HomeMy WebLinkAbout94-03586
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Mortgage company tor amounts due and owing, in the total amount ot
$75,405,30, together with costs, interest and attornoy's tees,
COUNT V . PROMISSORY 8STOPP.L
(Santiago v, Henson)
31, Paragraphs
1-30
are incorporated herein by
reterence,
32, Henson promised to pay Santiago the reasonable value
ot Santiago's services and materials upon receipt ot Santiago's
proper tinal invoice.
33, Santiago has pertormed all of its contractual
obligations and has delivered to Foster proper requests for
payment,
34. It was reasonable for Henson to expect that their
promise to pay for services and materials provided by Santiago
would induce Santiago to provide the services and materials.
35, Santiago relied upon Henson's promise to pay tor
those services and materials provided, and Santiago pertormed
fully,
9
.
.
.
36, Henson has benefitted at Santiago's expense by
failing to pay Santiago $75,405,30,
37, Injustice will result if Henson's promise to pay
Santidgo is not enforced,
WHEREFORE, Steven E,P, Santiago t/d/b/a Santiago
construction company demands judgment in his favor and against the
Defendants John L. Henson, Jr. and Beth Ann Henson and Integra
Mortgage Company for amounts due and owing, in the total amount of
$75,405,30, together with costs, interest and attorney's fees,
COUNT VI . PROMISSORY BSTOPPBL
(Santiago v, Integra)
38, Paragraphs 1- 37 are incorporated herein by
reference,
39, Henson promised to pay Santiago the reasonable value
of Santiago's services and materials upon receipt of Santiago's
proper final invoice.
40. Santiago has performed all of its contractual
obligations ar:.d has delivered to Foster proper requests for
payment.
10
.
.
STEVEN E. P. SANTIAGO,
t/d/b/a SANTIAGO
CONSTRUCTION COMPANY,
plaintiff
I IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
v.
JOHN L. HENSON, JR., BETH B.
HENSON and INTEGRA MORTGAGE
COMPANY,
NO. 94 - 3586 CIVIL TERM
Defendants
CIVIL ACTION
D...HDAII'l'S H.IISOIl8' AIISDR TO COIIPLJ.III'l' AND COU1l'1'.RCLJ.III
U8nR
1. Admitted.
2. Admitted, except that the correct address of the
Defendants Henson is 1073-6 Lancaster Boulevard.
3. Admitted.
COU1l'1' I - BRBACB O. COIl'1'RACT
(santiago v. Henson)
3. Admitted.
4. Admitted. By way of further answer, plaintiff also
executed the Construction Loan Agreement and became a party
thereto.
lAW lIlll. I',
5. Admitted.
6. Admitted.
7. Admitted.
8. Specifically denied that Plaintiff faithfully and
expedi tiously performed hb obligations. To the contrary,
Plaintiff devoted his time and attention to other building
projects and failed to arrange for his subcontractors and
workmen to perform their work at this building project in
.
timely fashion, with the result that after five months, with
only 35 days remaining until the April 5. 1994, completion
date, this house was less than half finished and could not be
completed on time. Moreover, Plaintiff's work was defective,
was not performed in a good and workmanlike manner and failed
to meet the prevailing standards in the industry, all in the
particulars more fully set forth on Exhibit "A" attached hereto
and made a part hereof by reference thereto.
9. Denied as stated. At the end of February, 1994, when
the house was less than half finished and Defendants Henson
complained to Plaintiff about his inadequate performance aB
described in paragraph 8, above, Plaintiff offered to withdraw
from the project.
10. specifically denied that Defendants Henson asked
plaintiff to give up possession of the improvements on February
28, 1994. Instaad, Plaintiff offered to withdraw from the
project because of Defendants Hensons' dissatisfaction with his
work as aforesaid, which offer Defendants Henson accepted.
lAW "'II' I',
11. specifically denied that Plaintiff surrendered
possession of the project on March 1, 1994. Plaintiff did not
surrender possession until on or after March 10, 1994.
12. Admitted that Defendants Henson received Plaintiff's
letter of April 19, 1994, which said letter speaks for itself.
13. Admitted that Defendants Henson have not paid the
invoice. Specifically denied that said sum is due and owing to
MAtH IN H M'I ^I I II
-2-
lAW '11110 I',
plaintiff for the reasons set forth in Defendants Henson.'
Counterclaim, below, the averments of which are incorporated
hereiu and made a part hereof by reference thereto. Moreover,
said sum of $75,405.30 includes realtorB' commissions and mark-
ups on materials and services that were added to pad profits,
none of which relates to the reasonable value of service. and
materials provided by Plaintiff, and said sum does not reflect
credits received by plaintiff for materials returned to
suppliers.
14. Admitted that Defendants Henson have not paid said
sum to Plaintiff, for the reasons set forth in Paragraph 13,
above, the averments of which are incorporated herein and made
a part hereof by reference thereto.
15. The averments of Paragraph 15 set forth a legal
conclusion to which no responsive pleading is required. By way
of further answer, Defendants Hensons' refusal to pay is not a
breach of the Agreement, but is instead justified for the
reasons set forth in paragraphs 8 and 13, above, the averments
of which are incorporated herein and made a pal't hereof by
reference thereto.
WHEREFORE, Defendants Henson demand that judgment be
entered in their favor and against the Plaintiff herein.
COUNT II - IBACH 01' COIl'1'RAcT
(santiago v. Hensons and Integra)
16. Paragraphs 1 through 15, inclusive, above, are
incorporated herein and made a part hereof by reference
-3-
thereto.
17. Admitted, except that Defendants Henson believe that
such notice was given to Integra by Plaintiff's counsel by
letter dated April 20, 1994, a true copy of which is attached
hereto and made a part hereof, marked Exh.ibit liB", which letter
speaks for itself.
18. paragraph 18 sets forth a legal conclusion to which
no responsive pleading is required. By way of further answer,
the Construction Agreement was terminated by Defendants Henson
on March 4, 1994, because of plaintiff's breach thereof as
described in Paraqraph 8, above.
19. Admitted that Defendants Henson have not paid said
sum to plaintiff, for the reasons set forth in paragraph 13,
above, the averments of which are incorporated herein and made
a part hereof by reference thereto.
20. The averments of Paragraph 20 set forth a legal
conclusion to which no responsive pleading is required. By way
of further answer, Defendants Hensons' refusal to pay is not a
breach of either, but is instead justified for the reasons set
forth in Paragraphs 8 and 13, above, and in Defendants Hensons'
Counterclaim, below, the averments of which are incorporated
herein and made a part heroof by reference thereto.
WHEREFORE, Defendants Henson demand that judgment be
entered in their favor and against the Plaintiff herein.
I ^W ""1' I",
-4-
COUll'l' II I - UllJU8'1' IIfRICHKllI'1'
(santiago v. Henson)
21. Paragraphs 1 through 20, inclusive, above, are
incorporated herein by reference thereto.
22. Speciflcally denied that Defendants Henson agreed to
pay the sum of $75,405.30 or that said amount is the reasonable
value of Plaintiff's services and materials, for the reasons
set forth in Paragraph 13, above, and Paragraph 32, below, the
averments of which are incorporated herein by reference
thereto.
23. specifically denied that Defendants Henson have used
and benefitted from said services and materials or that they
have wrongfully refused to pay, all for the reasons set forth
in Paragraphs 13 and 15, above, the averments of which are
incorporated herein and made a part hereof by reference
thereto.
24. The averment of unjust enrichment is a legal
conclusion to which no responsive pleading is required. By way
of f.urther answer, Defendants Henson specifically deny they
have been unjustly enriched, for the reasons set forth in
Paragraphs 13 and 15, above, the averments of which are
incorporated herein and made a part hereof by reference
thereto.
I ^W ill II' I'
25. The averments ot Paragraph 25 set forth a legal
conclusion to which no responsive pleading is required. By way
of further answer, Defendants Henson specifically deny that
-5-
judgment in favor of them will be an injustice, for the reasons
set forth in Paragraphs 13 and 15, above, the averments of
which are incorporated herein and made a part hereof by
reference thereto. The only injustice will be if Plaintiff is
awarded anything in view of his failure of performance and
breach of the contract.
WHEREFORE, Defendants Henson demand that judgment be
entered in their favor and against the Plaintiff herein.
COUNT IV - UllJUST .DIeHM.1IT
(Santiago v. Integra)
26. - 30. Count IV (paragraphs 26 through 30, inClusive)
pertains to Defendant Integra Mortgage company, only, and no
responsive pleading from Defendants Henson is required.
COUNT V - PROIII8S0RY .STOPP.L
(Santiago v. Henson)
31. paragraphs 1 through 30, inclusive, above, are
incorporated herein and made a part hereof by reference
thereto.
IIlW,IIII<!',
32. Denied as stated. Defendants Henson agreed only to
pay to Plaintiff the reasonable value of services and materials
provided prior to the terDination of the contract, less the
cost of correcting Plaintiff's defective workmanship and less
the amount by which the reasonable cost of completing the
contract exceeded the balance of the contract price, which said
amounts were not precisely known at the time.
33. Specifically denied that Plaintiff has performed his
-6-
I ^W '1'11< I.
contractual Obligations, for the reasons set forth in paragraph
8, sbove, the averment. of which are incorporated herein by
reference. After reasonable investigation, Defendants Henson
are without knowledqe or information sufficient to learn the
identity of "Foster" or to form a belief as to the truth of the
averment that proper requests for payment were delivered to
"Foster. II
34. Denied for the reasons set forth in paragraph 32,
above, the ave~ents of which are incorporated herein and made
a part hereof by reference thereto. Since Plaintiff did not
provide any services or materials after February 28, 1994, he
could not have been induced to do so by any such promise or
agreement.
35. specifically denied that Plaintiff performed fully,
for the reasons set forth in Paragraph 8, above, the averments
of which are incorporated herein and made a part hereof by
reference thereto. Specifically denied that Plaintiff relied
upon any such promise or agreement, for the reasons set forth
in Paragraph 34, above, the averments of which are incorporated
herein and made a part hereof by reference thereto.
36. Denied for the reasons set forth in paragraph 23,
above, the ave~ents of which are incorporated herein and made
a part hereof by reference thereto.
37. Denied for the reasons set forth in Paragraph 25,
above, the averments of which are incorporated herein and made
-7-
a part hereof by reference thereto.
WHEREFORE, Defendant. Henson demand that judgment be
entered in their favor and against the Plaintiff herein.
COUNT VI - PROIII880ay .8TOPPBL
(santiago v. Integra)
38. - 44. Count VI (Paragraphs 38 through 44, inclusive)
pertains to Defendant Integra Mortgage Company, only, and no
responsive pleading from Defendants Henson is required.
COUIITBRCLAIN
(Hensons v. Santiago)
45. Paragraphs 1 through 44, inclusive, above, are
incorporated herein and made a part hereof by reference
thereto.
46. Plaintiff breached the Construction Agreement dated
August 19, 1993, as modified by the Construction Loan Agreement
dated October 5, 1994, tor the reasons set forth in Paragraph
8, above, the averments of which are incorporated herein and
ma~e a part hereof by reference thereto.
47. As the result of Plainfiff's breach of contract .s
I ^W 'II fl' I
aforesaid, Defendants Henson terminated the Construction
Agreement dated August 19, 1993, as modified by the
Construction Loan Agreement dated October 5, 1993, by letter to
Plaintiff's counsel, dated March 4, 1994, a true copy of which
i. attached hereto and made a part hereof, marked Exhibit "C."
48. As the result of Plaintiff's breach of contract as
-8-
lAW '111 H.',
aforesaid, Defendants Henson hired another contractor to
complete the construction and erection of their home.
49. As the result of Plaintiff's breach ot contract as
aforesaid, Defendants Henson have spent or will spend a total
ot $7,496.54 to repair or replace plainfiff's defective
workmanship, to the extent that it can be repaired or replaced,
as more fully set forth in Exhibit "A" attached hereto and made
a part hereof by reference thereto, which amount is the
reasonable value of such repairs and replacements.
50. In addition to the amount set forth in paragraph 49,
above, as the result of plaintiff's breach of contract as
aforesaid Defendants Henson have spent or reasonably expect to
spend a total of $245,270.75 to complete the construction and
erection of their home, which amount is the fair and reasonable
value of the services performed and materials provided by the
second contractor.
