0 Bewertungen0% fanden dieses Dokument nützlich (0 Abstimmungen)
3K Ansichten4 Seiten
The owner of Ryan Homes responds to a letter sent by four U.S. Senators asking for answers about it's business practices and disputes with its customers.
The owner of Ryan Homes responds to a letter sent by four U.S. Senators asking for answers about it's business practices and disputes with its customers.
The owner of Ryan Homes responds to a letter sent by four U.S. Senators asking for answers about it's business practices and disputes with its customers.
Hogan Lovells US LLP
Columbia Square
555 Thirteenth Street, NW.
Washington, OC 20004
T +1'202 637 5600
F +1 202.637 5910
‘www hoganlovels.com
November 15, 2019
By Electronic Mail
‘The Honorable Sherrod Brown
The Honorable Richard Blumenthal
‘The Honorable Benjamin L. Cardin
The Honorable Chris Van Hollen,
United State Senate
Washington, DC 20510
Dear Senators:
We are in receipt of your letter dated November 6, 2019 accusing NVR, Inc. (NVR) of using “anti-
‘consumer tactics” in connection with its new home construction warranties and dispute resolution
procedures and claiming NVR uses “mandatory’ arbitration provisions and non-disclosure
agreements. Unfortunately, the facts as presented, both in the articles referenced therein and
reiterated in your correspondence, are not an accurate portrayal of what has transpired. We would
like to take this opportunity to correct those inaccuracies so as to respond to the concerns you raise.
‘The Facts Reaarding the Amos Matter
The Cincinnati Enquirer and Salisbury Daily Times articles referenced in your letter, although
portrayed as “investigative journalism,” mischaracterize the facts relating to the disputes described
therein. Allow us to set the record straight.
With respect to the Amos family’s home in Milford, Ohio, NVR made extraordinary efforts to work
with the Amoses and their attorney to correct, at NVR’s expense, the conditions they identified in
connection with their warranty claims. Although NVR strives to build every home to a standard of
excellence, in some cases like the Amoses’, punch list items and warranty repairs may be necessary
following construction. In those cases, it is NVR's practice to promptly and diligently complete any
punch list items and perform covered warranty repairs so that its customers get the home they
contracted for.
The Amos case was no different. NVR made numerous attempts to repair the items the Amoses
identified and extended several good-faith offers to resolve the Amoses' claims. At various times,
NVR offered to either: (a) repair all of the warranty and punch-list items the Amoses raised (including
several items that NVR in good faith does not believe are covered under the Amoses’ warranty), and
also provide a reasonable cash payment to cover the Amoses' claimed attorneys’ fees and various
incidental expenses incurred in connection with the repair work; or (b) provide a more substantial
cash payment to allow the Amoses to hire a third-party contractor to perform the requested repair
work.
Hoge Lovet Us Ll td ys nd nt Dart Curia. ‘Hogan Loa aan rams apd ac al es Hogan Lo
Hater Parry turns Cn ch Co Hare Kony outer rey trie Ler hes tebany ost Moses CO Wan MaMa
Say ‘uest Alan ew ek Mstan Vigna Pate Fary Piscopna one San Frances Seo Pau, shang Sheey Ve, Sap. Syy Tee
Wireeostegoe SC" Aeccced Ges Wolves skein taghe FZ Urata Zag Gunnese Svcs Cons: Jrwneury Louse
(USarSunte Cones ben ‘Frmers cen stv ogee-2- November 15, 2019
‘The Amoses repeatedly declined NVR’s offers, instead demanding a much larger cash payment
totaling several times the cost of the repairs and any reasonably related incidentals for the
acknowledged purpose of, among other things, adding a deck onto their house and paying a
contractor to plant additional trees in their backyard—items that were never part of the parties’
contract and have nothing to do with the Amoses' warranty claims or complaints over NVR's
construction. Notwithstanding the parties’ inability to reach a global settlement, NVR has already
repaired, at no cost to the Amoses, many of the items that comprised the Amoses' original warranty
claim and punch list. The only reason NVR has not repaired others of those items is because the
‘Amoses have refused to grant NVR access to the premises to address those items.
‘Additionally, that the Amoses’ home is ‘not approved for occupancy’ tells only half the story. The
home passed all county inspections and was issued a temporary certificate of occupancy that was
valid until May 2019. The certificate of occupancy was “temporary” due to the landscaping not being
installed at time of home settlement, which is a common Ohio practice for winter settlements.
Although its true that the final certificate of occupancy has not yet been issued, that is not due to
any failing by NVR. Had the Amoses accepted NVR’s reasonable seitlement proposals or even
allowed NVR to enter the property to complete the requisite repairs pending further negotiation of a
final settlement, those repairs would have been completed long before the 2019 expiration of the
temporary permit. NVR even wrote to the County to propose a joint inspection of the home so that
any issues holding up the final certificate of occupancy could be identified and resolved by NVR.
Rather than cooperate with that request, the Amoses chose to file a lawsuit.
Importantly, NVR did not, as you state, at any time "demand{ | that the Amoses enter into binding
arbitration and sign a non-disclosure agreement that would prevent them from publicly discussing
their experience” in connection with its settlement offers. NVR never insisted on any agreement to
arbitration as a condition of settlement. Although the Amoses’ warranty does contain an arbitration
provision, NVR never indicated any intent to enforce that provision and despite that it could have
done so, did not seek to enforce that provision even after the Amoses filed a lawsuit against NVR.
