' any losses or any damages they may suffer as a result of Builder's breach of this Agreement and such losses and costs shall include reasonable attorney's fees and expert witness fees. Builder hereby irrevocably authorizes and empowers any attorney or any court of record of Pennsylvania or elsewhere to appear for and confess judgment against Builder for all amounts for which Builder may become liable to QBW for the breach of this Agreement. as evidenced by an affidavit signed by an officer of QBW setting forth the amounts then due, plus attorney's fees incurred by QBW, with costs of suit and release of errors. Such authority shall not be exhausted by any one exercise thereof but judgment may be confessed as aforesaid from time to time as often as there is a default. Remedies stated herein are elective and not exclusive and QBW may elect to proceed under this or any other para- graph in this Agreement. 6. Suspension or Termination. QBW may terminate, or at its option, suspend Builder's participation in QBW's Warranty Program, or any entity or individual which Builder is affiliated, if QBW determines that Builder has done any of the follow- ing, which shall be deemed a breach of this Agreement. (a) fails to comply fully with all provisions of this Agreement; (b) fails to perform any of its obligations under this Agreement, including, but not limited to, cooperating in the operation of the program's informal dispute resolution and arbitration procedure; (c) fails to respond to QBW's notice of a homeowner's complaint; (d) fails to comply with a decision which is rendered pursuant to complaint procedures; (e) fails to provide adequate assurance to QBW within ten (10) days after it receives a written request from QBW for such assurance that (within a reasonable timetable established or approved by QBW) it is willing and able to cooperate in dispute settlement and to perform the obligations under any decision which is rendered pursuant to such procedures; (f) fails to otherwise cooperate in the operation of the QBW Program in accordance with the rules and regulations of the QBW Program; (g) fails to provide timely proof of compliance with this Agreement, as and when requested by QBW; (h) fails to comply with QBW Warranty Standards and building codes as stated in the Limited Warranty Agreement; (i) fails to comply with the enrollment procedures established by QBW; (j) fails to provide proof that enrolled homes have been subjected to required inspections; (k) fails to respond to purchaser complaints in a timely manner and as provided in the Limited Warranty Agreement; (I) fails to perform its obligations with professional competence or conduct its operations from a position of financial strength and stability; (m) fails to notify QBW within 30 days of a change in ownership, company name or company standing, financial condition, or of any other material fact which might affect Builder's ability to meet its obligations under this Agreement; (n) fails to meet ethical standards in its dealings with customers; or (o) misstates or misrepresents any information in connection with its application or in the rescreening process. QBW reserves the option to reinstate terminated affiliates of the primary, terminated Builder if QBW determines that the terminated Builder or its principals are not in a position to control the affiliated Builder. Termination of Builder by QBW shall not affect the rights or obligations of any of the parties to this Agreement with respect to the Warranty Program in effect at the date of termination, subject to the provisions pertaining to voidability. If a Builder is suspended or terminated, he shall not represent himself to be a member of the QBW Warranty Program nor offer the QBW Warranty and shall not use its Logo or refer to the program in any way nor attempt to enroll any home. The Builder shall immediately notify any Buyer currently under contract to purchase a home of the suspension or termina- tion and that the QBW Warranty Program has been withdrawn. Upon request, Builder shall immediately return to QBW all materials supplied by QBW and ail material making reference to QBW. Should Builder fail to take these steps, it shall indem- nify and hold harmless QBW and the insurer against any and all expenses incurred and losses suffered, including but not limited to attorney fees, by either of them as a result. In addition, Builder shall pay interest to QBW at the rate of 18% per annum on all sums due to QBW hereunder if such sums are not paid within 30 days of demand by QBW. Builder may terminate this Agreement upon 30 days advance written notice to QBW. If so terminated by Builder or by QBW, Builder's obligations under this Agreement shall continue as to those homes enrolled during the period in which this Agreement was in effect. 7. Notice. If QBW possesses a reasonable belief that reason exists to terminate or suspend a Builder for violation of this Agreement, QBW may immediately terminate or suspend the Builder by providing it with written notice. If QBW elects to sus- pend the Builder, such suspension will remain in effect until Builder has cured all defects to QBW's satisfaction, however, QBW reserves the right to terminate any suspended Builder. 