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Owners Are Embroiled in Worst-Case Scenario

January 06, 2002

Donald and Katherine Madden's desire to add a second story to accommodate an extended family led to mounting debt, a yearlong legal battle with South Bay Remodeling--which folded and filed for bankruptcy--marital breakdown and possible foreclosure.

The contractors have been referred to the attorney general and rated unsatisfactory by the Better Business Bureau because of complaints about business practices, but those measures won't help finish the Redondo Beach house Katherine Madden grew up in. Nor does the couple stand to collect much of the $158,826 judgment it won against South Bay Remodeling last fall.

"Every day I would be looking at it and there was nothing I could do," said Donald Madden, who maxed out his credit cards paying for an extended motel stay and his mortgage at the same time. "I got upside-down so fast."

"I can't even tell you the nightmare it has caused us," Katherine Madden said. "If I would have known what would happen, I would have bought a new house with the amount of money I spent."

There was no way to anticipate that things would turn out this way. After researching the contractor, the couple signed a contract for a 16-week job in late January 2000, intending to live in part of the house during the remodel. Madden said they had to decamp to a motel when the portion of the house they were living in was damaged a few weeks into the project.

The couple soon hired a consultant to investigate the job after a worker tipped them off that things were amiss.

By August 2000, construction ground to a halt amid charges of alleged misappropriation, according to court documents. South Bay Remodeling slapped the Maddens with a breach of contract lawsuit; the couple promptly countersued on negligence and fraud charges.

Late last October, the couple won their judgment, but by that time South Bay Remodeling owners Terry and Marilyn Taylor had already filed for Chapter 7 personal bankruptcy in U.S. District Court. The state suspended the company's contractor's license in April after the original sponsor withdrew support, referring the case to the attorney general for possible criminal charges. The Taylors' attorney did not respond to calls for comment.

According to David Berchauer, the Maddens' attorney, the only money they have a chance of recovering is a portion of the $7,500 contractor's bond. "The judgment was against the corporation, which probably has next to no assets," Berchauer said.

The Laguna Hills-based attorney, who has been working on the case pro bono, said he believes contractor bonds should be higher to protect consumers against contractors who don't adequately perform services.

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Diane Garrett

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