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Nguyen v. Glendale Construction Co.12/11/1989
The defendant, Homeowners Warranty Insurance Company (HOWIC) appeals a judgment in favor of Viet Cuong Nguyen and Phuong Hanh Thi Nguyen (Nguyen) for violation of the Consumer Protection Act. HOWIC also appeals the award of $32,715 in attorney's fees against it for violation of that act. Nguyen cross-appeals for a reversal of the trial court's award of attorney's fees in favor of another defendant, Home Owners Warranty Corporation (HOW). We affirm.
Nguyen purchased a new home from a builder, Glendale Construction Company, on June 6, 1984. Nguyen was aware that the home was covered by a HOW warranty, i.e., a written warranty by the builder to repair or correct certain defects which may occur, together with an insurance undertaking by HOWIC to the effect that if the builder did not correct a covered defect, then HOWIC would correct the same or pay the homeowner any loss suffered therefrom.
Both HOW and HOWIC are wholly owned subsidiaries of Home Warranty Corporation, which is in turn owned by thousands of builders throughout the country, including the builder in the instant action. HOW is the administrator of the builder's limited warranty under the HOW warranty program, while HOWIC provides coverage after default of the builder. The warranty program is evidenced by written limited warranty agreement; the coverage agreement is contained in an instrument titled Certificate of Insurance. HOW also indirectly pays the fees of the dispute settlers who are sent out to determine whether there was a builder default. Dispute settlers attend a 1-day training seminar on how to construe the HOW policy.
It is the builder's responsibility to enroll a house in the program upon transfer of title. However, Nguyen's warranty application was not received by HOW until November 1984.
Nguyen received his written copy of the warranty in February or March 1985; the same having an effective date of June 6, 1984, the date title passed to Nguyen. Nguyen had some familiarity with the HOW program from previous dealings.
Nguyen experienced water leaking into his basement in September 1984. He repeatedly asked the builder to correct the problem. The builder refused to do so. This particular defect was covered under the HOW warranty for a 1-year period from the commencement date of the agreement, and written claim for loss was required to be submitted within 30 days of the expiration of the warranty period.
Because the builder did not fix the leaky basement, Nguyen made such a written request for warranty performance from HOW in January 1986. Under the terms of the warranty, HOW then arranged for "informal dispute settlement" between the builder and Nguyen "by a neutral third party." Wayne Fisher was selected as the dispute settler. Fisher visited Nguyen's home to determine whether or not the leaky foundation and flooding basement were the responsibility of the builder. He determined that there was no builder responsibility because the warranty had expired. Fisher determined that it had expired on the grounds that no written claim was made to HOW within 30 days after the end of the 1-year coverage period as required by the policy. HOWIC then notified Nguyen that since the coverage term had expired, it had no responsibility for correcting the defect.
The HOWIC policy provides as follows:
Coverage During First Year. Your Builder warrants that, for one year beginning on the commencement date, the home will be free from defects due to noncompliance with the Approved Standards attached to this Warranty.
Time of Notice of Claim. You must give written notice of a defect in any item under this Warranty to HOW no later than 30 day
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