8. Voidabilit¥. QBW reserves the right to void any enrollment if Builder misstates or misrepresents any information in its appli- cation or in the rescreening process or misstates or misrepresents any information in the enrollment of a particular home or fails to pay any fees due for enrollment of any particular home or fails to forward an enrollment form for a particular home within 10 days as required, or fails to enroll all units of a multi unit building. SECTION C. BUILDER'S OBLIGATIONS: 1. Construction Obligations. Following are the Builder's obligations with respect to QBW's Warranty Program: (a) Builder shall construct all homes in conformity with the Warranty Standards provided in the Limited Warranty Agreement, and/or in conformity with approved building codes and other standards established by QBW and in effect at the begin- ning of construction of the enr, J home. QBW reserves the right to esta[ , special requirements for escrow pay- ments or other means of protection with respect to any homes constructed by Builder which QBW determines to be "High Risks." (b) Builder agrees to have all homes inspected, as required by QBW, and to pay all fees for the inspection and to provide evidence of inspection as and when required by QBW. QBW shall provide inspectors or shall approve governmental inspectors. (c) QBW shall have the right to perform spot inspections to verify Builder's compliance with this Agreement and Builder agrees to cooperate. (d) The Builder agrees to indemnify and hold harmless QBW and/or its Insurer for any losses or damages QBW and/or its Insurer may suffer as a result of the use of fire retardant treated plywood on any building enrolled under the QBW Ten Year Warranty Program. This will include all claims and liability for losses, damages and expenses which QBW and/or its Insurer may sustain, incur, pay or be liable for by means of any investigation settlement or litigation of any claim or action which may be raised, made or brought due to the potential defects caused or likely to be caused by use of the subject plywood. (e) If the Builder is informed by QBW that it is building in an area designated as one with active soil conditions, the Builder agrees to obtain such soils investigations and reports as may be required by QBW. If such reports indicate a need for special foundation design the Builder agrees to construct the foundation according to the design of a registered profes- sional engineer to take into account the conditions disclosed by the soil tests. 2. Warranty Obligations. Builder agrees to perform all obligations arising from this Agreement and the Limited Warranty Agreement. The Builder shall at its own expense perform all obligations as set forth in the QBW Warranty Program and this Agreement which includes meeting the warranty standards upon notice from the Purchaser without the necessity of QBW intervention. During years one and two under the QBW Warranty Program, if the Builder fails or refuses to perform its obligations in accordance with the Limited Warranty Agreement or this Agreement, QBW will perform the Builder's obligations, however, the Builder agrees to reimburse QBW and/or Insurer for all expenses incurred in performing their obligations, including but not limited to, cost of materials, cost of collection, labor, architect's fees, engineering fees and counsel fees. QBW and/or Insurer reserve all rights of subrogation. During years three through ten under the QBW Warranty Program, QBW will perform its obligations with respect to major structural defects as set forth and defined in the Limited Warranty Agreement without the right of subrogation against the Builder provided that the defect, or symptoms of the subsequent occurrence of the defect, first arose after the expira- tion of two years under the QBW Warranty Program in effect for that home, and that Builder did not attempt to conceal or cosmetically repair the defect or symptoms of the subsequent occurrence of a defect and that the defect does not arise from Builder's failure to construct the home to applicable QBW standards or adhere to Builder's responsibilities under the Builder Agreement. If the Builder repairs a major structural defect during years one or two, QBW must be notified. Once notified, QBW will perform a compliance inspection. 3. Builder ds authorized to advertise its membership in the QBW Warranty Program and to use its Logo in its business, pro- vided that any reference to QBW or its insurer, whether contractual or advertising copy, be approved by QBW in writing in advance of its use. SECTION D. INFORMAL DISPUTE PROCEDURE: 1. Builder should be aware that the Limited Warranty Agreement provides for an informal dispute settlement and arbitration procedure to resolve complaints by purchasers under the Limited Warranty Agreement. Builder should become familiar with the settlement procedures in order to be aware of its rights and responsibilities. Builder agrees to cooperate fully in the pro- cedure and to be bound by and to comply with any decision of an independent third party, or arbitrator. If the Builder fails to perform its obligations hereunder in a timely and workmanlike manner, such failure shall be con- sidered to be a refusal to perform governed by paragraph C.2 hereof. 2. The Builder agrees to pay all fees charged in connection with the informal dispute settlement and arbitration procedures. SECTION E. TERMS GOVERNING OPERATION AND INTERPRETATION: 1. Builder agrees to perform its obligations under this Agreement in a timely manner. However, time provided for performance of obligations hereunder shall be extended by events not subject to control by the person obligated to perform. Such events include acts of God, or the public enemy, or riot, civil commotion, or governmental conduct. 2. Descriptive headings as to the contents of particular provisions of this Agreement are intended for convenience only and are not to be considered in construing this instrument. 