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HomeMy WebLinkAbout04-3003QUALITY BUILDERS WARRANTY CORPORATION, Plaintiff V. ALLSTATE BUILDERS, INC. AND RAY AND SHIRLEY HAINES Defendant NOTICE IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA DOCKET NO. O CIVIL ACTION - EQUITY 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 WHERE YOU CAN GET LEGAL HELP. CUMBERLAND COUNTY BAR ASSOCIATION 2 Liberty Avenue Carlisle, PA 17013 (717) 249-3166 QUALITY BUILDERS WARRANTY CORPORATION, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. ALLSTATE BUILDERS, INC. AND RAY AND SHIRLEY HAINES Defendants DOCKET NO. CIVIL ACTION - EQUITY COMPLAINT AND NOW this 2-1 ? day of June, 2004, comes the Plaintiff, Quality Builders Warranty Corporation, by and through its attorney, John A. Gill, Esquire, and files the within Complaint and avers in support hereof the following: 1. Plaintiff is Quality Builders Warranty Corporation, (QBW), a Pennsylvania Corporation with its principal place of business located at 325 North Second Street, Wormleysburg, Cumberland County, Pennsylvania. 2. Defendant, Allstate Builders, Inc. (Allstate) is a Kentucky Corporation with its principal place of business situate at 630 Bruce Ave, Louisville, Jefferson County, Kentucky 40208. 3. Defendants, Ray and Shirley Haines, (Haines) are adult individuals who are husband and wife and who reside at 9808 Sunkist Way, Louisville, Jefferson County, Kentucky 40272. 4. QBW administers a 10-year new home Limited Warranty Program. 5. New-home builders, who are a member of QBW, can offer warranties against certain specified defects in the homes they construct. 6. Allstate applied for membership in the QBW Program in October 31, 1994, and membership was approved on January 4, 1995. 7. In connection with its membership, Allstate executed a Builder Agreement. A copy of which is attached hereto, incorporated herein and marked as Exhibit A. 8. Haines placed their endorsement on the Builder Agreement indicating that they agreed to indemnify and save harmless QBW for any losses incurred as a result of Allstates' breach of its Builder Agreement. 9. Shortly after approval, Allstate submitted for enrollment in the QBW Program a home located at 766 South Shelby Street, Louisville, Jefferson County, Kentucky, which was owned by Amy Judkins, (Judkins Home). 10. When Allstate submitted its construction Notification, Allstate indicated the Judkins home was constructed on fill. QBW then required that Allstate submit information concerning soil compaction and the bearing capacity of the soil. Allstate then indicated the home was not built on fill. QBW still had reason to believe that the home was constructed on fill and requested an engineering certification. A copy of said letter is attached hereto, incorporated herein and marked as Exhibit B. 11. Allstate indicated that they did not have compaction test and in lieu of the engineer's certification, QBW accepted the personal indemnification Haines. A copy of which is attached hereto, incorporated herein and marked as Exhibit C. 12. The Judkins home is located within the city limits of Louisville. 13. As a result of the indemnification provided by Haines, QBW provided Allstate with a warranty book and enrollment form to be issued for the Judkins' home. A true and correct copy is attached hereto, incorporated herein and marked as Exhibit D. 14. The homeowner, Judkins, subsequently contacted QBW complaining that a major structural defect existed in her home, Allstate took the position that the problems were caused by lack of homeowner maintenance. The homeowner then subsequently instituted suit against, among other parties, Allstate and QBW in the Jefferson County Circuit Court in Louisville, Kentucky. 15. Under cover letter dated May 25, 2004, Allstate's attorney forwarded, to QBW, a copy of an engineering report from Haggerty Engineering containing observations of the Judkins' home, which indicated that the home was constructed on poor sub-grade conditions, which were not sufficient to support the home and further indicated that the sub-grade likely consisted of pockets of debris fill in varying degrees of density and stiffness. A true and correct copy is attached hereto, incorporated herein and marked as Exhibit E. 16. Subsequent to receiving the report, QBW demanded that Allstate repair the Judkins Home. 17. Section C, 2 of the Builder Agreement indicates that builder agrees to perform all obligations arising from this agreement and the Limited Warranty Agreement and further that the builder shall, at its own expense, perform all obligations as set forth in the QBW Warranty Program and the Builder Agreement, which includes meeting the warranty standards upon notice of the purchaser without the necessity of QBW intervention. 18. Additionally, Section B, 5 of the Builder Agreement indicates that the builder agrees to indemnify and hold harmless QBW for any losses or damages, which QBW may suffer as a result of builder's breach of the Builder Agreement including reasonable attorneys fees and expert witness fees. 19. QBW seeks to specifically enforce the Builder Agreement with Allstate and the Haines, as indemnitors to require them to perform and repair the Judkins" home in accordance with the terms of the Builder Agreement and the Limited Warranty Agreement issued by Allstate to Judkins. 20. Additionally, QBW seeks reimbursement of attorney's fees and costs as authorized by the Builder Agreement and the Limited Warranty Agreement as follows: a. Attorneys fees paid $8,448.48 b. Expenses $1336.50 21. In the alternative to specific performance, QBW seeks damages against Allstate and Haines jointly and severally in an amount necessary to correct the defects in the Judkins home in accordance with the Builder Agreement and the Limited Warranty Agreement, which damages could, under the terms of the Limited Warranty Agreement, equal the purchase price of the home, which purchase price was $59,950.00. 22. Jurisdiction is proper in the Pennsylvania Courts since Section E, 5 of the Builder indicates, "this agreement shall be interpreted and enforced in accordance with the laws of the Commonwealth of Pennsylvania. All suits instituted under this agreement shall be brought in Pennsylvania in a Court of competent jurisdiction. The builder hereby consents to the personal jurisdiction of the Pennsylvania Courts." WHEREFORE, Plaintiff, Quality Builders Warranty Corporation, demands Judgement against Allstate Builders, Inc. and Ray and Shirley Haines, jointly and severally, as follows: a. That the Builder Agreement and Limited Warranty Agreement executed by Allstate Builders, Inc. and Ray and Shirley Haines be specifically enforced to require them to repair the defects in the Judkins' home located at 766 South Shelby Street, Louisville, Jefferson County, Kentucky in accordance with the terms of the Builder Agreement and the Limited Warranty Agreement and the indemnifications of Ray and Shirley Haines, b. In the alternative that the Defendant Allstate builders, Inc. and Ray and Shirley Haines, jointly and severally be ordered to pay damages equal to the cost of repairs in accordance with the terms of the Builder Agreement and the Limited Warranty Agreement. c. Attorney's fees and costs paid in the amount of $9784.98. d. Additional attorney fees, expenses and costs as authorized by Section B, 5 of the Builder Agreement. e. Such other relief as deemed appropriate by the Court. By JO A. GILL, ESQUIRE ey ID 441532 325 North Second Street Wormleysburg, PA 17043 Attorney for Plaintiff Quality Builders Warranty Corporation Exhibit A 01 BUILDER AGREEMENT rwE TV? AGREEMENT made this 22 nd day of December 19 95 between QUALITY BUILDERS WARRANTY CORPORATION, a Pennsylvania corporation, herein referred to as "QBW,• and Allstate Builders, Inc.f a Corporation Name of Builder: (indicate whether a corporation, partnership, individual or other) of Address 630 Bruce Avenue, Louisville, KY 40208 State Zip herein referred to as 'Builder." 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 or 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 execution of this Agreement or reacceptance, and QBW has inspected and approved the home. When enrolling other than a detached single family dwelling, Builder shall enroll each individual unit of any multi- unit 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 pur- chaser must complete, sign the Agreement and 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 direct- ly the cost of the enrollment fee. A home will not be considered enrolled until QBW receives and approves the fully exe- cuted 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 enroll- ment 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 con- nection 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 indemnity 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 specif- ic enforcement or other appropriate relief in legal or equitable proceedings, even if this Agreement has been termi- nated. Furthermore, Builder agrees to indemnify and hold harmless QBW and its insurer for any losses or any dam- ages QBW 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 else- where to appear for and confess judgment against Builder for all amounts for which Builder may become liable to QBW Exhibit A 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 paragraph 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 fol- lowing, 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 opera- tion 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 coop- erate 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; (1) 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 con- dition, 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 suspen- sion or termination and that the QBW Warranty Program has been withdrawn. Upon request, Builder shall immediate- ly return to QBW all materials supplied by QBW and all material making reference to QBW. Should Builder fail to take these steps, it shall indemnity and hold harmless QBW and the insurer against any and all expenses incurred and loss- es suffered, including but not limited to attorney fees, by either of them as a result. In addition, Builder shall pay inter- est 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 suspend 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. 6. Voldability. QBW reserves the right to void any enrollment if Builder misstates or misrepresents any information in its application or in the rescreening process or misstates or misrepresents any information in the enrollment of a particu- lar 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. 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 beginning of construction of the enrolled home. QBW reserves the rights to establish special require- ments for escrow payments 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 pro- vide evidence of inspection as and when required by QBW. QBW shall provide inspectors or shall approve gov- ernmental 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 professional 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. If Builder fails or refuses to perform its obligations in accordance with the Limited Warranty Agreement, QBW will perform those obligations; however, Builder agrees to reimburse QBW and/or its insurer for all expenses incurred in performing those obligations, including, but not limited to costs of materials, cost of collection, labor, architect's fees, engineering fees, and attorney's fees. QBW reserves all rights of subrogation. If the Builder repairs a major structural defect during year 1 or 2, QBW must be notified. Once notified, QBW will perform a compliance inspection. QBW agrees to perform its obligations pursuant to the Limited Warranty Agreement in years three through ten pro- vided that the defect that is the subject of the Purchaser's claim did not occur within the first two years and was not concealed or cosmetically or improperly repaired by the Builder during those two years. Builder is not responsible for any damage caused by a major structural defect, as defined in the Limited Warranty Agreement, occurring after the expiration of the first two years of the Limited Warranty Agreement provided the defect was not concealed or cosmetically or improperly repaired during those two years. QBW will hold the Builder harmless for the reasonable cost of repairing or replacing such defects, and against the payment of any money judgment, order or decrees made against Builder for the repair of the defect. 3. Builder is 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 writ- ing 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 arbitra- tion 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 coop- erate fully in the procedure and to be bound by and to comply with any decision of an independent third party, or arbi- trator. . If the Builder fails to perform its obligations hereunder in a timely and good and workmanlike manners such fail- ure shall be considered 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 proce- dures. 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 perfor- mance 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 part- nership between the parties. None of the parties, nor any of their employees or agents, shall have the authority to bind or obligate 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 determination will not affect the validity of the remaining provisions. 5. This Agreement shall be interpreted and enforced in accordance with the laws of the Commonwealth of Pennsylvania. All 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. For Builders who are licensed in the state of New Jersey, note that this agreement shall be interpreted and enforced in accordance with the laws of New Jersey; for all homes enrolled with an address in New Jersey. 6. Builder shall not assign this Agreement without the prior written consent of QBW. 7. This Agreement shall insure to the benefit of and be binding upon the heirs, executors, administrators, assignee, and successors of the representative parties. 8. This instrument, and security documents and documents referred to or incorporated herein by reference, contains 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 certifi d mail, postage prepaid, return receipt request- ed, to the recipient at the respective address shown below, or to "lever address the party may designate in writing. 11. The effective date of this Agreement shall-be the date of executiop'by QBW. By President Date of execution by QBW: January 4, 1996 Builder's Registration No.: 75031 BUILDER. Allstate Builders, Inc. (Name of Builder - please print or type) DATE By l\ cw' t1'? 2 c? ( nature of Authorized Representative - Title) Raymond Haines, President (Please print name(t@le of executor) 630 Bruce Avenue, Louisville, KY 40208 (Address) Raymond Haines and Shirley Haines, intending to be legally bound, jointly and severally do hereby agree to indemnify and save harmless Quality Builders Warranty Corporation against any and all actions, claims, demands, liability or loss, whatsoever,that may result from Allstate Builders, Inc. membership in Quality Builders Warranty Corporation's 10-year Limited Warranty including, but not limited to actions, claims, demands, liability or loss which may result from the execution and delivery of the within Builder Agreement or from Allstate Builders, Inc. non-performance of its duties or obligations thereunder which includes any liability for any Builder Agreement, past, present and future. ?n.,.,f?. ?i? `"jj ?,,<•iVa??i j,??,???5? .,?. ?„?i. ??__. !-f-°•?, ?-"<J Raymon Haines Date Shirley Haire Date Home Address copyright 1989 Quality Builders Warranty Corporation QBW FORM 050 3195 Exhibit B Quality Builders Warranty Corporation P.O. Box 271 Camp Hill, PA 17011 (717) 737-2522 March 23, 1995 Ray Haines Allstate Builders Inc. 630 Bruce Street Louisville KY 40272 Dear Mr. Haines, I am writing in connection of your Notifications of various homes located Louisville. Those homes are as follows: 159571 159572 159573 159574 159575 159576 159577 159579 159580 160541 160542 160543 160544 160545 160546 submission of Construction within the city limits of 768 South Shelby Street 766 South Shelby Street 752 South Shelby Street 938 East Liberty Street 912 East Muhammad Avenue 519 South Campbell 901 East Madison Street 903 East Madison Street 909 East Madison Street 1308 South 26th Street 1315 South 26th Street 1316 South 26th Street 1353 Cyprus Street 3527 Virginia Avenue 613 Iowa Avenue When the Construction Notifications were received, the homes were designated as being built on fill. Your Customer Service Representative contacted you to obtain information concerning soil compaction. You subsequently issued a letter indicating that the homes were not built on fill. We conducted further investigation which leads us to believe that the homes were, in fact, built on fill. It is our understanding that there were homes previously built on these lots which were demolished and new homes are now being built on the lots. Naturally, our concern is that the new homes are built on suitable material capable of supporting the loads for the current foundations. Exhibit B Page 2 Ray Haines Allstate Builders Inc. March 23, 1995 Given this information in order for us to accept any enrollments in the City of Louisville, we will need an Engineer's Ceritification that the "as built" foundation system is capable of supporting the home for a minimum of ten (10) years. In addition, we will need a copy of the Engineer's Errors and Omissions Insurance Policy indicating adequate coverage. Pending receipt of the Engineer's Certification, we will not be accepting any additional homes in the City of Louisville not built on virgin soil. In addition, for the homes for which a request was submitted and an enrollment issued, we will need the same certification or the enrollments will have to be voided since they are deemed "high risk" based on misinformation supplied by you. Please supply the above information within ten (10) days. Very truly yours, ohn A. Gill, Esquire Ge al Counsel JAGJcgm Exhibit C ,ipc'- ; _ 1 tiGq lh: ?kJ C?GHL i . 1 eL 1 LDEP .?HRRHI.I I Ti7 7-i I?Z88 r.L?6.-La- Quality Builders Warranty Corporation P .O. Box 271 Camp Hill. PA 17011 Rr. CIE. IVED ATR ' 1995 (717)737-2522 11UM MCATION Ray Haines and Shirley Haines, intending to be legally bound jointly and severally do hereby agree to indemnify and save harmless Quality Builders Warranty Corporation against any and all actions, claims, demands, liability or loss, whatsoever, that may result from, or are in any way related to structural defects caused by fill or improperly compacted or inadequate bearing soil on all homes within the city limits of Louisville which Allstate Builders, Inc, constructs. y/.? 9ti Ray Haines)) Date Shirley Hs0.nks Date Exhibit C TOTAL P.02 Exhibit D ALL INFORMATION AND SIGNATURE9F0119 4W DED. Wkny ;i)IIDEAC "fuliTy W. P.D.80 271, Cap Hill, PA 17001 State, Ky Coa JEFFERSON P1dr.Job No_: Enrollment No.: 159572 A. Vital Statistics Development : Buildiar's Nacre ALLSTATE BUILDERS INC. Builder's Registration Number- _ 75031 Purchasers' Name JUDKINS, AMY Address of home covered by Agreement : 766 SOUTH SHFI-BY STREET LOUISVILLE, KY 40203 E•f•fectiva Date o-F This, Agreement c 10-14-94 Final Sales Price. $.";9,950_00 tffW M WE PRIZE DF UM AM FRMY 2W BY Pty PO WT RIZIM FM TW I??fi1DOt) Condo ID fi: The effective date of the amtasty m atseue eleseuts, if ath)r shall be the slate as the rflative date of the warmaty of tte first oralied wit is that building. No croon elewnts comraga will be pmvided Unless all units to a building are earned. The Baited k"anty Agreerent does not rarer any darages to or camed by the use of fin-retardmt plywood. Therefore, hone pardmor agrees sod admorledger that the Llaiteed Vtrnntr Agtensat doors not cover alty &w apps, whether actual, incideetal, oYnNglMttit Cr DtAereint caused is thole or in part to or by the urr of fire-retardant plywood is the ptrdlawr's hrs. flimm Mo W MW aw or §W MW #8 MWIff 1W mum #8 or ? 