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Buyer Beware!
Wednesday, 29 April 2009
April 29 - Georgia residents Michelle Rechtien of Savannah, Greg Cole of Marietta and Scott Kimbell of Jefferson are in Washington, D.C., today to share their personal stories and lobby members of Congress for the bipartisan Arbitration Fairness Act.

Mandatory binding arbitration clauses are hidden in the fine print of everything from cell phone, credit cards, franchise and employment agreements to nursing home care contracts.  These clauses force consumers and employees to give up their right to take their case to court in the event there is a dispute with the corporation.  Instead, they must enter one-sided, rigged arbitration on the corporation’s own terms, regardless of how egregious the offense may be.

The Rechtiens, Coles and Kimbells saw firsthand how mandatory binding arbitration agreements are used by corporations to stack the deck against everyday Americans.  In 2006, six months after John Rechtien returned from a year of Army duty in Iraq, he and his wife, Michelle, closed on the purchase of a new house in Savannah.  At the house inspection the day before closing, the newly constructed home showed signs of sloppy workmanship.  However, the builder, JCW Wardlaw, reassured the Rechtiens and the sale proceeded as scheduled. After growing impatient at the slow pace of repair, the Rechtiens then hired a professional engineer to inspect the house, who found five building code violations. In addition, excessive leakage led to mold in the house, meaning all damaged materials had to be removed.

After learning that their warranty required forced arbitration, John and Michelle paid $2,500 to file an arbitration claim, listing 182 problems in their house.  In his decision, the arbitrator awarded the Rechtiens only 36 of the 54 items that Wardlaw claimed were covered by the warranty, and added three other items as “covered” defects.
Although the estimates approached $20,000, the arbitrator accepted Warlaw’s low-ball estimates and awarded John and Michelle only $3,210 for all of the repairs.  Days after receiving the arbitration decision, John was deployed for his second year-long tour in Iraq.

When John returns from Iraq - now scheduled for October 2009 - his unit will be transferred to Fort Drum, N.Y.  Accordingly, John and Michelle will have to sell the house and disclose everything, including the structural engineer’s report, the mold inspection, and the house’s substantial code violations.  They expect to lose thousands of dollars.

In 2000, Greg and Kimberly Cole bought a newly built house in Marietta.
 Within months, they discovered numerous construction problems.  The house contained such major structural deficiencies that during heavy and extended periods of rain, it literally rained inside the home.  They began to experience health problems, suffering from mold poisoning, due to faulty construction.  The Coles also were advised to abandon the house and all its contents.

In May 2006, Greg and Kimberly sued the contractor, Wieland Homes.
Citing a clause in its contract, Wieland Homes forced the Coles into arbitration.  Unbeknownst to the Coles at that time, the arbitrator had connections to National Association of Home Builders (NAHB).  In fact, he was an instructor for NAHB on using homeowner warranties and arbitration to “protect your business.”

Nearly eight months later, the arbitrator rejected Greg and Kimberly’s most serious complaints - including the mold that had made the house unsafe to live in.  The arbitrator required repairs within sixty days, but to date, none of the  ordered repairs have been completed.

In 2001, Scott and Leslie Kimbell hired subdivision developer Sue Campbell Properties, Inc., to build their dream home, and Scott and Leslie signed a purchase contract.  One year after moving in, Scott and Leslie noticed problems - a home inspector told them the floor was sloping in different directors and the floor was pulling away from walls.  Scott and Leslie solicited three estimates for repairs on their home, ranging from $43,320 to $72,350.

When the Kimbells wanted to sue against Campbell in court, Campbell their lawyer told them they could not because of the arbitration clause in the construction contract.  Subsequently, the Kimbells filed a claim with the American Arbitration Association (AAA).  A two-day hearing was held in August 2006, but the arbitrator refused to visit the Kimbells’
house to see the structural damage.  In his decision, the arbitrator accepted the existence of the defects listed by Scott and Leslie, but concluded that Campbell was not responsible for the repairs because the defects were either caused by the Kimbells’ own actions or inactions, were typical homeowner maintenance items, or were otherwise Scott and Leslie’s responsibility.  The arbitrator ordered the Kimbells and Sue Campbell Properties to split his fee and costs totaling $21,200 and the AAA fees of $4,700.  Each side was also ordered to bear its own costs, including attorney fees.

The bipartisan Arbitration Fairness Act of 2009 (H.R. 1020), introduced by Rep. Hank Johnson (D-Ga.), will ensure that corporations cannot manipulate the arbitration system in their favor at the expense of consumers.

More than 30 other arbitration victims from across the country came to the nation’s capitol to lobby their representatives to pass the
Arbitration Fairness Act.   They also will participate in a press
conference hosted by the Fair Arbitration Now Coalition that will include the release of a new poll detailing Americans’ views on arbitration.
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