3. This Agreement shall not constitute or be considered an agency, employer-employee relationship, joint venture or partner- ship between the parties. None of the parties, nor any of their employees or agents, shall have the authority to bind or oblig- ate the other party except as provided by this Agreement. 4. Should any provisions of this Agreement be determined by a court of competent jurisdiction to be unenforceable, that deter- ruination will not affect the validity of the remaining provisions. 5. This Agreement shall be interprete, d enforced in accordance with the laws ,e Commonwealth of Pennsylvania. Ali suits instituted under this Agreement shall be brought in Pennsylvania in a court of competent jurisdiction. Builder hereby consents to the personal jurisdiction of the Pennsylvania courts. 6. Builder shall not assign this Agreement without the prior written consent of QBW. 7. This Agreement shall inure to the benefit of and be binding upon the heirs, executors, administrators, assignee, and suc- cessors of the representative parties. 8. This instrument, and security documents and documents referred to or incorporated herein by reference, contain the entire agreement between the parties, and no statement, promises, or inducements made by either party or agent of either party that is not contained in this written contract shall be valid or binding; and this contract may not be enlarged, modified, or altered except in writing signed by the parties and endorsed hereon. 9. Failure of either party to insist upon compliance with any provision of this Agreement shall not constitute a waiver of that provision. 10. All notices required hereunder must be in writing and sent by certified mail, postage prepaid, return receipt requested, to the recipient at the respective address shown below, or to whatever address the party may designate in writing. 11. The effective date of this Agreement shall be the date of execution by QBW. QUALITY BUILDERS WARRANTY CORPORATION Date of execution by QBW: March 25, 2002 Builder's Registration No.: 51017 ,-~ ~UILDERt (Name of Builder - please print or Wpe)' - ' / , / ( 'g u e o Authorized Representative - Title) ' /l -- {Please print~ame/title of executor) (Address) / Please note that in reviewing applicants for the QBW Program, certain costs are incurred, therefore all application fees are non-refundable. Copyright 1988 Quality Builders Warranty Corporation QBW FORM 050 5,01 EXHIBIT 2 AMENDMENT TO BUll. DER AGREEMENT This Amendment, is ~ Qmlity Bu;l__,~_ Wa~nt~ Cor~ (QBW3 and HERMANSON I-tOMF, S, INC. r~ferred ~o as "Builder. Builder is & ~ in tho QBw I 0 Year Limite~l Warramy Program. ~BW and Builder desir~ to modify the tmn of the Builder Agreement. Q~]W and Builder, in exchange for the mut~ml cove~tnt~ contained herein and intmdfnS tO be legally b~und h~by ~grt~ ~s follows: 1. Builder simll maintain lU membership in QBw's Lbnited Warranty Pro.-am fo~ aa additional period of flvc (5) years :o commence upon the below date md submi~ fo~ enrollment homes whi~ Builder o~ aey afl~lia~ coes~ruots during tluU time, Builder may nm terminate his participstioa in the QBW Prosram within tha~ l~ried unless con.seated to by QBW in writing. 2, Buiid~ shall psy ~n armual membership fee. :3. Builder's rote will be lowered to $1.80 per thousand. The ate will rmain in effect for the period of this Ammdme~t. The Ame~lme~t will rmew for s like term unless thirty (30) days prior m thc ~xp~6on of' this term or any ~tcnsiora either party ixovides the other edrty C30) days advanoe written notice that they intend nm to extmd the period entitling the Builder to a Iowo' me. If'Builder provides notice. QBW will m:ljuta, the Builder's ra~e upward effective et the 4. If in the uaforesee~ event ore me ineres~, caused by Legislation, c~ skuatloes beyoud ~ha r, mmol or QBW, Builder has the right m termina~ parti:ipa6on. 5. If tl~ terms Contained in this Arr~ndm~qt a~e inconsistent with the Builder A~'umnn~, I1~ ~ of this Ame~iment ~utll 1~ W'iTNES$ WHEREOF, I1~ parties hereto have caused this Amendment to be e~ecuted by t~elr duty ~uthmi~ officers, a~ of'thi~ 3rd day of',44~ii 2002. OUAL~'~ 8~ WARK~,NTY CORP. VERIFICATION I, Eric W. Dethlefs, state that I am the Vice President of Operations for Quality Builders Warranty Corporation and verify that the statements made in the foregoing Complaint are true and correct to the best of my knowledge, information and belief. The undersigned understands that false statements herein are made subject to the penalties of 18 Pa. Cons. Stat., Section 4904, relating to unswom falsification to authorities. QUALITY BUILDERS WARRANTY CORPORATION Eric W. Dethlefs- Vice President of Operations SHERIFF'S RETURN - U.S. CERTIFIED MAIL CASE NO: 2003-00284 p COMMONWEALTH OF PENNSYLVANIA COUNTY OF CUMBERLAND QUALITY BUILDERS WAP~ANTY CORP VS. HERMANSON HOMES INC R. Thomas Kline , Sheriff of Cumberland County, Pennsylvania, who being duly sworn according to law served the within named DEFENDANT ,HERMANSON HOMES INC by United States Certified Mail postage prepaid, on the 21st day of January ,2003 at 0000:00 HOURS, at 36134 POLK STREET STANCHFIELD, MN 55080 and attested copy of the attached COMPLAINT - EQUITY with receipt card was signed by BETSY FERRIE 01/27/2003 , a true Together The returned on Additional Comments: Sheriff's Costs: Docketing 18.00 Cert Mail 4.88 Affidavit .00 Surcharge 10.00 .00 32.88 Sheriff of Cumberland County Paid by QUALITY BUILDERS WARRANTY CORP on 02/03/2003 Sworn and subscribed to before me this g ~ day of~ ~z~ A.D. fP~othonotary '