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Cyrus Dugger

Podcast Series: Arbitrating Away The American Dream (Vol. 2) – “The Stupid People”

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Arbitrating Away the American Dream (Vol. 2): The Stupid People

Jordan Fogal, an award winning author whose personal struggle with her builder and her mandatory arbitration contract was featured in a Mother Jones Magazine article, has tirelessly struggled to bring attention to the public about the dangers of mandatory arbitration agreements.

A 61 year old grandmother from Texas, Ms. Fogal was working on her new book of memoirs until it was interrupted by the deterioration of her brand new home. She then began her fight against the mandatory arbitration agreements that protect bad builders and create devastating personal tragedies for homebuyers.

In her second podcast “Stupid People,” Fogal talks candidly and personally about how Americans dismiss those caught up in predatory home lending and mandatory arbitration agreements as simply “stupid.”

If you find yourself foreclosing on your property, living with predatory lending rates, and/or without the option to go to court because of a mandatory arbitration agreement, you are just “stupid.”

Jordan asks, “if we’re all so stupid, then why are you doing business with us?”

I will add, nobody really condemns and shames corporate America for its many mishaps, bailouts, irresponsible decisions, and immense subsidies in the same way as we criticize our fellow individual human beings when they experience their financial stumbles.

On a different note, if mandatory arbitration agreements are so good for us consumers, then why are they mandatory?

Listen in to “Stupid People” and you may realize just how stupid you are to believe in corporate America, or for that matter, a fair shake at attaining the American dream.

Cyrus Dugger: Author Bio | Other Posts
Posted at 10:35 AM, Jan 16, 2007 in
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Comments

"if mandatory arbitration agreements are so good for us consumers, then why are they mandatory?"

What a marvelous non sequitur! If mandatory litigation agreements are so good for consumers, why not let consumers demand them, rather than mandate them through laws?

Mandatory arbitration agreements aren't mandatory. No one is forcing you at the barrel of a gun to sign a mandatory arbitration agreement. You, however, are proposing to forbid me from taking advantage of the lower prices I can get through agreeing to a mandatory arbitration agreement. Why so anti-choice?

Posted by: Ted | January 16, 2007 2:12 PM

Hi Ted,

I'm interested in your reaction to the actual podcast. If you've actually listened to it, I'm interested in your thoughts about the very real experience of Jordan Fogal.

When listening, you should keep in midn that Jordan Fogal is a former ultra-conservative who has actually defected from the Republican Party as a result of her experience.

If you have not done so, it might help this discussion be more grounded in reality than rhetoric to respond to the actual podcast itself.

If you take a close look at this issue I think you will find that those who oppose mandatory binding arbitration ARE pro-choice.

This position defends the right for a consumer to CHOSE arbitration AFTER a dispute arises as opposed to being bound to it when they purchase a product or service by contract.

The reality is that there is little effective choice left to avoid these mandatory arbitration contracts when purchasing certain kinds of products or services including: a new home, new car, car lease, credit card, bank account, cell phone, storage room, utilities.

Ted, I'd be incredibly impressed if you can find a major home lender in America that does not have an arbitration clause like Jordan Fogal's (besides the FHA, VA, and the recently reformed -after taking a lot of predatory lending criticism from Consumer groups- Wells Fargo).

Your current employment contract likely even has one.

Posted by: Cyrus Dugger | January 16, 2007 2:50 PM

Ted,

Arbitration on its own, without being forced upon homebuyers with false information, cannot stand up to the civil courts. It is no contest.

In Fogal's experience, she, like many thought arbitration was fast, fair, and inexpensive compared to the courts.

She was wrong. Very wrong.

The application fee was $9000. That did NOT include the cost of her attorney, the cost of the arbitrator, the stenographer, the expert witnesses, or the legal stuff. $9000 just for the privelege to arbitrate.

People are stupid!

Posted by: john cobarruvias | January 16, 2007 3:28 PM

I was hit by predatory lending it was a drag, there's no help from the government. I had to deal with it myself dealing with attorneys that don't comply with the rules of law or anything else.

Try to get the Attorney General of your state to help or even reply... Ask the FTC they won't help, what about HUD? lol that's a JOKE to.

Posted by: forst | January 16, 2007 5:06 PM

Cyrus: I have no intention of listening to weepy, lying, lawyer propaganda testimonials.