1W I10 Dbtet This esclisim does not apply to those I firm and "M* FAR) B. Addldonal Ealushans The fdlowa)g rtv, are now covered by this policy because they were not barkhed by the Builder and are not Otdoded in the galas pica or nave been speonCafy excluded. (Pleage use additional sheet It necesemy) CONSEDUENnAL CAMAGES ARE EXCLL;DED AND NOT COVERED 6Y TNIS WARRANTY ALL INFORMATION MUST BE COMPLETED: P"Wo itg by MI" Adamrc t Conventional Finandng [ ] VA Financing I ) RIP. Financing [ ) WHA Fnancog I ) Other (Specify) +Check one: Wee MM price wind M fire #net ssba pries above? Yee ( 1 No . Type m Son: vwpn stn price Fie Acdve otbW ISMdM I VII Single Family [ ) Condo ( ) Heating System Type /yynAe c / 4j c ( I Towvuouce [ j Owl" [ J A;r Cddidmiing Type e,« ;?v / [ ) one Story [ ] Two Story [ I Septic Symm I ) wee [ ) Split Leval [ ) 814evet [ --]'Pubic Sewer ( j Oven;,'- Ox-e ( ) Anscheo Garage i ) Pubic taster ( ] Full Basement [ j Slab So" Number ot: [ ) P tai Basement ( ) Concrete Patio Slabs (fmxttrrediYaa9che0) Q CMmneyv ( Crawf Space ( ) Block 3 Sedromw Baths O Fireptecea __Q-• Decke [ 1 O 8eremant is Fmiahad by Builder ,- Porches G BOOT the Guider and see purctnua fe) must sign INS EM01IMent torn Gr Wgninp, the purChOW aCWwwbdgea MW he has read ate anwhed AgmemeM lid hae received a copy of Otis P" and the Agreement itsed. The Builder represente and warrants Olaf no ie r89190red with OGw. that the frame has been irmpecred Snit wW be procansd for rudiment and the he has paid the fees for ervollment or tole do so ea invoiced by OSW. Payment of all fees Is a condition txeeeawn for arvdinent and OGW may void any enrollment for wnictt paymmd nee not been mcn vod. The 9uAder must send two coples of this torn[ to CAM at the address fasted on the cover page (within 10 days of offeo• IN* datsl6 f8ee reverse Yor oddWonsl [neLVpttdrre). OAte '7/, 9/95 OATS: ?l??,gs Oaw 301 t1Q04) PURCHASFA:(ALL)NR= it7G4QL) AU BUIVDIER fT_) E COPIES WHITS b YELLOW • Oaw Past • BULOFR OMD • nOWISWO.ETi lpa a s N S=bdm) Exhibit D TCTRL P.32 STATE ENROLLMENT NO. Builder Job No. P. O. BC9 CAMP HILL, PI LIMITED WARRANTY ©Copyright 1986 Ouality Builders Warranty Corporation OBW FORM 300 10i 1- LIMITED WARRANTY AGREEMENT 1. Introduction Quality Builders Warranty Corporation ("QBW") administers a program whereby homebuilders registered with QBW enroll homes they construct in the program. Although homeowners are responsible for the regular maintenance of the newly-constructed home, this program allows Builders to warrant that the new home will be free from specified deviations from the Warranty Standards set forth in Part V of this agreement and from structural defects as defined in Part II of this agreement. NOTE: This Limited Warranty Agreement includes a procedure for informal settlement of disputes. Homeowners should read this entire Agreement carefully in order to understand the protection which it provides, the exclusions which are applicable to it, and the Warranty Standards according to which the Builder's compliance will be measured. For additional information, contact QBW at (717) 737-2522. The following pages describe in detail the QBW Limited Warranty Agreement. Part II defines the transactional terms used in the agreement. Part I I1 sets out the problems and defects not covered by this Agreement. Part IV highlights the protection provided by the Agreement, the rights and responsibilities of the parties, and other general terms and conditions that affect coverage under the Agreement. Part V sets forth the technical Warranty Standards against which the Builder's compliance will be measured. Part VI details the procedure forfiling complaints under the Agreement. Homeowners should carefully review the complaint procedure in order to preserve their rights under this Agreement. Finally, this Agreement contains the Enrollment form to be completed by the parties who want to take advantage of the protection offered through this Limited Warranty Agreement. Homeowners should note that this warranty is automatically transferable without cost to subsequent purchasers of the home during the life of the Agreement. This warranty is non-cancellable by QBW or its insurer. l It. Definitions For the purpose of this agreement, and as used in this agreement, the following definitions shall apply: A. Purchaser. The purchaser shall include the first person to whom the home is sold and any and all successors in title, lessees having a leasehold interest in the home of at least 50 years, and a mortgagee in possession. B. Builder. The person, corporation, partnership or other entity which is a participating member of QBW. C. Insurer. The established insurance company insuring the performance of QBW at the time this Agreement is executed. the insurance policy (ies) in effect may be inspected during normal business hours at the offices of QBW. 0. Home. Asingle-family dwelling unit or a two-or-more unit structure wmcnmaybeconveyed asa single unit. As used in the Agreement, the common elements which comprise the building in which a condominium unit is situated are also included in the definition of "Home." E. Major Structural Defects. Only actual physical damage to the following load-bearing segments of the home and only such damage caused by failure of such load-bearing segments which affect their load-bearing functions to the extent that the home becomes unsafe or unlivable: 1. Columns; 2. Bearing walls and partitions; 3. Floor systems; 4. Roof framing members and systems (rafters and trusses only); 5. Foundation systems and footings (which are an integral part of the home and structurally attached); 6. Load-bearing beams: ?.- 7. Girders; 8. Lintels. -1- Examples of nonload-bearing elements which are not considered major structural segments include, but are not limited to: 1, Brick, stucco, or stone veneer; 2. Finish flooring material and floor coverings; 3. Plaster, lathes, or drywall; 4. Wall the or paper and other wall coverings; 5. Nonload-bearing partitions and walls; 6. Doors, windows, trim, cabinets, hardware, insulation, paint, stains, 7. Appliances, fixtures or items of equipment, 8. Heating, cooling, ventilating, plumbing, electrical, and mechanical systems; 9. Roof shingles, tar paper, all sheathing and other surfacing material; 10. Any type of exterior siding; 11. Concrete floors, 12. Decks and porches not integral to the structure of the home. F. SoflMovement. Subsidence, expansion or lateral movement of the soil, but excluding floods and earthquakes. G. Fixtures, Appliances and Equipment. Water heaters, pumps, stoves, refrigerators, compactors, garbage disposals, stoves and ranges, dishwashers, washers and dryers, bathtubs, sinks, commodes, faucets and valves, lights and fixtures, switches, outlets, circuitbreakers, thermostats, furnaces and oil tanks, humidifiers, oil purifiers, ventilating fans, air conditioning material and similar items, H. Electrical System. All wiring, electrical boxes, and connections up to the public utility connection. 1. Plumbing System. All pipes, supply and waste, and their fittings, including septic tanks and their pipe drain fields, on-site wells as well as gas supply lines and vent pipes. J. Cooling, Ventilating and Heating Systems. All duct work, refrigerant lines, steam and water pipes, registers, convectors and dampers. Ill. Exclusions In addition to the nonload-bearing elements excepted from the definition of Major Structural Defects, the following damages, losses, deficiencies or defects are not covered by this Agreement (in addition to those named on the Enrollment form of this Agreement): A. Damages or losses not caused or created by the Builder or his employees, agents or subcontractors, but resulting from accidents, riots, civil commotion, acts of God or nature, including but not limited to, fire, explosion, smoke, water escape, changes in the underground water table (underground springs, etc.) wind storms, hail, lightning, fallen trees, aircraft, vehicles, floods, earthquakes, mudsiides, wind driven water, or volcanic eruptions. B. Any deficiencies in or damage caused by material or work supplied by anyone other than the Builder or his employees, agents, or subcontractors. C. Loss ordamage resulting from the purchaser's failure to minimize such loss or damage orto notify Builder or QBW or the Insurer, as provided herein. D. Normal deterioration or normal wear and tear. E. Losses or damages to or resulting from defects in improvements which are not part of the house, defects in outbuildings, such as detached garages and carports, swimming pools and detached recreational buildings and facilities, and defects in driveways, walkways, patios, decks, boundary and retaining walls, bulkheads, fences and landscaping of all types. F. Any damage resulting from any defect which is covered by any other insurance or for which recovery is granted by state legislation (including soil movement). G. Following yearone, loss ordamage resulting from concretefloors of basements, attached garages and chimneys which are constructed separate from foundation, walls or other structural elements of the home and are not part of the load-bearing structure of the home. H. Any loss or defect which arises when the home is used for nonresidential purposes. I. Losses resulting from damages to real property other than to the home itself. J. Damage caused by insects, squirrels or other animals or rodents. K. Loss or damage resulting from, or aggravated by changes to the real property, by anyone. L. Any claim reported to QBW after an unreasonable delay or later than thirty (30) days after the expiration of this warranty on that item. M. Loss or damage resulting from, oraggravated by, oroccurring to modifications or additions to the home made after occupancy (other than those performed to meet the obligations of this Agreement), N. Personal property damage or bodily injury or punitive damages and/or legal fees. 0. Loss or damage resulting from, or aggravated by, dampness or condensation caused by negligence of the purchaser not maintaining proper ventilation. P. All consequential damages, including but not limited to costs of shelter, transportation, food, moving, storage or other incidental expenses related to relocation during repair. Q. Any defect which does not result in actual physical damage to the home. R. Any defect, damage or loss which is caused or aggravated by failure of anyone other than the Builder, his agents, employees or subcontractors to comply with the manufacturers' warranty requirements concerning appliances, fixtures or equipment. (Note: See Section II-G). S. Failure of the Builderto complete construction of the homeorany part of the homeon orbeforethe effective date. An incomplete item is not considered a defect. T. Loss or damage resulting from toxic or carcinogenic or suspected carcinogenic fumes or substances, such as, but not limited to, acids in the soil, radon, radon gas or radon daughters. U. Following yearone, any deficiencies in fixtures, appliances, and equipment. Improper maintenance or operation, or negligence and improper service by the homeowner causing defects will not be covered by this Agreement. V. Loss or damage resulting from, or aggravated by, negligent maintenance or operation. W. Any loss or damage resulting from the potability or clarity of water supply. X. Any loss or damage resulting from the weight and/or performance of any type of waterbed or other furniture excessive in weight or other abnormal loading of floors. Y. Any loss or damage resulting from a loss in the water supply. Z. Solar panel systems or their installation or operation. AA. Standing or ponding water on the property which does not directly affect the immediate area surrounding the foundation of the home. BB. Following the first year of this Agreement, any deficiencies in fixtures, appliances, and items of equipment, whether or not components of the cooling, ventilating, heating, electrical, plumbing or in-house sprinkler systems. During the first year of this Agreement, coverage on fixtures. appliances, and items of equipment (including attachments and appurtenances) is for one year or the manufacturer's written warranty period, whichever is less. Damage caused by improper maintenance or operation, negligence, or improper service of such systems by the Purchaser or its agents will not be covered by this Agreement. CC. Loss or damage resulting from a condition not resulting in actual physical damage to the home, including uninhabitability or health risk due to the presence or consequences of unacceptable levels of radon, formaldehyde, carcinogenic substances or other pollutants and contaminants; or the presence of hazardous or toxic materials. DD. Loss or damage caused directly or indirectly by flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these (whether or not driven by wind), water which backs up from sewers or drains, changes in the water table which were not reasonably foreseeable, or water below the surface of the ground (including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool, or other structure), wetlands. springs or aquifers. EE. Violations of applicable building codes or ordinances, original dwelling plans and specifications. FF. Soil erosion and run-off caused by failure of the purchaser to maintain the properly established grades, drainage structures and swales, stabilized soil, sodded, seeded and landscaped area. GG. Any claim not filed in the manner set forth in this Limited Warranty Agreement. HH. Any gtormwater or soil erosion/sedimentation control requirements, that are approved previously by the local governing jurisdiction for development. 11. Any glass breakage or failure of Builder to perform any type of clean-up. JJ. Violations of local or National Building Codes and Ordinances. KK. Loss or damage caused by or to roof sheathing after one year from the effective date of warranty. LL. Since this warranty covers only those defects which first occur during the Warranty Term, any homeowner-acknowledged, pre-existing conditions, such as "walk through" or "punch list" items are not covered. IV. General Terms and Conditions/Rights and Responsibilities A. Coverage Provided. This Agreement provides the following protection, effective as of the date on the Enrollment form: 1. During the first year of this Agreement, and subject to the terms and conditions listed herein. your Builder warrants your home against faulty workmanship and materials, defects in appliances, fixtures and equipment, defects in wiring, piping and duct work in the electrical. plumbing, heating, cooling, ventilating and mechanical systems, and Major Structural Defects (See Definition, Section II-E) due to non-compliance with the Warranty Standards. 2. During the second year of this Agreement, and subject to the terms and conditions listed herein, your Builder warrants that your home's cooling, heating, and ventilating, electrical and plumbing systems (exclusive of appliances, fixtures and equipment-coverage is one year or manufacturers warranty whichever is less) will be free from defects due to non-compliance with the Warranty Standards set forth in Section V of this document. Your Builder further warrants that your home will have no Major Structural Defects in that period. (See Definitions. Section II-E). 3. In years three through ten of this Agreement, OBW warrants that your home will be free from any Major Structural Defects as and only as that term is defined in Section II-E of this document. 3- 4. The Builder is the warrantor during the first two years of this Agreement. QBW through its insurer pro- vides insurance coverage insuring the Builder's performance hereunder during the first two years of this Warranty and is the warrantor providing insurance protection through its insurer against Major Structural Defects, as defined in Section B, during the third through tenth years of this Warranty Quality Builders Warranty Corporation ("QBW") will administer the limited warranty program for partici• .4 pacing Builders. The protection provided under the limited warranty program is automatically transfer- able to subsequent Purchasers during the ten year term of this Agreement B. Rights and Responsibilities. If any defect subject to the terms and conditions of this Agreement occurs and fails to meet the Warranty Standards, within the first two years, your Builder will repair, replace or pay you the reasonable cost of repairing or replacing the defective item. if your Builder fails to perform, OBW will perform in accordance with the Warranty. QBW will repair or replace, or pay you the reasonable cost of repairing or replacing, the defect or item determined to be a Major Structural Defect in years three through ten. In any case, actions to correct Major Structural Defects will be limited to those necessary to restore load-bearing capacity or to repair any defects which make the home unlivable. 0. General Conditions. Notwithstanding your Builder's responsibility to maintain the standards established by this Agreement, the following conditions will apply: I . The decision whether to repair or replace, or to pay the reasonable cost of repair or replacement, resides with the Builder. If the Builder is unable or unwilling to perform, the decision resides with QBW. (It the Builder or QBW is not afforded the first right to repair or resolve, no warranty coverage will be effective on that item and no rights for any recovery or reimbursement shall be permitted. The choice of the method of repair resides with the Builder or QBW.) 2. This Agreement is subject to certain deductibles. If your Builder or QBW performs its obligations under this Agreement, you agree that upon request you will assign the proceeds of any other insurance or warranty which you may own covering the same defect to your Builder or QBW, as the case may be. Such assignments shall not exceed the cost and expenses to your Builder or QBW to perform its obligations under this Agreement. 3. When your Builder or DEW completes its obligations under this Agreement, you agree to sign and deliver to your Builder or QBW a full and unconditional release of all legal obligations with respect to that defect. 4. Actions taken to cure defects hereunder will not extend specified periods of coverage. 5. The total liability of this Warranty Agreement is limited and shall not exceed the sales price of your home as stated on the Enrollment form of this Agreement. 6. If your Bu ilder does not fulfill his obligations for years one and two under this Agreement, OBW will be responsible for his obligations, subject to the deductible in Section IV-C-8, infra. 7. In years three through ten, or in years one and two if the Builder fails to perform, the decision whetherto repair or replace, orto payyou the reasonable cost of repairing or replacing, resides with QBW. The choice of the method of repair resides with QBW. 8. QBW's liability hereunder is subject to a deductible of $250 per claim on warranties for homes with sales prices up to and including $50,000 and a deductible of $500 per claim on warranties for homes with sales prices in excess of $50,000. Payment of such deductible is a condition precedent to QBW's performance pursuant to this Agreement. The sales price is that which is shown on the enrollment form. 9. When the Builder finishes repairing or replacing a defective item or prior to the Builder paying you the reasonable cost of doing so, you must sign and deliver to the Builder a full and unconditional release of all legal obligations with respect to the defect. If QBW fulfills such obligations of the Builder, you must sign and deliver to OBW a full and unconditional release of all legal obligations of QBW with respect to the defect when QBW finishes repairing or replacing a defective item or prior to QBW paying you the reasonable cost of doing so. 10. Other than the Expressed Warranties contained herein, there are no other warranties expressed or implied including Implied Warranty of Merchantibility or Implied Warranty for Particular Purpose, which implied warranties are specifically excluded. D. Condominium Coverage. If your claim involves a common element in a condominium, it maybe made only by an authorized representative of the condominium association. Subject to that limitation, however, coverage will include common elements of the condominium structure used for the residence of the structure, such as hallways, meeting rooms or other spaces, and any part of the cooling, ventilating, heating, electrical orplumbing systems that service two ormore residential units. Common elements will be covered for the same periods and to the same extent as comparable items which are part of individual homes. The deductible fora condominium coverage is $500 per unit affected by the common elements defect. E. General Terms Governing Interpretation and Operation. Certain generally applicable terms and conditions will govern the interpretation and operation of this Agreement. These terms and conditions are: 1. It is intended that the use of one gender herein includes all genders and the singular includes the plural. 2. This Agreement includes the entire agreement of the parties. and cannot be modified. altered or amended in any way except by a formal written instrument signed by all of the parties hereto. 3. This Agreement shall be interpreted and enforced in accordance with the laws of the state in which the home is located. 4. Should any provision of this Agreement be determined by a court of competent jurisdiction to be unenforceable, that determination will not affect the validity of the remaining provisions. ' 5, This Agreement is separate and apart from your contract with your Builder. It cannot be altered or amended in any way by any other agreement which you have. Contractual disputes shall not involve QBW. 6. Your Builder must assign to you and provide you copies of all manufacturers' warranties on products included in the sales price of your home. 7. All notice required hereunder must be in writing and sent by certified mail (return receipt requested), postage prepaid, to the recipient at the respective address shown on this Agreement, or to whatever other address the party may designate in writing. 8. This Agreement is deemed to be binding on the Builder. QBW and the purchaser, his heirs, executors, administrators, successors and assigns. 