51. Defendants Henson had previously paid to Plaintiff
the total amount of $105,000.00 tor services and materials
provided prior to his breach of the contract.
52. The amounts set forth in Paragraphs 49, 50 and 51,
above, together with the amount claimed by plaintiff in his
Complaint, represent a total cost of $433,172.59 for the
construction and erection of Defendants Hensons' home.
53. As the result of Plaintiff's breach of contract as
aforesaid, Plaintiff is liable to Defendants Henson for the
-9-
amount by which the actual coat of construction of the home
exceeds the contract price of $350,000.00, to witl
$83, 172.59.
54. As the result of plaintiff's breach of contract as
aforesaid, Defendants Hensons' home was not completed by April
5, 1994, the completion date specified in the construction Loan
Agreement dated October 5, 1993, and is still not completed
despite their best efforts.
55. As the result of Plaintiff's breach of contract as
aforesaid, which prevented the completion of their home on
time, Defendants Henson believe and therefore aver that since
April 5, 1994, they have incurred additional interest on their
construction mortgage loan in the amount of $4,776.44, which
interest they would not have incurred if their home had been
completed on time.
WHEREFORE, Defendants Henson demand judgment in their
favor and against the Plaintiff herein in the amount of
$87,949.03, together with
intZ~:2~:~:o.t. of ..it.
Marlin R. McCaleb
Attorney 1.0. No. 06353
219 East Main street
Mechanicsburg, pennsylvania 17055
(717) 691-7770
FAXI (717) 691-7772
Attorney for Defendants Henson
I ^W 'I~II' I',
MM-UIN II M'l All-It
-10-
VIIRI.ICATIOM
JOHN L. HENSON, JR., hereby certifies and stat..l that I
aID one of the Defel\dants in the within action, and that the
facts set forth in the foregoing Answer and Counterclaim are
true and correct to the best of my knowledge, information and
belief.
I understand that false statements herein are
to the penalties of 18 Pa.C.S. Section 4904".rel
unsworn
falsification.
7- J7-P'l'
Date:
, 1994
lAW 1111111',
-11-
2155 Old Trail Road · Elters. PA 17319
(717) 938-4539
The following i. our list of defects. along with total cost incurred to correct
problem.
$ 300.00
1.) Contractor did not allow for brick skirting per plans
Approximately 22' of top course of block has been cut from an 8" block to
a 4" block to allow for brick ledg.,.
2.) Foyer dinensions are smaller then indicated on print causing a winder tread
to be installed in staircase. As a result of this. we are being forced to
install smaller french doors (4'0" x 6'8" ) instead of the ( 5'0" x 6'8")
called for in the print.
319.00
274.54
Complete framing around installed staircase along with drywall nailers
Winder tread with tax
3.) Kitchen wall to left of kitchen bowed approxilllately 5/8" to 7/8". An attelllpt
to correct this problelll was made by padding one area of the wall.
$ 249.00 Mova entire wall to line up with existing living roolll wall
4.) Anderson windowe were illlproperly installed. Framers attempted to correct the
problem by beating sides of windows to plumb. Windows were damaged upon
installation cracking corner frames and separating windows frolll nailing strips.
Two of the front windows with curved tops were forced into rough opening size.
$ 500.00 24 windows from pulled and reset properly. Nailing flanges were re-installed.
5.) All exterior doors were inproperly installed. Doors were installed on an out
of level floor causing doors to improperly open and close.
$ 480.00
All exterior doors have been pulled and re-hung properly
6.) Bathroom whirlpool deck was built 3/8" to 1/2" out of level. This deffect
would make it impossible for tile installer to perform a good job.
$ 120.00 Remove whirlpool deck and reframe level
7.) Bathroolll soffits were to be 8" to allow for 3 1/4" casing plus cap moulding
per plans. Contractor delivered 10" soffits which would force rosette blocks
and casing to be ripped.
$ 225.00 Removal of 10" soffitsand frallle to allow for casing per plans.
8.) Master closet floor has a 1/2 to 3/4" dip in the floor. Contractor has attempted
to correct this problelll but dip still remains.
$ 448.00
We attempted to correct using sleepers but were forced to shim floor sheathing
~J(""4', 'A"
o b 0
. ~@I:C>J'IllI't..ftnU~
2155 Old Trail ~oad · Etters. PA 17319
(717) 938-4539
9.) Deck on front balcony has no overhand to allow for crown moulding par plana.
Contractors intantions were to layar over .xisting with proper aiz. decking.
Thia procedure would not allow for door clearanca.
$ 117. 00
Dacking has been removed and a proper size of decking re~install.d to allow
for prop.r balcony trim
10.) Knea walls supporting rafters in attic are loose and unsupportad.
$ 30.00
Corract knee walls in attic.
11.) Contractor claimod to have deliverad double waterproofing of exterior wall..
$ 60.00
Applied waterproofing to improperly waterproofed walls
12.) Terret has an extra piece of plywood overlapping. Framers carried a 16"
overhang and then dropped to a 12" overhang.
$ 344.00
Carry a 16" overhang around on all sides and remove incorrect pitch on garaglt
side of terret.
13.) Lack of headers above basement windows.
$ 275.00
Installation of headers over basement windows
14.) Anderson will not honor manufacture warranty with damaged windows. Seven
$1855.00 damaged windows. full replacement
$1500.00 15.) Labor to remove and re-install new windows. This fee would includ. re-installin
of exterior which has been installed.
$ 100.00 16.) Exterior fire door leading from garage into mudroom, damaged top
$ 100.00 17.) Damaged top of living room french door
$ 100.00 18.) Damaged side strips of dining room french door
$ 30.00 19.) Attic access does not allow for trim per plans.
$ 70.00 20.) Werped board garage side to except facia
RN't/,,. ;:..,.
Problems which cannot be corrected.
1.) Kitchen is 6 3/4~ smaller in width per plans.
2.) Due to smaller dimensions in foyer. we have been forced to use 4' french doors
instead of the 5' doors called for in the print.
3.) Exterior walls are out of plumb by as much as 1~. Interior walls are also out
of plumb.
4.) Delay in construction: 5 months into construction home was 25% completed. From
February 03 to February 28th nothing was performed except 1 1/2 day for the
heating company to rough in.
5.) Felt on roof has been blowing off due to staples being used instead of roofing
nails or cap nails. Contractor claims roofer showed up on March 03.
6.) Exterior french doors were changed from 2' 8~ to 2' 6~ without authorization.
Contractor claillls Anderson does not make a 2' 8~ door in that size. We were not
given the opportunity to increase size to a size that Anderson does manufacture
nor were we given the opportunity to switch to a llIanufacture that does make the
proper size door.
7.) Print calls for rafters over garage to be 16~ o.c. and every other floor joist
to be doubled. Contractor delivered 24~ o. c.
8.) Spacing on rafters are inconsistent
9.) Existing jack post in lower garage was knocked out of place by contractors
employees and never re-installed.
10.) Contractor did not allow for siding in rear of house per plans. Framing and block
work are flush instead of allowing an overhang for furring strips and then siding.
Contractor claims that fluted nails could be used.... This procedure would cause
siding to wav~ over a period of time. Siding needs to be able to shrink and
expand according "0 weather conditions.
11.) According to our engineer. the original floor would have not worked without using
2 layers of rebar ( II 4 1 / 2~ ). Beams in garage were too far apart to have
accepted original 1 layer of rebar and 6~ of concrete. We used double rebar
with chairs and 7~ of concrete from top of decking as advised.
12.) Exterior sunroom door was delivered as a 6'8~ instead of the 8' x 2' 8" per plans.
13.) Interior wall from study thru family room is 1~ out of parallel.
14.) Vindictive nature of contractor closing driveway to keep us frolll entering
bN~'r A.
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TODD oJ '''".1.
.II:h1Nll'rlt M. ...."U...
William R. Pierce, Vice Pre'ldent
Integrl Mortgaglt Company
99 November Drive
Camp Hili, PA 17011
Dear Mr. Pierce:
...
RIlI@ADN '" SINON
ATTO"NEV8 AT l..A1N
C.U~HIN B,\,NK BUILDING
TWIEL,.TH F"LOOIllt
ONe SOUTIo4 M,AjlltlClrT S~u"'..c
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MUNICIPAL GROu", 71,...31...10
L.ITIQATION Ollto...,,,, 717pQ.3"..~7
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231-6632
"I..r: NO,
RE:
3921/01
Construction Loan Agreement Cated October 5, 1993
John L Henson, Jr. end Beth B. Henson, Owners
Notice Of Dispute Under Contrllct
Notice fot Creation snd Exsmlnatlon of Escrow
Comoletion Date: Aonlll. 1994
April 20, 1994
tmegrs Mortgage Company Is hereby notified under Paragraph 2 Of the H~nson
Construction Loan Agreemenl dated October II, 19113 (the 'Aoreement') not to disburse Iny fund. from
the Heneon mortgage loan accoum or the restricted escrow account created by the failure of Henson to
complete the Improvements by April II, 1994 unllllt has paid Semllgo Construction Company the sum
of 580,8152.73 for the ImprOl/ements as described In tho Agreoment A copy 01 the self-explanatory
demlnd of SlntlsgO Construction Comp:.!ny Is eno10511O.
The Santiago Construction Contrlct (the 'Contract') remains In lull lorce and effect until
Samllgo Is paid under It. A dispute has arisen under the Contract. On February 28, 1994. Mr. and Mrs,
Henson ('Hen.on') and Mr. Santiago aglled thaI for payment In full, Santiago would relinquish possession
of the Improvements to Henson. At that time and later. Henson snd his lawyer told Santiago that Inttsrs
agreed to his Ictlons. You are hereby notllled thllt Santiago Construction Company has not been paid
under its Malch 215. 1994 Invoice. II It Is not paid In rull by tho end olthlll week, Wll willlnltlatl legal
proceedings to Stop the work on the site which Is Its remedy under the Contract.
In the Interim, kindly confirm that the restricted e.crow account required by Item 2 of th.
ConSlrucllon Loan Agreement Is In place as to the full amount of the undisbursed proceeds
(approximately $250,000.00) and provide us with a ststement 01 account activity since February 15, 19\14.
L.BAlif
wle
We advise you that under the Agreement. Sanllago must Sign off on Ivery disbursement.
'lJ' "
O"I'd,r
Very truly yours.
R~qS & SINO<
BY:~(<:U~<..)Cc.allM.'V
'L.awrence B, Abrams
L.ANC"'ST[~ f')1l''-ICC
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AIlOmO)' I,D, No, 5579.
RHOADI .& SINON
000 Iou'" Mortlolllqull'o. 1211I Floor
P,O, 10. 1146
Hlniobu". ......,.1..010 11101-1146
(717) 233.5731
ATTORNEYS POR PLAINTIFF
fo .l:i.J (JiI/" IIh.
YO'I rta her, !'y
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"
STEVEN B.P. SANTIAGO,
IId/b/a SANTIAGO CONSTRUCTION
COMPANY,
.,Or' i..! I '
; t,-J ":.: .:1, L ,',..d.
! , ,
Atto~Vf~ F';"''''~ ,t, '
IN TIlB COURT OF COMMON PLEAS
CUMBERLAND COUNTY,
PBNNSYLV ANIA
Plaintiff
: CIVIL ACTION - LAW
v.
: NO. 94-3586
JOHN L. HENSON, JR., BBTII B.
HENSON and INTEGRA MORTGAGB
COMPANY ,
Defendants
NOW COMBS Plaintiff, Steven B,P. Santiago, IId/b/a Santiago Construction
Company, and files the within Answer to Counterclaim With New Matter as follows:
45. Plaintiff is advised by counsel that avennents contained in paragraph 45
of Defendants' Counterclaim contain no avennents of fact to which a response to deemed
necessary.
46. Denied. It is specifically denied that Plaintiff breached the construction
agreement dated August 19, 1993.
47. Denied as stated. It Is specifically denied that Plaintiff breached the
contract. The remaining avennents of paragraph 47 are denied Insofar as they constitute
conclusions of law. The rights, duties and obligations of the parties are embodied In legal
documents which speak for themselves. In particular, Plaintiff references and incorporates.
herein the Construction Agreement dated August 19, 1993.
48. oenied. It is specifically denied that as a result of Plaintiff's breach of the
contract, Defendants were required to hire another contractor to complete the construction and
erection of their home.