Here is something from criminal cult indoctrination training camp for you. Arbitration to take place in Fallujah, Iraq, with all $500/hour, travel and legal costs at the expense of the consumer, is only possible in a contract of adhesion. The adhesion of a contract is unconscionable per se. Contracts is now torts. Not only should a judge rescind the contract as a penalty for its injustice, but should allow an adverse third party claim of legal malpractice against the land pirate that drafted it. The lender or whatever should be forced to disgorge all improper profits. This lender should then seek recourse from the mandatory legal malpractice insurance of the land pirate for its legal malpractice. If the contract is to be imposed on a class, then the class should be compensated for its injury by the tortfeasing, adhesing land pirate. No class legal malpractice insurance, no contract imposed on a class.

Either you believe in torts and seek to extend its regulatory benefits to the externailities of the criminal cult enterprise that is your profession, or you shut up already with the whiny, crybaby stories from highly educated, rich people who did not bother reading or asking about the contract they signed.

Posted by: Supremacy Claus | January 16, 2007 5:45 PM

Supremacy Claus, is right on the money that's what I did go after the attorneys and make all involved play by the RULE'S if not make them PAY!

the contract was voided when they breached it with FRAUD...

What was the out come of this ?

Posted by: forst | January 16, 2007 10:07 PM

Well, Supremacy Claus, I must have taken my vitamins out of the wrong bottle today because I agree with you 110%.

but, you cannot deny, I think, that many contracts should be honored. The problem here is...what do you do when your elderly parent has become ill, or hurt themselves, and the admission packet to the best (and second best, and anything else better than a black berry in case of an emergency) nursing home in the area has the arbitration clause buried on page 25, with no disclaimer?

In the south, such agreements were routinely beaten in court, at great cost, until penalty caps were implemented.
Is it the lawyers fault?
Each lawyer is bound to represent the interest of their client, over their own personal moral code.

Is a doctor any different? Will a doctor let a gangster die, despite the power to save him, in some personal stance against future violence?

Next, should accountants refuse to get the best results for business clients that do not support the same charities?

Should teachers refuse to educate children from the wrong background?

You know, several hundred years ago wealthy land owners were frustrated with their inablity to pass the benefits, without the responsibilities, of land ownership to their heirs. Trust law was basically invented to forego traditional courts for those of equity.

Could it be that Ted Franks' (no, he did not invent it but he certainly is fond of it) idea of health courts is quite similar?

Isn't mandatory arbitration the same...wealthy parties closing the courts as a due course (curse?) of business???

Posted by: John | January 16, 2007 10:11 PM

John: Put it on the list of lawyer control statutes. Reverse case law. Give unconscionability a tort remedy, its being an unethical misrepresentation, a malum in se. If the contract adheres, hurts a class, let the lawyer answer to the class for sharp practice.

Teachers, docs, accountants, etc. differ from the lawyer. The Law of Agency does not apply to them, as it does to the lawyer. Do you intend to disregard the Law of Agency too, when it comes to lawyer accountability?

Posted by: Supremacy Claus | January 17, 2007 1:09 AM

I guess I am just plain stupid. I purchased a brand new house now only 6 months old. It started falling apart in July, 28 days after I moved in. I have been fighting with the builder to get them to find out the problem and to fix it. All they wanted to do was to band-aid a couple of things. Their stonewalling has only caused the damage to increase, get worse and become insurmountable. It has been physically, mentally and monetarily stressful. I can't litigate because I have a 'binding arbitration' clause. If I go to arbitration, using a company that is chosen by the builder (as stated in the contract) my chances of winning are slim to none. In addition to losing, I will be forced to pay their atty fees also and the house will continue to slide off the foundation.

I have also been a victim of predatory lending and mortgage 'irregularities'. These came to light when I was and am still pursuing the builder to buy back this piece of junk. So call me stupid. These issues are now in the hands of federal agencies being investigated.

It never went through my mind one time that I was being taken advanatage of, being scammed, cheated and defrauded by the builder and the mortgage company (who BTW is all one happy family) I do realize this was not personal, they do it to everyone. So call me stupid.

Actually I am a very intelligent woman. I did my homework, asked questions, took a long time to decide to buy with this builder and still came out on the wrong side of the deal.