9. Whatever timely performance is called for hereunder. the time therefore shall be extended to the extent performance is delayed by an event not caused by the conduct of the person obligated to perform. Such events including acts of God or the common enemy or riot, civil commotion or sovereign conduct. V. Warranty Standards A. The applicability of these Warranty Standards is conditioned upon the purchaser's proper maintenance of the home to prevent damage due to neglect, abnormal use or improper maintenance. Common elements will be covered for the same periods and to the same extent as comparable items which are part of individual homes. B. The applicability of these Warranty Standards is conditioned upon the fact that your home is constructed in compliance with the local building codes as well as one of each group of the following model codes or the Minimum Property Standards of the U.S. Department of Housing and Urban Development: One and Two Family Dwelling Code BOCA Basic Building Code Standard Building Code, Southern Building Code Congress Uniform Building Code National Building Code BOCA Basic Mechanical Code Uniform Building Code, Volume II, Mechanical Standard Mechanical Code, Southern Building Code Congress Electrical Code for One and Two Family Dwelling National Electrical Code BOCA Basic Plumbing Code Uniform Plumbing Code Standard Plumbing Code, Southern Building Code Congress C. The table below establishes the standards by which it will be determined whether your home hasa problem or defect covered by this policy and whether it is the obligation of your Builder, or OBW or its insurer to correct these defects. Where specific standards and obligations are not set forth. the standards shall be the generally accepted industry, practice for workmanship and materials. WARRANTY STANDARDS AND COVERAGE FOR YEAR ONE ONLY LOT GRADING AND DRAINAGE (1) Ground settlement around foundation and utility trenches. (a) Standard. Ground settlement should not disrupt water drainage away from the structure although some settlement may occur. (b) Repair Responsibility. It the final grading was performed by the Builder, he will replace fill in excessively settled areas once. Builder is not responsible for removal or replacement of shrubs, grass, etc. -5- (2y Poor lot drainage. , (a) Standard, After normal rainfall, water should not stand in yard or within 10 feet of dwelling for more than 48 hours. These standards will vary upward due to frost, snow or saturation. (b) Repair Responsibility. The Builder is responsible for establishing the proper grades and swales; after that, the purchaser is responsible for maintaining them. (3) Basement water dampness and leaks in basement. (a) Standard. Basement should not leak. Dampness of newly constructed floors and walls is common and not considered a deficiency. (b) Repair Responsibility, Builder will correct leakage (actual flow and accumulation) into the basement. Leaks caused by improper landscaping or failure to maintain proper grade are not covered. INSULATON (1) Inadequate insulation. (a) Standard. This warranty assures q!jly that your insulation will meet the applicable energy code requirements. (b) Repair Responsibility. Builder will install sufficient insulation to meet the applicable local code requirements. Contractual Agreement for additional insulation shall not involve this warranty. (2) Air infiltration from electrical outlets. (a) Standard. This is common in new construction. (b) Repair Responsibility. None. ROOFING (1) Roof leaks. (a) Standard, The roof should not leak and no leaks should arise from fiashings except where snow and ice are allowed to build up continually. Prevention of unusual snow and ice buildup is the purchaser's responsibility. (b) Repair Responsibility. All roof and flashing leaks not caused by snow and ice buildup or other than neglect by the purchaser will be repaired. The Builder is not responsible for color variations. (2) Gutters and downspout leader leaks. (a) Standard. Gutters and leaders should not leak. However, during heavy rains, overflow should be expected. (b) Repair Responsibility. Builder will correct leaks not caused by purchaser's negligence or improper maintenance. Ladders allowed to rest against gutters will cause deformation and will affect purpose. (3) Poor gutter drainage. (a) Standard, Some standing water should be expected within certain tolerances. (b) Repair Responsibility. Builder will repair so that, if free from debris, the standing water depth will not exceed 1 inch. (4) Insufficient attic or roof ventilation. (a) Standard. The applicable building codes will control. (b) Repair Responsibility. Builder will correct to meet the applicable code requirements. (5) Standing water on flat roof. (a) Standard. Water shall drain from flat roof except for minor ponding immediately following rainfall or when the roof is specifically designed for water retention. (b) Repair Responsibility. Builder will take corrective action to assure proper drainage of roof. SIDING AND CAULKING (1) Siding, trim and masonry cracks and separation. (a) Standard. Separation between siding, masonry and trim should not exceed 3/8 inch. Siding, trim and masonry should be capable of excluding the elements. (b) Repair Responsibility. Builder will repair by caulking or other methods. (2) Leaks due to snow or rain driven into the attic through louvers or vents. (a) Standard. Attic vents and/or louvers must be provided for proper ventilation of the attic space of the structure. (b) Repair Responsibility. None. (3) Caulking shrinkage. (a) Standard. Since all caulking shrinks, purchaser is responsible for maintaining caulking. (b) Repair Responsibility. All junctions and separations of wall surfaces will be caulked once to prevent water leakage. Any shrinkage thereafter will be the purchaser's responsibility. (4) Delamination of veneer siding or joint separation. (a) Standard. All siding shall be installed according to the manufacturer's and industry's accepted standards. Separations and delaminations shall be repaired or replaced. (b) Repair Responsibility. Builder will repair or replace siding as needed unless caused by purchaser's neglect to maintain siding properly. Repaired area may not match in color and/or texture. For surfaces requiring paint, Builder will paint only the new materials. The owner can expect that the newly painted surface may not match original surface in color. 6- (5) Paint or stain peels or fades. (a) Standard. Fading caused by weathering is normal and should be expected within certain tolerances. Varnish or lacquer on the exterior will deteriorate quickly and is not covered by this warranty. Mildew and fungus on siding are caused by climatic conditions or nearby bodies of water 1 and are not covered by this warranty. (b) Repair Responsibility. If paint or stain is defective Builder will refinish affected area. Builder is not responsible for color variations. (6) Cracks in stucco wall finish. (a) Standard. Cracks in stucco wall finishes are common and should be expected within certain tolerances. (b) Repair Responsibility. Builder will repair (once) cracks in excess of 1/8 inch width. (7) Cracks In vinyl siding or dents in aluminum siding. (a) Standard. These defects can be caused by an object striking the siding. (b) Repair Responsibility. Builder will correct defects only if reported prior to occupancy. Builder not responsible for color variations or discontinued patterns. (8) Cracking or delamination of wood on exterior-wooden decks, walks, porches, railings, shingles. (a) Standard. Wood exposed to the elements will react and crack. Certain types of wood should be painted or stained or sealed continuously. This is considered a homeowner maintenance item. (b) Repair Responsibility. None. (9) Loose or fallen siding. (a) Standard. All siding, which is not installed properly, so as not to come loose or fall off under normal conditions, is a deficiency. (b) Repair Responsibility. The Builder will repair or replace improperly-secured siding. Builder is not responsible for fallen siding caused by unusual winds. MASONRY AND CONCRETE (1) Cracks in concrete walls. (a) Standard. Shrinkage or settlement cracks are common and should be expected within certain l tolerances. S (b) Repair Responsibility. Any cracks greater than 1/8 inch in width will be repaired by surface patching or pointing; Builder is not responsible for color variations. (2) Cracks in block or veneer walls. (a) Standard. Mortar shrinking cracks are common and should be expected within certain tolerances. (b) Repair Responsibility. Any cracks in the block greater than 1/8 inch in width will be repaired by surface patching or pointing; Builder will not be responsible for color variations. (3) Cracks in concrete basement floors. (a) Standard. Hairline cracks due to shrinkage are common and should be expected within certain tolerances. (b) Repair Responsibility. Any cracks greater than 3/16 inch in width or 114 inch in vertical displacement will be repaired by surface patching or comparable remedies. (4) Movements of concrete slabs at joints. (a) Standard. Concrete slabs are engineered to move at expansion and contraction joints. (b) Repair Responsibility. None. (5) Cracks in attached garage slab or structurally attached patio slabs. (a) Standard. Shrinkage cracks are common and should be expected within certain tolerances. (b) Repair Responsibility. Cracks exceeding 1/4 inch in width or 1/4 inch in vertical displacement will be repaired by patching or other remedies. (6) Rough, uneven concrete floors in living areas. (a) Standard. Concrete may be pitched to facilitate drainage in basement and garage floors. (b) Repair Responsibility. Builder will correct uneveness which exceeds 114 inch in a 32 inch measurement in initially intended living areas only. (7) Concrete slab cracks causing finished floor coverings to rupture. (a) Standard. Cracks which rupture finish flooring shall be repaired. (b) Repair Responsibility. The problem will be corrected so that the defect is not readily noticeable. (8) Pitting, scaling or spalling of concrete work (excluding sidewalks and driveways). (a) Standard. Concrete surfaces shall not disintegrate to the extent that the aggregate is exposed and loosened under normal conditions of weathering and use. 7- (b) Repair Responsibility. Builder will take whatever corrective action necessary to repair or replace defective concrete surfaces. Builder is not responsible for deterioration caused by salt, chemicals, mechanical implements and other factors beyond its control. (9) Separation of stoops. (a) Standard. Minor separation is normal. (b) Repair Responsibility. Builder will repair separation of more than 1 inch. (10) Efflorescence on masonry (brick, block, concrete). (a) Standard. Discoloration caused by the lime content in the mortar will occur. (b) Repair Responsibility. None. (11) Water absorption by exposed brick veneer. (a) Standard. Absorption varies in the type of brick/masonry chosen and cannot be controlled by Builder. (b) Repair Responsibility. None. CHIMNEYS AND FIREPLACES (1) Insufficient draw or down draft. (a) Standard. Trees too close to the chimney or high winds can cause down drafts. Some homes are extremely air-tight and a window may have to be opened slightly in order to maintain an effective draft. (b) Repair Responsibility. Builder will correct problems caused by improper construction or design. (2) Chimney separation from home. (a) Standard. Some minor separation is normal and should be expected within certain tolerances. (b) Repair Responsibility. Separation in excess of 1/2 inch in any 10 foot measurement will be corrected by caulking or other measures.This is a one year covered item and is not considered a structural item. (3) Firebrick cracks. (a) Standard. Heat will cause some cracking and should be expected. (b) Repair Responsibility. None. (4) Fireplace brick veneer cracks. (a) Standard. Some cracking is common and should be expected within certain tolerances. (b) Repair Responsibility. Cracks in brick greater than 1/4 inch in width will be repaired by pointing or patching. (5) Creosote or resin build-up or creosote seepage through chimney. (a) Standard. Creosote seepage is caused by the burning of improperly seasoned wood or improper operation of the fireplace. (b) Repair Responsibility. Builder will construct the chimney to meet code requirements. Since the Builder does not have control of the materials and methods used in operating, he is not responsible for any defects caused by anything other than a code violation in construction. (6) Fireplace inserts and blowers. (a) Standard. Some types of fireplace inserts and blowers will alter the performance of standard fireplaces, causing extreme increases in heat in the fire chamber and creosote build-up. (b) Repair Responsibility. Builder is not responsible for damage and loss caused by fireplace inserts and blowers. WINDOWS AND DOORS (1) Warping of doors. (a) Standard. Some warping, especially of exterior doors is normal and is caused by surface temperature changes. Such warping, however should not cause the doors to become unusable or allow entrance of the elements, and should not exceed 1/4 inch measured corner to corner diagonally. (b) Repair Responsibility. Defective doors will be repaired or replaced. Builder is not responsible for slight variations in finish. d-VU (2) Door panel shrinkage. (a) Standard. Expansion and contraction is normal and may cause unfinished surfaces to appear. (b) Repair Responsibility. None. This is a homeowner maintenance item. -8- (3) Door panel splits. (a) Standard. Some splitting is normal and should be expected within certain tolerances. (b) Repair Responsibility. If the split allows the entrance of light, it will be repaired once. The Builder is not responsible for slight variations in finish. P (4) Glass breakage and scratches. l -, (a) Standard. None. (b) Repair Responsibility. None. Must be reported prior to occupancy. (5) Garage door malfunctions. (a) Standard. Maintenance is purchaser's responsibility. (b) Repair Responsibility. The door will be repaired and adjusted to function as designed except where a result of purchaser action or negligence. (6) Garage door - entrance of elements. (a) Standard. Even a door installed to manufacturer's specifications will allow some entrance of the elements and should be expected within reason. (b) Repair Responsibility. The door will be adjusted to meet the manufacturer's specifications. (7) Windows do not operate. (a) Standard. Reasonable pressure should open and close windows. (b) Repair Responsibility. Builder will repair as required. Builder not responsible for condensation or frost caused by climatic and internal humidity conditions. (8) Air infiltration around doors and windows. (a) Standard. Some infiltration is normally noticeable around doors and windows, especially during high winds. Poorly fitted weatherstripping shall be adjusted or replaced. It maybe necessary for the owner to have storm doors and windows installed to provide satisfactory solutions in high wind areas. (b) Repair Responsibility. Builder will adjustor correct poorly fitted doors, windows and poorly fitted weatherstripping. (9) Moisture or condensation on window glazing. (a) Standard. This is caused by atmospheric conditions and can be aggravated by insulated drapes keeping in the moisture. (b) Repair Responsibility. Builder is responsible for repair only if window seal is broken ordefective. Condensation on window and sky lights caused by a lack of thermal break are excluded. Consideration of thermal break should be given when selecting price range of windows. (10) Excessive opening at the bottom of interior doors. (a) Standard. Passage doors from room to room that have an opening between the bottom of the door and the floor finish material in excess of 1-1/2 inches is a deficiency. Closet doors having an opening in excess of two inches is a deficiency. (b) Repair Responsibility. The Builder will make necessary adjustment or replace door to meet required tolerance. (11) Double hung windows do not stay in place when open. (a) Standard. Double hung windows are permitted to move up or down within a two inch tolerance, when put in an open position. (b) Repair Responsibility. The Builder will adjust sash balances one time only. (12) Hardware does not work properly, fails to lock or perform its intended purpose. (a) Standard. All hardware installed on doors and windows should operate properly. (b) Repair Responsibility. The Builder will be responsible for repairs of hardware, if reported by the homeowner, no later than seven (7) days after construction completion. (13) Storm doors and windows do not operate or fit properly. (a) Standard. Storm doors and windows, when installed by the Builder, should operate and fit properly to provide the protection for which they are intended. (b) Repair Responsibility. The Builder will adjust, repair or replace as necessary for proper fit and operation. (14) Screen panels do not fit properly. Screen mesh is tom or damaged. (a) Standard. Rips or gouges in the screen mesh must be documented by the homeowner prior to completion. The screen panels shall fit properly. (b) Repair Responsibility. The Builder will adjust screen panels to fit in the frame properly, onetime only. Where tears or gouges are reported prior to completion, the Builder will repair or replace. If a the Builder does not perform awalk-through, the Builder will be responsible for repairing tears and gouges if reported by the homeowner in writing no later than seven (7) days after completion. -9- INTERIOR WALLS AND TRIM (1) (2) Molding and trim defects. (a) Standard. Some separation between moldings and adjacent surfaces (including casement, base, etc.) is normal and should be expected within certain tolerances. (b) Repair Responsibility. Separation in excess of 1/4 inch will be repaired by caulking or other methods. Cracks in interior wall and ceiling surfaces. (a) Standard. Hairline cracks are not unusual in interior wall and ceiling surfaces. Cracks greater than 1/8 inch in width shall be repaired. (b) Repair Responsibility. Builder will repair cracks exceeding 1/8 inch in width as required, onetime only, during the first year of the Limited Warranty period. (3) Nail pops, blister in tape or other blemishes. (a) Standard. Slight "imperfections" such as nail pops, seam lines and cracks not exceeding 1/8 inch in width are common in gypsum wallboard installations and are considered acceptable. (b) Repair Responsibility. Builder will repair only cracks exceeding 1/8 inch in width, onetime only, during the first year of the Limited Warranty period. (4) Ceramic tile cracks. (a) Standard. Cracking of grout joints is common and should be expected within certain tolerances. Purchaser is responsible for routine maintenance of grout joints. (b) Repair Responsibility. Broken tiles will be replaced and excessive cracking of groutjoints will be repaired once. Builder is not responsible for discontinued patterns or colors or for variations in colors. (5) Peeling of wallpaper or wall covering. (a) Standard. Wallpaper should not peel. (b) Repair Responsibility. Builder is not responsible for peeling caused by owner negligenceor use. Builder will repair or replace defectively installed wallpaper or wall covering. Builder not responsible for discontinued patterns or colors or variations in color. (6) Edge mismatching in pattern of wall covering. (a) Standard. None. (b) Repair Responsibility. None. (7) Mildew on floors, base and moldings. (a) Standard. Mildew is caused by the humidity level maintained by the occupants of the home and is considered a maintenance item. In homes constructed on concrete slabs, more humidity level maintenance is required. (b) Repair Responsibility. None. (8) Variations in paneling color; scratches or checks on finished surfaces. (a) Standard. Plywood paneling pattern and color will often vary and is not considered a deficiency. Scratches and checks on the paneling surface are deficiencies, if reported before completion. (b) Repair Responsibility. The Builder will repair damaged paneling, if such damage was documented on a walk-through inspection. If the Builder does not perform a walk-through, Builder will be responsible for repairing the defects, if reported bythe homeowner in writing no later than seven (7) days after completion. The Builder is not responsible for discontinued variations. (9) Lumps, ridges and nail pops in wallboard which appear after homeowner has wallcovering installed by others. (a) Standard. The homeowner shall insure that the surface to receive wallcovering is suitable and assumes full responsibility should lumps, ridges and nail pops occur. (b) Repair Responsibility. None. FLOORING AND COVERING (1) Uneven joints in wooden floors and floor boards. (a) Standard. Squeaks and loose sub-flooring are usually passing conditions caused by lumber shrinkage or temperature changes and are not covered by this warranty unless caused by a defective joist in the floor system. (b) Repair Responsibility. Uneven joints resulting in ridges or indentations exceeding 1/4 inch within a 32 inch area (measuring perpendicular to the ridge or indentation) will be repaired. _In_ (2) Cracks between floor boards. (3) (a) Standard. Some separation is normal and should be expected within certain tolerances. (b) Repair Responsibility. Separations exceeding 1/4 inch in width will be repaired by filling or replacing at the Builder's option. Nails popping through resilient flooring. (a) Standard. Only nails which have broken through the floor covering will be repaired. (b) Repair Responsibility. The nail pops will be repaired or replaced at the sole option of the Builder in the area damaged. The Builder is not responsible for discontinued patterns or colors or for variations in color. (4) Ridges in sub-floor. (a) Standard. Minor ridges or indentations are common and should be expected within certain tolerances. (b) Repair Responsibility. Ridges or indentations in excess of 1/8 inch (measured with a straight edge perpendicularly over the ridge and the deflection measured no more than 3 inches from the ridge) will be repaired and affected floor covering will be repaired or replaced. Builder is not responsible for discontinued patterns or colors or for variations in color. (5) Loose floor coverings. (a) Standard. The Builder has sole option of repairing or replacing. (b) Repair Responsibility. The affected area will be repaired or replaced. Builder is not responsible for discontinued patterns or colors or for variations in color. Bubbles may be repaired by injecting adhesive through a cut placed in the flooring. (6) Gaps in seams of resilient coverings. (a) Standard. Minor gaps are common and should be expected within certain tolerances. When the purchaser installs flooring and covering, sub-floor preparation is his responsibility. If sub-floor repairs are to be made when the purchaser installs floor covering, the removal and replacement of the floor covering is the purchaser's responsibility. (b) Repair Responsibility. Minor gaps in excess of 1/8 inch will be repaired or replaced at the affected area. Builder is not responsible for discontinued patterns or colors or for variations in color. Builder is not responsible for flooring or coverings installed by purchaser. (7) Gaps in carpet seams. (a) Standard. Seams will be apparent. Spotting or fading of carpet is not covered by this warranty. (b) Repair Responsibility. The carpet will be repaired or restretched if necessary so gaps are not visible, only once. CARPENTRY (1) Walls which bulge, bow or are out-of-plumb. (a) Standard. All interior and exterior walls have minor differences, and routine differences should be expected within certain tolerances. (b) Repair Responsibility. Walls bowing more than 1/4 inch within a 32 inch measurement or 3/8 inch within a 4 foot measurement (floor to ceiling or wall-to-wall) will be repaired. CABINETS AND COUNTER TOPS (1) Counter-top or cabinet imperfections. (a) Standard. None. (b) Repair Responsibility. Chips, cracks or delaminations will be repaired. Cracks and chips, including porcelain and fiberglass fixtures, not reported to the Builder prior to occupancy will not be covered by this warranty. (2) Warping of doors and drawers. (a) Standard. Minor warpage is common and should be expected within certain tolerances. (b) Repair Responsibility. Warpage in excess of 1/4 inch from the face of the cabinet will be repaired or the doors or drawers replaced. Builder is not responsible for variations in color. (3) Cabinet separates from wall or ceiling. (a) Standard. Some separation is common and should be expected within certain tolerances. (b) Repair Responsibility. Separation in excess of 1/4 inch will be repaired or the cabinet replaced. it- COOLING AND HEATING (Coverage for one year only.) (1) Cooling variations. (a) Standard. Where applicable, the