doc002.98-C-132 Aug. 15, 1998 RESPONSE OF D. R. HORTON, INC. - CHARLOTTE TO NOTICE OF FILING OF A COMPLAINT response to complaint Rolly Chambers Rolly Chambers Attorney for D.R. Horton, Inc. - Charlotte D. R. HORTON, INC. - CHARLOTTE dba D. R. Horton Custom Homes text/xml NORTH CAROLINA LICENSING BOARD FOR GENERAL CONTRACTORS File No. 98-C-132 In the Matter of: D. R. HORTON, INC. - CHARLOTTE dba D. R. Horton Custom Homes license no. 29676 Respondent RESPONSE OF D. R. HORTON, INC. - CHARLOTTE TO NOTICE OF FILING OF A COMPLAINT D. R. Horton, Inc. - Charlotte, N.C. dba D. R. Horton Custom Homes ("Horton"), license no. 29676 respectfully responds to the allegations in the Complaint Package dated May 25, 1998 in this matter as follows: Section I 1. A copy of the Agreement of Sale dated October 21, 1989 (together with subsequent addenda for custom changes) between D. R. Horton, Inc. and the complainants, Glen and Yevone Sherrill, is attached as Attachment A. The project was the construction of a house at 5942 Rathlin Ct. N.W., Concord, North Carolina. The custom changes included changes to Horton's standard Plan 708 model. As provided in paragraph 8 of the Agreement of Sale Horton furnished the complainants with an express warranty on the house as set out in the Home Owner's Warranty (HOW) Corporation Insurance/Warranty Documents Booklet. 2. Not applicable. 3. The construction of the complainants' house was completed in August, 1990 by Horton. The closing took place in August, 1990. 4. Horton was not dismissed or terminated. 5. Horton did not abandon the project. 6. Horton does not dispute that a Certificate of Occupancy for the House was issued in August, 1990 by the Cabarrus County Building Inspections Department as stated in the complaint form. 7. The Building Permit was issued on February 26, 1990, and Horton began work on the House a few days later. The House was completed in August, 1990 and the closing took place in August, 1990. 8. There is no pending formal proceeding between Horton and the complainants. However, the complainants sent a letter dated April 27, 1998 to Horton demanding that Horton perform corrective work on the house. The complainants wrote that they had experienced a termite swarm in March, 1998. They had subsequently discovered that the garage area was backfilled against a double floor sill which had not been flashed or treated for ground contact. A copy of the complainants' letter is attached as Attachment B. Horton assumed that the complainants were making a warranty claim and responded in a letter dated April 28, 1998 that the claim was not warrantable due to the age of the house (over 7 years old) and the terms of the warranty. A copy of Horton's letter is attached as Attachment C. The complainants then informed Horton in a letter dated May 4, 1998 that they were filing a formal complaint against Horton with the North Carolina General Contractors Licensing Board. Horton also previously received a complaint from the complainants in 1994 regarding moisture problems with one window and two window sills in the house. Horton informed the complainants that the warranty period applicable to the window sills was one year, but that the failure of the thermopane seal on one window was covered under a 5-year manufacturer's warranty. Horton referred the complainants to the window manufacturer, Oldach, to obtain a replacement of the thermopane glass. On November 4, 1994, the complainants filed a complaint against Horton with the Better Business Bureau of Southern Piedmont regarding problems with the window and two window sills. Copies of letters to the Better Business Bureau from the complainants dated November 4, 1994 and January 10, 1995 and from Horton dated December 16, 1994 are attached as Attachment D. 9. Horton has not filed any civil complaint in this matter and has not been notified that the complainants have filed any civil complaint. 10. Horton does not dispute that as indicated in a letter dated April 15, 1998 from Kenneth McCombs, Cabarrus County Building Inspector, to the complainants, the wood rim band adjoining the garage slab of the house apparently was only partially flashed. Horton also acknowledges that the wood rim band should have been completely flashed. After learning of the filing of this complaint, Horton investigated this matter and has learned the following: Horton's superintendent for the construction of the house was Mitchell D. Whitley, who left Horton's employment more than six years ago. Horton has not been able to learn Mr. Whitley's current address or place of employment and has not been able to contact him about this matter. The subcontractor that poured the garage slab was Matthews Concrete, as shown by the