Opinion: Governor's 'right to repair' veto bad for homeowners, builders

Matt Morrow is executive officer of the Home Builders Association of Greater Springfield.

The growing cost and shrinking availability of general liability insurance is fast becoming a crisis in the home building industry. In our increasingly litigious culture, some dissatisfied homeowners have come to believe their only recourse is to "sue now and ask questions later." Some of these lawsuits are legitimate. But the vast majority of these disputes could easily be resolved without needless litigation and huge attorney fees on both sides.

Worse, some of these lawsuits are flat-out frivolous. In these cases, plaintiff attorneys embark on fishing expeditions designed to find the deepest pockets and land the biggest possible settlement or jury verdict in their favor, without much regard for matching those settlements and verdicts to actual damages.

These are not the majority of the cases. But their outcomes greatly affect the ability of all home builders to buy general liability insurance at anything resembling a reasonable price. The risk for insurance companies is simply too large and too unpredictable for them to continue to insure builders even very good builders with excellent track records at a fair premium. And these growing costs greatly affect the affordability of new homes for home buyers.

This was a major motivation behind the efforts of the Home Builders Association of Greater Springfield and the HBA of Missouri in working for the passage of "Right to Repair" legislation. After two years of hard work, the Missouri General Assembly in May adopted "Right to Repair" (SB 1081) with broad, bipartisan support. The legislation requires written notice to contractors of any alleged construction defects and requires the builder to respond within a defined period of time with an offer to remedy the situation. If no immediate remedy can be agreed upon, both parties would then go to mediation. If mediation fails, the homeowner and contractor both reserve their right to a lawsuit but only after these first good-faith efforts have been made.

Twenty-three states have adopted similar legislation. In states where the legislation has been in effect for a year or more, litigation costs in the industry already are down dramatically in some cases by more than 90 percent. These litigation costs are down because when homeowners and builders are encouraged to make an honest effort to work out their disputes, they usually are successful. Both homeowner and builder are satisfied in a timely manner, and nobody has to pay exorbitant attorney fees.

Despite passing the House of Representatives by a vote of 142-17 and the Senate by a vote of 29-3, Gov. Bob Holden vetoed the bill. Let me be clear: the only people who benefit from this veto are trial attorneys looking to bill unnecessary hours of legal fees. Holden had a golden opportunity to show his commitment to homeowners and home builders. Instead he folded under pressure from the trial lawyers' lobby.

Holden made it clear with his veto that he is no friend of small business, of home builders or of homeowners. As usually is the case with political actions like this one, there was a fair amount of misinformation spread on the bill. Opponents argued that the process was too complex for consumers and that the deck was stacked in favor of builders. For anyone tempted to believe that line, all I can do is invite you to read the bill. It is loaded with new protections for home buyers. It helps honest consumers achieve their real goal: a completed, well-built home in a timely manner. And, for any builder foolish enough to ignore the paper trail of a complaint generated by this process, the lawsuit that would certainly follow would be sure to find in favor of the plaintiff.

The misinformation campaign had one purpose: to provide political cover for a governor who appears to be in the pocket of a special interest in this case, the trial attorneys. Why is the governor so fiercely loyal to the trial lawyers' lobby? A look at his campaign finance reports sheds some light on the matter. The list is too lengthy to recount here, but anyone interested in seeing a list of the governor's campaign contributors may do so on the Missouri Ethics Commission's Web site (www.moethics.state.mo.us).

The cost of this one terribly irresponsible decision will ultimately fall to home buyers. At the very least, new homes will cost more because builders' liability insurance will continue to escalate needlessly.

What the governor seems unable or unwilling to understand is that businesspeople want satisfied customers. It's good for business.

In a business based largely on word-of-mouth referral, that may be the worst effect of a needless lawsuit. Builders just want the opportunity to satisfy their customers before being hauled off to court by an overzealous trial attorney. This bill would have provided a common sense process. Unfortunately, common sense must be a foreign language in the governor's mansion.