cooling system should be able to maintain a temperature of 78 degrees (measured 5 feet above the center of the floor in the room where the thermostat is located) under local outdoor ASHRAE specifications. In the case of excessive outdoor temperature, a 15 degree difference is acceptable. Purchaser is responsible for minor adjustments such as balancing dampers and registers. All rooms will vary in temperature by 5 or 6 degrees. This is acceptable under industry standards. (b) Repair Responsibility. The Builder will repair the system so that it will perform as described. (2) Heating variations. (a) Standard. Where applicable (Coverage for one year only.) the heating system should be able to maintain a temperature of 70 degrees (measured 5 feet above the center of the floor in the room where the thermostat is located) under local outdoor ASHRAE specifications. Purchaser is responsible for minor adjustments such as balancing dampers and registers. On extremely cold days, a 5 to 6 degree difference between the actual inside temperature and the thermostat setting is acceptable. All rooms will vary in temperature by 5 to 6 degrees. This is acceptable under industry standards. (b) Repair Responsibility. The Builder will repair the system so that it will perform as described. (3) Heat pump - continues to run. (a) Standard. On extreme outside temperatures the heating unit will work more frequently. If the unit still does not supply sufficient heat, the outside temperature setting on the unit may need to be adjusted. (b) Repair Responsibility. None. This is a homeowner maintenance item. Please consult the manufacturer's instructions for use. (4) Noisy ductwork. (a) Standard. When metal ducts heat and cool, some noise will result. (b) Repair Responsibility. Builder will correct excessively loud noise only. (5) Condensation Lines (a) Standard. None. (b) Repair Responsibility. Condensation lines will clog eventually under normal use. This is a homeowner maintenance item. Builder shall provide unobstructed condensation lines as of the effective date of the Limited Warranty. PLUMBING (Covered for one year only.) (1) Pipes freeze and burst. (a) Standard. Purchaser is responsible for draining pipe lines supplying outside faucets. (b) Repair Responsibility. Builder will insulate pipes to prevent freezing during normal winter temperatures. (2) Plumbing fixture, appliance and trim fitting defects. (a) Standard. None. (b) Repair Responsibility. Builder will correct leaks or malfunction in faucets, valves, appliances and trim fittings caused by defects in materials or workmanship. (3) Noisy pipes. (a) Standard. Expansion and contraction caused by water flow will cause some noise which is to be expected. Pipe noise is more pronounced in plastic piping. (b) Repair Responsibility. Builder will correct only excessively loud pipe noises caused by "water hammer" in the supply lines. (4) Cracks or chips in porcelain or fiberglass. (a) Standard. The purchaser should inspect these items and report them to the Builder prior to occupancy. (b) Repair Responsibility. The Builder will be responsible for surface imperfections only if reported in writing prior to occupancy. Staining of fixtures is not covered by this warranty. -12- ELECTRICAL (Coverage for one year only.) (1) Outlets, switches or fixtures. (a) Standard. Should operate as intended. (b) Repair Responsibility. Defective outlets, switches and fixtures will be repaired or replaced. (2) Consistently blown fuses or circuit breakers kicking off. (a) Standard. Builder will not be responsible if caused by overloads in the system. (b) Repair Responsibility. Builder will inspect and repair any defects caused by Builder noncom- pliance with applicable building and electrical codes, or by defective wiring or components. (3) Ground fault interruptor trips frequently. (a) Standard. Ground fault interruptors are sensitive safety devices installed into the electrical system to provide protection against electrical shock. These sensitive devices can be tripped very easily. (b) Repair Responsibility. Builder shall install ground fault interruptor in accordance with approved electrical code. Tripping is to be expected and is not covered, unless due to a construction defect. WARRANTY STANDARDS AND COVERAGE FOR YEARS ONE AND TWO ONLY (1) Lack of water supply. (a) Standard. All on-site service connections to municipal water main and private water supply shall be the Builder's responsibility. Private systems shall be designed and installed in accordance with all approved building, plumbing and health codes. (b) Repair Responsibility. Builder will repair if failure is the result of defective workmanship or materials. If conditions beyond Builder's control disrupt or eliminate the sources of the supply, the Builder has no responsibility. Potability of water is not covered by this warranty. (2) Septic system fails. (a) Standard. Septic system should operate properly. Excessive use or failure to properly remove septage are not covered by this warranty. (b) Repair Responsibility. Builder only will warrant against faulty workmanship and materials and will repair or replace to perform properly with the exception of the above mentioned items as well as 1. Excessive use of water such as overuse of washing machine and dishwasher: including their simultaneous use; 2. Connection of sump pump, roof drains or backwash from water conditioner to the system, 3. Placing of non-biodegradable items in the system: 4. Addition of any harsh chemicals, greases, or cleaning agents, and excessive amounts of bleaches or drain cleaners, 5. Use of a food waste disposer not supplied by the contractor; 6. Placement of impervious services over the disposal area. 7. Allowing vehicles to drive or park over the disposal area: 8. Failure to periodically pump out the septic tank when required. (3) Pipe leaks. (a) Standard. Condensation on pipes is normal and should be expected. (b) Repair Responsibility. Builder will repair leaks. (4) Clogged drain and sewers. (a) Standard. N/A. (b) Repair Responsibility. Builder will repair only if caused by a defect in construction. Purchaser will pay for Builder's repair if not a construction defect. (5) Ductwork separates. (a) Standard. Should not separate under normal conditions. (b) Repair Responsibility. The Builder will repair. -13- (6) Wiring fails to carry specified electrical load. (a) Standard. Wiring should be capable of handling the required load. (b) Repair Responsibility. Builder will correct to meet applicable building and electrical codes. VI. Complaint and Claim Procedure A. Step One. Upon discovery of some fault or defect which you believe is covered by this agreement, you should first send a clear and specific written notice to your Builder. You must make your home available for inspections and repairs during normal working hours. Notice to your Builder does not constitute notice to QBW. B. Step Two. If, after receiving notice, your Builder does not respond within a reasonable time, you should then give written notice of your complaint to QBW by certified mail, return receipt requested. QBW must receive written notice of your complaint no more than thirty (30) days after the expiration of the applicable warranty period. If your complaint is received by QBW after 30 days from the expiration of the warranty on the item, it will not be honored. Notice to your Builder does not constitute notice to QBW. The notice to QBW must include: your warranty number and effective date, your name, address and telephone number. Builder name and address, as well as a description of the defect and the warranty standard which applies specifying the page and section of the warranty, as well as all previous written correspondence to the Builder pertaining to the defect. Telephone complaints will not be honored as notice. Photographs are not necessary, but if supplied will not be returned. C. Step Three. QBW will review your complaint and, if necessary. QBW will cause an investigator, who may bean employee of QBW, to view the defect and to report to both you and your Builder. The investigators report will be completed within twenty (20) days of receipt of your request. The report will state the Builder's obligations. Upon receipt of this report, you have thirty (30) days to acceptthe report. Where a claimed defect is filed that cannot be observed or determined under normal conditions, it is the homeowner's responsibility to substantiate that the condition does exist. Any cost involved shall be paid by the owner, and if properly substantiated, reimbursement shall be made by your Builder or QBW, whichever is liable for the claim. D. Step Four. If you disagree with the investigator's report, you have (30) days to notify QBW and the Builder in writing, that you disagree. In such event, disputes on covered items shall be submitted for arbitration to the American Arbitration Association (AAA) or such other independent arbitration service as may be designated by QBW, for resolution in accordance with the rules and regulations of the AAA or such other service. You must pay the cost of arbitration when filing a claim. Such arbitration shall be a condition precedent to the commencement of any litigation by the homeowner or builder arising out of or connected with the rights and obligations created by this Agreement. Upon delivery of an arbitration award ("Award") to the parties, any party may, within twenty (20) days, request an appeal of the Award. A request for appeal must be sent, together with the appropriate administrative fee, to QBW, with copies of the request simultaneously being sent to all other parties. Upon receipt of the request for appeal and the appropriate administrative fee, QBW will forward the application to the AAA, or other service, for administration. The AAA. or other service, will appoint an appellate arbitrator, in accordance with its procedures, to review the matter, and visit the home and view the subject matter of the Purchaser's complaint. Within ten (10) days of receiptof notice of appeal from the AAA, or other service, the other parties must deliver a written reply to the appeal to the AAA, or other service, and simultaneously send it to all other parties. The AAA, or other service, will transmit copies of the appeal and the reply to the Appellate Arbitrator. The Appellate Arbitrator will schedule an additional hearing at the home. The Appellate Arbitrator shall render a decision regarding the application for appeal and reply, if no party wishes a site hearing, or within twenty (20) days after the site hearing. The Appellate Arbitrator may not review any new or different complaints, but may modify or change the Award if he or she finds that the Award exceeds or does not meet the scope of the Warranty or its coverage. The AAA, or other such party, will notify all parties of the decision of the Appellate Arbitrator, which will be final. The Builder and QBW have agreed to be bound by the final award of arbitration or appellate arbitration, as applicable, in all states. Judgment upon the final award rendered in arbitration may be entered in any court having jurisdiction in those states where such arbitration is binding upon all parties thereto. 1L- This request for Arbitration shall occur only after the investigation process has been completed. In states where this arbitration can be legally binding on all parties to the arbitration, then this arbitration is binding. In states where this arbitration is not binding on one or more parties to the arbitration, then arbitration in accordance with this contract shall be a condition precedent to the commencement of any litigation by the homeowner or builder to compel compliance with the warranty documents or to seek relief for any dispute arising out of this program. 1. Acceptance. If you accept the decision, you must sign a copy of that decision which will be provided for this purpose and you must then return the signed copy to QBW within thirty (30) days of its date. Your Builder will then perform as required by the decisions, but neitherQBW nor the Builder will be responsible for damages caused or made worse by your delay in accepting the decision. If the decision places a time period on your Builder's performance, the timeallowed will be measured from the date QBW receives your acceptance of the decision. Sixty (60) days will be the standard time for compliance, weather conditions permitting. 2. Rejection. If you decide to reject the decision, your Builder is under no obligation to perform. 3. Right of Access. You must provide the Builder, or if applicable, QBW, with reasonable weekday access during normal business hours in order to perform its obligations under this Agreement. Failure by you to providesuch accessto the Builder orQBW may relievethe Builder or QBW of its obligations under this Agreement. NOTICE OF MAJOR STRUCTURAL DEFECT CLAIM TO QBW; TIME of NOTICE If you have a claim as a result of a Major Structural Defect occurring during the third through tenth years of this Agreement, you should notify QBW and QBW will investigate the claim. All such claims must be presented in writing to QBW (not the Builder) by certified mail, return receipt requested, within a reasonable time after the Major Structural Defect arises but in no event later than thirty days after the expiration of the term of this Agreement. Claims received after this period will not be honored. Notice should include the information requested in item B above. VII. Legal Actions. S This Agreement provides a procedure for you to Give notice to both the Builder and QBW of potential claims, to have an inspection at no cost to you, and to give the Builder or QBW, as appropriate, an opportunity to fulfill their obligations hereunder. If you institute legal proceedings against the Builderor QBW for any obligation arising or claimed to have arisen under this Agreement prior to giving the Builder or QBW the proper notices and opportunities to cure provided under this Agreement and prior to using the dispute settlement procedure herein, you agree to indemnify the Builder and QBW for all costs and expenses of such litigation, including reasonable attorneys' fees, regardless of whether you have an otherwise legitimate claim underthis Agreement. For purposes of this Agreement, litigation shall include arbitration proceedings. In no event shall QBW have any obligation to reimburse you if the Builderfails to pay to you litigation costs which may be awarded to you hereunder. In the event you commence any legal action against QBW, prior to complying with all steps in the complaint procedure, you agree to reimburse QBW, or any other agent of QBW, for all of its costs and expenses of litigation, including reasonable attorneys' fees. -15- ADDENDUM TO WARRANTY FOR FHA/HUD PROPERTIES ONLY For all FHA/HUD Properties being enrolled in the Quality Builders Warranty Program financed through FHA, the following standards govern and replace those previously stated in this booklet and shall govern performance as to Warranty Coverage provided. REFERENCE STANDARD AND RESPONSIBILITY 1. Pg. 2, Section I1. E (9) and Roof sheathing will be covered. Pg. 3, Section 111. Item KK. 2. Pg. 3, Section III. BB. Defects in the first year of warranty coverage on appliances and equipment shall be corrected if damaged during installation and/or improperly installed causing a malfunction. 3. Pg. 4, Section IV. C.8. The deductible shall be$250-00forallclaimsfiled by a homeowner during the first two years of coverage, and $250.00 per claim filed during the third through tenth years of coverage. -16- STATE OF INDIANA ADDENrE[4 - RIDER AN? Notwithstanding anything contained in the attached printed form of Quality Builders Warranty Limited Warranty Agreement, the Warranty shall include the following protection: SECPION IV.A. GENERAL TERMS AND CONDITIONS/RIGHTS AND is amended to read: A. COVERAGE PROVIDED This agreement provides the following protection, commencing with the effective date on the Enrollment Form: 1. During the first and second year of this Agreement, and subject to the terms and conditions listed herein, your Builder warrants your home against faulty workmanship and materials, defects in appliances, fixtures and equipment, defects in wiring, piping and duct work in the electrical, plumbing, heating, cooling, ventilating and mechanical systems, and Major Structural Defects (See Definition, Section II-E) due to non-compliance with the Warranty Standards. With respect to fixtures, appliances and items of equipment, the warranty is for one year or the manufacturer's written warranty, whichever is less. During the second year of this Agreement, and subject to the terms and conditions listed herein, your Builder warrants that your home's cooling, heating, and ventilation, electrical and plumbing systems (exclusive of appliances, fixtures and equipment - coverage is for one year or manufacturer's warranty, whichever is less) will be free from defects due to non-compliance with the Warranty Standards set forth in Section V of this document. Your Builder further warrants that your home will have no Major Structural Defects in that period. (See Definitions, Section II-E). A. DURING YEARS THREE AND FOUR COVERAGE Commencing at the beginning of the third year following the effective date of warranty as specified on the Enrollment Form, and subject to the terms and conditions listed herein, your Builder warrants that for a period of two years your home will be free from defects caused by faulty workmanship or defective materials in its roof systems. 3. In years three through ten of this Agreement, QEW warrants that your home will be free from any Major Structural Defects as and only as that term is defined in Section II-E of. this document. Notice of defective roof in years three and four should be reported directly to builder as stated in Step One of Complaint and Claim Procedure. 4. The builder is the warrantor as explained above. QBW through its insurer provides insurance coverage insuring the builder's performance hereunder and is the warrantor providing insurance protection through its insurer against Major Structural Defects, as defined in Section II-E, during the third through tenth years of this warranty. Quality Builders Warranty Corporation (QBW) will administer the limited warranty program for participating builders. The protection provided under the limited warranty program is automatically transferable to subsequent purchasers during the ten year term of this agreement. The warranties and rights listed aboveare in addition to, and are not exclusive of, any warranties listed in the Agreement. Exhibit E - Kmw--- LAW OFFICE ICLINGMAN, MATHEIS & WEINSTEIN, PLLC 310 WEST LIBERTY STREET, SUITE 300 LOUISVILLE, KENTUCKY 40202 W. DAVID KLINGMAN KENNETH S. MATHEIS DAVID S. WEINSTEIN May 25, 2004 Mr. John Gill Quality Builders Warranty Corporation 325 N. 2' Street Wormleysburg, PA 17043 Re. Allstate v. Judkins Dear Mr. Gill: PORTLAND 2318 PORTLAND AVENUE LOUISVILLE, KENTUCKY 40212 This is in answer to your many calls. With respect to calls, I know that your company has other business with Mr. Haines of Allstate, but I would appreciate you directing all calls to me with respect to the Judkins' matter. Mr. Haines reports on several occasions, someone has called from your company and tried to discuss the Judkins' case with him. Since we are in somewhat of an adversarial posture on this case, I would suggest that in order to fulfill all ethical requirements, you speak with me only on this case. Allstate is currently in the process of trying to put together some form of package in order to settle this case. The first leg of this journey is to involve the City of Louisville and Mr. Haines is waiting for a response from the City. The settlement would involve participation by the City, by Allstate, by your company and by Ms. Judkins. The exact proportions of participation have not yet been determined for obvious reasons. Before we approach Ms. Judkins, the three other parties must have resolved their various degrees of participation. Otherwise, there will be probably no settlement unless settlement of the case is determined by some other tribunal. In the report of Hagerty Engineering, it states that "because of the long history of movement within the house, it is possible that simply supporting the existing foundation may not guarantee soundness of the structure. Many of the structural elements likely have racked or twisted and the current condition of these elements may not be suitable for the purpose for which they were designed. Furthermore, repair or replacement of individual unsuitable elements may lead to virtual replacement of the entire structure." TELEPHONES: DOWNTOWN (502) 587-7007, SHIVELY (502) 449-0750, PORTLAND (502) 772-7501 FACSIMILE (502) 587-7066 Exhibit E MT. John Gill Quality Builders Warranty Corporation May 25, 2004 Page Two The report also states that "poor drainage on the site undoubtedly has exacerbated the problem caused by the poor support conditions." I have enclosed a copy of the report relative to 766 South Shelby Street. I have omitted those sections of the report which deal with unrelated matters. The report with respect to 766 South Shelby also states as follows: "I recommend you address this matter immediately so that the unknown specifics or the risks do not become evidence at the expense of human life." The report advises tat while a sudden, catastrophic collapse of the structure appeared unlikely at the time of her visit, the probability of continued serious deterioration of structural elements and corresponding reduced safety and functionality of the house is high. I will contact you as soon as we have heard from the City so that we may discuss the settlement of this matter. If the house collapses, I think there will be unquestionably coverage if injury or loss of life or property occurs. This is the last thing that any of us want to happen, I am sure. Very truly yours, 0 4it THEIS & WEINSTEIN, PLLC W. Dngman n Attorney at Law Enclosure W DK/blb PC: Ray Haines TELEPHONES: DOWNTOWN (502) 587-7007, SHIVELY (502) 4-49-0750, PORTLAND (502) 772-7501 FACSIMILE (502) 587-7066 Ao r--26 •- 2004 9:19AM a ---- No • 4401 P •-3H-I: , 04/23/2003 11:08 8122BY6173 H4GERTY DIG PAGE 02 lH(A.tGIEJ1 LD%'- ? nY E'NCYX TEED ZING . April 22, 2004 Mr. Gabe Fritz Allstate Builders 630 Bruce Avenue Louisville, Kentucky 40208 SMOKETOWN RESIDENTIAL SITES 766/ South Shelby Street LotdsvilIe, Kentucky HET Project No. 4-0501: Lear Mr.: mi . 