invoices attached as Attachment E. According to Mr. Tom Ryan, a former Horton employee who was Horton's construction manager at the time the complainant's house was built, Horton's general practice was to have the concrete subcontractor flash areas in need of flashing, such as the rim band area on complainants' house, before pouring concrete. As indicated in the April 15, 1998 letter from Mr. McCombs, there apparently was an effort to flash the rim band area in question with some type of asphalt flashing, but the flashing is not present along the entire rim band. This is not consistent with Horton's general practice at the time and Horton is not aware of any other instances where this condition has occurred in any of the approximately 1200 houses that Horton has built in the Charlotte area. Horton does not believe that this is an incident of gross neglect, but acknowledges that installation of flashing for the entire rim band area apparently was overlooked by the concrete subcontractor, by Horton's job superintendent, and by others who inspected the house. After receiving the complaint package in this matter, Horton arranged for Mr. Peter Verna, a North Carolina professional engineer, to examine the rim band area of the complainants' house. In a report dated August 3, 1998, Mr. Verna confirmed that flashing possibly was not installed in the rim band area and some rotted band board is present. Mr. Verna reported that the area could be repaired by either cutting a 12" wide strip parallel to the perimeter of the garage slab, replacing the rotted sill, and then reflashing and repouring or removing half the garage slab, repairing the rotted rim band, and then reflashing and repouring. A copy of Mr. Verna's report of August 3, 1998 is attached as Attachment F. Horton has not been informed by Mr. McCombs or Mr. Verna that the condition of the rim band has created an imminent danger to the safety of the house and does not believe that such a danger is present. Section II 1. The Cabarrus County Building Inspections Department performed building code inspections of the complainants' house. 2. Horton believes that Mr. Ken McCombs and Mr. Shane Albright of the Cabarrus County Building Inspections Department are familiar with this complaint. 3. Horton does not dispute that the lack of flashing along the entire rim band of complainant’s house is a building code deficiency. 4. Horton was not directly responsible for the lack of flashing since the concrete subcontractor, Matthews Concrete, was responsible for the installation of the flashing in question. However, Horton does not dispute that it was overseeing the work on complainants’ house, including the placement of flashing by the concrete subcontractor. 5. Horton was first notified of the apparent building code issue involving the rim band flashing of complainants’ house by a phone call from the complainants in late April, 1998, which was followed by a letter dated April 27, 1998. 6. Horton believes that the lack of rim band flashing is not a warrantable item under the warranty that Horton provided the complainants when they bought the house. However, as a compromise to resolve this matter, Horton is willing to consider performing the work described in Mr. Peter Verna’s report dated August 3, 1998. Horton has not formally proposed to perform this remedial work for the complainants in light of the pending status of this matter. 7. Not applicable. 8. See Horton's response to Item 6 above. 9. Not applicable. 10. Horton believes that the available information shows that an effort was made to place flashing along the sill area in question when the complainants’ house was built in keeping with Horton’s general practice, but Horton acknowledges that the available information indicates that the entire sill area was not flashed. In this regard, Horton acknowledges that overlooking the installation of flashing along the entire sill area should not have occurred. However, Horton is not aware of any information indicating that it has been grossly negligent or incompetent in the practice of general contracting. As indicated above, although Horton does not believe it has a legal obligation to the complainants to perform any corrective work under the circumstances, it is willing to consider performing the work described by Mr. Verna to resolve this matter. This the 15th day of August, 1998. ____________________ Rolly L. Chambers Smith, Currie & Hancock, LLP 1023 West Morehead St., Suite 301 Charlotte North Carolina 28203 (704) 334-3459 Attorney for D. R. Horton, Inc. - Charlotte ____________________ Ms. Joan Kelly 215 Queens Road, Suite 200 Charlotte NC 28204 Warranty Manager D. R. HORTON, INC. - CHARLOTTE dba D. R. Horton Custom Homes