Steven Parenteau dba All-Home Remodeling v. Susan Nott, Orange County Housing and Community Development Department
Published: Dec. 2, 2000 | Result Date: Jan. 27, 2000 | Filing Date: Jan. 1, 1900 |Case number: 795172 Arbitration – $14,531
Judge
Court
Orange Superior
Attorneys
Claimant
Respondent
William L Haluck
(Koeller Nebeker Carlson & Haluck LLP)
Experts
Respondent
Richard D. Bowen
(technical)
Facts
HCDD is a fiduciary trust fund holder and awards low income loans or grants to qualified homeowners. In July
1996, contractor AHR, homeowner Nott and the Orange County Housing and Community Development
Department entered into a contract to rehabilitate NottÆs residence. It determined the scope of the contracts,
approves the work and released payments to contractors upon the homeownerÆs acceptance of the work. Its
contract provided for arbitration of disputes between the homeowner and the contractor.
An award in such an arbitration is binding, but discretion exists regarding costs. However, attorney fees are not
recoverable. The county is given broad indemnification rights from the counterparts to the contract.
In June 1997, AHR completed the work and HCDD approved it, but homeowner Nott declined to authorize the
release of the final payment of $14,531.31 to AHR. She claimed that AHR did not obtain sufficient insurance
and building permits when it started the project. Nott prepared extensive pick-up lists, but refused AHR access
to her residence to correct the work.
Concurrently, Nott complained to the State ContractorsÆ Board against AHR, alleging that HCDDÆs
rehabilitation program was a fraud, but her administrative complaint was closed because she failed to provide
support for her claim.
In May 1998, AHR requested that Nott submit the payment dispute to binding arbitration, but she declined to
do so. AHR requested payment from HCDD, or, alternatively, that it commence arbitration. HCDD allegedly
denied both without NottÆs consent.
In June 1998, AHR filed a declaratory relief complaint against HCDD alleging that its contract was
unworkable and imposed a hardship of pursuing the intransigent homeowner who disregarded the contractÆs
arbitration clause.
Additionally, AHR sued Nott for breach of contract, quantum meruit and to compel binding arbitration.
Neither of the defendants cross-claimed.
In March 1999, the case proceeded to judicial arbitration. The arbitrator made a preliminary finding that the
contract called for binding arbitration and offered his services to serve as such. However, Nott declined and the
arbitrator suspended the proceedings and issued an award that Nott refused to arbitrate.
Subsequently, AHR brought a petition in Superior Court to compel binding arbitration. Nott opposed it on the
ground that HCDD was not impartial and that the clause in the contract which provided for the county to select
the arbitrator was unconscionable.
The Superior Court agreed with defendantÆs unconscionability argument but otherwise granted the plaintiffÆs
petition and the case was eventually heard by James L. Smith of JAMS.
Result
The arbitrator awarded the contractor the full amount owed jointly and severally against Nott and HCDD. Nott was held solely liable for claimantÆs JAMSÆ fees as costs. It was noted that NottÆs expertÆs opinions were not supported by evidence, applied a standard not pertinent to the work of rehabilitation and included opinions as to the items of work which were not part of the subject contract or were done for the respondent by others. NottÆs contentions as to the contractorÆs failure to obtain proper insurance and building permits and her presentation of the character evidence were likewise found to be unsubstantiated, speculative and of little evidentiary value. Although the arbitrator found an instance of mismanagement and accepted the homeownerÆs claim that a portion of her obligations to HCDD should be viewed as a grant as opposed to a loan, he determined that this had no bearing on the ability of the contractor to recover the contract value of his work. The arbitrator found that since HCDD funded the project, it was entitled to repayment of the loans and should not be prevented from paying the contractor by the homeownerÆs unreasonable refusal to accept the work. Additionally, the arbitrator found that NottÆs conduct of excluding the contractor from the site discharged the contractor from an obligation to make corrections. Further, NottÆs speculative reasons for disapproving the work, without pointing to any particular item of damage or harm, amounted to breaches of her express and implied duties under the agreement. The arbitrator retained jurisdiction to determine the precise amount of the cost award.
Other Information
At binding arbitration, the plaintiff introduced a videotape of a C.C.P. Section 2031 inspection of the subject premises to demonstrate the condition of the property as of September 1998, and contrasted it with an array of still photographs predating the work. The claimant also introduced witnessesÆ testimonies that it had met all criteria required of it to be on HCDDÆs contractor bidding list, that it had obtained insurance and required building permits and that its work was inspected and approved. The claimantÆs witnesses also allegedly testified that the work was done according to the rehabilitationÆs programÆs aspirations, in a workmanlike manner and in all instances, in accordance with the homeownerÆs wishes. Accordingly, the claimant took the position that its work met the applicable H.U.D standards and should be deemed to satisfy the reasonable expectations of the homeowner. The claimant purportedly demonstrated that the respondentÆs primary problem was with HCDDÆs loan/grant process and that her stand against the contractor was pretextual and should not impact the contractorÆs ability to recover. Nott defended by insinuating that AHR and other contractors conspired with HCDD against low income homeowners and provided shoddy work of rehabilitation. She attempted to impugn the characters of the contractorÆs principal and HCDDÆs officials by alleging instances of lying, theft and bad reputation. She introduced expert testimony that her house was damaged in excess of $18,000 as the result of substandard work, based upon alleged deviations from the industryÆs custom construction standards. HCDD did not present any evidence and did not engage in any form of presentation of evidence or cross-examination.
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