49. Denied. After reasonable investigation, Plaintiff is without knowledge or
infonnation sufficient to fonn a belief as to the troth of the avennents contained in paragraph
49 and the same are therefore denied. Proof thereof, if relevant, is demanded at time of trial.
.50. Denied. After reasonable investigation, Plaintiff is without knowledge
or infonnation sufficient to fonn a belief as to the truth of the avennents contained in paragraph
.50 and the same are therefore denied. Proof thereof, if relevant, is demanded at time of trial.
By way of further denial. it is specifically denied that the sum of $24.5,270.75 is the fair and
reasonable value of the services perfonned and materials provided by the Hensons' replacement
contractor.
- 2 -
51. Admitted In part. Denied In part. It Is admitted that the HenllOns have
previously paid Plaintiff the total amount of $105,000. It is specifically denied, however. that
Plaintiff breached the contract.
52. Plaintiff is advised by counscl that the avennents contained in paragraph
52 of Defendants' Complaint contain no avennents of fact to which a response is required. To
the extent a responsive pleading is required, it is specifically denied that the amount set forth
represcnt a total cost to the Defendants of $433,172.59. To the contrary, the action by the
Defendants, not Plaintiff, have contributed and othelWise caused Defendants to incur substantial
costs, all of which is denied.
53. Denied. The avennents contained in paragraph 53 constitute conclusions
of law to which no responsc is required and the same are denied. By way of further denial,
after reasonable investigation, Plaintiff is without knowledge or infonnation sufficient to fonn
a belief as to the truth of the avennents contained in paragraph 53 and the same are therefore
denied. Proof thereof, if relevant, is demanded at time of trial.
54. Denied. It is specifically denied that Plaintiff breached the contract. By
way of further denial, after reasonable investigation, Plaintiff is without knowledge or
- 3 -
infonnation sufficient to fonn a belief as to the troth of the avennents contained In panllraph
54 and the same are therefore denied. Proof thereof, If relevant, Is demanded at time of trial.
55; Denied. It Is specifically denied that Plaintiff breached the contract. By
way of further denial, it is specifically denied that Plaintiff in any way contributed to the delay
in the completion of Defendants' home. By way of further denial, after reasonable investlsatlon.
Plaintiff is without knowledge or infonnation sufficient to fonn a belief as to the troth of the
avennents contained in paragraph 55 with regard to the remaining avennents regarding additional
interest accumulations, and the same are therefore denied. Proof thereof, if relevant, Is
demanded at time of trial.
WHEREFORE, Plaintiff Steven B.P. Santiago, t1d/b/a Santiago ConslNctlon
Company, respectfully requests that the Court enter an Order dismissins Defendants'
Counterclaim with prejudice. awarding costs of suit to Plaintiff.
.4.
WHBRBFORB, Plaintiff Steven B.P. Santlqo. tldlbll Santlqo Conatnlctlon
Company, rupectfuUy requeats that the Court enter an Order dlsmlsslnl Defendants'
Counterclaim with prejudice, Iwardlnl costs of suit to Plaintiff.
RHOADS &: SINON
1
e South Market Square
P. O. Box 1146
Harrlsbul'J, PA 17108-1146
(717) 233-5731
Attorneys for Plaintiff
By:
,."
. 6.
I''':
';;J.,~"lt~.
"
"
,
VERD'lCATlON
Steven B.P. Santlqo, deposes and says, subject to the penalties of 18 PI. C.S.
14904 relatln. to unsworn falsification to authorities, that the fracts set forth In the fore.oln.
· Artswe~ to Counterclaim With New Mattc~. are true and correct to the best of his knowlcdp.
.~' '
Infonnatlon and belief.
,,_-I
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Steven B.P. Santlqo
"
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. .
SHERIFF'S RETURN
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF CUMBERLAND
In the Court of Common Pleas of
Cumberland County, Pennsylvnaia
No. 94-3586 Civil Term
Complaint in civil Action Law
and Notice
Steven B.P. Santiago
t/d/b/a Santiago Construction
Company
VS
John L. Henson, Jr., Beth B. Henson,
and Integra Mortgage Company
SERVEI Integra Mortgage Company
R. THOMAS KLINE. Sheriff, who being duly sworn according to law,
says, tha t he made
defendant, to wit.
diligent search and inquiry
Integra Mortgage Company
for the within named
but was unable to locate
them
in his bailiwick. He therefore
Allegheny
deputized the sheriff of
to serve the within Complaint in Civil
County, Pennsylvania,
Action Law and Notice
On October 17, 1994
, this office was in receipt of
the attached return from
Allegheny
County, Pennsylvania.
Sheriff's Costs.
Docketing
Out of County
SurCharge
Allegheny County
$
Sworn and subscribed
So answers:
oz~?t1 .
~ . OMAS KLINE,
atty
10-l7-94
l4.00
5.00
2.00
23.00
44.00 pd. by
to before me
Sheriff
this ,H'i!:
day of QUbi..,~
19_~, A.D.
~, . (} hld/, - . ~'tf.
Prothonotary
ALLEGHENY COUNTY SHERIFF'S DEPARTMENT
ROOM 111 . COURTHOUSE
PITTSBURGH, PA 1~219
r- L ~ f) (;, P.here: 3~~,4700
PLAINTIFF ~re.lJf?Aj f- ' . ;:ttf(! ( A9 ()
IDEFT, 7Plfitk'1+- !IJa2.7. (lCi
ADD, DEFT,
ADD, DEFT,
GARNISHEE -4 j ,~
ADDRESS -...J. I ':f:!-
'IUGIH& ".COON
llItrIIf
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.
, '
19__
ATT'Y:
JOHN M. MaNAMAIIA
Chle' DepuIV
"" .1~fJ-'P~-- ~
EXPIRES __ ......., ",'
II SUMMONSIPR ECIPE ~
~I OMPLAINT ONLY
NOTICE AND COMPLAINT
II EVIVAUSCI FA
1 INTERROGATORIES
[ 1 EXECUTION, LEVY
[I GARNISHEE
[~ozrm--i;z{~ =
Now,
INDICATE TYPE OF SERVICE: 0 PERSONAL [I PERSON IN CHARGE [] DEPUTIZE II CERT, MAil II POSTED [ ] OTHER II lEVY n SEIZED & STORE
_'9__" I, SHERIFF OF ALLEGHENY COUNTY, PA do hereby depullze Ihe Sheriff of
CountV to .xecute this Writ Ind make return thereof accordillg to law.
NOTII ONL V A'PLlCAILI ON WRIT M IXICUTIONt N... WAIV.R 0' WATCHMAN. AnV deputy ,hln" l.vylng upon or IlllChing IIny prop,rtv under within wnt m.y
!..ve lime wltneul . w.tchm.n, In cl...tody 0' whomtvlr I, found In po.....lon, IN" notilYlMg p,,..on or I",y or Il1achmlnt, with oul Iilbilily on Ih, plrt 0' luch deputy
"trtl'1lor Iny lOll, d"lruetlon or rt,1'KN,1 or anv lutn prop."V b,forl Ih,nll'1 1111 th,reo',
Seize, levy, adyertlse and sell ell the personel properly ollhe defendanl on Ihe premises located al:_.___..______
SHERIFF'S OFFICE USE ONLY
"V'" "'-- '~, r.+ -.----------,. '" 1..1
I "er,bV CIRTI:'V Ind RETURN thll on In. Jt.L.......... d'y 0' .. & \{ _____.______.._____. 'G~\., II
\ \" ~(\ o"'OO:k, A~~~~dd'''' a,low, Co,"" 0' Alloghlny, P.nn,y~.ni.
I h8VI "Ned In lh, mlnner Otlcnbtd bllow:
o OI'lndlnl(l) pII'IOnlUv "Ned,
t1 Adull 'amUv member wltn wl'lOm Hid O"lnd.nl(l) r..ldl(I). Naml & R'llliOlllhip__~__._.___
o Adult In enlrg. or O.rlndanl'. rllidlnee wl'lo r.ruled 10 glv. nlml or "lllionllhlp.
o M.,.rlCllrk 0' pile' 01 loclGI~ In wl'llen D"lndlnt(l) "lldl(I).. .____.___~ +
~nl or plrton In en.rgl 0' O,r.ndlnl(l) orlc. or UlulIl plICI of bUllnell. '-l.':"~""\. N I:..n~~~~:'" """"" ~~
o OIMr
rJ ProPI"V PO'led
OI'"l1dlnl nol round bee.tal: Ll Moved
o CI"lntd M.1I [J Rec'lpt
o R'gular Mill Wny:
MAKE
MODEL
MOTOR NUMBER
n Unknown L J No Anew,r 11 Vac.nl
r.] Envllopl Allurnad______.
You are hereby nOllfled thai on
Sale Jte' as bee I for
y ~ I $'J""3
ATTE T, __J
SERIAL NUMBER
LICENSE NUMBER
t, \,
( ,,-,,,,-,l.
110Ih"-........._..__.
II Neill'll' nln;pl or en'lelrlpO returned; wril 'lIplred
, 19_____, levy wu ml\'Jo In the case oL.
____,___.______._h_"... ., 19, , (It ..__ o'clock,
......J____. _ ......_ 1_,.___
OCT, 0 5 ,aM
1
NoIo'"OI ~.I
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Pink Copy. Attornoy
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In TnliJ Court or C.:mmOrl Flees ci
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\,.:,J""'-"tC'l-n ",,"'''-'''1 ann!":y ~/"'r:I'"
~.._'--' -, ~'-tI'I.'I.' _.......
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Steven E.P. Santiagol t/d/b/a Santiago Construction Company
',5.
Integra Mortgage compa~y
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P4 J586 Ciuil T9rw
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Q~p~~~na~ nA. '99A
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h=-..by c..;:u== c!::: Sh='.:i' 01
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SWOr:l :l.Dd S'..lb:::-:ce-:l bCcn:
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COSTS
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$
STBVIm I. P. SANTIAGO,
t/d/b/a SANTIAGO CONSTROCTION
COMPANY ,
Plaintiff,
I IN THE COURT or COMMON PLBAS
I CtlMBERLAND COtlN'l'Y, PBNNSYLVANIA
I
I
I NO. 94-3586-Civil Ter.z
I
I
I Civil Action - Law
I
I
I
I
I
VS.
JOHN L. BENSON, JR., BETH B.
BENSON and INTEGRA MORTGAGE
COMPANY ,
Defendants.
PETITION POR INTERPLEADER
NON COMES, Defendant Integra Mortgage Company, by and
through its attorneys, 8uchanan Ingersoll Professional
Corporation, and files the within Petition for Interpleader as
follows:
1. This case emanates from a dispute relating to the
construction of a new home by Stephen E. P. Santiago, t/d/b/a
Santiago Construction Company ("Santiago") for Defendants John L.
Henson, Jr. and his wife, 8eth B. Henson (hereinafter "the
Hensons") at Lot 70, parthemore Circle, Lewisberry, Pennsylvania
(hereinafter "the Project"). Defendant Integra Mortgage Company
(" Integra") is a mere stakeholder in this proceeding as it is
simply holding Seventy-five Thousand Four Hundred Five and 30/100
($75,405.30) Dollars of the construction loan proceeds that are
the subject of this dispute. In this regard, Santiago has made
demand upon Integra for payment of the amount at issue, while the
Hensons have refused to authorize payment and have specifically
directed Integra not to pay Santiago.
2. Santiago is a residential home builder with
offices located in York County, Pennsylvania.
3. Santiago agreed to build a new home for the
Hensons pursuant to the terms of a Construction Agreement dated
August 19, 1993. In order to provide the necessary financing for
the Project, a Construction Loan Agreement dated October 5, 1993,
was executed by the Hensons as "Owners," Santiago as "Contractor"
and Integra as tlLender. tI (True and correct copies of the
Construction Agreement and the Construction Loan Agreement are
attached to Santiago's Complaint as Exhibits "A" and tlB. tI)
4. The Construction Loan Agreement effectively
modified the terms of the Construction Agreement.
5. The contract price for the Project was Three
Hundred Fifty Thousand and 00/100 ($350,000.00) Dollars, such
amount to be paid from the loan proceeds provided by a mortgage
loan from Integra to the Hensons in the amount of Three Hundred
Sixty-nine Thousand and 00/100 ($369,000.00) Dollars.
