Developers and home contractors say juries cannot be trusted to fairly resolve these disputes between a builder and a buyer.
"The last place you want to go is the civil court system. The facts don't matter to a jury," said Bobby Bowling IV, a builder from El Paso and president of the Texas Assn. of Builders. "In court, the plaintiff's lawyer makes it rich versus poor. It's about the redistribution of wealth."
Bowling said he and other builders were convinced that private arbitration was the best way to settle disputes.
"It's been a great system for me. I had a woman who had about 60 things she wanted fixed. I finally said, 'Let's go to arbitration,' " he said. "It cost about $10,000 to take care of it all. And it was done in 30 to 60 days. There's nothing like that in the civil justice system."
But consumer advocates say that closing the courthouse door to buyers removes a strong incentive for builders to do right by their customers.
"Having a legal remedy does two things," said Reggie James, director of Consumers Union in Austin. "It gives an individual a right to be compensated. And it is a deterrent for business in the future.
"And businesses respond to that. By the late 1990s, the builders here didn't have to worry about the risk of liability."
When Mary Cohn and her family moved out of their still-new home, she said, her builder offered $8,000 to repair the roof. That did not begin to cover the cost of replacing the moldy wallboard.
After concluding that the arbitration process was stacked against the buyer and would cost them several thousand dollars, the Cohns hired a lawyer and tried to sue the builder.
"They got screwed big-time. They paid three-quarters of a million dollars for a house that they couldn't live in," said Jim Moriarty, their lawyer. "This was as obvious a case of a construction defect you will ever see."
However, a succession of judges threw out their claim, saying their only choice was to take their dispute before a privately hired arbitrator.
In the end, a generous interpretation of their homeowners insurance policy paid most of the $300,000-plus repair cost. But the Cohns say they paid $35,000 in upfront deductibles.
The Cohns almost got their wish to go to court. While the repair work was underway, they put a bright orange sign in front of their home that urged others to "Think Twice" before hiring their builder. When they refused to take down the sign, he sued them for slander.