There needs to be a lemon law for houses to protect ME from builders who have run rampant and know the building lobbyists in D.C. will protect their illegal and immoral activities. There needs to be some consumer rights laws. In my state, there are none for the consumer, but all kinds of laws to protect the builder from people like me. So why should the builder be afraid? Why should he care if the house he sells someone is not safe? Why should he care if it ever gets repaired? He doesn't. The great American dream. yeah right. maybe for the builder, but not for me.

My analogy of home builders like this is Hansel and Gretel. They pursuade you with honey, sweetness, and freshly baked cookies and soft drinks. They are so nice to you replying to your emails, telephone calls and visits. However once you close, baby you are on your own. Welcome to the hot oven.

After this is all over because I know this builder will buy back this house that is falling down around me - I will become an advocate for laws that protect people from builders like this.

Want to talk? I am more than willing.

Posted by: Susan | January 17, 2007 9:17 AM

If I was you I would re-read the contract every word and try to see if there is something you can use to show they are in non-compliance, if they don't resolve problems then I would think they would be in breach of contract I'm not an attorney that's just my opinion, you might want to talk to an attorney.

If they don't answer your emails that shows bad faith and I would think negligence?

One more if, If it was me I would find out more about who you are dealing with such as do they have a web site, if so do they have a Best Practice Policy, Mission statement, Grievance procedure and if the have a compliance officer or someone that handles resolutions, send that person a Fax plus mail the letter certified return receipt, include your address name info regarding the home and contract include their info and the name of the person you are contacting, in your letter put in what you want to be done to resolve the problems, try to keep it sort and to the point if you have a copy of the other emails you sent provide the dates of the emailed letter and what it was regarding in your newest letter. tell them you want this resolved in a timely manner and tell them that any replies must be in writing.

mean while find out what part of the Government handles Home builders, do some research on the company like Google search for court cases v. the builders name, there's a site called the rip-off report.com you can check it out to see if they have any other complaints against them.

Well, that's just my 2 cents. try to stay on top of things keep good records, keep everything you get from them and only send copies. you might want to start a file.

Good Luck!

:o)

Posted by: forst | January 18, 2007 11:23 AM

"Do you intend to disregard the Law of Agency too, when it comes to lawyer accountability?"

No, I just refuse to distort it as you do. In an adverserial system, outcomes the benefit one party will necessarily and adversely effect another. those adverse effects are attributable to the principle, not the attorney.
Further, the attorney does not have the authority to establish policy for the company, that's up to it's board of directors, president, or owner.

Negative legal or business outcomes are not always as dramatic or unfair as those proposed in this post. An attorney may get a license or patent for a product that three other compaines are fighting to develop. The adverse effects on the two other parties are immense,but serve no basis for an action against the attorney and the same applies to any business decision. Those decisions that benefit one party will by definition hurt the competition.

As far as applying this to the current cases: construction arbitration; As mentioned by Ted above, injured consumers need look no further than their own attorney for a meritorious case and chance for compensation. Suing the lawyers who drafted the agreements is simply absurd because if they failed to do so, they would be lieable for malpractice tot heir own clients.

"A thousand lawyers at the bottom of the ocean is a good start" may be a funny joke, but to portray it as sound social policy just doesn't work.

Posted by: John | January 18, 2007 11:23 AM

Susan: I am ignoring John's apologetics for lawyer lawlessness and self-dealt immunities. He does not trust juries to regulate the lawyer. Juries are not good enough for for the anti-tort reform crowd here, when it comes to their being regulated, as lawyers.

If you haven't, may I suggest you get a decent real estate lawyer or property law practitioner. You are having a lot of trouble. Get a good lawyer (not sarcastic).

General questions to the lawyers.

1) Is a contract of adhesion allowed in new construction by statute? If not outlawed by statute, it may be unconscionable per se (automatically) in case law. Is the location of arbitration in Fallujah, Iraq or an unequally unappetizing location? What does this mean?

If a court does not buy it, can the arbitrator declare the contract unconscionable? Here is a review for one state.

http://www.selegal.org/Arbitration%20in%20Tennessee.pdf

2) By statute, is there a warranty of habitability for new construction whether surrendered in the contract or not? The obnoxious land pirate will demand, "Why didn't you come to me with this piece of X*!% before you signed?" They are being dramatic, and trying to make their task seem humongously hard to pump fees.