6. The Construction Loan Agreement provided that
Integra would retain possession of the loan proceeds during the
.:2 .
construction of the Project and would remit disbursements to
Santiago in accordance with the disbursement schedule contained
therein upon completion of the work and upon written request of
Santiago as approved and executed by the Hensons.
7. Santiago began construction of the Project in
October of 1993. However, by March of 1994. a dispute had arisen
between Santiago and the Hensons regarding the quality,
performance and timeliness of Santiago's work. For example,
although the construction Loan Agreement specifically
contemplated that the Project would be completed by AprilS,
1994, only about fifty (50) percent of the work had been
completed by late February of 1994.
8. As a result of the above-described dispute,
Santiago surrendered possession of the Project to the Hensons on
or about March 1. 1994.
9. At the time of his surrender, Santiago had
previously been paid One Hundred Five Thousand and 00/100
($105.000.00) Dollars for work performed on the Project.
10. On March 24, 1994, Santiago submitted a final
invoice to the Hensons for $75.405.30 for work performed on the
Project up until the date of surrender.
- 3 -
11. The Henso~s refused to authorize payment and
specifically directed Integra not to disburse payment to
Sant iago. The Hensons c::::ntended that Santiago materially
breached the terms ot the parties' agreement by failing to
perform the work in a prcper and timely manner.
12. On or about April 20, 1994, Santiago, by and
through his attorneys, submitted a written demand for payment to
Integra. (A true and correct copy of Santiago's demand is
at tached hereto as Exhib it" A. " )
13. In accordance with the express terms of the
Construction Loan Agreement requiring written approval of the
Hensons, and at the specific direction of the Hensone, Integra
has refused to make payment to Santiago.
14. Santiago has now instituted this action against
both the Hensons and Integra by filing a Complaint on or about
July 1, 1994.
15. Santiago's Complaint avers that he is owed
$75,405.30, plus interest, for work performed prior to his
surrender of the Project on March 1, 1994. Santiago claims,
inter ill.a, that the Hensons and/or Integra have breached the
terms of the Construction Loan Agreement and are therefore liable
to him in the aforesaid amount.
- 4-
16. The Hensons filed an Answer and Counterclaim to
Santiago's Complaint on or about August 2, 1994. The Hensons
aver, inter~, that Santiago materially breached the terms of
the parties' agreement by failing to perform the work in a proper
and timely manner. Further, the Hensons aver that, as a result
of Santiago'S breach, they were forced to terminate Santiago and
hire a new contractor to complete the Project.
17. Additionally, the Hensons aver that they will
expend an additional Two Hundred Forty-five Thousand Two Hundred
Seventy and 75/100 1$245,270.75) Dollars to complete the Project.
Accordingly, they claim that their consequential damages set-off
and exceed Santiago's claim by the amount of Eighty-seven
Thousand Nine Hundred Forty-nine and 03/100 ($87,949.03) Dollars.
The Hensons have asserted a counterclaim against Santiago.
18. Although Integra has been named as a Defendant in
this action, it is clear that Integra is a mere stakeholder..
As such, and as a di,rect consequence of the competing claims,
Integra has placed the $75,405.30 at issue into a non-interest
bearing escrow account.
.Santiago attempted to serve Integra with a copy of the
Complaint by certified mail. This type of service is not
authorized by the Pennsylvania Rules of Civil Procedure and Integra
contends that it has not yet been properly served. Accordingly,
Integra expressly reserves its right to contest this issue if
and/or when a responsive pleading to Santiago'S Complaint is
required.
- 5-
19. The Hensons' contentions are directly adverse to
Santiago/s claims against Integra.
20. More part:cularly, because the Hensons contend in
their Answer and Counterclaim that it will cost $87/949.03 to
complete the project, Integra expects and believes that the
Hensons will make a demand upon Integra to pay the $75/405.30 at
issue to the replacement contractor to complete the Project.
21. Alternatively, Santiago placed Integra on notice,
by his letter dated April 20/ 1994/ of his claim of $75,405.30
and his attendant expectation that Integra will not disperse the
said funds to any other person.
22. Thus, Integra may ultimately be exposed to
multiple liability in this case unless the competing claims of
Santiago and the Hensons are first adjudicated through this
Petition for Interpleader.
23. This petition for Interpleader is filed in good
faith and not in collusion with either party to this action. In
view of the existing facts and circumstances, and in an effort to
avoid the time and expense associated with the filing of this
Petition, Integra previously contacted co~nsel for Santiago and
offered to interplead the amount at issue. Santiago refused to
cooperate and summarily rejected Integra's offer.
- 6 -
24. Integra claims no interest in the $75,405.30 at
issue and is presently willing and able to payor deliver the
aforesaid sum in controversy into the Court or, alternatively, to
such person as this Court may direct.
25. Integra has not admitted the claim or subjected
itself to independent liability to Santiago, the Hensons or any
other claimant with respect to the subject matter of this pending
action.
26. Pursuant to the provisions of Pa.R.Civ.P. 2307(bl,
and upon t.he granting of the instant Petition for Interpleader.
Integra would be entitled to an order discharging it from all
liability upon payment of the interpleaded amount of $75,405.30
into the Court or, alternatively, to such person as this Court
may direct.
27. Additionally; and in accordance with Pa.R.Civ.p.
2307(b), Integra would be entitled to an order discharging it
from any costs accruing after the date of entry of such order,
and would also be entitled to recover all costs and attorneys
fees incurred by it in association with this action and the
filing of the within Petition for Interpleader. Such costs and
attorneys fees to be paid from the interpleaded amount of
$75.405.30 and ultimately taxed to the losing party as costs of
this action.
-7-
WBllIrOIl, Integra Mortgage Company prays as follows:
(1) that this Court enter the attached
Rule to Show Cause and stay all further
proceedings in this action with respect to
Integra Mortgage Company pending final
adjudic~tion of the merits of the within
Petition for Interpleader;
(2) that the Court enter an order
granting the within petition for
Interpleader;
(3) that the Court discharge Integra
Mortgage Company from all liability to
Santiago and/or the Hensons upon payment of
$75,405.30 into the Court or alternatively,
to such person as the Court may direct;
(4) that the Court discharge Integra
Mortgage Company from any costs accruing
after the date of entry of such order
granting the within Petition for
Interpleader; and
(5) that the Court award Integra
Mortgage Company all costs and attorneys fees
incurred by it in association with this
action and the filing of the within Petition
for Interpleader. such costs and attorneys
fees to be initially paid from the
interpleaded sum of $75,405.30 and ultimately
taxed to the losing party as cost9 of this
action.
Respectfully submitted,
jh~" · ~
Arthur J. Schwab. Bsqui
Attorney I.D. No. 15895
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
58th Floor, 600 Grant Street
Pittsburgh, PA 15219-2887
(412) 562-1438
- 8.
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STIVIH I. P. SAII'l'IAGO, I IN TBI COURT or COMMON PLIAS
t/d/b/a SAII'l'IAGO CONSTRUCTION I CUMBERLAND COUNTY, PINNSYLVAlfIA
COMPANY, I
plaintiff, I
I
V. I NO. 94-3586 CIVIL TERM
I
JOHN L. BBNSON, JR., BBTH B. I
BaSON and INTBGRA MORTGAGE I
COMPANY, I
I CIVIL ACTION - LAW
Defendants. I
CONSENT AND STIPULATION
TO INTBRPLB.ADBR
The parties hereby consent, agree and stipulate that
Integra Mortgage Company's petition for Interpleader should be
granted pursuant to the terms of the proposed Order attached
hereto as Exhibit "A. II
Dated: lofft-I'IL
,
Ar~~~~-;;'~
Attorney I.D. No. 15895
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
58th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219-2887
(412) 562-1438
John B. consevage, Esquire
Attorney I.D. No. 36593
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
8th Floor, Vartan Parc
30 North Third Street
Harrisburg, PA 17101
(717) 237-4854
Attorneys for Defendant,
Integra Mortgage Company
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OCT 2 5 199~
lAW '11110 I',
MA.H IN II M, ( ^t [1\
,
STEVEN E. P. SANTIAGO,
t/d/b/a SANTIAGO
CONSTRUCTION COMPANY,
plaintift'
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
v.
JOHN L. HENSON, JR., BETH B.
HENSON and INTEGRA MORTGAGE
COMPANY,
NO. 94 - 3586
CIVIL TERM
.
.
Defendants
: CIVIL ACTION
cOUIIT.R-RIPLY TO AIISWlR TO COUIITIRcLAIII WITH II.. IlATT.R
56. Specifically denied that Defendants inflated or
overestimated costs of repair or replacement. To the contrary,
Defendants have at all times acted in good faith to make all
such repairs or replacements at market value or to obtain
estimates for same at market value.
57. The averments of Paragraph 57 set forth a legal
conclusion to which no response of pleading is required. By
way of further reply, there were no Acts of God that justified
the delay causeo by Plaintiff as described in Paragraph 8 of
Defendants' Answer, the averments of which are incorporated
herein and made a part hereof by reference thereto.
58. Admitted that Plaintiff encountered rock that
required additional blasting but it was not of sufficient
amount, extent or duration as to justify the delay caused by
Plaintiff as described in Paragraph 8 of Defendants' Answer,
the averments of which are incorporated herein and made a part
hereof by reference thereto.
59. Specifically denied that Defendants interfered with
t ^W ll~fH I",
MAflLlN r. M..C^Ufl
VJtRI.ICa.'l'IOK
JOHN L. HENSON, JR., hereby certifies and atat.al that I
am one of the Defendants in the within action, and that the
facts set forth in the foregoing Counter-Reply to Answer to
Counterclaim with New Matter are true and correct to the best
of my knowledge, information and belief.
I understand that false statements herein are made subject
to the penalties of 18 Pa.C.S. Seotion g to
unsworn falsification.
Date; / () <'l~' ?'I 1994
,
John L. Henson, Jr.
, -3-
C..'l'JI'ICAT. 01' I..VIC.
I hereby certify that true and correct copies of the
within Defendants Hensons' Counter-Reply to Answer to
Counterclaim with New Matter were served upon the other parties
to this action, or their counsel, on
Cfdb.,. ;2~
, 1994,
by depositing same in the mail at the United states Post Office
at Mechanicsburg, Pennsylvania, postage prepaid, properly
addressed as follows:
Jesse R. RUhl, Esquire
Rhoads & Sinon
One South Market Square, 12th Floor
P. O. Box 1146
Harrisburg, Pennsylvania 17108-1146
(Attorney for Plaintiff)
du.l..;) ~t
Mar~i: R. McCaleb
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ST.vJH .. P. SAMTIAGO,
t/d/b/a SANTIAGO CONSTROCTION
COMPANY ,
IN THI COtnlT 01' COHKON PLUS
CtlIIBIRLAND COtJllTY, PINNSYLVANIA
Plaintiff,
NO. 94-3586-Civil Term
v.
JOHN L. HIINSON, JR., BITH B.
HINSON and INT.GRA MOR'l'GAGB
COMPANY ,
CIVIL ACTION - LAW
Defendant..
ERQQr or PAYMENT or INTIRPLIADID FUNDS
NOW COMBS Integra Mortgage Company by and through its
undersigned attorneys, Buchanan Ingersoll Professional
Corporation, and remits payment of the interpleaded funds in the
amount of Seventy-five Thousand Four Hundred Five and 30/100
($75,405.30) Dollars pursuant to thu Court's Order dated October
25, 1994, a copy of which is attached hereto as Exhibit "A." At
the direction of the Court, the aforesaid sum is to be placed
into an interest-bearing account.
~L~
Arthur J. Schwab. Esquir
Attorney I.D. No. 15895
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
58th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219-2887
(412) 562-1438
{i
John B. Consevage, Bsquire
Attorney I.D. No. 36593
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
8th Floor, Vartan parc
30 North Third Street
Harrisburg, PA 17101
(717) 237-4854
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Attorneys for Defendant
Integra Mortgage Company
, '
Dated: November 10, 1994
Of Counsel:
Richard J. Klein, Bsquire
Litigation Counsel
Integra Financial Corporation
Four PPG Place, 6th Floor
Pittsburgh, PA 15222-5408
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C.RTII'ICAT. 01' S.RVIC.
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AKD NOW, this 10th day of November, 1994, I, John B.