NVR did propose that the repairs being made by NVR be inspected and signed off on by a neutral,
third-party contractor mutually agreeable to NVR and to the Amoses, for the purpose of achieving
final resolution of the parties’ dispute and avoiding future disputes. The Amoses' attorney did not
take issue with this request as the negotiations proceeded.
Similarly, while NVR proposed a limited non-disclosure provision to be incorporated into a final
settlement agreement, the proposed provision was to apply only to the amount of the cash payment
NVR was providing to compensate the Amoses’ for their attorneys’ fees and incidental expenses—it
‘would not have prevented the Amoses from “discussing their experiences” or disclosing any
information they may have wished to disclose regarding the purported defects in construction or the
repairs NVR agreed to perform for them. Moreover, the Amoses were represented by an attorney
throughout their settlement discussions with NVR—they were free at any time to break off
negotiations and file a lawsuit, as they ultimately did.
If necessary, we could provide a point-by-point rebuttal to numerous other issues raised in the
Cincinnati Enquirer and Salisbury Times articles. As noted above, those articles do not accurately
portray NVR's dealings with the Amoses or its overall handling of warranty claims,
‘The Facts Regarding NVR's Warranty Practices
NVR provides a warranty for every home that it builds—and it honors those warranties as it has
sought to do for the Amoses.
NVR is one of the largest homebuilding companies in the country—it was started in 1948 and has
built over 120,000 homes in the last 10 years (2009-2018). NVR performs a detailed third-partyNovember 15, 2019
Quality Assurance Inspection prior to settlement and provides a comprehensive warranty on every
home built. NVR would not be the successful company itis today if it ignored its customers’
warranty concems. Indeed, NVR provides each of its customers submitting a warranty claim the
opportunity to evaluate NVR's warranty work through a survey. The average survey score over the
last three years is 9.5 on a 10-point scale.
On the occasions when NVR receives complaints from its customers, NVR acts promptly and in
ood faith to attempt to resolve those complaints. Over the past 10 years, NVR has built 123,757
homes, but has been sued fewer than 200 times related to warranty claims and has entered into
arbitration over a warranty claim fewer than ten times (and zero times since 2016). In other words,
less than two tenths of a percent of the homes NVR has built have resulted in legal proceedings,
and arbitration has very rarely been used. Moreover, for the majority of the handful of claims that
‘went to arbitration, itwas the homeowner that requested arbitration and not NVR. As you can see,
forcing customers into arbitration simply is not a business practice or legal strategy employed by
NVR. To the contrary, NVR's practice is to do everything reasonably possible to fix any issues its
customers may experience
Italso is not NVR’s practice or policy to request that homeowners enter into non-disclosure or
confidentiality agreements as a condition to obtaining legitimate warranty repairs. Indeed, NVR
routinely performs such warranty work without requiring non-disclosure agreements,
Itis, however, a common business practice for NVR and any other company dealing with claims that
could result in litigation to include a non-disclosure clause in settlement agreements, whether the
agreement relates to a disputed warranty claim or any other legal matter. Requesting that a
homeowner sign a non-disclosure agreement in connection with the settlement of a legitimate
dispute is not, as you phrase it, “corporate blackmail.” Itis a standard term included in virtually every
private settlement of potential litigation. Where there is a dispute over the proper scope of warranty
repairs or where, as in the Amos matter, NVR is asked to consider a resolution that involves a cash
payment on top of making legitimate warranty repairs, NVR is well within its rights to seek a limited,
reasonably tailored non-disclosure agreement to protect its legitimate confidentiality interests in
connection with any settlement offer it may extend. We strongly believe there is nothing illegal or
improper about doing so,
Nor is there any coercion involved. No consumer is “forced to execute a settlement agreement.
They are the result of arms-length negotiations. Consumers are free to negotiate the removal of the
provision from any settlement or dectine an offer and proceed with litigation or arbitration, just as the
‘Amoses did with respect to NVR's limited non-disclosure proposal which, again, only covered the
amount of the cash payment.
Arbitration Provisions in New Home Warranties Are Both Legal and Appropriate
NVR strongly disagrees with the contention that the inclusion of arbitration provisions in new home
construction warranties is “anti-consumer’ or “unconscionable,” and there simply is no basis for the
implication that it “may be illegal.” As you are no doubt aware, the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 and its implementing regulations only apply to residential
mortgage loans and consumer credit transactions. They do not apply to new home warranties,
Perhaps more importantly, we vigorously disagree with the notion that arbitration somehow is more
harmful to consumers than litigation. In many instances, arbitration allows for a speedier and lower-
cost resolution of legitimate claims. We also respectfully disagree with the conclusions in the CFPB
study referenced in your letter.November 15, 2019
‘We hope this correspondence provides you with helpful clarity in regard to what NVR believes to
have been an appropriate response to the Amos matter, as well as a more complete overview of
NVR's history in dealing with homeowner warranty claims and the appropriate and limited use of
arbitration and non-disclosure provisions in connection with these matters.
Sincerely,
David J. Hensler
Senior Counsel
david.hensler@hoganlovells.com
D 202-637-5630
ce Jan Singelmann, Counsel, U.S. Senate Committee on Banking, Housing, and Urban Affairs