3) Even if none of the above is true, did the condition of the house or of the loan constitute a material breach of the contract? Which will be more rewarding, an action in contracts or in torts?

Why try to find a top notch property expert? Because the criminal cult enterprise rigged it so that no one could not get out of hot water without paying their fees. As things stand, the public has little choice.

The other possibility is that some consumers are crazy. They may never be satisfied due to a defect in personality and not in the house. They may have an infinite list of nitpicking microscopic defects, and should be screened by an arbitrator before making a federal case of the matter. There is usually pretty good agreement between arbitrator statistics and jury trial verdicts, only the cost is much lower for the same results.

Posted by: Supremacy Claus | January 18, 2007 11:08 PM

"There is usually pretty good agreement between arbitrator statistics and jury trial verdicts, only the cost is much lower for the same results."


That is absolutely false. It is impossible to state the relationship between arbitration and trial verdicts because arbitration decisions are unpublished, and often held confidentially between the parties.

It costs hundreds of dollars to bring a lawsuit in court, but thousands to arbitrate. This is especially important for plaintiffs, who may retain a lawyer on contingency, and pay nothing until a judgment is rendered.

Finally, in arbitration discovery is typically limited, so the plaintiff has little opportunity to find useful evidence...therby lowering their opportunity to prove their case.

Posted by: John | January 20, 2007 10:50 AM

John: Sorry, you are right, that is absolutely false. Juries rule in favor of plaintiffs 73% of the time, arbitrators, in favor of plaintiffs 98% of the time. And the average payouts? Right you are there too. Juries handed out an average $19,000, and arbitrators? $22,000.

http://www.findarticles.com/p/articles/mi_qa3923/is_200311/ai_n9463732

Posted by: Supremacy Claus | January 20, 2007 8:29 PM

I had a lawyer for a short time period. This is what the builder wants. My atty would send a letter requesting information and the builder's atty would respond with something off the wall. I spent $5,000 in one month and cannot afford that. The builder is a billion dollar company and can out spend me every day. So I decided to do it my way.

There is a clause in the sales contract that I will be given a house free of defects. The builder won't hold themselves to it, but of course hold me to the arbitration clause. In this clause it actually states the company will be chosen by them. It will cost between 50-60K to arbitrate, money I can ill afford.


I have sent certified letters to the CEO of the builder, the president of the mortgage company (also the same family), senators, congressmen, state senators and representatives, governors, HUD, FTC, FBI, etc. etc. Oh yes also the city and county people. Their response was typically, "what do you want me to do". Neither housing inspectors or builders are licensed in KS. By the time this is done, I can be an inspector. (geesch)


Even though the builder and the mortgage company knows about the problems with the house, they actually sold the loan to another lender. I sent a certified letter to that lender and they are livid. They have an airtight contract with the builder and uless the house is in litigation the builder won't buy the house back. I informed the new lender the appraisal value on the house at this point in time is $0. It won't even appraise. I also told them once the house become uninhabitable I will not pay the mortgage. They are not happy because they won't be able to recoup anything of what is due on the mortgage. None of this is my fault even though the builder is telling people that it is. (typical assault from builders in the wrong)


I have built a formidable web site. http://www.geoctites.com/myllamas/CCFL/pulte.htm



I receive a lot of email from people giving me advice and requesting advice. I hold open houses, I have informed my neighbors who are truly concerned about the 'warranty'. I have signs in my window. I have been on local television (call for action type). Besides the people and agencies mentioned above, I have posted on every type of site I can find that may spread the word. There have been kind people who have posted my web site to theirs and one person in particular who is in the trade has posted it on all kinds of bulletin boards.


I am working with Homeowners for Better Building (hobb.org) and Homeowners Against Deficient Dwelling (HADD.com). I am also working with Americaswatchdog.com and a couple of other agencies on the west coast. I have something in the works that will, well not only be national, but supposedly internationally. (a surprise for a while)


I am doing everything I can to get the builder to buy this house back. I have gotten emails from housing inspectors and builders (not locally) who tell me to move out. They are concerned the house may soon fall or slip off the foundation in one fell swoop. We are experiencing heavy snowstorm tonight to last for at least one more day. This concerns me because of the broken boards in the attic (check out my site), I am concerned.