Consevage, Esquire, hereby certify that I this date served the
within Proof o~ Payment of Interpleaded Funds by depositing
copies of same in the United States mail, first class, postage
prepaid, at Harrisburg, Pennsylvania, addressed to the attorneys
or parties of record as follows:
,
"
Jesse R. Ruhl, Esquire
Thomas A. French, Esquire
Rhoads & Sinon
12th Floor, Dauphin Bank Building
One South Market Square
P. O. Box 1146
Harrisburg, PA 17108-1146
Attorneys for Plaintiff, Steven E. P. Santiago
Marlin R. McCaleb, Esquire
Frankenberger Place
219 East Main Street
P. O. Box 230
Mechanicsburg, PA 17055
Attorney for Defendants, John L. Henson, Jr.,
and Beth B. Henson
Jo?~!:0;:t:i:
MIG1; Con....... Jolin; 10698
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3. The parties have agreed to sellle their dispute pursuant to the followina
lCnns and conditions:
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Santiago Construction Company will receive the sum of $35,000,
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to be paid directly from Defendants in certified funds at the time
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this Stipulalion is executed;
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The Henson Defendants will receive the balance of the funds
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Plaintiff will file a praecipe marking the case settled, discontinued
and ended; and
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~ 100 Wh,1I11nd RolId . Lewllbtrry, P'nnl~v.nl. 173311
r,lIphollll (7171788.6622
of Failure to Make PaYIDent
for Payment in Full
~~ Stop Work
~pril 19, 1994
HI:
Notice
Demend
Notice
Mr. John L. Hinson, Jr.
Mrs. Beth Ann "In,on
1073B Lancaster poulevard
Mechanicsburgl fA 17055
Dear Hr. and Mrs. Henson:
You a~ree4 to pay '350,000.00 to Santiago Construction Company
("Santiago ') fOr the construction of improvements under a
Construction Agre.ment of August 19, 1993 (the "Contract"). On
February 28, ll1g., you uksd Santiago to give you posaession of the
Improvements ~n return for paymsnt under the Contract. You assured
Santiago that VAij had Integra" agrsament to your plan. Santiago
surrendered Po.....ion of the Proj.ct to you on March 1, 1994, and
Santiago illvo~ced you for $75,.05.30 on March 24, 1994, after a
full disclosur. and verification meeting with your attorney. You
have not paid the invoice or any part thereof. The Contract remains
in sffect until Santiago is paid in full. The Contract provides
for interest at 18' per annum with attorneys fees and costs. The
balance now due i. $88,852.73, as follows:
'76,405.30
1,847.43
3,600.00
0.00
~80L85~~n
Invoice .322
Interest through April 19, 1994
Legal fees (estimated)
Costa of suit (to be determined)
We hereby make demand on you for payment in full of $80,852.73
plus intereat at '47.70 per diem and any additional attorneys fees
and costs due to Santiago under the Contract.
Additionally, the Contract provides that Contractor haa the
right to stop work on the Improvements if Santiago is not paid
within ten (10) days of invoice. The invoice was dated March 24,
1994, and haa not been paid. Accordingly, we notify you that all
work on the site will be atopped by legal process during the week
of April 25, 1994, unless Santiago is paid in full prior to that
date.
..
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CONSTRUCTION LOAN AGREEMENT
TIllS CONSTRUCTION l.OAN AGJ(HMI:Nl ("AIl'~cmcIIl") l~ IIlad~ IIII~ 5lh da)' 01
Octohtlr , 19~, by and amunlllllltllrll MurlllllllC CompllllY ("1.ellder");
John I.. ""111101\. Jr. wid llelh U. 1Il!II~qL____'____________u_("OwII~r"l; alld
SduliHgn CnnR~LJJJu.J';u.~_..__.,__.____._._. __... _. p_.. __ ___.t"('unUal.:lur""
INTENDING TO BE LEGAllY 80UNLl, 1111: parlic~ hereby ~ove'\anl alld IIllrce, lur
Ihemselves, their bein, execulors, adlllin15l1alOrs, 5u~~e~~urs alld as~illns, m comideraliulI of
Ihe aramina of the J..oIUl, hereinafler described, and ulhcr CUllvelllS sel lonh III Ihls Allreemelll
lIS folluws:
I. IMl'ROVEfttENTS
The Conllaclor Iball creel and complele a buildinll ('Improvements') coslinll no less Ihan
$ 350, 000.00 ("Conlra~1 Pri~e') on the lallddcs~ribcd III IIle allllched Exhibll "A"
("Properly"). The ImprovemenLS and ProperlY shall be free from Mechanics Claims or
Liens and shall comply willi buildina reslllcliuns, aovelllmenLilI reaulalions, zoninll
ordinllllces or laws. deed or plan resllkliollS and be ill accordance wi!h !he Comrael
Ducumems, as defined below,
2. COMPLETION DATE
The ImprovemenLS will be compleled wilhin 1U0 days trom Ihe dale of IIlis Aareernenl.
Tbis Complelion Dille supersedes any olher ~ompleliundale Ihallllay appear in IIle COllllae!
DocumelllS, If the Improvemenlli are nOI fully cumpleted ur lite elllire sum commilledlu
be luaned or advanced hereunder has 1101 been bUlluwed UII ur before ApI i 1 5 ,
19 94, Owner hereby authori:u:s and direclS Lender 10 advallce IIle IUllds 50 commiued bUI
nOI borrowed ("R,maininll Funds") inlu a reSlri~lcd es~row a~~our.'1 held by Lender on
Owner', accounl, .ubjecl 10 !he (ollowina conditions: (a) !he Remainina Funds, when
advanced (or Owner's account shall be charaed inleresl al!he rale provided in the NOle, as
defined below; (b) I( the Improvemen~ arc (ully compleled as required herein Lender will,
10 IIle eXlenl directed by Owner and Comraclor, apply 1111: Remaining Funds 10 !he cOSI of
complelion of the ImprovemenLS; (c) if the Impruvemellls are not fully compleled, lender
may, al Lender's $ole discrelion: (i) apply !he Remaining Funds 10 the cost of complelion
of IIle ImproYemenLS, (ii) hold !he Remainina Fundi in Ihe evem of a dispule between
Owner and COPlrlClor umil such dispule ii resolved; (iii) credilthe Remainina Funds 10 !he
reduclion of Itle debt evidenced by the NOle by applyina !he same 10 the inslallmellls due
!hereunder in the inverse order of their malurilies or (iv) credil IIle Remainina Funds in IIle
manner provided m (Iii) !bove. and declare the emire balance of the Note due and payable
wi!h the same for~ and eHec~ as thouah tbe Nole had become due and payable al maturity
and paymenl bad been refused,
3. CONTRACT POCUMENTS
The ConllaclJ}ocumenLS. wbich conslitute !he emire agreemenl belween !he Owner and \he
Conlraclor, excepl (or modifi.:alions aartcd 10 in writiu& by all IIle parlies issued afler
execulion of Itlis Allrccmem, arc as follows:
a, ('un~llue!ion ConU'a~1 llclwecn Owncr and ('olllraclor daled lhc I')
Augut;t . III ')) rConmu~liulI ('o/llra~n,
day 01
b, Drawinas issued by &ml i"!J" Cum;11ll"l lull (;Ldaledlhe 19 day of
August ,19 9] ,
c. Specifications (or sile improvemen~ and leneral conslruclion issued by
Santiago COflstIucl!on t;:.N1Cd Ihe I') d<iyof AU!Just . 1993,
Owner and ConlllCtor cerlify ilia I the sianed COllllae! r)ocumen~ are the d.J(umen~
pursuam 10 which the Inlprovemen~ will be compleled, and upon which the Lender may
rely,
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,
CHANGES IN AT~CT DOCUMENTS ANU/OR "ROVEMENTS
No ahcrationl or chanies in thc Contract DOculllellts or tbe ImprovelllenLS shall bc madc
by the Contractor or authorized by thc Owner nc~pl on writtcn approval of the Lender,
Such approval .h,IIILatc the amOUllIIO be paid by thc OWncr or allowed by tllC Contraclor,
by virlue of .Ilch a1terlllolll or chanics, No exlras or addilioll5, however, which shall be
aireed 10 by lIle OWller Ihlll be authorized by th~ Lender or made by the Contraclor unlen
lIle COli of .uch CllllS or additions are paid 10 I.ender, ill wh, by the Owner, al the lime
such extras or addhloll5 are authurlud,
5. OWNER ITEMS
The Owner II POI permllled to personally COlLUrucl or permit anyone olber than Ibe
Contraclor to COQlllucl any pari of tile Improvements or 10 supply any materials, fixlures
or appliancello be used inlbe Improvcments (Ullleclively 'Owner llellls") unlelS specific
wrillen approval is iranled by thc Lender, The Lender lIIay at its sole discrelion refuse 10
arant approval for Owner hems,
6. mE LOAN
The Improvemenl5 will be financed in pari by the proceeds from a mOrlgaac loan (' Loan")
frolll Lender 10 Owner, in thc amourd of $ 36Y. lJOO. ollvidenced by a cerlain Promi5Sory
NOle Crom the Owner ("Note') and .ccwed by a fifSl morlaaae or deed of trUSI
('Morlgage") on the Properly, The Owners have seluide out of their own funds
$ 00.00 ("Owner's Funds") and deposited them inlo an inlereSl bearing account
witb Lender. These Owner's Funds, when combined with the Loan, will be suftlcienllo
complele the l:ol\Slluclion of said Improvements, l.endcr has nOI agreed 10 lend any
additional money 10 complete the Improvements, or for elltru, or for any other purposc,
7. PROTECTION OF LENDER'S SECURITY
For the sole purpose of prOteclion of Its securily In tile ProperlY and tile Improvements, tile
Lender may U1lCrprel (but shall hal'e no obhaaliOnlo) tile ContraClDucuments with tile f1ahl
10 condema IO~ Pin oC the Improvements and/or malCrials and for this PlllJlOlC Its decision
sball be rlllll. The OWllCr and the ContraclOr authorize reprClCDlllives of the Lender 10
enler upon thc ProperlY 10 inspecl the Improvements at all reasonable limes, The
COntraclor 'hili:
a. Provide sufficienl ,aCe and proper Cacilities al all limes for the inspeclion of the
ImprovemenlS by the Lender;
b, Within twenly-Cour hours afler receivina WrilleD nOlice from the Lender, remove
from the f'rpperty all malerials condemned by the Lender, and take down all pan ions
of the Improvements wbich the Lender bas deslgnaled as failing to conform 10 the
Contrt!:tl)QcumcnlS, and make aood all parlS of the Improvements and malerials and
damage 10 the ProperlY'
Tbe Contracl POl:umenlS and other arrangements for the construction of the Improvements
are Owner', IOle rC4ponslbilily and nothing berein contained shall be consuued to require
Lender 10 review the ,ame or 10 ascertaiu the llxistcuce oC defects, omisslolll or
i.lcolllisleoclCl therein or 10 construCl, supervise or ill5pcctthe Improvements. Lender shall
bave the rigblto Illake insPCClloll5 of the Improvements al llny lime or from lime 10 lime,
bUI shall nOI be abllaaled 10 make such insPCCllow, II is further understc.od and aareed that
lhe L.ender, in making inspecliuns and disburslll~ Iunds, is doing so only for iu own
prolection anil sbJlI nOI COlISlilUle a representalion by l.euder as to compliance: with the
Contracl Documents or thaI the Improvements will be free of faully workmanship or
materials, Owncr will make sud. indcpendenl inspeclions of the ImprovemenlS as Owner
deems necessary for Owner's proteclion and will nOI rely upon inspeclions, if any. made
by Lender, The Lcnder assumes no respolllibilily for the qualily of the ImprovemenlS or
complelion of the ImprovemenlS either in accordance with tile Contracl DocumenlS or for
the contracl pricc. Tbe Lend:r sball nOI be liable Cor any aclS, other than lIS aross
DCaliaence or IllIlfeasancc, in the disbursemenl of the Loan and/or Owner's Funds. The
Lender is DOl the Aaenl of either the Owner or the COlllraclo1. and Iball in DO evenl be beld
liable for any lIe,lecl, omissloD. default or breach by Ihe OWner or Contractor,
..-~---,.._._--_.,. '-r-'-",--.-'--.' ...--- --....