6j5 I ousl SIre31 J>Nzrmmgle. mu?ana <?t37 i ul (0"12} ht39t2 f.3s (^,7217FN-9173 Enroll' ha;7Env?Gbu.G,ra agcrty Emgineerin& Inc. (? h=s nermrmed IituSt~d site observations and exploratwy activities at the referenced site. Om work was ambori=d by you and was conducted in gcncral accordance with REI Work Authorization No. 417-01a15a, dated April I-5, 2004. On April I4: 2004. T visited the project sites to make general observations concerning rocks and other damage to residential s'suc ores = the properties. My observations are detafed below for each individual property, and general comments about both sites are given in a separate secuorL 766 South ShePhp Stm. ha orcpcty at 766 South Shelby Strecr included a single-family two-story residential structure (a house), an attached wood font porch an attached wood rear decL, and a concrete sidewalk on the frorA of the D-opetty amending tom the sidewalk along Shelby 5u-est to flat Si ant porch. The :douse wa; of wood fame construction with vinyl siding Downspouts dischar= to splash blocks at the grotmd suram tranmortcd rw off from the structure. Qise; vatious ofDamasze Pxtmuor: Most of the damage visible on the exterior of this structure :vas located an the north side. The concrete foundation call sagged visfoly near the center of the north wall and cracks were abund= in the sagging A series of cracks "nipped" down through the mortar joints from a point at the top of the foundation waR near the center of the wag toward th,- east and the west throaQh three courses of conere:e block- As the cracks reached the horizontal martar joint in the wail at tfre ground surface, the separaE OW extended to the ewt and wesr horizontally through the joint. The separation is the hor2oatal mortar joint was 3/8" at the widest point and continued about 10 f= in both directions until it V:a&mlly narrowed to close. Cracks also were observed to tite west of the central cracked section. A crack in the foundation wall. at the location of two Geateehntcat t:ngineating _ Gensttactian 7estfng EaYEronmental Sersises ?c roiven lino -0nr 7^ IIl'iGAIJ Apr-26, 2004 9:20AM---- No•4407 P-1 4/,1fi, W73/2003 11:06 8122646173 HACERlY ENG PAGE 03 Srnoketor x Fes61enW Slues 76eV74 South Sbdby Sired 1Oft&VM4 Xenueky Aprr722, IW exterior discharge pipes stepped down iiam the top of the wall through mortar joints to the east but also sheared off the upper corner of one concrete block. Another set of c, wl6 new the gas meter on the nartb. wall stepped down through mortar joints froth the top of the wall through two block courses then sheard vertically tbrough a concrete block just above the grormid surface. These separations were about V4" wide on average. Additional cracking in the foundation wall was located r the southwestem corner of the house on the south foundation wall. Separations were observed in the mortar joints between the concrete blocks near the corner of the house, suggesting downward movement ofthe kmndstion. Mildew and ftmgal growth were observed on *Ix vinyl siding at various locations around the house, most notably on tin north wall. L addition- separations and distortions in the siding were present at several locations on the house. luteZOr: Extensive damage was observed during a cursory eramiaation of the interior of the house. Unrn entrPonce tbrough the &ont door the -1-Mag ro6n1 floor Was observed to slant dowmcard severely toward the west and south. A fame separation was obse -+ed between the bathroom floor and the bathtub- A similar sevaration was observed b-tween the rear door sill and the kitchen floor. The kitchen floor also sloped dramatically, and sliding closet doors in the kitchen would not close. Throughout the house, large cracks wee present in the drywall. Some of these separations were wider than 31r°A notable -=k egos located at the elevation ofthe top of the Stst fever is the scairw?y on the worth side of the house- This crack was borizonfaL over 3 fact long, and at Itast. %" wide. The pattern., size, and orientation of the cracks throughout the house were typical of damage produced by relatively severe foundation movements. Dom fa portions of tfr hot= did not close properly. Other daor> voa?d not stay open and swung shut be cruse the raznes were tilted. General Conditions: The ground suriacc around most of the st 7^ ure sloped downward toward the hoard or was ievei. adjacent to the house. Although downspouts with. splash blocks or extensions were located around the' ouse, the ground surface was not graded to remove the runoff after it was disuha -jed from the downspotrt. Downspout on the south side of the house discharged directly to a co_ocrete sidewalk between the house znd an adjacent house (768 South Sbelby Street). Erosion of =ferals under and around the sidewalks was observed. as was movement of the sidewalk sectioas Demolition debt's fill was observed not just in the test excavation advanced on the sire (dctar'Fed in the following section), but at the ground surface and in small depressions around the property and on the property to the north Also, the ground surface was relatively irregular on most of the site, Wm-om HAGER Y D._.;,,,. -.F, An, 9; in ,Flu Avf.26. 2004 M: AM 04/23!2093 11:08 8122846173 _-.. - No, 4401 P- UII. P HAGERTY ENG PAGE: 05 SneokamwnReSMex dSilo 766,76d Sowk Shelby Sand L=6WA4 &cxW* .. ApnT22, 2044 As the drainage conditions worsen and more runoff is discharged to the bearine materials, support for the structure will continue to weaken. A sudden, catastrophic collapse of, the structure appeared unlikely at the time of my visit, but the probability of continued, serious deterioration of structural elements and corresponding reduce safety and functionality of the horse was high, In aerleral the health risks associated with continued occupancy in the damaged house are significant but unquaxztiftable. 1 recommend tbst you address this matter immediately so that the unknown specifics of the risks do not become evident at the =pence of human life. The extensive interior cosmetic damage and the visible exteaior damage to the foundation walls likely are just part of the caralogie of damage to the lvuvse. The type of nonuniform rnovernent apparently cxperie=d by the st vcr= typically leads to stresses and damage in etl parts of the hot=, particularly in a two-story Aructuure. The condition of the mo ;for exarrrplc was not evahtated as part of this s udy, but roof damage is a common byproduct when sign• cant difrererrctisII fnun dadoa movement o= M The vrotr ty owner indicated evidence of a reccaaent roof leak; observation of this portion of Lye house probably would produce a deta led list of items to be tepaired. Because of she a• his`torv of nwvcment within the house, it is possible that simply supporting the =isting fauadatian will not etsar'antee soundness of the atnsctnrc. Mazy of the .qtr?i elements likely have racked or twisted, and the current condition of these elements may not be suitable for the pulWse tar which they were desip=L Furthermore, repair or replacement of individnsl unsuitable ek C= :say lead to virtual replace-'rent o` the enter structure. Recormnendations Lf an attempt will be lade to repair the existing house, the bllowing tasks must be ;.anrvleted: Excavate se-ver 11 test pits on the site to observe the general composition of the bearing mat-nags and to define the average size of debris in the U deposits. Conoft with sev=al rep.itable, exeerience3 roundation underpinning Contractors to explore the F mutations of underpinning the =ire house, based on the exisCino damage and, on the characterization of the subs-m: act produced nom the test excavations one contractor's cotntuen`o should address; repaksladditiow to the ends ing dvrmdztlon spstera to allow zor underpitmiug openatiotu; !1o ty depths to suitable baring mAc ials; perceived limitations to restoring or; ;, aI ptiunbneJ velness of structural members. Consult with several reputable, experienced roofing conuactots to determine needed repairs to the c cisting roof, system; inchiding possible replacement of fraiming elements. • Evaluate tk condition o f the floor system and identify elements to be replaced. • Perform a complete surrey of all cosmetic damage sod identify repair/replactntcnt 01366M zvahrare 4 doorways, window openings, stairways, and other structural clemeists Chat may have been twisted or racked beyond the point of simple repair. HAGIERTY ENGIN15EP-INli raea;vad Tema doe 'i^ ?05;;dS1 VERIFICATION I, JOSEPH M. OLSHEFSKI, President of Quality Builders Warranty Corporation, hereby certify and state that the foregoing Complaint is true and correct to the best of my knowledge, information and belief, and that I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4904, relating to unworn falsification to authorities. Quality B ' ders Warran Co ration Date: (9'ad'-oy By: / Joseph M. Olshefski, President CJ I 1 J (JI a Ao_?-26,_2004 9:21A.M No.4407 P. 1/J I, 04i23/2003 11:08 6122846173 . , . HAGERTY ENG PAGE 06 SmokdOWP ZesidenaulSites 7WI-68 Soum Adby Shred LovrsyQA, Kentucky AP7771711 seas Prepare a new grading a drainage plan. to transport nmoff away from the foundation. T'ncse items constitute the minimum mandatory preparation needed to arterupt to restore the house to a structurally sound, stable, fiuzctiouai condition It may became apparent during then, tasks that the amount of work to be done is excessive with relation to the final goal of the project At that time, project planners may decide to demolish the existing, damaged house and r=nstrnct a new one with suitable foundation support and appropriate drainage. It should be noted that repair of the boas= will carry with it same degree of risk due to the L-Tracticality of stripping an cosmetic finishes from the house to evaluate the condition of every struont<al member. The effort to n luate the entire structure to eliminate this isl- would be slightly less than the effort to relnaild the house. Therefore, if some risk o f future problems is =a=--ptable to the eoncerned parties, the house should be demolished end rebar7t properly. 13 H.AGERT YY E'NGIN1:FRING Ppr.pim' Time 10r.91. In AU 2.Q44-9,23AM- 04/23/2003 11:08 B122648173 HAGERTY ENG m * a No.4407 P. -II/II PAS 10 It is very important to note that my evaluation and conclusions were limited necessarily by the limited scope of work of tide study. Unusual or awmaious conditions rmy exist on the site that have a$,ected or generated the damage observed during my visit but that were not obvious or evident based on the visual observations and minor ex?Joratory work nerk,tmed. F:agerty "nQ ag, Inc. is not responsible for such conditions or or changes in the remedial scope of work n°cessitatedi by these unkaowns. 4 A k I appreciate the opportunity to pro-A& you vrttlh gcotechnical engineering ser-Accs. If I can answer any questions, please call. sincerely, ENCnINEEhING, NC- ?eggy Hag ty Dtrfiy, F.E. °rezmzrrt Registercd Kentucky 13306 Cc: Ivlr. Alan Farley Mr. Bill Cratewaod HAGE Rzr.aivai Tim: dor.2?. iii 5EARl VERIFICATION I, JOSEPH M. OLSHEFSKI, President of Quality Builders Warranty Corporation, hereby certify and state that the foregoing Complaint is true and correct to the best of my knowledge, information and belief, and that I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4904, relating to unworn falsification to authorities. Quality Builders WarranCo ration Date: (9 - a F' 0 y By: / Joseph M. Olshefski, President -6t- w QUALITY BUILDERS WARRANTY CORPORATION Plaintiff IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA DOCET NO. 04-3003 EQUITY TERM V. ALLSTATE BUILDERS, INC. CIVIL ACTION -EQUITY AND RAY AND SHIRLEY HAINES Defendant AFFADAVIT OF SERVICE BY MAIL On June 28, 2004, I mailed a true and correct copy of the Complaint by certified mail, return receipt requested to, Allstate Builders, Inc. for Defendant, Article # 7002 1000 0005 0063 1395, at their address. The Defendant, Allstate Builders, Inc. received the Complaint on June 30, 2004, as indicated by the receipts attached hereto as Exhibit "A',. I make these statements pursuant to 18 Pa.C.S. 4904 relating to unswom falsification to authorities and understand that false statements may be subject me to criminal penalties under that statute. V on Shaflrer, Secretary John A. Gill Attorney at Law June 28, 2004 SENT VIA CERTIFIED MAIL - 7002 1000 0005 0063 1395 Allstate Builders Inc. 630 Bruce Ave Louisville, KY 40208 RE: Quality Builders Warranty Corporation vs. Allstate Builders, Inc. and Ray and Shirley Haines Dear Sir: Please find enclosed a copy of the lawsuit, which v Common Pleas, Cumberland County Pennsylvania Sincerely, Jrnerail Gill, Esquire Counsel JAG:rss L" M01 R 0.111 I= I I M a a M o LOUISVILLE I 0 Postage t-t O C vied Fee O (EndorReturn ed,pt Fee sement Required) O O Restrictetl Delivery Fee (Endorsement Admired) O Total Postage 8 Fees ti p Sent To 325 T' T w n O Q C_ r T T r - n:! ??: !... Cali ?T l0 =< QUALITY BUILDERS WARRANTY CORPORATION Plaintiff v. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA DOCET NO. 04-3003 EQUITY TERM ALLSTATE BUILDERS, INC. CIVIL ACTION -EQUITY AND RAY AND SHIRLEY HAINES Defendant AFFADAVIT OF SERVICE BY ]HAIL On July 9, 2004, I mailed a true and correct copy of the Complaint by certified mail, return receipt requested to, Ray Haines, for Defendant, Article # 7002 1000 0005 0063 0039, at his address. The Defendant, Ray Haines received the Complaint on July 12, 2004, as indicated by the receipts attached hereto as Exhibit "A". I make these statements pursuant to 18 Pa.C.S. 4904 relating to unworn falsification to authorities and understand that false statements may be subject me to criminal penalties under that statute. on Shaffer, Secretary John A. Gill Attorney at Law July 8, 2004 SENT VIA CERTIFIED MAIL - 70021000 0005 0063 (1039 Ray Haines 345 White Tail Circle Shepherdsville, KY 40165 RE: Quality Builders Warranty Corporation vs. Allstate Builders, Inc. and Ray and Shirley Haines Dear Mr. Haines: Please find enclosed a copy of the lawsuit, which was filed against you in the Court of Common Pleas, Cumberland County Pennsylvania. tr m 0 0 m 0 C3 postage I . -IS Here Gem,ed Fee O C7 C) Return Receipt Fee ent Required) (Endorsem O Restricted Delivery Fee ent Required) O (Endorsem O a N O O N r) 325 North Second Street, Wormleysburg, Pennsylvania 17043 • (717) 730-9789 • FAX (717) 737-4288 ' c z J '- - Gi -< 9. Also complete ry is desired- ess on the reverse card to You. tck of the mailpiece, •-rR,? e;?c?e X Signature x by ( Printed Name) ? AOSM Z:> _ I- rl L T - ? Yes D. Is delivery address different from Rem 17 E3 No If YES, enter delivery address Zoe Type >resa Mall 9. fif?? MCI p Return Recelpt for Men 's: C) Registered u inso w ...... 0 Yew 4 , Restrict a F-) r-, Domestic Return Receipt 2001 UNITED STATES POSTAL • Sender. Please war, I2t's 1 10, ON3 QUALITY BUILDERS WARRANTY : IN THE COURT OF COMMON PLEAS CORPORATION : CUMBERLAND COUNTY, : PENNSYLVANIA Plaintiff DOCET NO. 04-3003 EQUITY TERM V. ALLSTATE BUILDERS, INC. o CIVIL ACTION - EQUITY AND RAY AND SHIRLEY RAINES ; Defendant Mi= • rn r AFFADAVIT OF SERVICE BY.MAIL On July 9, 2004, I mailed a true and correct copy of the Complaint by certified mail, return receipt requested to, Shirley Haines, for Defendant, Article # 7002 1000 0005 0063 0022, at her address. The Defendant, Shirley Haines received the Complaint on July 12, 2004, as indicated by the receipts attached hereto as Exhibit "A". I make these statements pursuant to 18 Pa.C.S. 4904 relating to unworn falsification to authorities and understand that false statements may be subject me to criminal penalties under that statute. o Shaffer4Secre4? John A. Gill Attorney at Law July 8, 2004 SENT VIA CERTIFIED MAIL - 70021000 0005 0063 0022 Shirley Haines 345 White Tail Circle Shepherdsville, KY 40165 RE: Quality Builders Warranty Corporation vs. Allstate Builders, Inc. and Ray and Shirley Haines Dear Mr. Haines: Please find enclosed a copy of the lawsuit, which was filed against you in the Court of Common Pleas, Cumberland County Pennsylvania. tl.l ti C3 ?• - 0 m .D 0 0 ul Postage Cert"Od F O O Return Receipt (Endorsement Requi d) C3 Resirlctetl OelNery Fee (Entlorsement Re quire e a Total Postage a Fees ru p Sent To O O- co-vo, ?....,- 325 North Second Street, Wormleysburg, Pennsylvania 17043 • (717) 730-9789 • FAX (717) 737-4288 A 7Also complete a7nd 3- Id pelivery is desired. ind addre ss on the reverse m the card to you. to the back of the mallplece, Ce permits. to: b 3.ecei? by ( YC! `%'7,...._, t Wm . Is deli s dMe Item 17? D If YES, enter delivery address below: ?yAiCli° S - ?IiETa,\ G Lam.. a• Service TYPe ?Exp?Mail ` 1 Jt`n k ?J ?Derttlied Mall 1 0 Re4l stared ? Retum Rece ?v )LO i 4v Los, ? Insured Mail?- _M1^ 4. Restricted Deliver/? (Edre Fee) ^ 0 ' ot45 or pf)O 'fJt?-' t.sowtm? wo ??? Return Receipt Domestic August 2001 N< Ye UNITED STATES POSTAL SER E4. L E • Sender. Please Prin name, address, and ZIP+d 3as n ??,??md ?? I'? ?rml eys pq ?d 13 IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA QUALITY BUILDERS WARRANTY CORPORATION, Plaintiff V. No. 04-3003 - Equity Term ALLSTATE BUILDERS, INC. and RAY AND SHIRLEY HAINES, Defendants NOTICE TO PLEAD TO PLAINTIFF: You are hereby notified to file a written response to the enclosed Preliminary Objections within thirty (30) days from service hereof or judgment may be entered against you. LATSHA DAVIS YOHE & MCKENNA, P.C. By La "3LJ Glenn R. Davis Attorney I. D. No. 31040 P. O. Box 825 Harrisburg, PA 17108-0825 (717) 761-1880 IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA QUALITY BUILDERS WARRANTY CORPORATION, Plaintiff V. No. 04-3003 - Equity Term ALLSTATE BUILDERS, INC. and RAY AND SHIRLEY HAINES, Defendants DEFENDANTS' PRELIMINARY 013JECTIONS TO THE COMPLAINT AND NOW, COMES, Defendants, Allstate Builders, Inc. ("Allstate') and Ray and Shirley Haines ("Haines") (collectively "Defendants"), by and through their attorneys, Latsha Davis Yohe & McKenna P.C., pursuant to the Pennsylvania Rules of Civil Procedure 1028, preliminarily object to the Complaint in the above-captioned matter, and support thereof, aver as follows: 1. Plaintiff, Quality Builders Warranty Corporation ("QBW" or "Plaintiff"), is a Pennsylvania corporation with a principal place of business in Wormleysburg, Cumberland County, Pennsylvania. 2. Allstate, a Kentucky corporation, has a principal place of business in Louisville, Jefferson County, Kentucky. 3. Allstate does not conduct business and has no minimal contacts in the Commonwealth of Pennsylvania. 4. Haines reside in Louisville, Jefferson County, Kentucky. 5. Haines do not conduct business and has no minimal contacts in the Commonwealth of Pennsylvania. 6. Plaintiff bases its cause of action upon a Builder Agreement alleged to have been entered into between Plaintiff and Allstate which is attached to the Complaint as Exhibit "A"; Haines were not party to that Builder Agreement. Section A, Paragraph 6, of the Builder Agreement states that the builder's membership shall commence on the date of the execution by QBW and shall continue until terminated by either party in accordance with the terms of this Agreement .... 8. In Paragraph 6 of the Complaint, Plaintiff alleges that the Agreement is dated January 4, 1995. 9. The Builder Agreement attached by Plaintiff as Exhibit "A" is executed on behalf of Plaintiff by Joseph M. Olshefsky, President, and dated January 4, 1996, not 1995. 10. In Paragraph 8 of the Complaint, Plaintiff alleges that Haines endorsed an indemnification in which they agreed to indemnify and save harmless Plaintiff for losses incurred as a result of Allstate's breach of its Builder Agreement. 11. The endorsement referenced in this paragraph attached to the Complaint as Exhibit "A" is dated December 22, 1995. 92285.1 2 12. In Paragraph 9 of the Complaint, Plaintiff states that Allstate submitted for enrollment in the QBW program a home located at 766 South Shelby Street, Louisville, Kentucky. However, Plaintiff never provides the time frame for this averment. 13. In Paragraph 10 of the Complaint, Plaintiff makes averments which are allegedly supported by Exhibit "B;" a letter which is dated March 23, 1995. 14. The letter attached as Exhibit "B" predates the Builder Agreement of the Complaint's Paragraph 7 and the indemnification of the Complaint's Paragraph 8 by at least nine months. 15. In Paragraph 13 of the Complaint, Plaintiff alleges to have issued a Limited Warranty Agreement to Amy L. Judkins for the residence located at 766 South Shelby Street, Louisville, Kentucky, which is attached to the Complaint as Exhibit "D." 16. The Limited Warranty Agreement which is attached to the Complaint is dated July 19, 1995, which predates the Builder Agreement and indemnification by more than five months. 17. Plaintiff alleges that the homeowner, Judkins, complained of structural defects to her residence and instituted suit against, among other parties, Allstate and Quality Builders Warranty Corporation. 18. In Paragraphs 17,18 and 19 of the Complaint, Plaintiff seeks specific performance under the Builder Agreement for issues which are the subject of the pending lawsuit that Plaintiff acknowledges to have been filed and made a party of in Jefferson County Circuit Court, Kentucky. 927$5.1 3 19. The litigation admitted by Plaintiff to be pending in which it is a party is docketed at No. 99-CI-001784 in Jefferson County Circuit Court, Louisville, Kentucky. 20. Plaintiff filed an appeal in the aforesaid action in the Commonwealth of Kentucky, Court of Appeals, at No. 2002-CA-002108-M.R. in which the appellant court determined that QBW's appeal was interlocutory and remanded the matter to the trial court where arbitration had been directed. See Exhibit "..A." 21. QBW filed a motion for review with the Supreme Court of Kentucky as to the decision of the court of appeals, which motion was denied by Order dated February 11, 2004. See Exhibit "B." 22. In Paragraph 20 of the Complaint, Plaintiff seeks reimbursement for attorney's fees which, although it does not identify for what they have been incurred, are believed to be as a result of Plaintiff's litigation in the Jefferson County Circuit Court and various appellate suits. 