Texas Couple Wins $51 Million for Defective $250,000 House
It's all up to the judge now: a Texas couple who won a $51 million verdict against a major homebuilder on March 3 is awaiting word on whether they will be able to keep any of that award.
The builder, Houston-based Bob Perry, first tried to have the record-breaking verdict thrown out. Now the homeowner, Bob Cull of Mansfield, Texas, says his case is in legal purgatory with caps and multipliers that could limit the award. Ultimately, a district court judge will render a judgment.
"But I'm sure Perry will appeal," says Cull, which will make his decade-long battle even longer.
The lawsuit has carried the retirement-age couple through the courts, arbitration and all the way to the Texas Supreme Court. Though they've won every round, their home is still defective and both sides have spent substantial money on legal fees for a $233,730 home. Van Shaw, the Cull's Dallas-based attorney, says Perry Homes has spent well over a million in legal fees. The Culls have spent more than $100,000 in hard legal expenses.
"I'm a conservative, " says Bob Cull. "Bob Perry and I probably vote alike. But I see this system not being functional any longer for the average, hardworking American."
The Tarrant County, Texas verdict awarded Bob and Jane Cull of Mansfield, Texas $51 million in damages for a 2,800-square-foot home they bought from Perry Homes in 1996 on a golf course southwest of Fort Worth. The home showed post-tension slab-on-grade-foundation problems shortly after they closed.
In 1999 cracks appeared in the foundation. That's when the Culls first told Perry they were a little nervous about their home.
Leaves and critters came in the house due to poor-fitting doors; roof supports came loose in the attic; fissures appeared in the walls and tiles. Engineers said the home's foundation was defective, even those from the warranty company contracted by Perry Homes.
"We went for two or three years," says Cull, "working directly with Perry and the warranty company on our own." But the Culls claim that Perry only applied "cosmetic fixes."
"I sent a letter to Bob Perry and begged him: please don't make us have to get an attorney," says Cull. "Isn't there some common ground we can work from?"
Perry refused, telling Cull he put a French drain in the backyard, and that was enough.
It is not clear why Perry continues to wage what is clearly a very expensive legal battle. A spokesman for Perry refused to comment. He's the nation's most generous individual political donor and a leading advocate of laws to limit court awards, or tort reform. He's also a major donor to politicians and judges, particularly Republican candidates in Texas. And he donated more than $340,000 to the nine Texas Supreme Court justices who heard the Culls' case.
It could be that the Culls angered Perry when they decided to seek arbitration. Before the case went to trial the first time, back in 2000, the couple chose arbitration due to their age -- both are in their 60s. But Perry resisted and both sides went to court.
They ended up in arbitration anyhow after a district judge, the appeals court and the Texas Supreme Court all ruled in favor of the Culls.
In 2002, an arbitrator told Perry Homes to pay the Culls more than $800,000 in damages plus interest, which topped $1.3 million. But the former Swift Boater refused to pay up; so, too, did Warranty Underwriters Insurance Co. This time the Texas Supreme Court -- every single member of which got some campaign dough from Bob Perry -- refused to rule in the couple's favor: In 2007 it vacated the arbitration award and kicked it back to the lower court, which is where it landed in early 2010.
All through the legal process, everyone agreed that Bob Perry (who is no relation to Texas Gov. Rick Perry but is one of his largest donors) was liable for repairing the home. That is, until they got to the Supreme Court of Texas the second time around.
Local homebuilders are distressed over the verdict for many reasons. What a guy like Bob Perry has done, said one who wished to remain off the record, is ruin it for the independent home builders.
And now the Texas Residential Construction Commission (TRCC) has been dismantled, and some homebuilders think the reason why might be Bob Perry.
"I think his heavy-handed efforts were one of the main reasons the TRCC went away," the independent homebuilder said.
The TRCC was a state board to monitor homebuilders -- sort of. While it could not force homebuilders to fix defective houses, it could force homeowners to first go through a complaint process before seeking arbitration or litigation. Builders liked it because it prevented costly lawsuits which, they argue, drive up costs for everyone.
Gov. Perry signed the TRCC into being in 2003 and appointed Perry Homes' general counsel, John Krugh, to lead the commission. The TRCC was dismantled in February of this year.
"It was perceived that that agency was nothing more than a shell for the big builders like Perry," said the local builder. "What I really worry about is what kind of damage this does to the rest of us homebuilders – if we're perceived as being flush with cash, then what's to stop John and Jane Homebuyer from firing up the trial lawyers and suing at the first sign of a problem?"
Anthony Holm, Perry's spokesman, told the Fort Worth Star Telegram that the Culls' $51 million award is "equivalent to every single resident in Texas depositing $2 into the lawyer's bank account." He said it would be appealed. Holm would not comment for this story.
Perry Homes reported revenues of $420 million in 2002 -- probably way more during the boom. Of course the burning question is: Why didn't Bob Perry just buy back the Culls' home early on? Was he worried that the case would set a precedent, open a huge can of worms?
The home next door also had problems, says Shaw, the Culls' attorney. Perry took care of them. Shaw thinks Perry was tiring of homeowners in that subdivision, The Villages at Walnut Creek, complaining about problems and he wanted to teach them all a lesson,
"They are the most stubborn," says Shaw. "They think we are making this all up. And if you accuse them of making a mistake, they are going to make you pay for that."
Perry did offer to buy back the house, but not until the Culls were way downstream in the legal process.
"There was a time early on when they could have bought our house back, taking into account what we had spent on engineering and legal fees," says Cull. "But when they finally made the offer, we were so deep into this, it had been so long and there were so many moving parts."
"I'm a capitalist pig with an M.B.A.," says Cull. "But every business decision Bob Perry has made in this case has been wrong."
Shaw thinks the district court judge will uphold the $51 million award. Perry will appeal to the Fort Worth Court of Appeals. If he loses there, the U.S. Supreme Court will be the last stop.
"And we'll be there," says Shaw. "We're going the whole way,"
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