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I. RIGUT Of O"'"[R TO INSPECT
AI all rcasonablc limes, Ihc Owner shall have Ihc rlllhl Iu IlIspe,' Ihe IlIIpruvclIll:IlIS fur
qualily and conlormily 10 1111: Cunl/acl DOCUIllClllll and IIlc ('olllra,l Pn,e, The Conlraclur
shall pro\'ld~ lufficielll nfc alld propcr racllllles lur IlICsc InSpe,lIons,
P. DU1'IES Of CONTRACTOR BEFORE BEGlNNIN(1 TilE IMPROVEMENTS
The Conuaclor willnol permil Ihc comlllencemCIll olany ,UllSlIucllon of Ihe Impruvellll:lIl,
sile preparalion of Ihc PropcrlY, delivery of nUllerlals and/or delivcry Ill' equlplllclll unlll:
a, A Waiver of Rigln 10 File Lien, or olher equlvalclIl documelll salisfactory 10 Ihe
lender, lIu been flied in 1I1e ProlhonolaIy's Oflkc or olhcr approprlalc recordinll
official of lire cOUIllY wherc ProperlY is localed, This hcm Is applicablc whcre stale
and local laws provide for such documenuuion and;
b, One day aher Ihe MOrlgage is recordcd IInd;
c. Wrillen permission 10 Slarl Ibe Improvemellls, sitc preparalions and/or deliver
malerials or equipmelll has been received from IIlc L~nder,
The Contraclor Ihall promplly obtain and deliver 10 lhe Lender, prior 10 IIle fim
disbursemenl of funds, an affidavit from the excavalor or other pcrson who did lire fim
improvemenq upon or delivered lhe fusI malerials 10 IIle Properly sClling forth lhe dale and
hour when Ihe fim improvemenlS were done or maleriab delivered. The lender mal'
refuse 10 proceed with the Loan if the Contraclor docs nol comply willi this Paragraph 9,
10. COMMENCJ;MJ:NT AND PROGRESS OF TUE IMPROVEMENTS
The Comraclor shall, willlilllhiny (30) days of Ihc sillniilg of Ihis Agreemem, bcgin and
proceed continuously with duc dllillence 10 complele IIle IlIlprovemenlS, If 1I1e Contraclor
fails 10 begin the construclion of the ImprovemenlS, willlin thilly (30) days of lhe signing
of this AgrCOlDeql, and subsequeolly 10 proceed colllinuously with due diligence willI
lufficienl .IUlled workmen and quality malerials 10 complele Lbe Improvemenls . sllikes,
walkouts and At" of God excepled . the lender may refuse 10 proceed with ll1e Loan. If
the Coouaclor def.ulu in performance as required above, and lire default conlinues for more
than (10) day., the Leoder and/or Owner may do any or all of Ihe followiog:
a, Take possession of lire ImprovemenlS alld Propeny and lake such sleps as IIrey, in
their .ole discrelion, may deem advisable for the prole~lIon of their iOlereSI.
b, TermiQllle the CODSuuClioll Contrae! and thc employmelll of the Conlraclor alld lake
. possession eof the ImprovemeolS and Properly aod all plans, specifications, malerials,
10015, IDd appliances thereon. for the purpose of compleling the Improvemenu,
TermWlion of the Construclion Conllacl mUll be in writing by the Owner 10 the
Conlr.clOr ('Terminalion NOlice') and be delivered via U.S, Certified Mail wilh a
relurn r~ipl required, The Owner, within five (S) days of Inailinathe Terminalion
NOlice, mllll provide the lender with a copy of the Terminalion NOlice and prool
of mllUwa. II is incumbenl upon the CoollaclOr thai within len (10) days of recc:ipl
of the Terminalion NOlice thai the COoullclor nOlify lhe Lender w writing of any
llIIounla .lill owed the Coollaclor, failure of the Conuaclor 10 nOlify lhe L.~nder
in wriliDa ~ in . limely manner will rele;ue the lender from any and allliabihlY,
illdudinll bUI nol limited IU. COSlS. Upell~eS, fees, lusses elc, Ihal Ihe Contractur
shall "Iffer or daim 10 suffer because of Ihe Icrmination of Ihe Consuuction
Coouael,
In the event of lerminalion 01 the Consuuction ('onlIael by IIle Owncr and Ihe
Improvemenll arc nOI complele, the owner musl enler inlo a CODuaCI willi another
conllactor ('New ContrllClOr') 10 complele the IrnprovemenlS, Owner agrees 10 indemnify
Lender for IIDY d4unaaes (including IlIoruey fus) thai may arbe as a relull of l~nder's
Paymeots. II defillcd below, 10 the New Contraclor. In such eveol, the Conuaclor shall
nOI be enlillc4 10 receive any further paymenl umil the Improvemenu shall be wholly
fll1ished. Al dial lime. any unpaid balance 01 the llIIounl 10 be paid under the Conllacl
DocumenlS '''''1 lit paid 10 the COnlflelOr if thai balance e~cccds the ellpense incuned by
the I..~nder lIIl4/or Ihe Owner in finishinathe Improvemenls; bul ilthe upense in finbhing
the Improvem'DIa ucecds the unpaid balance, then lhe ConlIlelor shall upon demand pay
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Ihe difference 10 I~e Lender, The expense Incurred Ihroullfi such defauh may. bUI nOI be
required 10 be. be audhed and cerlifiell 10 by Ihe I.ender, whose cerlincalion shall be
concluiive upon the panics,
II. OHlER DUTa:S OF OWNER AND CONTRACTOR
OWller or CPIllI',Clor will. al OWlICr or Conllaclor's own cOSI .nd Cllpell5e. oblllin all
neceuary perm I.. and approvals, iJlcludina bUI nOI limiled 10, municipal authoriulion.
required for &lie C:Oll5l1uclion of Ihe Improvemelll5 allhe earllcsl dales UpOIl which the samc
are oblainable. and Owncr and Conllaclor will obtain al a COSI 10 be iuued all cerllficalcs
of occupancy and all final Ill5pcclions, approvals and acceptanccs of all Pllllies who arc
required 10 Qr have Ihe riahl 10 make such illspeclions anll 10 !uue such cerlificalCs,
approvals or ICccplam;cs,
11. DELAVS
Should the Conuaclor be delayed In thc colIsuuclion of thc Improvemellls by the acl,
nei1cCl or def.ul! pf thc Owner. or any olher colIUaClor employed by lhe Owncr. or by any
damallc c:.Iuacd by fire. Iiahlnlng. carlhquake. cyclone or any oilier casuahy beyond lhe
COIIUO/ of the CQQlI'aclor. Iben thc lime fixed for lhe completion of the Improvemenl5 sball
be Clllended (PI' . period equal 10 the limc losl. The eXlcndcd lime period allowed shall be
delcrmined by Ibe Lender, bUI no allowance Ihall be madc unlcu a claim is presellled in
wrhlnlllo Ibe !.ender wilhin forly.elabl bours afler lhe dl:lay Ol:CUIS. Any delay caused by
the failurc o( Ibe Lender 10 nOlify Ibe conllaclor 10 proceed wilh IIlc ImprovemenlS as
provided In Para,raph 9 Iball bl: coll5idered as an eXlell5ion of Ibe lime of complelion
willloulthe Conll',clor beina rcquired 10 file nOlice of IIle delay. If, In the sole discrclion
of IIlc Lender, Ibe delays arc caused by lhe aCI. ncglecl or dl:fauh of lhl: Owner, IIle Owner
will be cOll5ldered 10 bc in Defauh Ilnder lhis Agrccmenl.
13, DISBURSEMENT OF FUNDS
The lcnder has funds in ilS posseuion. comprised of Ihl: loan and IIIC Owner's Funds, if
applicable. which ,hall bc hcld by IIlc Lendcr and applilld 10 llie Conuacl Price sel forlh in
Paragraph I. PilblU'lemenl5 ('Payments') will be made from the funds and may be In the
form of inslrumepl5 payable 10 Ibe Conll'aClor solely, 10 Ibe Conll'aClor and the Owner
joilllly, or dircclly 10 subcOnlraClors, malcrialmen, or laborers, as the Lender in ils sole
discrelion may ciCci. All such Paymenl5 shall be deemed 10 be for Ibe Owner's aCCOUDl and
al IIle Owner', requesl, unleu thc Lender shall bc Ill5l1'uclcd 10 llie eODlI'ary in wrilini by
the Owner. Such 11I511'ucllons shall apply only 10 disbursemenl5 10 be made afler the dale
the wrlllen WII'UCI!OIl5 are received by and acknowledged by lhe Lender's employee
assigned 10 admillisler IIle loan and 11'5 disbursemclII bereunder, Owner's Funds shall be
disbursed before any of lhe Loan is disbursed,
Paymenl5 shall be made .only wben lhe under deems il is properly secured and upon:
a, Reuipl of a Requesl for Paymenl in Ibe form altaehed as Ellbibil 'C' ('Requesl for
PaymePI") .Ianed by Ibe Owncr(s) and llie Conlfaclor, upon wbicb Ibe Lender may
conclu'iv,1y rely. In !be evenllbe Owner bas exercised their rlabllo Icrminate the
ConUICI pd lhe employmenl of Ibe Conuaclor under Paraaraph lOb above. the
Reque,1 for Paymenl is 10 be .ianed by IIlc Owner and Ibe New CODuaclor;
b. Reuipl of wril1CD cerlificalion rCertificalion') by a repreSeDlalive or llie Lender
lhallbe amounllo be paid is duly payable under lhis ^ireemenl in accordance wilh
llie DisbunemclII Schedule altached as Exhibil 08', tender rescrves llie riahl 10
make advances al differenl limes, in differenl amounlS and un\ler differenl
eondilioos!ban Ibose sel forth in Exhibll '8' and;
c. RecCipl of lueh. further documentalioD u may be required by llie DisburscmeDl
Sebedllle.
The Paymen... Cll~pl for !be final Paymenl, sball be made wilhin five (5) buslllCss days
afler reuipl of &be orlai.oal Rl:quesl for Paymenl, Cerlificalioll5, and Required
DocumeolalioQ, The fUlal Paymenl will be made payable II} llie Conllaelor aDd thl: OWlICr
when, in the ....lIder.1 sole opinion, Ibe Improvemenl5 have been completed and the Lender
is fully seew", IlI4 Ihere bas been wrillen accepLilnce by llie OWlICr of Ibe Improvemenu
as described iJllbe Conlrael Documenl5, and shall be comin,enl on all the Owner hems
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beina in place allbilllime. The Comraelor allrees lhal all Paymerlls shall be uscd only for
lllc ll.l)'lIIeul of I.bor, maleriab, and 5cr\'ieesueceuiry I'or lhe ImprovemclII$. IlIlhe'evclII
allY dispule ariscI bClweenlhe Owner aud Comraelor, IIr Il'lhe Owner rel'uses 10 sillnlhe
Requesl fur Paymem, Ihe mailer shall be refem:lIlu arbilralion as provided In Paraaraph
18.
Upon rcque51 frllm lime 10 lime, thr CUlIlraelor shall turnish Iu Ihe Lender, a Sllllemelll
IboWinll an ilemiUIIon of upentJhures 10 dale, ilenls due and unpaid, hems necessary fur
complelion of lbc Improvemenls, receipled bills, affidavils, waivers of liens, ami olher
aalidaclory evidence of paymenl of lubconllllcLOn; malerial suppliers and Ihe like, Upon
compleliun of the Improvemenu and prior 10 lht final Paymenl, lhe ComraClor shall, If
required. furnish 10 the Lender a full and complele properly execuled Release of Mechanics'
Liens releasilla lIIe Owner andlor ProperlY from any and all possible Mechanics' Claims or
Liens on the Property thai may result frum Ille COI15lruClion uf Ihe Improvemenu,
14. PAVMENTS NOT AN ACCEI'TANCE Qt' DEt'ECTlVE IMPROVEMENTS
Tbe Owner Ind/or Conllaclor agree Ibal no Payments under III is Agreemem, includinlllhe
fUIII Paymenl, .baIl be conclusive evidence of the performance of 11115 Agreemenl, ehher
wholly or in pal'l, and lbal no Payment shall be cOI15llued as IIn aceeplllnee by Ille Lender
of defeclive improvemenlS or improper malerials,
15. POSSESSION Of PROPERT\'
The Owner .hall DOL, eXcel'll' as pruvided in Paragraph I() of Illis Allreemelll, lake possessiun
and the Contraclor Ihall nOI deliver possession of we "roperl)' unlilwe Improveme/lls are
compleled and lbe final Paymelll is made 10 Ille COlllraelor.