23. In Paragraph 21 of the Complaint, Plaintiff seeks damages necessary to correct defects to the Judkins home, which defects and liability have not been determined as they are clearly the subject of the suit pending in Jefferson County Circuit Court, Louisville, Kentucky. Nonjoinder Of Necessary Parties 24. Defendants incorporate Paragraphs 1 through 23 herein as though set forth in full. 92285.1 4 25. Plaintiff has named only Allstate Builders, 'Inc. and Ray and Shirley Haines as party to this suit and have failed to name Amy L. Judkins, known to Plaintiff to be a necessary party of interest. 26. The rights of and remedies available to Plaintiff cannot be addressed as they are so directly connected with and affected by the litigation currently pending in Jefferson County Circuit Court, Louisville, Kentucky, without infringing upon the rights of unnamed parties to this suit. 27. Judkins must be named by Plaintiff as a necessary party for this suit to move forward. WHEREFORE, this Honorable Court should dismiss this Complaint for failure to join an indispensable party. Pendency Of A Prior Action 28. Defendants incorporate Paragraphs 1 through 27 herein as though set forth in full. 29. Plaintiff admits in its Paragraph 14 of the Complaint that there is a prior pending action in Jefferson County Circuit Court, Louisville, Kentucky, which addresses the issues involved in this suit, or in the alternative, which determination provides the basis for the claims in this suit. 30. Plaintiff's prayer for relief in the alternative is based upon damages having been adjudicated in that pending suit and determined to be against Plaintiff rather than against Defendant Allstate. 92285.1 31. Plaintiff had and has the opportunity to raise any and all issues which have been raised in this Complaint in its pending litigation in Jefferson County Circuit Court, Louisville, Kentucky. WHEREFORE, this Honorable Court should dismiss this Complaint due to the pendency of a prior action. Lack Of Jurisdiction 32. Defendants incorporate Paragraphs 1 through 31 herein as though set forth in full. 33. Plaintiff's cause of action arises out of the Builder Agreement which it avers has a jurisdictional clause. 34. All acts taken by Defendant Allstate arose in the Commonwealth of Kentucky. 35. All witnesses other than Plaintiff's representative as well as the res of this action, the Judkins' house, are located in Kentucky. 36. Defendant Haines did not enter into the Builder Agreement and have not been alleged by Plaintiff to be subject to the jurisdictional language of the contract. 37. This court lacks both personal and subject ;matter jurisdictional over all parties and the issue in the instant suit. WHEREFORE, this Honorable Court should disrniss the Complaint because of lack of jurisdiction. 92285.1 6 Demurrer/Motion To Ouae h 38. Defendants incorporate Paragraphs 1 through 37 herein as though set forth in full. 39. The facts as pled by Plaintiff do not sufficiently support any theory of law that would allow this Court to grant the relief requested. 40. Plaintiff has failed to plead sufficient facts to establish a right to specific performance or other relief. 41. Plaintiff has failed to separate its causes of action or to identify against which named defendant they have been brought in violation of Pa. R.C.P. 1020. 42. In the event that Plaintiff has stated a cause of action, such cause or causes are not ripe for determination by this Court. WHEREFORE, Defendants, Allstate Builders, Inc. and Ray and Shirley Haines, respectfully request that this Honorable Court dismiss the Complaint against them. Respectfully submitted, Dated: ZS -IM(Y LATSHA DAVIS YOHE & MCKENNA, P.C. By. C3,??'aQoao Glenn R. Davis Attorney I.D. No. 31040 P. O. Box 825 Harrisburg, PA 17108-0825 (717) 761-1880 Attorneys for Defendants, Allstate Builders, Inc., and Ray and Shirley Haines 92285.1 Tommomuralth of I mtnrkB Lonrt of Appro1.5 NO. 2002-CA-002108-MR QUALITY BUILDERS WARRANTY CORPORATION APPELLANT APPEAL FROM JEFFERSON CIRCUIT COURT v. ACTION NO. 99-CI-001784 AMY LOUISE =KINS AND ALLSTATE BUILDERS, INC. APPELLEES ORDER DISMISSING APPEAL BEFORE: EMBERTON, CHIEF JUDGE; BAKER AND MCANULTY, JUDGES. The Court has considered the motion of appellee, Amy Louise Judkins, to dismiss appeal and the responses thereto filed by appellant, Quality Builders Warranty Corporation, and by appellee, Allstate Builders, Inc. Appellees' argument is that this appeal is interlocutory. The appeal was taken from an order requiring appellant to submit names of Kentucky arbitrators. Appellees contend the appeal is premature because the order appealed from does not deny a request for arbitration and, therefore, is not appealable under the Kentucky Arbitration Act, specifically KRS 417.220(1). Although appellant argues the order is appealable because the trial court has in effect stayed arbitration, this Court has determined that appellees' argument is well taken. The trial court has already referred the matter to arbitration. Pursuant to its decision the arbitration process will continue to go forward, albeit with an arbitrator other than the one initially chosen by appellant. Therefore:, we agree that this appeal is premature. It is ORDERED that the motion to dismiss be GRANTED. Appeal No. 2002-CA-002108-MR is hereby DISMISSED. ENTERED : 'APR i12003 I 6?'7 JUDGE, URT OF APPEALS - 2 - ,%uprmr faourf of 'firnfurkij 2003-SC-0350-D (2002-CA-2108) QUALITY BUILDERS WARRANTY CORPORATION V. JEFFERSON CIRCUIT COURT NO. 1999-CI-1784 MOVANT AMY LOUISE JUDKINS and ALLSTATE BUILDERS, INC. RESPONDENTS ORDER DENYING DISCRETIONARY REVIEW The motion for review of the decision of the Court of Appeals is denied. ENTERED February 11, 2004. Chie J stice CERTIFICATE OF SERVICE The undersigned hereby certifies that on this date a true and correct copy of the foregoing was served by first-class United States mail, postage prepaid, upon the following: John A. Gill, Esq. 325 North Second Street Wormleysburg, PA 17043 Dated: Z D J30'-4 Glenn R. Davis l? 0 .1 _ l4 O 'Y GO IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA QUALITY BUILDERS WARRANTY CORPORATION, Plaintiff V. No. 04-3003- Equity Term ALLSTATE BUILDERS, INC. AND RAY AND SHIRLEY HAINES Defendants PLAINTIFF - QUALITY BUILDERS WARRANTY CORPORATION'S REPLY TO DEFENDANTS' PRELIMINARY OBJECTIONS AND NOW comes Plaintiff Quality Builders Warranty Corporation, (QBW), and files the within reply to Defendants' Preliminary Objections and avers in support hereof the following: 1. Admitted. 2. Admitted. 3. Denied. Allstate executed an agreement with QBW, and over a nine year period, submitted paperwork and information to QBW who is domiciled in Pennsylvania, in order to apply for and receive warranties for their benefit and agreed to the jurisdiction of the Pennsylvania Courts. 4. Admitted. 5. Denied. Haines, the owners of Allstate, executed an agreement with QBW, enrolled homes for their benefit in the QBW program, which is domiciled in Pennsylvania, and agreed to the jurisdiction of the Pennsylvania Courts. 6. Denied. Haines are a party to the Builder Agreement as evidenced by their signatures on the last page of the Builder Agreement. 7. Admitted. 8. Denied. Paragraph 6 of QBW's Complaint states that Allstate was approved for membership on January 4, 1995. Allstate originally executed a Builder Agreement dated October 31, 1994, and executed by QBW on January 4, 1995, a copy of which is attached hereto, incorporated herein and marked as Exhibit 1. The following year, Allstate and the Haines executed an additional builder agreement, which is attached to QBW's Complaint as Exhibit A and containing the indemnification of Raymond and Shirley Haines. The agreement clearly states that the Haines' liability is for any builder agreement, "past, present and future." 9. Admitted. By way of further answer, QBW never alleged that Exhibit A was executed by QBW in 1995. 10. Admitted. 11. Admitted. 12. Denied. Paragraph 9 clearly references a time flame in which Allstate submitted the enrollment of the Judkins' home. More specifically, Allstate submitted a construction notification for the Judkins' home, which was received by QBW on February 6, 1995. The actual effective or closing date of the home was October 14, 1994. Thus, Allstate requested that a warranty be issued on a home, which was already closed for six months. The warranty was not released to Allstate until July 17, 1995, after Allstate and the Haines provided adequate assurances of their ability to meet their obligations under the warranty including liability for damages caused by soil movement or inadequate bearing soils. (See Exhibits B & C to the Complaint) 13. Admitted. By way of further answer, Exhibit B, in general, deals with various homes located within the city limits of Louisville, including the Judkins' home. 14. Admitted in part and denied in part. It is admitted that Exhibit B predates the Builder Agreement attached to Plaintiff's Complaint as Exhibit A. However, the indemnification indicates that the indemnification is for liability for any Builder Agreement, "past, present and future". 15. Denied. Paragraph 13 of the Complaint indicates that as a result of the indemnification, provided by Haines, QBW provided Allstate with a warranty book and enrollment form to be issued for the Judkin's home. 16. Admitted in part and denied in part. The effective date of warranty for the Judkins' home was October 14, 1994. Allstate requested the warranty after settlement of the Judkins' home and apparently the parties, including Allstate and the homeowner, executed the enrollment form on July 19, 1995. 17. Admitted. 18. Admitted in part and denied in part. It is admitted that QBW seeks specific performance under the Builder Agreement and alternatively damages. The issues in the within action are not the subject of the pending lawsuit in Kentucky. A copy of the Jefferson County Circuit Court Kentucky Complaint and Allstate's answer are attached hereto and incorporated herein and marked respectively as Exhibit 2 and 3. Allstate and Haines have maintained that the problems experienced in the Judkins' home was from a lack of maintenance. Allstate now has provided a report that the builder failed to construct the residence on suitable bearing soil. (See Exhibit E to the Complaint). Additionally, QBW retained an engineer to verify the conditions at the residence, a copy of his report is attached as Exhibit 4. After repeated demands, Allstate and Haines have refused to correct the problems at the Judkins home as required by its Builder Agreement with QBW. 19. Admitted in part and denied in part. It is admitted that a complaint was filed as docketed. The matter is pending arbitration. 20. Admitted in part and denied in part. The Complaint in Kentucky was originally filed by Ms. Judkins on March 26, 1999. There has been various proceedings to refer the matter to Arbitration and determine the scope of Arbitration. The subject matter of the Kentucy Complaint is distinct and different from the within Complaint. 21. Admitted. The Order only involved the Trial of Courts ruling concerning the scope of Arbitration and who would be the arbitrator. The Trial Court in effect rewrote the arbitration provisions of the QBW Warranty. 22. Admitted. QBW seeks reimbursement of attorney's fees and expenses as authorized by the terms of the Builder Agreement. 23. Admitted in part and denied in part. QBW alternatively seeks damages against Defendants for and under the terms of the Limited Warranty and Builder Agreements issued and executed by Defendants. Allstate's own engineer identified the urgency of the matter and severity of the defects in his report attached as Exhibit E to the Complaint. Nonioinder of Necessary Parties 24. QBW incorporates herein its reply to Paragraphs I through 23 of Defendant's Preliminary Objections as though set forth in full. 25. Admitted in part and denied in part. It is admitted that QBW named Allstate and Ray and Shirley Haines. Amy Judkins is not a necessary party to the within Action since QBW has instituted suit against the within Defendants for breach of contract. Judkins was not party to that. contract and is not a necessary party to the within litigation. 26. Denied. QBW incorporates herein as reply to Paragraph 25. 27. Denied. QBW incorporates herein as reply to Paragraph 25. WHEREFORE, QBW requests this Honorable Court to deny the Preliminary Objection of the Defendants. the owners and indemnitors of the builder, Allstate. Haines' liability are joint and several under the Builder Agreement and indemnification clauses. WHEREFORE, QBW requests this Honorable Court to deny the Preliminary Objection of Defendants. Respectfully Submitted, QUALITY BUILDERS WARRANTY CORP. Dated: ?/ ay?? ?, X61' B Jo A. Gill, Esquire General Counsel Attorney I.D. No. 41532 325 North Second Street Wormleysburg, PA 17043 Attorney for Plaintiff, Quality Builders Warranty Corporation CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the Plaintiffs reply to Defendants Preliminary Objections has been duly served upon the following part of record by depositing the same in the United States mail, postage prepaid, in Camp Hill., Pennsylvania on this 13th day of August, 2004, and to the address listed below: Law Offices of Craig A. Diehl 3464 Trindle Road Camp Hill, PA 17011 i Rho da Shaffer, Secretary -r, u r; ? o °1:21 _, ol l °; q ?Ooa AGREE,..__NT BETWEEN (QUALITY BU,._JERS (M. WARRANTY CORPORATION AND BUILDER AGREEMENT made this 31st day of October 19-94-, between QUALITY BUILDERS WARRANTY CORPORATION, a Pennsylvania corporation, herein referred to as "QBW,"and Allstate Builders Inc a Corporat.L Name of Builder'. (indicate whether a corporation, partnership, individual or other) of 630 Bruce Ave Address Louisville Kentucky 40208 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 behaviorto 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. Builder has paid its initial membership fee. All registration fees (initial and annual) 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. The term of this Agreement shall be for one (1) year, commencingi on the date executed by QBW. Prior to the expiration of this Agreement, and any extensions thereafter, Builder may apply for re-registration and, upon approval by QBW and payment by Builder of re-registration fee then in effect, the Builder shall continue as a participating member for another one (1) year term. If Builder does not re-register, the provisions of Section B, item 6 hereof concerning termination 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, Builders Principals common control constructs in any state in which QBW operates and to pay all fees required by OBW 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 riot sold or 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 execution of this Agreement or reacceptance, and QBW has inspected and approved the home. When enrolling other than a detached single family dwelling, Builder shall enroll each individual unit of any multi-unit dwelling such as but not limited to duplexes, townhouses and condominiums. For each home enrolled, the Builder shall pay a warranty fee as fetermined by QBW within the time periods established by QBW. All warranty fees are nonrefundable. 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, sign the Agreement and 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 notto charge the purchaser directly the cost of the enrollment fee. A home will not be considered enrolled until QBW receives 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, the Builder, upon the request of QBW or its insurer, shall immediately assign 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 in the event an assignment occurs 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. Furthermore, Builder shall assign and deliver all manufacturer's warranties to the purchaser of the home. 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 expired or terminated. Furthermore, Builder agrees to indemnify and hold harmless QBW and its insurer for any losses or any damages QBW 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. Exhibit 1 Builder hereby irrevocably-authorizes and empowers any attorney or auvcourt of record df 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 anyone 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 paragraph 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 following, 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; (1) 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 for initial or re-registration. 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 termination and that the QBW Warranty Program has been withdrawn. Upon request, Builder shall immediately return to QBW all materials supplied by QBW and all material making reference to QBW. Should Builder fail to take these steps, it shall indemnify 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 annurn 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 suspend 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. Voidability. QBW reserves the right to void any enrollment if Builder misstates or misrepresents any information in its application for registration or re-registration 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. 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 inconformity with the Warranty Standards provided in the Limited Warranty Agreement, and/or inconformity with approved building codes and other standards established by QBW and in effect at the beginning of construction of the enrolled home. QBW reserves the rights to establish special requirements for escrow payments 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 indemnity 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 liablefor 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 professional 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. If Builder fails or refuses to perform its obligations in accordance with the Limited Warranty Agreement, QBW will perform those obligations; however, Builder agrees to reimburse QBW arid/or its insurer for all expenses incurred in performing those obligations, including, but not limited to costs of materials, cost of collection, labor, architect's fees, engineering fees, and attorney's fees. QBW reserves all rights of siubrogation. If the Builder repairs a major structural defect during year 1 or 2, QBW must be notified. Once notified, QBW will perform a compliance inspection. QBW agrees to perform its obligations pursuant to the Limited Warranty Agreement in years three through ten, provided that the defect that is the subject of the Purchaser's claim did not occur within the first two years and was not concealed or cosmetically or improperly repaired by the Builder during those two years. Builder is not responsible for any damage caused by a major structural) defect, as defined in the Limited Warranty Agreement, occurring after the expiration of the first two years of the Limited Warranty Agreement provided the defect was not concealed or cosmetically or improperly repaired during those two years. QBW will hold the Builder harmless for the reasonable cost of repairing or replacing such defects, and against the payment of any money judgment, order or decrees made against Builder for the repair of the defect. 3. Builder is authorized to advertise its membership in the QBW Warranty Program and to use its Logo in its business, provided 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 procedure 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 good and workmanlike manner, such failure shall be considered 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 partnership between the parties. None of the parties, nor any of their employees or agents, shall have the authority to bind or obligate 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 determination will not affect the validity of the remaining provisions. 5. This Agreement shall be interpreted and enforced in accordance with the laws of the Commonwealth of Pennsylvania. All 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. For Builders who are licensed in the state of New Jersey, note that this agreement shall be interpreted and enforced in accordance with the laws of New Jersey; for all homes enrolled with an address in New Jersey. 6. Builder shall not assign this Agreement without the prior written consent of QBW. 7. This Agreement shall inure to, benefit of and be binding upon the heirs, 6. -,Jtors, administrators, assignee, and successors of the representative parties. 8. This instrument, and security documents and documents referred to or incorporated herein by reference, contains 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 contractshall 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 awaiver 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 By Joseph M. Date of execution by QBW: Janu6ry 4, 1995 Builder's Registration No.: 75031 BUILDER: TION Allstate Builders, Inc. (Name of Builder - please print or type) DATE October 31, 1994 By _(-2, President (Signature of Authorized Representative - Title) Ray Haines President (Please print name/title of executor) 630 Bruce Avenue, T.ouisville, Ky. 40208 (Address) Copyright 1888 Quality Builders Warranty Corporation OBW FORM 0504/93 /0-1 CASE NO. 99-CI- JEFFERSON CIRCUIT COURT F, ?y Q DIVISION , i €7 AMY LOUISE JUDKINS PLAINTIFF 766 South Shelby Street Louisville, Kentucky 40203 V. VERIFIED COMPLAINT AND PETITION FOR DECLARATION OF RIGHTS ALLSTATE BUILDERS, INC. P.O. Box 72372 Louisville, Kentucky 40272 SERVE: KENNETH S. MATHEIS 310 West Liberty Street/Suite 100 Louisville, Kentucky 40202 and QUALITY BUILDERS WARRANTY CORPORATION DEFENDANTS P.O. Box 271 Camp Hill, Pennsylvania 17001-0271 SERVE: CT Corporation System Kentucky Home Life Building Louisville, Kentucky 40202 Comes the Plaintiff, Amy Judkins, personally and by counsel, and for her Verified Complaint herein, states as follows: Plaintiff is an individual resident of the Commonwealth of Kentucky, residing at 766 South Shelby Street, Louisville, Jefferson County, Kentucky 40203. 2. Defendant, Allstate Builders, Inc. (herein "Allstate:"), is a Kentucky corporation which conducts business in Jefferson County, Kentucky. 3. Defendant, Quality Builders Warranty Corporation (herein "Warranty Corporation"), is a Pennsylvania corporation which conducts business in Jefferson County, Exhibit 2 Kentucky. In the late summer of 1994, Plaintiff contracted with Allstate, in Jefferson County, Kentucky, for the purchase of a new home located at 766 South Shelby Street, Louisville, Kentucky 40203. Plaintiff took possession of said residence on or about October 15, 1994. After moving into her new home, Plaintiff discovered numerous defects in the construction of the residence, including but not limited to the improper installation of exterior siding, improperly and incompletely installed plumbing fixtures and/or pipes, a defective: foundation, and excessive foundation settlement which has caused a number of related problems. 