More than two weeks after the state of Delaware filed a 39-count consumer fraud lawsuit against NVR Inc., the Reston, Va.-based builder has yet to respond to the charges, or even offer its side of the story to the press.
Dan Malzahn, NVR’s spokesman, told BUILDER that the company would not comment on the suit, filed by Delaware’s Attorney General Beau Biden on Feb. 18 in New Castle County Superior Court. As of Thursday afternoon, the company had not filed an answer to the state’s complaint, according to Kerry Angell, a public affairs assistant with the Delaware Department of Justice.
The state is seeking $10,000 in damages—the maximum penalty for a violation of the state’s consumer protection act—for each of the 39 buyers of homes sold by NVR in two neighborhoods called Tweedsmere and Lynemore at the 615-acre Odessa National Golf Community in Townsend, Del. This is the first time in a decade that the state has taken a developer to court, Deputy Attorney General told The News Journal. The lawsuit is the result of a two-year investigation of NVR’s marketing practices, and was precipitated by a breakdown in negotiations between the state and the builder over the placement of amenities at these two neighborhoods.
Angell said the Department of Justice would not comment on why NVR, which does business as Ryan Homes, was singled out among the four builders active in at Odessa—the others being D.R. Horton, Rubino Builders and Capano Homes—or whether there are other open investigations. (Ian McConnel, director of the state’s Consumer Protection Unit, told the News Journal that there are active investigations of various complaints against all four builders.)
The state’s lawsuit alleges that:
• NVR marketed houses in the two neighborhoods with promises of amenities, to be completed by 2008, that ranged from a pro shop and clubhouse, a swimming pool, tennis courts, basketball courts, recreational fields, and children’s playgrounds. These amenities “were never built,” the state asserts.
• NVR told homeowners that the $1,200 in mandatory annual “social membership” fees they paid would be used to construct the promised amenities. The builder allegedly also told some buyers they could “opt out” of certain fee obligations.
• NVR failed to identify the existence of additional fees, which were maintenance fees; and
• The builder withheld information about deed restrictions.
This isn’t the first time NVR and Delaware have butted heads over this community. In 2008, the builder settled allegations of deceptive marketing at Odessa’s Legacy, an active-adult subdivision. Without admitting liability, NVR agreed to assume the $1,200 in annual golf club membership fees for 71 home buyers who had previously been told they would not have to join.
In a separate settlement, Joseph Capano, a developer who owns Wilmington, Del.-based Capano Homes, agreed that the company he set up for the golf course development, Odessa National Golf Course LLC, would complete all of the community’s amenities by the end of 2010. However, the state contends that Ryan Homes “is equally responsible for the building of the amenities because it was Ryan Homes which and promised them to home buyers.” The state’s complaint goes on to say that “for years Ryan took no action to ensure that the home buyers received what they had been promised.”
Capano could not be reached for comment at presstime. In her email to BUILDER, Angell said the Department of Justice would not comment on why it didn’t file suit against Capano, stating only “there is ongoing litigation in this matter.”
Odessa National has been controversial since it was first proposed in 1999, according to local press reports. It has been the target of numerous protests and lawsuits by various civic groups and residents. And the dubious ways builders have marketed their homes at Odessa in the past led to passage of a state law that bans fees for amenities that don’t materialize.
John Caulfield is senior editor for BUILDER magazine.
Learn more about markets featured in this article: Washington, DC.