My insurance company has had a structural engineer conduct an inspection. I am able to keep my insurance but I can never file any claims. The reason the insurance company said all of the damage is due to construction defects. Actually that is the 4 (fourth) structural engineer inspection. I have had two laser readings conducted and am waiting for the report from the geo-tech guys and the core sample results. That was conducted on 8 December and I know the builder has it (I called the company and they sent it), but the builder is taking their sweet time. The builder now wants a 5th structural engineer to conduct an inspection of the attic. I have been asking since September for them to look at the attic. When the VP of construction of the KC area came to see the attic (I sent him an email and told them they better have someone waiting for me that night when I got home from work), he said, "well sometimes when the trusses/boards are delivered they are dropped and break". He insinuated the boards were put up broken. (that says a lot about this builder). He told me, "I would feel comfortable with my family living here". He also tells me the continuing destruction of this house is, "my opinion" and another mgmt level person tells me "there is nothing wrong with the house." But not one of them has offered to move in.


I apologize if I got off onto a tangent. I just wanted to let you know I am doing everything I can think of and more. I get lots of advice and contacts and am more than happy to accept them. I am tenacious and even though I am paying a price for this mentally and physically, I will not stop. I am standing up for my rights. I don't think that a builder (or other companies) should be able to believe they are above the law and do what ever they want to people. - and don't get me started on their work force being at least 85% illegals.

Posted by: Susan | January 21, 2007 12:30 AM

Susan: Your link is misspelled.

They offered to make repairs. The legal alternatives are expensive, as you said. Remember to include the value of your time and worry in the expense of litigation.

Posted by: Supremacy Claus | January 22, 2007 9:39 AM

You sure are a fighter Susan, it sounds like your doing a good job so far. I would think they would be in breach of contract for a number of things, like not resolving in a timely manner, not holding up their end of the contract, not proving a quality product or standing behind it.

You said you contacted the owner of the company, if so that should show PROOF of default/breach on the part of the contract and or lender. By them not doing anything to help resolve your problems is costing you money, right? this is economic stress.

you should read about Mortgage Servicing Fraud and Predatory Lending it might help, you should also read about RESPA laws.

If it was me I would send a letter to everyone involved, put all the names on the letter of the people and their company names, like the old lender the new lender the builder the title company and who ever else involved in your case and tell them, that they have 30 days to resolve or you will be forced to take them all to court.

that's just my 2 cents I'm not an attorney, I just won against my mortgage company and didn't have an attorney, it took 2 years and lot and lots of letters and a paper trail ten miles long......

you should focus on making a case against them, start a file by date to show how you are trying and have been trying to get things resolved but they aren't doing anything and are showing bad faith. PROOF is the KEY!

Good Luck :o)

Posted by: forst | January 22, 2007 10:16 AM

supremacy: your brief and misleading quote from the article completely denies the conclusion of the paper; that the studied arbitration awards and jury awards were roughly equal.
It also ignores that under the prevalent circumstances, the arbitor was far more likely to give something to both parties,particularly by giving something to those who deserve nothing and less to those who deserve more, rather than choose one side over the other.
Perhaps the most revealing point is that this was a study of 300+ automobile accidents, with court mandated arbitration, which is appealable in CA.

That's why we need lawyers, to point out the flaws in arguments from blow hards like you. (yes, ad hominem., but no, i do not feel bad about it.)

any how, in most construction contracts, unbeknownst to the buyer, the arbitration is mandatory, with limited discovery, without full disclosure to the buyer, and without publication of any decision.

This is what hits Susan, like so many other citizens who enter into service contracts: They are giving up their right to pursue grievances through the court system as consideration for the services.
Cyrus, as a budding fan of yours, I am suprised you do not have more to say on the subject.


Susan, I suggest that you seek an arbitration task force from a local plaintiffs attorney. Most plaintiff attorneys from highly unregulated states (compared to my home state of Mass., which to be fair probably means every other state) will employ specialists to defeat the mandatory arbitration clause before committing to a case.

do not seek an hourly attorney, send your case out to contingency attorneys. don't ignore your government either, your state's highest law enforcement official is dually sworn to protect your interests, even in the face of legislation that may indicate other wise.

Posted by: john | January 23, 2007 11:24 PM