6. Plaintiff repeatedly brought these defects to the attention of Allstate, but Allstate failed or otherwise refused to correct said defects. In March of 1998, Plaintiff retained the services of a structural engineer to investigate the extent and cause of the defects to her home. Said engineer observed numerous problems caused by sub-standard construction methods of the Defendant. The engineer noted the above-mentioned defects and discovered other defects, including but not limited to, "a pronounced side to side sag from near the front door to the rear" of the house on the first floor. A copy of this report is incorporated by reference in this Verified Complaint and attached hereto as "Exhibit 1." 8. In April of 1998, another engineer was retained who confirmed the findings of the engineer previously retained by the Plaintiff. This second engineer noted severe settlement of both the north and south walls of the home at some places in excess of two inches. The engineer also noted poor grading of the Plaintiff's lot which resulted in improper and inadequate drainage. A copy of this report is incorporated by reference herein and attached hereto as "Exhibit 2." Said report supports the findings of the engineer who inspected the Plaintiff's residence during the prior month. 9. The Plaintiff conveyed the findings of both of the aforesaid engineers to Allstate. Allstate, however, has refused or otherwise failed to remedy said defects. 10. As a result of the defective construction labor and/or materials supplied by Allstate, Plaintiff has suffered significant damage to her home which damages exceed the minimum threshold to invoke the jurisdiction of this Court. 11. The acts and omissions of Allstate as alleged herein violate state laws regarding building codes, including certain provisions of KRS Chapter 19EB. 12. The acts and omissions of Allstate as alleged herein constitute negligence and negligence per se. 13. The conduct of Allstate as alleged herein constitutes breach of contract and breach of express and/or implied warranties. 14. The conduct of Allstate as alleged herein constitutes one or more violations of state laws prohibiting unfair, false, misleading and deceptive business practices, including but not limited to KRS 367.100 et seq. 15. At some time prior to Plaintiff's purchase of her new home, Allstate obtained a warranty policy from Quality Builders Warranty Corporation (herein "Insurer") on behalf of Plaintiff to cover problems associated with her residence at 766 South Shelby Street in Louisville, Kentucky. A copy of the warranty agreement obtained by Allstate in regard to the Plaintiffs new home is attached hereto as "Exhibit 3" and incorporated by reference in this Verified Complaint. 16. On or about October 26, 1998, the Plaintiff or her authorized agent informed the 1*1 Warranty Corporation of the problems which Plaintiff was experiencing with her home as a result G of the defective work and materials rendered by Allstate in regard to the Plaintiff's residence. In so doing, the Plaintiff presented copies of the foregoing Exhibits 1 and 2 to the Warranty Corporation. \5) 17. The Warranty Corporation responded to this connnunication by letter dated December 3, 1998 in which the Warranty Corporation denied all coverage, placed blame for the aforesaid defects upon the Plaintiff, and closed Plaintiff's claims file. A copy of the letter denying coverage is attached hereto as "Exhibit 3" and incorporated by reference in this Verified Complaint. 18. The Warranty Corporation was obligated by agreement to pay for the cost of repairing the deficiencies noted by both of the aforesaid engineers. Furthermore, the Warranty Corporation knew or, in the exercise of reasonable care, should have known that coverage for these defects was provided. 19. The Warranty Corporation refused payment of any portion of Plaintiff's claim for repairs without any reasonable basis for doing so. Moreover, the Warranty Corporation knew that no such reasonable basis for rejection of Plaintiff's claims existed or acted with reckless disregard of whether or not such a reasonable basis existed. 20. The Warranty Corporation's actions and/or omissions constitute breach of its agreement with the Plaintiff. 21. The Warranty Corporation's actions and/or omissions constitute bad faith under state law. 22. The Warranty Corporation's actions and/or omissions constitute one or more violations of state laws prohibiting unfair, false, misleading and deceptive business practices, including but not limited to KRS 367.100 et seq. 23. The Warranty Corporation's action and/or omissions constitute one or more violations of state laws prohibiting unfair claims settlement practices, including but not limited to KRS 304.12-230. PETITION FOR DECLARATION OF RIGHTS Comes the Plaintiff, Amy Judkins, personally and by counsel and pursuant to KRS 418.045, and petitions this Court for a determination as to the rights and duties of the Plaintiff in view of the following circumstances: Paragraphs 1 through 23 above are incorporated by reference as if fully set forth herein. 2. Plaintiff never signed the warranty agreement in question. 3. Prior to Plaintiffs making a request for a copy of the applicable warranty agreement, Defendant insurer or its authorized agent informed Plaintiff that insurer held no warranty on her behalf. 4. Despite numerous requests for same, Plaintiff never received a copy of said warranty agreement. 5. Plaintiff s first opportunity to discover the terms of the agreement was on or about March 3, 1999, shortly after her attorneys had received a copy of same. 6. Certain provisions of the warranty agreement are unconscionable, and thus should be deemed unenforceable under state law. Certain provisions of the warranty agreement are contrary to the public policy of the Commonwealth of Kentucky, and thus should be deemed unenforceable under state law. WHEREFORE, Plaintiff respectfully requests the following relief. A jury trial on all issues so triable, Damages in an amount appropriate to compensate her fully for her damages incurred incurred as a result of the Defendants' acts and /or omissions; Punitive damages as allowed by state law, 4. An expedited hearing as permitted under Civil Rule 57 of the Kentucky Rules of Civil Procedure to determine the enforceability of certain provisions of the warranty agreement at issue in this case, 5. An order declaring certain provisions of said warranty agreement to be unconscionable and in violation of the rights of the Plaintiff and thus unenforceable as against the Plaintiff, 6. An order declaring certain provisions of said warranty agreement to be contrary to the public policy of the Commonwealth of Kentucky and thus unenforceable as against the Plaintiff; Her costs incurred herein, including a reasonable attorney's fee, as provided by state law; and 8. Any and all other relief which justice and equity require, including injunctive relief. Respectfully submitted, MARK W. OBBINS H. KEVIN EDDINS TILFORD, DOBBINS, ALEXANDER, BUCKAWAY & BLACK 1400 One Riverfront Plaza Louisville, Kentucky 40202 (502) 584-6137 Attorneys for Plaintiff, Amy Louise Judkins VERIFICATION The undersigned hereby verifies that she has read the foregoing Verified Complaint and that all statements contained therein are true and correct to the best of her knowledge and belief. Amy Lou' Judk? G:\OMCE\M W DUUDKINS\CO W LAIN.1 OCT-30-1998 16 06 March 12, 1998 ALLSTATE BUILDERS Amy Judkins 766 S. Shelby Street Louisville, Kentucky 40203 Re: Structural Inspection of Residence at 766 S. Shelby Street Dear Mrs. Judkins: Accompanied by you, we visually inspected the referenced residence at 766 S. Shelby Street on Tuesday March 10, 1998 invasive procedures were used. P.. Oe No You told us that the house is approximately 4 years sold. It is wood framed with vinyl siding, on a crawl :space. The foundation walls are concrete block. There is a second floor over the rear portion. The lot is substantially level. You told us that there once was some kind of manufacturing building on the property that was demolished. The entry off the front porch is set back. The 2x10@16 floor joists span between the side wall foundations from the front door to the rear. The second floor joists bear on the entryway inside wall and stairway wall. These walls are bearing three feet and more out in the span of the first floor joists. The foundation along the right side of the house has settled vertically and tilted outward- There are openings in the concrete block mortar joints along the left; side that are indications of foundation settlement. It is possible that the fill material placed in the basement of the demolished building is consolidating under the weight on the house foundations. Surface water that collects adjacent to the foundations will saturate the soil under the footings and cause settlement. This is occuring all along the both sides of the house. There is a large hole near the right rear corner that you told us was caused by settlement of the soil. The discharge from the nearby downspout is entering this hole. The space between the sidewalk and foundation on the left side of the house is trapping water from the downspouts and rain water running down the side of the house. 1 OCT-30-1998 1'6:06 RLLSTRTE BUILDERS F.09 The first floor has a pronounced side to side sag from near the front door to the rear. The weight of the second floor and ceilings on the inside walls running front: to rear, then on the first floor joists, is most likely the cause of the sagging. This could also be the cause of much of the drywall cracking throughout the house, although the settlement of the foundations probably is causing some of the cracking- The horizontal crack in the drywall of the outside stairway wall most likely was caused by foundation settlement and tilting. This crack is at the point where the second floor stud wall sits on the first floor stud wall. This creates a hinge in the height of the wall from the first floor to the roof. The wall can also flex under wind pressure against the side of the house. We recommend that the foundations along both sides of the house be underpinned to arrest the settlement. We also recommend that additional support be placed under the sagging first floor joists. This should consist of foundations, posts, and a girder located near the center of the span of the joists. We also recommend that soil be placed 4 to 6 inches deep against the foundations walls to divert surface water away from the house. We suggest that you obtain estimates from several contractors who do this type work. Their estimates should be explicit as to what they propose to do. Let us evaluate the proposals prior to your accepting them, or otherwise making use of them. If we can be of any further service, please let us know. Very truly yours, William H. Cassidy, P.E. i0-]S88 .6:05 ALLSTATE BUILDERS F. 05 Copy April 7, 1998 Mr. Jim Haines Vice President Allstate Builders, Inc. 630 Bruce Avenue Louisville, Kentucky 40208 Rangaswamy 8 Associates, Inc. Consulting Engineers Ref.: Residence at 766 South Shelby Street, Louisville, Kentucky. Sub.: Structural review of limited scope. Dear Jim : 98027_'01 HANGASWAMY 8 ASSOCIATES, IPT Phone: (502) 937 0629 (Home) (502) 636 5214 (Office) (502) 636 5393 Fox : (502) 636 5913 As per your telephone request, I have visited the above referenced property on April 7, 1998 to review certain areas of concern. During my review, I was accompanied by yourself, the lady of the house. her son, and Mr. Rao of our firm. The concerns raised, our observations, conclusions and recommendations are as follows : AREA OF CONCERN # 1 : The residence has several stress cracks In the drywall In first as well as upper floors. The dry wall nulls has been popping out gradually since the last remedial work:. Lateral movement of the side wall in the lower bath room Is evidenced by the fact the tub Is pulled away from the vinyl floor covering by approximately'/." . Certain amount of earlier remedial work to patch drywall cracks and sinking-in the drywall nulls were performed. However, the building appears to move with time causing more of the some problems described above. The door Jambs of the rear door has dry rots. OBSERVATIONS: During my review I have noticed drywall cracks at several locations. The pullout of the nails are noted as well as the rusting of the nail head. The movement of the Loath tub in the first floor of approximately '/." was observed. A gap of 'A" between the bath tub and the edge of the vinyl flooring was noted. During our observation we have noted severe settlement of the south foundation wall with the settlement profile approximately equivalent to that of a parabolic curve. The maximum settlement was noted at the location of the bath room in the first floor. A'ong the south side of the wall the concrete slab stops short of approximately V-0" away from the side wall and as a result this area is equivalent to an open trench capable of absorbing the storm water discharged into it. The storm water from the down spouts on the south side are discharged in to this trench. The north foundation wall also found to have undergone severe settlement from the water from the adjoining vacant lot. The maximum settlement of this wall was noted to be approximately at the mid length of the wall. The settlement of both walls at extreme point was noted to be in excess of two inches. Close to the west down spout, a hole approximately 18" diameter X 18" deep was noted and was attributable to the storm water from the down spout. The owner said that they hove filled that hole, one time, with'/." crushed gravel. However, all has been washed into the ground by the rain water. Sinking of ground surface along the north foundation wall was noted at several locations. The water on the north as well as south side was not directed away from the foundation wall. The water from the vacant lot stagnates along the north side wall of the residence. The flashing around the rear door is improper and is causing the water to get through the door jambs and stagnate at the bottom. CONCLUSIONS: The Landmark Building . Suite 420 . 304 West Llberty Street - Loulsvile • Kentucky Tel: 15021 589-2212 • Foxy 15021 589-22an . ?-- --o, .;I--..-.. 7-- . OCT-307199e •16 05 ALLSTATE BUILDERS P.06 A close look at the residence shows that the drainage around the residence is improper and inadequate. Water percolating into the ground does damage to the foundation in at least two different ways. 1.) Wash away the finer materials of the fill or soil below the foundation and cause it to settle. 2.) Consolidate the loose fill materials under the foundation and cause it to settle. The poor drainage has caused severe settlement of the foundation and is active. The foundations will continue to settle further unless improvements to drainage around this residence are made. Excessive settlement has caused excessive deflection and rotation of the walls and the framing. The drywalls and its joints are capable of absorbing a deflection gradient not to exceed wall length divided by 360. Based on the observations, we conclude that the settlement of the foundation walls has caused the framing and the drywalls to stretch beyond its allowable limit. Stretching of the drywall caused the cracking at various joints as well as pulling of the nails at several locations. The water stagnation at the bottom of the rear doorjamb can cause dry rot of wood especially when the bottom of the jamb is not sealed. RECOMMENDATIONS; We recommend that the foundations be underpinned using steel jacking system similar to PermaJack System of United Dynamics (812-282 2222). All piles shall be driven to refusal. At the conclusion of the underpinning operation, the drainage shall be corrected to have the storm water run away from the building. We recommend that all downspouts be connected to an underground drain pipe and all storm water be taken to the street. In addition, the vacant lot be graded to discharge the water into the street rather than against the north wall of the residence. In view of the owner's statements over the disappearance of the gravel, we also recommend that extensive investigation be made to find out the nature of the fill below the foundation and existence of any abandoned storm sewer underneath the lots. At the completion of the structural repairs, cosmetic repairs such as re-sinking of the drywall nails, patching drywall cracks, pointing and caulking can be undertaken. We recommend the flashing around the rear door be corrected to prevent water penetration. In addition the rear doorjamb be replaced with new one preferably made of treated wood. The bottom of the jambs be sealed using polyurethane or other suitable wood sealers. STANDARD OF CARE: The observations, conclusions, and recommendations expressed herein ore to the best of our knowledge and belief and are based on review of the building at the eye level, and based on deformations and crocks observed during our site review. No efforts were taken to remove exterior or interior coverings such as dry wall, plaster, brick, carpet, sheathing, and roofing, to expose the construction or predict the cause with pin point accurocy, since it was beyond our scope. Should you require an in-depth study and report we can perform such studies and 1 shall present a proposal to conduct the some. In performing our professional services, we have used that degree of care and skill ordinarily exercised under similar circumstances by members of the profession practicing In the Commonwealth of Kentucky in the Held of structural engineering. No other warranty, express or Implied, Is made or Intended by our oral or written report. LIMITATION OF SCOPE: This report is a product of the engineering evaluation performed on certain areas of this property. We do not Intend this to be an Investment advise and hence this report shall not be used as a basis In any Investment analysis, to forecast return-on-Investment, profitablllty, cash flow, Ilfe cycle cost analysis etc. Report for Investment analysis shall be in great detail and shall be based on real time numbers from contractors normally engaged In estimating and construction. We must emphasize that it is not within the scope of acceptable Architectural or Engineering practice to express or imply a guarantee Rangaswomy & Associates, Inc. The Landmark Building • Suite 420 • 304 west Liberty Street • Louisville • Kentucky • 40202 Tel: 15021 509-2212 • Fax: (5021 589-22,10 • email: ma@roa-inc.com • web site: roo-Inc.com OCT-30-1998 .16:06 ALLSTATE 3UILDERS P.01 that certain conditions exist when, in fact, it is impossible to know for certain they exist. This review shall not be construed as complete and exhaustive and is very limited in scope. Our review is limited to a few areas of concern that were brought to our attention by the Owner-Agent, or those defects blatantly visible during our visit. As such, other deficiencies, code variances and latent defects that are not so obvious may exist in this building. OPINION OF COST: Any opinion of cost expressed herein is a very coarse and preliminary engineering estimate based on the limited, if any, design information available at this time and will probably be substantially different from final engineering estimates based on final contract documents. The Contractors estimate for the some project may be different from that of the Engineer's estimate since the means and methods employed by each profession is essentially different and is based on each professions experience at that particular locality, type of construction and availability of materials- labor and equipment. If a better and more reliable estimate is desired, we recommend that you get the final designs and hire a Certified Quantity Surveyor to perform a very detailed cost estimate based on unit costs of construction, COPY RIGHT: The contents of this report are confidential and prepared for the exclusive use of our client or his/her agent, and shall not be copied, photocopied, reproduced. translated or reduced to any electronic medium or machine readable form, In whole or in part, without prior consent, in writing, from Rangaswamy & Associates, Inc. Unauthorized reproduction and distribution of this report is strictly forbidden. Thank you for giving us this opportunity, and if you should have any questions on this report please call us at your convenience. Sincerely, and Associates, c T.Rangaswarn D..P..,S.E„ L.S. President O Rangaswamy & Associates. Inc. 1998 TR:ir/as 1628/msword/o:\do to\som\allsta te041098.doc Rangaswamy & Associates, Inc. The Londmark Building • Suite 420 • 304 West Liberty Street Louisville • Kentucky • 40202 Tel: (5021 589-2212 - Fax: 15021 589-2240 • emolt: roa6raa-inc.com • web site: raa-inc.com QUALI'T'Y BUILDERS WARRANTY C 0 R P 0 R A T I 0 N P.O. Box 271 Camp Hill, PA 17001-0271 telephone: 717 737-2522 fax: 717 737-4288 December 03, 1998 Mr. Mark W. Dobbins, Esq. Tilford, Dobbins, Alexander,-Buckaway & Black 1400 One Riverfront Plaza Louisville, KY 40202 RE: Enrollment # 159572 Effective Date: 10-14-94 Ms. Amy Judkins, 766 South Shelby Street, Louisville, KY 40203 Dear Attorney Dobbins: In response to your correspondence dated October 26, 1998, and received by this office on October 29, 1998, applicable to the aforementioned enrollment number. I make reference to Allstate Builders, Inc:. correspondence dated October 23, 1997 specifically paragraph number two (2), concerning the replacement of the missing rain carrying components that should be replaced to retard any possible foundations problems in the future. Also attached is correspondence from William H. Cassidy, P.E. and T. Rangaswamy, Ph.D, P.E., S.E., L.S. indicating that almost a year later, the continued absence of the rain carrying components still exist. There. is hnm-ow Per re-onsibi14ties lnv:,lved in owning and maintaining a home and it appears that these responsibilities have never been in place. With the information contained in the reports, prepared by two independent professional engineers, both noting that the same problem exist, and knowing the problem could have been eliminated by adhering to the builder's recommendations, I am closing our file on this matter. Thank you. r William C. Bashore Construction Standards Manager WCB:dll cc: Mr. Ray Haines Allstate Builders, Inc. Deliveries: 325 N. Second Street, Wormleysbwq, PA 17043 AOC-105 5-90 Commonwealth of Kentucky Court of Justice CR 4.02; CR Official Form I a?tn o?? _ ? c E ? 