WASHINGTON, D.C. – In Case You Missed It, U.S. Sen. Sherrod Brown is urging Ryan Homes to remove forced arbitration clauses from its agreements, after a recent Cincinnati.com report found that the company often constructed subpar and unsafe housing, including houses with structural issues, electrical wirings not up to code, leaks caused by bad caulk jobs, and uneven flooring. According to the report, Ryan Homes would then offer to repair homes, but only if homeowners agreed to arbitration and a non-disclosure agreement prohibiting them from talking about the issues publicly. Ryan Homes is the fourth-largest homebuilder in the country.
Brown led a letter last week with Senators Richard Blumenthal (D-CT), Ben Cardin (D-MD), and Chris Van Hollen (D-MD), calling on Ryan Homes and its parent company, NVR, Inc., to remove the arbitration provisions from their agreements and stop requiring homebuyers to sign non-disclosure agreements in order to resolve disputes.
“NVR and Ryan Homes do not need to wait until the CFPB acts to do right by its customers and honor its warranty. We ask you to immediately remove and agree not to enforce arbitration provisions from NVR’s warranty agreements with homebuyers and cease the use of and agree not to enforce any non-disclosure agreements with homebuyers,” the Senators wrote.
Brown’s letter to NVR can be read here.
By: James Pilcher and Matthew Prensky
November, 10, 2019
Calling the company's legal tactics the equivalent of "corporate blackmail," a group of U.S. senators, including Ohio's Sherrod Brown, is seeking answers from one of the nation's largest homebuilders.
In a letter sent last week to the CEO of the parent company of Ryan Homes, the four senators wrote that the homebuilder was engaging in "anti-consumer tactics" and asked that NVR, Inc. and Ryan Homes stop requiring homeowners to enter binding arbitration and non-disclosure agreements.
"Forcing homeowners into arbitration and non-disclosure agreements is unfair, unjust, and abusive," the senators wrote to NVR's president and chief executive officer Paul Saville. "It is corporate blackmail."
The letter came in response to a USA TODAY Network/Cincinnati Enquirer investigation into the building and legal practices of Ryan Homes, the nation's fourth-largest homebuilder. (A full copy of the letter can be found at the end of this story.)
The stories highlighted several cases of shoddy workmanship followed by the company's aggressive use of binding arbitration, provisions requiring a private arbitration and barring customers from suing if there are disputes over warranty claims.
Such arbitrations often come with non-disclosure agreements, prohibiting homeowners from discussing repairs or settlements publicly.
"Ryan Homes should be embarrassed about this," Brown, a Democrat from Cleveland, said in a separate interview with The Enquirer. "You see Ryan Homes everywhere, but if they're going to have a record of scamming the public, of doing substandard work, and then taking away public rights through forced arbitration ... that's pretty damn close to blackmail."
Officials with NVR did not respond to messages seeking comment. NVR earns more than $800 million in profit annually and has a stock price of about $3,400 a share. The senators' letter asks for a response by Nov. 19.
"We’re glad that Ryan’s business practices have come to the attention of government officials who might be able to help," said Michael Amos, one of the families featured in the reporting. "It’s been very difficult for our family to stand up against a powerful corporation like Ryan. For Ryan, hiring lawyers and filing lawsuits is just part of their business. For us, this process has been very scary and expensive. It’s not at all what we signed up for when we built our house."
Others signing the letter included both senators from Maryland, Democrats Ben Cardin and Chris Van Hollen, as well as U.S. Sen. Richard Blumenthal, D-Conn., the lead sponsor of a bill that would outlaw forced arbitration.
The USA TODAY Network stories included an example from Maryland, a Ryan-built condominium complex in Ocean City, Md., where owners are fighting the company for repairs over waterproofing issues.
Van Hollen called for a possible criminal or civil investigation by Maryland state officials.
“This is an outrageous situation and it’s really imperative that the company step up and compensate these homeowners for the losses caused by the company’s negligence,” Van Hollen said. “The Maryland attorney general should use the full powers of his office to go after this fraudulent misconduct."
Blumenthal told The Enquirer that the letter "makes a very powerful case that NVR needs to do the right thing" and stop using binding arbitration.
He also called most non-disclosure agreements "despicable" that "simply protect a wrongdoer from embarrassment or a potential criminal investigation."
In September, the U.S. House already passed a version of the bill that would ban any contract or agreement from including a provision for mandatory arbitration.
Other homeowners currently struggling with Ryan welcomed the attention. Those included several new Ryan customers who contacted The Enquirer after the stories were published.
One of those cases involves the Reichart couple from Hamilton, who sued Ryan Homes and several contractors in Butler County Common Pleas Court originally in 2017 but then refiled the case earlier this year.
According to the lawsuit, the couple bought a new Ryan house in 2015 for nearly $313,000. But the couple complained about several items not being installed correctly and discovered mold growing on drywall.
Later, workers for a subcontractor cut a large amount of granite inside the home without proper ventilation as part of a separate repair, the suit states. That led to silica dust infiltrating the ventilation system.
Following that repair, and an emergency evacuation after the dust was sent all over the home, Kelly Reichart was diagnosed with severe lung disease including fibrosis and the growth of inflammatory cells.
The couple also contends that their dog died of cancer caused by the dust. The Reicharts' lawyer Tom Connick said that the original contract included an arbitration provision, but that NVR/Ryan has not yet tried to invoke it.
"Ryan Homes defend their claims very aggressively and this has been a very litigious case," Connick said. "I would not be surprised to see this wind up in a jury trial."