16. INSURANCE
The Owner .hall, during Ille prollress of we construclion of Ille ImprovemenlS, mainlllin
insurance, ~iIla Lender as MOrlgagee, on all the ImprovemenlS and Ille Properly againsl
1055 or dam.ae by fire and oilier casualty, and such olller Insurance as Ibe Lender may
require. Tbe policies shall be filed with we Lender, and Ille insurance proceeds are 10 be
made payable 10 lbe par lies as their Imeresl may appear,
17. OWNER CHOOSES CONTRACTOR
The Owner bas cbosen the Conllaclor. and hereby acceplS Ille sole responsibilily for Ihc
seleclion of lb~ Contraclor (and Ille New Conllaclor if Illal eveJll occurs), and all malerials,
supplies, and ~qllipmenl used in Ille ImprovemenlS, Tbe Lender assumes no responsibilily
for the completioll of the ImprovemenlS, accordinlllo we ConllaCI Documenu and/or for
Ihe Con trace Price,
18. ARBITRATI()~ ()WNER/CONTRACTOR
!f the Owner to4 Contraclor dispute malten of paymeDl, allowance or 1055 reterred 10 in
Paraarapbs 10, II, and 12, and/or ill any other mailer under this AllreemeDl, we dispule
.ball be re.olved elclusively by arbitralion. If the Lender bas funds lefl in Ille Owner's
conseruclion accounl and the Owner and ConllaClor caUllol agree on paymenl, Illen we
Lender can d"ide 10 iniliale arbitral inn proccedwlls, The arbillalion shall be conducled by
a panel of three arbieralon in IIARR1SBUIt:; . PEtJ.lSYLVANIA ,by Ille
American Arbitralion ASSOlaaliun undel lIS Rul~$ 0" Commercial Arblllallun, The
arbilralon shall ~use a bearing 10 be held wiwin thirty (30) days afler the Owner or
ConllaClor give. IIOlice of iu intenlion 10 arbillale and shall render an award wiwin fifleen
(15) days of lbe complelion of the hcar inll , Any arbillalion bereunder musl be inslltuled
within len (10) day. of the announcemenl of a detision or aClion laken by Ille Lender. Ille
Owner andlor lbe Contraclor, Failure 10 inslilule arbillallon within such period sball be an
absolule bar 10 the Wlilulion of allY preceding by Ilbillalion, al law or in equily and a
waiver of all c:1.iIDI DOl '0 insliluted, The parlies shall be enlilled 10 reasonable pre-hearinll
discovery by InlCrrolalory, Dcposilion and Produclion of Documcnu and records Illlder the
.upervislon of \be arbillllon. Tbc award of the arbitralors .ball be final, bllldina and
nonappealable IDd lbe CO'II of the arbltralion, includina r~onable counsel feel as 'el by
lbe arbillaloll, .ball be paid by the DOn-prevailinll parly, Judlllllenl may be entered on the
award in any ~url of record, The Lender is nOI subjetl 10 arblllalion and lbe arbiualors
shall have DO authorily 10 ordcr Paymclll by tcnder of any parr of the toan unless Ihe
. ......
Exhibit A
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-... .,,'u...,........'''w t,... ,,,..'. ~ 11111 1+t1:l'.ilU (i)
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This jlgre-..nt
CONSTRUCTION AGR~NT
r.d
IlIddtl till>> II .hlY U 1
A '
>-. ~l~~{.
lIul Wtltlll Santiago Con~trucUon COIIpOlRli, lh'v IlIlJ IlII
IH' IIIC IlJd I IJ I dce 0 f l)\11I i IIUlIlI 011 1110 Whtld l.l dnd I~Chld,
LtlwIsben'y, Pennt>ylv.ulia, y.ll'k Coullly, 1'7139 (hlllUllldflel
called "COlIlI"4ctOI''' I dlld .John 11011111011 dllll Btllh IIUII>>ull, hill
witu, of 10'/3-6 Ldllcdlltlll' Blvd. ~lllChdlll(lOb\lILI, I'llllllbylvdllld,
1'I05~ (htllllln4ftlH c,d ItliJ "OWNE:H").
IIITIlQSIl'rII: Tlldt III <:LllltHCltlld\.1UII ul Illu IUllllldl
eovendlllll alld agrellllltllltll h'H'eindttel' cOllldlllUd, dlld Intelldll\ll
to be legdlly bound heruby, lhu partleb hllluby dLJltl" db
folloWlI:
U'I'!fLE!: S~ of If!!!~
'I'h.! cUlltl'detIH' "hdll 11I1'III>>h dll ol tht! IlId tt! I 1,,1:; dll<l
pel'follll dll of lhu wOlk llUCllblOdlY fOl IhL! C\1Il101 nlcllOIl ul "
l.e::2111tJntldl, tv.O titoLY VICt.OlldU lU.llH:H.: uti lHt.!udL'if,l::.:i lJwnud hy
lhe OWllel dt:
l.ut " 'Iu Pal'th'!llll"'" ['llell!, Ll!wl,.la,ny. I't:llllllylvdllld
dnd dlO 1II01e tully dUIOCllbuiJ III dl:L;OlddIlU, Wllh ':t!ndlll I'ldllt,
dlld ~IH~citlcdtlon:; dttachud bUl'eto dlld 1lI..de 1>dI't hel'eot,
IIIdl'klld Exhibit A, siYllud .Hld illil1dll!d by thu pdl'tiUlO hen!ll.
alld thll>; Identified fo the COlllldCt,
ThllO contl'act, III ItlO 'Hltln,ty, ,;hdll l"ovi,lt! 101' thL!
constL'llcll.HI of the two :;tcHY Vl,:tOII.1I1 hOll>>u only, Tht!
Contrdctor !ihall nol be lUljllil'UU lo "'(lCUlU govellllllt!lItdl
dPPI'OVdl, licenselO 01 llel'llllt...
'file Contractur !ihdll lIot be n;!ipollllilde III lldble IOl
damage", dS d result of dllY ..illk hole", 01 tiUbblllt.lce
conditions, as well dlO dll l'ock drld ditch eXL'"vdliUIIS Slldll
be dllellled to be extl''', dlld Contl"actUl "hill I bu ellti tlt!d to
compell6dtion on the basH. of cust lllcullml lul ..did ",,:k
l'elllOVd I ,
It lIhdll be tht! HlblHl1ltilblllty ul 11ll! ()WllIH (u propul'ly
illdlL;dle upon the aile wheu! dnd how the dwellill'.l tlhidJ be
bitUdtt!U, gIving elt!vdtIOllti, b.!IIch IIldl,kll, dllU olhel' Jdtd
llecelilsdry for this pllq>06",
AR!!CLI~: ,*.. of ('--lInc..-el!~ iIOd ~Q~!!~!or!
WCllk to CORUllellce wlthlll lhllly (JI)I IldY::; ot Ih" !il41\11H1
ot thlti cUlltract allll 10 lJ" Ib..,I~ I'd "1,,11., WIII'III ,,,,, If"
1II0llth:; Irom the ddtt! ut CUIlUIlt!IIL't!1I1t!1I1. ',,' "'pllll\l d.ddY... "."..u,j
vy fllU, cyclone, willLhaUlIll dllll uthu ,I" III ul God 01 dl',I"y..
du~ to tht! dct.lons of OWUt!l, UL olhel l:'II.:..H.t~ lJuvond t.he
\,
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Contractor's contrul, iou. llxtrds and cllall\ll! ul'dul'l;. It dny
of thw dbove delays tdke pldce, thll COlllldelCll t>hdll be
allowed ruason.ble extra tilllU fllr compll!lioll ut Pl'ojllct.
~!ICLI lL Cont~.ct 'riga ID4 '~oa~... 'auaAftll
'I'hll Owner aha 11 poly thl! Cant l'dctUI l<ll. lht! pOll tonllance
at the work and thl! turn'lsh1ny ut thOl Pldllll'l"lt> spec1fied ill
thlli AYI.eement, 8ubjuct tu "dditlons dill! dllduetiollli dS
pl'ovlded hel'ein for dllowduellll, thu lIum of TlullE: hundred
foa'ty-lwo thousand two hundllld o1nd e1yhly-twu dullan; dnd 1m
cents I$J!lO,OOO.OOI, to bu paid dS folluw,.;
Thl.ee plH'Cent (H) llue dt llme ot >>1\lUIUY coutract
$I 0500.00
1:;even pllrcent ('/6) !leek; 1Ubtdll<illoU ot tuutertl/
foundation, parglng "nd t;aU6faetOlY Wlall:qJlooflllg,
filst floor j01o>t5 dnd 5ub-f1ool, $24~)lJll.OO
", TWllnty-fivs pluc'!IIl (.lh'l.) lJud'H HaJt: I IllS.. tlvll
pel'cllnt (5%1 If shingles al.ll IlOt lUllt.dlltJd) to include
all windows and extllr10r doors. $~7500,OO
Ten percent (10~) Exterior; brick or siding installed
I $35000.00
F1fteen percent (15~) llrywall: drywali laplld and sanded,
or plaster compllolted, roughlld in plumbing, wil'ing and
heating. $52500,00
Ten percent (10'1.1 lIeat: complutuly 1II6talled ..nd
~t operational. $35000.00
Fifteen percent (l5~ 1 Intel'ior: complete 1n(;ludlllg
tl'1m,kitchen cabinets and applidllces, all vanlatles and
bathl'oom t ixtures, Wdtlll' 8uppl y dud >>ewdye dlspasa 1
systems operational. $52500,00
'ren pel'cent (10'61 Flool1ng; cal'pet, v1llyl,
pa1nt, wallpaper, etc, dnd light flxlules,
tltc; Willis,
$35000.00
Flvoa I'lll'cent (5'1.1 f'llldl; completion, 1IlttHllH' and
exterior to include ,hlvQway, wdlk,. imd lough
gl-dding. (Funds will be l'l~tdined tOI lllcompletion.)
$1'/500.00
The dbove dl'aw,'l coin be submitted III <iny <Jldel'. If Ownel'
exceedtl dllowance., COlltrdctol hellO the ll~lht tv eldd up to
Twenty percent (20\) fal' oVOll'head Oil tht! dm<Junt which QxctJeds
thu allowance.
The OWller shall he let;l'uIlSlhl.> I
the obtdllllllent of f HlclnclIl<j tUI CUll.
il t cosl.~ In', 1 ,,; to
'DIl 1I f t h.,
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/w
ARTICLE 1~ Alt.r.tions ~ ~lions.
Once lhe speclticalluntl have been ::;i\llled, all chdnge
orders wlll be charged un a time dnd malerial basis Vlus
Twenty percent (20') overhuad. The parlllltl lo this cuntract
a9ree that any change.., al tel'at 1011.. or add it lOllS to thi tl
contrelct, to other pldllli" Ul' apecificatllHlll inculpOl'atud,
except as otherwise plovlded hel'ein, mu..t he in wl.itin\l,
execuled by 0111 pal'ties, dnd dny l-educll1111 01' lnCnlalll! in
cost 01' expenses shall be lillt torth in ..aid wllthl\l and
agl'eed to by the pell'tiel> betol'e dny tlllch chaIlYl!, e11tel'ation
or addi lion shall be made. Payment!> 01 leductton.. ot
payments dnd the A1ilnner in which they bhd 11 be made tlhclll be
specified in said writiny. Payment sh..ll be due upon the
completion of the change 01 job oldel.
Contl'actor may Ilub!>tilule m..tllri..1 at hit! dillcretion due
to availability of product::;. Melturial will be of equal or
better quality. It material is more expensivll, the change
must bll approved by Owner dnd then Chdr\led acconJingly.
Likewise, a credit will be iSllued if the material is less
expensive.
The builder, at hi::; dlbCl'lll111n, Ulblll.VllS lhe right to
invoice tor phone calls and meetings dfter the contractll and
specifications are apvroved. Phone Collis ill eXClltls of 1/2
hour per week and meet ing.. in exce..s of 1 hma pel' month 01' I
hOUl' pel' draw !Day be i.nvoic;ed at $40.00 pel" hou1'.
AIlTICLB 5. ~WUcat1oa fa! ..- Jtt.