3 CIVIL SUMMONS County / AMY LOUISE JUDKINS PLAINTIFF ALLSTATE BUILDERS, INC. and QUALITY BUILDERS WARRANTY CORPORATION VS. SERVE: CT Corporation System Kentucky Home Life Building DEFENDANT Louisville, KY 40202 THE COMMONWEALTH OF KENTUCKY TO THE ABOVE-NAMED DEFENDANTS: 9?;17 84 Court Circuit Jefferson 3t1H You are hereby notified that a legal action has been filed against you in this court demanding relief asshown on the document delivered to you with this summons. Unless a written defense is made by you or by an attorney in your behalf within 20 days following the day this paper is delivered to you, judgment by default may be taken against you for the relief demanded in the attached complaint. The name(s) and address(es) of the party or parties demanding such relief agoinstyou or his (their) attomey(s) are shown on the document delivered to you with this summons. Date: p" PROD Y, This summons was served by delivering a true copy and the complaint (or other initiating document) to: This day of 19 Served By: c cH CT System Service of Process Transmittal Form Loulsville,Kentucky 03129/1999 Via Federal Express (2nd Day) TO: Joseph M Olshefski Quality Builders Warranty Corporation 325 N Second Street Wormleysburg PA 17043 RE: PROCESS SERVED IN KENTUCKY FOR Quality Builders Warranty Corporation Domestic State: Pa ENCLOSED ARE COPIES OF LEGAL PROCESS RECEIVED BY THE STATUTORY AGENT OF THE: ABOVE COMPANY AS FOLLOWS: 1. TITLE OF ACTION: Amy Louise Judkins, Plaintiff vs Allstate Builders, Inc., at al., including Quality Builders Warranty Corporation, Defendants 2. DOCUMENT(S) SERVED: Summons, Verged Complaint and Exhibits 3. COURT: Ciruict Court of Jefferson County, KY Case Number 99-CI-1784 4. NATURE OF ACTION: Breach of Contract 6. ON WHOM PROCESS WAS SERVED: CT Corporation System, Louisville, Kentucky 6. DATE AND HOUR OF SERVICE: By Certified mall on 03/29/1999 With Postmarked Date 03/26/1999 7. APPEARANCE OR ANSWER DUE: Within 20 days 8. ATTORNEY(S): Mark W. Dobbins Titford, Dobbins, at al. 1400 One Riverfront Plaza Louisville, KY 40202 9. REMARKS: SIGNED CT Corporation System PER Supervisor of Process ADDRESS 1511 Kentucky Home Life Building Louisville, KY 40202-3333 SOP WS 0002296044 Information contained on this transmittal form is recorded for C T Corporation System's record keeping purposes only and to permit quick reference for the recipient. This information does not constitute a legal opinion as to the nature Of action, the amourd of damages, the answer date, or any information that can be obtained from the documents themselves. The recipient is responsible for interpreting the documents and for taking the appropriate action. Exhibit 3 NO. 99CI-01784 AMY LOUISE JUDKINS VS. ANSWER OF ALLSTATE BUILDERS, INC. PLAINTIFF ALLSTATE BUILDERS, INC. and QUALITY BUILDERS WARRANTY CORPORATION DEFENDANTS Comes the Defendant, Allstate Builders, Inc. (hereinafter Allstate), by counsel, and for its Answer to the Complaint herein, states as follows: 1. The allegations stated in the Complaint fail to state a cause of action for which any relief may be granted. 2. The allegations contained in paragraphs 1, 2, 4 and 17 of the Complaint are admitted. 3. The allegations contained in paragraphs 7, 8, 16, 18, 19, 20, 21, 22 and 23 of the Complaint, and of the Petition For Declaration Of Rights, paragraphs 3, 4 and 5, are denied for insufficient information with which to form a belief as to the truth or falsity of the averments therein. 4. The allegations contained in paragraphs 10, 11, 12, 13 and 14 of the Complaint, and of the Petition For Declaration Of Rights, paragraphs 6 and 7, are denied. 5. Paragraph 3 of the Complaint is admitted to the extent that it alleges the Quality Builders Warranty Corporation conducts business in Jefferson County, Kentucky; but the state of incorporation of Quality Builders Warranty Corporation is unknown to Allstate and, therefore, that portion of the allegations is (G JEFFERSON CIRCUIT COURT DIVISION TEN (10) denied. 6. With respect to paragraph 5 of the Complaint, Allstate admits so much that alleges the Plaintiff took possession of the said residence on or about October 15, 1994, and denies the balance of the paragraph 5. 7. So much of paragraph 6 of the Complaint which alleges that the Plaintiff brought to the attention of Allstate alleged defects is admitted, but the balance of paragraph 6 is denied. 8. With respect to paragraph 9 of the Complaint, Allstate admits that the findings of two engineers were conveyed to it; but Allstate denies the balance of the allegations contained in paragraph 9, and affirmatively states that it has made any repairs for which it was responsible and fulfilled its contract and other obligations to the Plaintiff. 9. With respect to paragraph 15 of the Complaint, the allegations there are admitted, except that Allstate believes it purchased a warranty and provided same to the Plaintiff at the closing. 10. All allegations not specifically admitted or denied with respect to the Complaint and the Petition For Declaration Of Rights herein are denied. 11. The Plaintiff was at fault in causing and bringing about the damages alleged in the Complaint:, and Allstate relies upon the fault as a bar to so much of the damages in the Complaint as are found to be the fault of the Plaintiff. 12. In the event the damages suffered by the Plaintiff, if any, were caused or brought about from the negligence of others 2 not under the control of Allstate, then Allstate relies upon that negligence as a bar to the claims of the Plaintiff herein. 13. The Plaintiff has failed to mitigate her damages, if any. 14. Allstate affirmatively pleads accord and satisfaction, estoppel and statute of limitations to the allegations raised in the Complaint. WHEREFORE, the demands as follows: (1) that the Co (2) for its reasonable attorney's fee; (3) for any and appear entitled. Defendant, Allstate Builders, Inc., mplaint be dismissed with prejudice; costs expended herein, including a and all other proper relief to which it may KLINGMAN, MATHEIS & WEINSTEIN, PLLC W. Davia KZingman Attorney for Defendant Suite 300, 310 West Liberty Street Louisville, Kentucky 40202 587-7007 CERTIFICATE OF SERVICE; I hereby certify that a copy hereof was this fl+? day of May, 1999, mailed to Mark W. Dobbins, H. Kevin Eddins, TILFORD, DOBBINS, ALEXANDER, BUCKAWAY & BLACK, 1400 One Riverfront Plaza, Louisville, KY 40202 and Richard M. Sullivan, Edward L. Lasley, CONLIFFE, SANDMANN & SULLIVAN, 2000 Watford Plaza, 325 West Main Street, Louisville, KY 40202. ?, 3 NORTHEASTERN I ENGINEERING ASSOCIATES, INC. Quality Builders Warranty Corporation 325 N. Second Street Wormleysburg, PA 17043 ATTN: Mr. John A. Gill, Esquire General Counsel Reference: Defect Inspection for Amy Judkins 766 South Shelby Street Louisville, KY 40203 QBW Enrollment # 159572 NEA Job No.: 04-162 Dear Mr. Gill: ?s ?' July 6, 2004 Per your request, we visited the above referenced property on Monday, June 28, 2004. The purpose of our visit was to review reported settlement problems and miscellaneous foundation and interior wall cracking. The following report is based on our visual observations of the existing conditions. Our review was not intended to be an all-inclusive inspection of the structural features of the residence, but rather an observational visit. Some aspects of the structure were hidden or inaccessible and therefore could not be reviewed or verified. Given the limited scope of our services no guarantees are expressed or implied with respect to the following comments. OBSERVATIONS: The home is a two story structure, generally, constructed with conventional stick frame construction. The stick frame construction bears on a concrete block foundation wall approximately 3 ft. in height. The interior 1s' floor framing o:)nsists of 2x10's at 16" o.c. spanning approximately 15' from exterior masonry bearing wall to exterior masonry bearing wall. It is our understanding the home was built in 1994. Exterior We were escorted around the residence and shown the various foundation cracks, warped vinyl siding and holes in the soil adjacent to the residence. The foundation wall consisted of concrete block units, which at the time of our site visit were severely cracked in multiple areas and showed visible vertical deflection. This deflection is most noticeable along the north wall or right side of the residence, where the center of the wall is deflected down approximately 2" lower than the ends of the same wall. It is near this area where many of the cracks occur in the masonry. The cracks are mainly located in the masonry joints and some are gapped up to W. The southwest comer of the foundation also has a vertical crack in the block that is gapped approximately %" at the top of the wall and continues vertically through the blocks down to grade where the crack stops. Also, the siding is generally buckled and wavy and many of the window screens are racked and do not fit in the windows. Structural and Civil Engineering Consultants 1 of 3 172 South Main Street, Nazareth, PA 18064 w Phone (610) 746-5779 n Fax (610) 746-5758 RR#1 Box 1558, Newfoundland, PA 18445,, Phone (570) 676-9857 F Fax (570) 67611-5341,.. 6 Exhibit 4 NORTHEASTERN' I ENGINEERING ASSOCIATES, INC. At the northwest comer of the residence, there is a 2' diameter hole in the soil that is approximately 2' deep. According to the owners, they have continuously filled this hole with gravel, sand and soil only to have it disappear again and again. The southwest comer of the residence also has a hole in the soil. This hole is under portions existing concrete side walk and the neighbor's (768 S. Shelby Street) deck. The hole is approximately 5' in diameter and no bottom was observed. Portions of the adjacent concrete sidewalk were broken and falling into this hole. In speaking with the owners, apparently the city did dye tests in both holes and determined that the water and debris was not going into the! city pipe lines, but they could not determine where the material was going. Interior Upon entering the home, the slant of the floor is immediately distinguishable. The floor noticeably tilts toward the center of the residence. The bathroom tub at the front of the house has pulled away from the wall and floor finishes 1" at the bottom comer and the bathroom door will not stay open. It swings "downward" toward the closed position because of the severe pitch of the floor and supported door frame. In fact, none of the 1" floor doors can be opened or closed readily because of the racked door frames causing interferences. Many drywall cracks were noted. Most of the cracks were located in the first floor at or around window/door or other wall openings. Some of these cracks were gapped up to 3/8". The north stairwell wall has a horizontal drywall crack that starts at the top of the stairs with a 3/4° gap and continues horizontally 10' to the end of the wall where the crack closes. The floors not only slant from the front and back of the house toward the middle, but they also slant from the north side of the house toward the south and vice versa depending on where you are in the house. The 1s' floor joists under the interior non-loadbearing walls did not appear to be doubled up, but were instead single joists spaced at their typical intervals (2'x10's at 16" o.c.). Also, the 2nd floor joists appeared to bear on the interior stair wall, which is in turn supported by the 1" floor joists under this area. COMMENTS AND RECOMMENDATIONS: Based on our field measurements and information provided to us by the owner as well as existing conditions, it is our opinion that the cause of the majority of the deficiencies listed above are created by differential and excessive settlement of the foundation and framing members due to poor/unstable soil conditions. The two holes on the property raise serious concems because no one knows where the soil or dye or any other material put in the holes is going. In addition to these inadequate soil bearing issues, a quick analysis of the 1" floor joists shows that some of these joists are overstressed. Our analysis was based on code required live loads, estimated dead loads, field measurements as well as an assumed lumber material of No. 2 Hem-Fir. Although, the floor joists may be partially, contributing to the overall problems, our opinion is that differential and excessive settlement of the bearing soils is the major issue. Structural and Civil Engineering Consultants 2 of 3 172 South Main Street, Nazareth, PA 18064 Phone (610) 746-5779 s Fax (610) 746-5758 RR#1 Box 155B, Newfoundland, PA 18445 M Phone (570) 676-9857 u Fax (570) 676-5341 NORTHEASTERN I ENGINEERING ASSOCL4TES, INC. Due to the severity and continued deterioration of the structural elements, we recommend that a solution (repairs to or replacement of residence) is determined as soon as possible in an effort to protect the safety of the occupants. Because the defects are not isolated and are widespread throughout the structure, it is difficult to determine if repairing the house is economically feasible at this point. The fact that the residence has settled so drastically and unevenly and that the settlement has created numerous serious cracks thoughout the home now requires that the main structural elements be exposed and reviewed for damage. Even if repairing the home turned out to be economically feasible, it would be extremely difficult to ensure that it would level, plumb and square. In conclusion, we recommend that a thorough subsurface ge otechnical investigation be performed and that the home be repaired or replaced as soon as possible. If you have any questions or need any additional information, please feel free to contact our office. Sincerely, Jeffrey D. Evans, PE Kentucky PE #23367 Structural and Civil Engineering Consultants 3 of 3 172 South Main Street, Nazareth, PA 18064 e. Phone (610) 746-5779 a Fax (610) 746-5758 RR#1 Box 155B, Newfoundland, PA 18445 ;s Phone (570) 676-9857 a Fax (570) 676-5341 - ?V 71 C?vl9'6if/ ?urG,ri,2S k//'Itti9r-4r ?C/amp P` ??vTl7Y' vs fIGG?TI?T? t3 v, l.d eo ,,c of << c, , r 94e r&l --If Case No. i!? Statement of Intention to Proceed To the Court: intends to proceed with the above captioned matter. Print Name Sign Name Date: lo, L Z'07 Attorney for Lpf r ? I Explanatory Comment The Supreme Court of Pennsylvania has promulgated new Rule of Civil Procedure 230.2 governing the termination of inactive cases and amended Rule of Judicial Administration 1901. Two aspects of the recommendation merit comment. 1. Rule of civil Procedure New Rule of Civil Procedure 230.2 has been promulgated to govern the termination of inactive cases within the scope of the Pennsylvania Rules of Civil Procedure. The termination of these cases for inactivity was previously governed by Rule of Judicial Administration 1901 and local rules promulgated pursuant to it. New Rule 230.2 is tailored to the needs of civil actions. It provides a complete procedure and a uniform statewide practice, preempting local rules. This rule was promulgated in response to the decision of the Supreme Court in Shop v. Eagle, 551 Pa. 360,710 A.2d 1104 (1998) in which the court held that "prejudice to the defendant as a result of delay in prosecution is required before a case may be dismissed pursuant to local rules implementing Rule of Judicial Administration 1901." Rule of Judicial Administration 1901(b) has been amended to accommodate the new rule of civil procedure. The general policy of the prompt disposition of matters set forth in subdivision (a) of that rule continues to be applicable. II Inactive Cases The purpose of Rule 230.2 is to eliminate inactive cases from the judicial system. The process is initiated by the court. After giving notice of intent to terminate an action for inactivity, the course of the procedure is with the parties. If the parties do not wish to pursue the case, they will take no action and "the Prothonotary shall enter an order as of course terminating the matter with prejudice for failure to prosecute." If a party wishes to pursue the matter, he or she will file a notice of intention to proceed and the action shall continue. a. Where the action has been terminated If the action is terminated when a party believes that it should not have been terminated, that party may proceed under Rule230(d) for relief from the order of termination. An example of such an occurrence might be the termination of a viable action when the aggrieved party did not receive the notice of intent to terminate and thus did not timely file the notice of intention to proceed. The timing of the filing of the petition to reinstate the action is important. If the petition is filed within thirty days of the entry of the order of termination on the docket, subdivision (d)(2) provides that the court must grant the petition and reinstate the action. If the petition is filed later than the thirty-day period, subdivision (d)(3) requires that the plaintiff must make a show in to the court that the petition was promptly filed and that there is a reasonable explanation or legitimate excuse both for the failure to file the notice of intention to proceed prior to the entry of the order of termination on the docket and for the failure to file the petition within the thirty-day period under subdivision (d)(2). B. Where the action has not been terminated An action which has not been terminated but which continues upon the filing of a notice of intention to proceed may have been the subject of inordinate delay. In such an instance, the aggrieved party may pursue the remedy of a common law non pros which exits independently of termination under Rule 230.2. 4'7 e? r."' ? -r7 ? „? ejj +?? 4? C'.'? ? -y ? 1 5 F f {*,y ;? t_.r ? ?' ? ) ? f, ? ? ,,, ?, '/ ~~ vs ~L~~~"~~ Case No. d 7 ' /?0 Fr-~b~7 rn t ~~~• tV ~1~G 5~~~ ,~3~.c,~PRS .LNG ~ .~L ~~7 ~- ~s~(srdw/7f ~ ~;? Statement of Intention to Proceed ~ _ c» To the Court: y~'u_ a(, ~~_~y I L~ 7 ~~~~Y ~r(~l ~ intends to proceed with the above captioned matter. Print Name ~6ti- ~.1 ~ l L~'' Sigrt Na Date: 'l/ ~3d ~/~ Attorney for ~r'.1'}pt, ~ ~' Explanatory Comment The Supreme Court of Pennsylvania has promulgated new Rule of Civil Procedure 230.2 governing the termination of inactive cases and amended Rule of Judicial Administration 1901. Two aspects of the recommendation merit comment. I. Rule of civil Procedure New Rule of Civil Procedure 230.2 has been promulgated to govern the termination of inactive cases within the scope of the Pennsylvania Rules of Civil Procedure. T'he termination of these cases for inactivity was previously governed by Rule of Judicial Administration 1901 and local rules promulgated pursuant to it. New Rule 230.2 is tailored to the needs of civil actions. It provides a complete procedure and a uniform statewide practice, preempting local rules. This rule was promulgated in response to the decision of the Supreme Court in Shop v. Eagle, 551 Pa. 360,710 A.2d 1104 (1998) in which the court held that "prejudice to the defendant as a result of delay in prosecution is required before a case maybe dismissed pursuant to local rules implementing Rule of Judicial Administration 1901." Rule of Judicial Administration 1901(b) has been amended to accommodate the new rule of civil procedure. The general policy of the prompt disposition of matters set forth in subdivision (a) of that rule continues to be applicable. II Inactive Cases The purpose of Rule 230.2 is to eliminate inactive cases from the judicial system. The process is initiated by the court. After giving notice of intent to terminate an action for inactivity, the course of the procedure is with the parties. If the parties do not wish to pursue the case, they will take no action and "the Prothonotary shall enter an order as of course ternvnating the matter with prejudice for failure to prosecute.'' If a party wishes to pursue the matter, he or she will file a notice of intention to proceed and the action shall continue. a. Where the action has been terminated If the action is terminated when a party believes that it should not have been terminated, that party may proceed under Ru1e230(d) for relief from the order of temunation. An example of such an occurrence might be the temunation of a viable action when the aggrieved party did not receive the notice of intent to terminate and thus did not timely file the notice of intention to proceed. The timing of the filing of the petition to reinstate the action is important. If the petition is filed within thirty days of the entry of the order of termination on the docket, subdivision (d)(2) provides that the court must grant the petition and reinstate the action. If the petition is filed later than the thirty-day period, subdivision (d)(3) requires that the plaintiff must make a showing to the court that the petition was promptly filed and that there is a reasonable explanation or legitimate excuse both for the failure to file the notice of intention to proceed prior to the entry of the order of termination on the docket and for the failure to file the petition within the thirty-day period under subdivision (d)(2). B. Where the action has not been terminated An action which has not been temunated but which continues upon the filing of a notice of intention to proceed may have been the subject of inordinate delay. In such an instance, the aggrieved party may pursue the remedy of a common law non pros which exits independently of termination under Rule 230.2. OF CU,yI David-D. Buell- ' ' e. Renee X Simpson Prothonotary , ➢ 1St Deputy eputy cProthonotary 7(irk,S. Sohonage, ESQ r,_<- Irene E. Morrow Solicitor 1750 2nd Deputy Prothonotary Office of the Prothonotary Cumberland County, cPennsy(vania 64 - 3003 CIVIL TERM ORDER OF TERMINATION OF COURT CASES AND NOW THIS 29TH DAY OF OCTOBER, 2013,AFTER MAILING NOTICE OF INTENTION TO PROCEED AND RECEIVING NO RESPONSE-THE ABOVE CASE IS HEREBY TERMINATED WITH PREJUDICE IN ACCORDANCE WITH PA R.C.P.230.2. BY THE COURT, DAVID D. BUELL PROTHONOTARY One Courthouse Square • Suite 100 • Carlisle, PA 17013 • (717)240-6195 • Ea., ,(717)240-6573