The Contractor shall sulJmit such dppl ical10nll tal.
payment in accordance with the terms fOl apvlication and
payment as provided in the agreement with the financial
institution lending Ownel' the conlltruction fund!>, whic:h
application and procedure for payment shall be incorporated
herein by addendum.
U'rICLB I.. Conactioa gf !!!!.!~..
~he Contractor shall correct any work th..ot fail.. to
ccmfonn to the plans dnd Hpecifications 01' cont..act
requirements, and correct all def~cts that appedr during the
progress of the work.
It the Contractor defduits O~ neglectl> to cdrry out the
work in accordance with the viana dnd specifications or
contract l'equireAlents, thu Ownel' Alay, aftel' >ltlVtln (7) days
written notice to the Contractor, and atter the Contractor
fails to C01'l'ect deticiende::; 01 l't1dol'm withlll fifteen (151
days at !>uch not ice, lIIake \Juod tluch ,hd II I".", ha; ..oil.! IIIdY
deduct the cost thel'eof f 1'010 the payment, then 01' the18at ter
due the Contractor, or, at hla option tennlnate the Contl-..oC'l
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and take posselision ot thO! alle and of ..II IIlaturlals thenlOn
owned by the Contractor and may f1nish the wOl'k by whiAtevel'
method he may deem expedient, and if tht! unpclld balancll ot
the contract sum exceeds the expensell of finishing the work,
such expense in excellli Ilhall be pdid tu the C<llltL-actor, but
if such expense exceeds such unvald bal dncll, the Contrdctol'
shall pay the difference' to Owner.
AlftICU 1.. 1..uI'~.
A tlre and Qxtended coveragu policy ot inllurdnce ahall
be provided by the Owner in sufficient amount to covel' thtl
cost of construction dt any givtln state. and the Contractol"
shall be named in said policy as its interest may appear.
The Contractor shall prOVide Comprehensive Liability
Insurance and Workmen's Cumpensation.
ARTICLE!~ SubCOPtractora.
A Ilubcontractol' is a purson who hall d dinll;t contl'act
with the Contractor to perform work at the Iiitu, The
Contractor shall be responsible for selecting Ilubcontractors
and fOl' cool'dinaling d 11 pOl-tions of the wOl'k ullder the
contract.
Contractof .~ll pot be rssponsible for any work or
.arranty 0' WOfk psrfor.ed by subcontractor. or aaterial
supplier. ~at ..fe hired or purchased by the Owner..
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ARTICLE ~ IQ4apeadent Contrac~
The Contractor sha 11 be cons idel'ed dn independent
contractor in respect to that pal't of the wOl'k in the
erection and construction of the said building which it hds
undertaken to do and perform, and that it Ilhall alone be
answerable for any loss or damage by It or itll
subcontl'actors, agents, or employO!es, cllld II dgrees to fully
indemnify, protect and save harmless tlw Owner or Owners,
against loss, damage, or expense as to dll claims or
liabilities l'esultlng from accidents, negl1gence, 01' from
other cause.
ARTICLE 10L R.I...e of ~i8Qs.
If a Stipulation Against Liens hall not be~n filed, the
Contractor, with his request for findl payment, shall deliver
to the Owner a cumplete reledse of all lluns drilling out of
this contract, and, if required, shall furnish an Affidavit
that so far as he has knowledge or information the Releases
include all the labor and material for which a lien could be
fi led; but the Contl'actol' Rlay, if any subcontldctol' refuses
to furnish a release 01 receipt In full, bUllish IHHlll
satisfactory to the Owner, to indellmity ()WII,i!l' d\j..lllst and
lien. If a Stipulation Against I,lens hoJll bet!n flltld, the
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Contl'actol' 5ha11 bu undel' nu ol.llilJatlulI wtlattlOtlV'H, tu
furnish a Release of Lillntl.
y!ICLB!L. Po..,aaion llx CQntrilctol'....
From the time of cOllunencement of pel'tOl'lllanCe of the wOl'k
under this agreelllent unU I its completion, the Contractor
shall be entitled to and remain ill posses6ion of the property
of the ()WOIll' so far all Iluch postiession ill l'equil'ed l.Iy him fOl'
the pUl'l>Olles of such pel'fol'luance, but l:iuch pOllsellllioll shall
not in any way interfere wilh the right of the Owner to go
upon thtl pl'operty and to in6pect the same and the wOl'k being
done, either personally Ul' lhrough the OWnEll"1l .uchituct.
Pl'ovided however, Owner 01' Owner's agenl shall make
appointmentli with Contractor for duch inspections becaulie
of liability and safety conlliderations. It is further
understood that no keys are to be removed from the pl'operty.
If any work itemll undUl lhlll agreemenl dUl detel'lnined tu
be incomplete, by eithel' the Owne1' 01' illl agenl including
agents uf ita landIn', Contl.dctOl' tihall hdvtl fl'ee use dnd
posllellsion of the site for the purpose of completing
to Ilatisfaction or con'ectlng 01' l'ell'dil'iny dny items so
declared in writing.
ARTICLE 121. Pi..al pav-nt
r'inal payment shall bucollle due UpOIl cumpletion of the
contract work. Upon .eceipl of notice of completion by the
Contractor to the Owner thdt wOL'k ill completed, Ownel' shall
make a final inspection of the premilles listing dny
corrections required. Owner shall not enler into occupancy
of the said dwelling houllu until such time dS findl
inspection has been mdde dnd vel'ified by Ownel"s eignatul'e,
at which time payment fOl' the balance of the contl'dct pl'ice
and any additional sumo owing by l'ealiOll of changes 01'
allowances lihall be pdid in full. Provlded howevel', that
Contrdctor extends a one year wdrranty to repdlr or repldce
any defects in workllldllship.
ARTICLE !1~ Iq~ecterenc. witb ~ QE f8ilur! to ..ke pa~nt
If the work under thi~ agreement shdll be stopped for d
period exceeding 10 working daytl thl.ough llU faul t or dct of
the Contl'actor, then Contl.dctor may UpOIl ~ ddyti notice in
wr i t in9 to Owner atop work dnd tel'minatu lhi tl contract dnd
l'ecover h'oRl the Ownel' paymlmt of dll wOl'k dOllu and ony
reasonable profits and damdgea togettlel. with illlel'eat at the
rate of Eighteen percent (18%1 per annum, lugal feetl and cosl
of suit.
It tile Contrdct'lI 6hould fdll to l.e(:Ulve wllhll1', tidY"
dfter ils IIldturily aud Illu.wlltall0n dllY IlUIIl dPpll'.'" .." I"
the Conllaclol' dnd ltlled6tld by tlla COlll:ilnu:II<,1l 1..",le. '" .IlIY
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Paymenl(51lle cerllnell in \\'ritillllll~ paYllblt by lilt l.l:lllltr'~ rl:prt~elllali\'e~ unlltr Ihc
lerlllS of Ihl5 ^lrcclIlenl.
19, IlEFAUl.l'
Tile occurrerx:e Qf any of the followirlll even14 5tudl, III Lendtr's oplion, cOll5lilUlt all evenl
or dcraull (.Pef'III1.) bereunder: (II) Oerauh in Ihe paymcnlllr principal or inlcre~1 on tllC
NOIC Dr illY QllIer ddauh unller tile Il:rms 01' 1I1e NOle, Iht Morlllllae or any written
commillnenl herOlorore issuell by Lender; (b) Owner 5hall become insolvcllI or unable 10
pay Owner', debl$ 15 the IID1C 5hallmilure; (c) Owner shall me a volunUlry pelhion in
bankruplCY or . volunla/'y pelilion .eekiJli reorllani,ullion Dr 10 effecl a plan or olller
Ilranaemenl willi Dr for 1Ile beneOI of Owner', credilors; (d) Owner .hall apply for Dr
COll5enllo Ibe appolnlDlenl of a receiver, UUSlee or cor15erValor for any pOri ion of Owner's
properly Dr .uch appoinlmenl shall be made wilhoUI Owner's consem and shall nOI be
vacaled wllbinthiny (30) days; (e) Ddauh illlbe perfornlan"e 01' illY covenalll or aireemenl
15 sel forlb bereill or in \be Nole or MOrla1ie; (I) any represenUllioll or warranly made by
Owner bercin.hall prove false or mislcadlna in Iny mllerlal rcspecl; <&) Owner nealecl5,
fa Us or refuleI to keep ill full force Illd ef(~l any permil or approval issued with rcspecl
10 coll5uucliop of Ibc hnprovcmenlS or any commitmclll luued by an Inslilulion or public
or privlle Icnder (Dr illY type of consuuclion or lDorlaaae financina for the Improvemenls;
(h) any nOlleo .b~1 bc live thai any pcrmil, approval, priorily Dr commitmcnl refcrred 10
in subparaarapb (a) above hl5 been or wUl be cancelled; 0) &he conveyance of &he ProperlY
by Owners; 0) die enuy of any lien or encumbrance alainsl Ihe Property Cllcepl for Ialles
which are due bill pOI yel payablc and Iicns incurrcd In Ihc ordinary course of bU5ine55 wilh
respcclIO amollnl$ which arc nol yel due Dr paymenl of which is beilla diHaelllly collies led
in aoud faim by ,ppropriale procccdiJlgs; (k) tllC Properly or 1I1c ImprovemenlS shall be
endanaercd by allY physical condilions or circumslances; (I) any parly shall obUlin or seck
III order 10 decree In any courl of compelerll jurisdiclion sceking 10 enjoin in the
COll5lruClion of the Improvemcnl5 or 10 dclay COll5lruClion of &he same or 10 enjoin or
prohibil Owner Qr Lendcr. Dr ei&her of the from carrying OUI the lerms and condilioll5
hereof and sllt:b prPCCCdinss are nOI disconlinued or such dC(;ree is nOI vacated afler Lender
shall have liY~n Owner Wrillen nOlice under &he provisions hereof; (m) Owner fails 10
prosecule COIIIII'II,Uon of \be hnprovemenl5 willI dUisence; (n) Owner negleclJ or faUs to
carry OUI any umlortaklnl or oblilalion sel for&h or referred 10 in the NOle, &he MOrlgage
or this AgreemePt; (0) Delay by &he Owner 15 described in Paragraph 12; (P) Failure 10
provide ill5urance as described in Paragraph 16,
20. LENDER'S IU:Mt:DlES IN EVENT OF IlEFAUl.T
If one or more of the foregoing evenl5 of Defaull occur, Lender may declare Owner 10 be
ill Default hereunder by giving nOlless than len (10) days prior wriclen nOlice 10 Owner and
thereafler Lender may exercise one Dr more of &he fullowlng remedies: (a) lerminale &he
credil provid~ boreby, "declare &he NOle due and payable and inslilule procudings for
coll~tion; (b) UlIlilule foreclosure proceedings on the MOrlgaae; (c) COler upon &he
Properly, expel Owoer and all persons claimillg through or undcr Ow ocr and colleclthe
renes, issues and profilS \bercfrom; (d) complele colUlruclion of the ImprovemcnlJ al the
cost and expePle o( Owner and add such COSllo &he debt evidenced by the NOle lInd secured
by the MOrlgaae and this Agreement; (c) discbarge any mechanic's lien or othcr lien againsl
the ImprovemenlJ or Ibe Properly; (I) inslilule such legal proceedings or olber proceedings
in the name of Owocr or Lender as l.ender may deem appropriale for the purpose of
prolecling the Property and lender's inlcresl therein; (a) I5sert or exercise any or all of the
rlalles and remedies providctl herein or in the Monllage or Nule or oUlerwue pruvlded by
law wilh respecl 10 the NOIe &he MOrlgage, this Agreement and such o&her collateral 15
Lender may bold as security for the indebledness evidence by &he NOle for the performance
of Owner's undertakinas hereunder or (h) do and perform all such acts and deeds in Ihe
name of Borrower Dr Lender 15 l.ender shall deem necessary or desirable 10 prolecl the
Properly and Lender's inleresl therein,
21. lNDEMNIFlC~TlON
The Owner and Contractor agree 10 prolecl, indemnify. defend and save harmless Lender
and il.l dir~tor., Q(ficer., lacnlS and employees from and aaainsl any loss, liability and
expelue (inclullina reasonable altorneys' fees) arising OUI Jf dispulcs belween Owner and
ConlraClor Dr bclWun any conUaClor and any subCOnlraClor, malerialmeu Dr supplier, or
belween Owner or any COnlraclor,
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