In mid-2010, Debbie Ballagh lost her husband and could not afford her home mortgage anymore. She sold her house and went looking for a new place to live that she could afford on her own. She was looking for something smaller with a place for her mother to move in. They could keep each other company and share chores around the house.
After a dry summer, a significant rain poured in Lynchburg. Debbie Ballagh went to her finished basement to do some laundry and there was water everywhere. Everywhere.
She started frantically cleaning it up with a shop vac. Her efforts were unsuccessful. She called in a cleaner to help get the water up. Ultimately, she lost all of the carpet in the basement, many of the baseboards developed mold and mildew. The basement was destroyed.
Debbie called several basement waterproofing companies to get estimates for fixing the underlying problem. She was given estimates from Evergreen Basement Systems and Seal-Tite Basement Waterproofing Co. The estimates, however, pre-dated her ownership of the home and named the prior owner of the home. It appeared that the prior owner had obtained at least two basement waterproofing estimates, but never employed a basement waterproofing company to fix the problem.
Shortly after discovering this information, Debbie hired Evergreen Basement Systems to install a basement waterproofing system. The estimate more than doubled because the damage to the basement. See the video at the end of this post to see what the basement looked like after the flood.
Brandon sent a demand letter in November of 2010 to the General Contractor who sold the home and did the renovations to the basement. The contractor bought the house from an elderly lady who was transitioning into a nursing home. He intended to finish the basement and re-sell it for a profit.
Neighbors told Brandon that there used to be two sump pumps in the basement and the basement used to leak whenever there was a heavy rain. The sump pumps would pump water in the basement out into the yard.
The contractor hired counsel who responded to my letter and said that they would not enter into negotiations.
So, litigation ensued.
In the complaint, we alleged actual fraud both by misrepresentation and by concealment, constructive fraud both by misrepresentation and by concealment, and a violation of the Virginia Consumer Protection Act. The parties exchanged written discovery and then we moved on to depositions.
In depositions, the defendant admitted to the basement leaking at least 2 times while he owned it. He tried to explain every step he tried to eradicate the water issue. He described it as a multistep process that he thought worked. He spoke negatively about the internal waterproofing system installed by Evergreen Basement Systems and explained that, in his “expert” opinion, the external solution is the only way to fix a leaky basement.
He used his own guys to do the work and he never hired anyone who was just a basement waterproofing expert. He hired a plumber to clear some drains in the front yard and to reroute some of them. He met with an engineering company, the City, and his plumber to discuss redirecting the surface water away from the house. The City said it wasn’t their problem and the engineer gave some ideas about redirecting water. But they never saw the basement; they never went inside. Other than the plumber, no one was hired to do any work that would be directed at waterproofing the leaky basement.
THE FIRST JURY TRIAL
None of those individuals testified that what they were doing was directed at waterproofing the basement.
At the first trial, we presented evidence of at least 3 leaks in the basement that were cleaned up and nothing was done to repair the basement. The Defendant presented evidence in the same way that he explained in his deposition that made it sound like he had tried his best to fix the problem. He said he applied a tar substance to the exterior wall all along the front. He said he put 4-millimeter black plastic down against the wall and troughed it out about 6 feet under the flower bed. We presented evidence from our own expert from Evergreen Basement Systems that what the defendant did was not sufficient.
The trial judge, over my objection, instructed the jury that the plaintiff’s burden of proof on the Virginia consumer protection act claim was clear and convincing evidence. The jury returned a defense verdict.
We appealed. We won. The Supreme Court reversed the trial court’s decision and remanded the case back to the Lynchburg Circuit Court for a new trial. You ca listen to the audio from the oral arguments in the Supreme Court. So we tried the case again.
THE SECOND JURY TRIAL
This time, I hired an expert to go out to the property and dig down to the footer of the exterior wall to see what the defendant did, or did not do. As it turns out, he applied black tar, but only about 1-2 feet below the surface. The footer was a good 9-10 feet below the surface. The Evergreen Basement Systems expert and my new expert both explained the concept of hydrostatic pressure to the jury.
Ultimately, the hydrostatic pressure puts the most weight on the joint where the basement wall and the footer’s join together. The defendant did not disagree that hydrostatic pressure is what caused the basement to leak. He just thought he did everything necessary to fix the problem. The problem from the Defendant’s perspective was that he didn’t touch the joint where the problem was. The “efforts” he made were at least 7 feet above that joint.
So in reality, he faked the fix. This became my theme in the second trial. Every “effort” he did to stop the leaking was a fake to make it look like something legitimate had been done. The fact that he tarred the exterior basement wall but only 1-2 feet below the surface made it look like the tar would extend all the way to the footer. What homebuyer is going to dig all the way down to the footer to see if the tar goes where it is supposed to go? This was the nature of this Defendant’s misrepresentation. In legal terms, it’s called concealment.
After the plaintiff rested her case, the parties entered into settlement negotiations to see if a resolution could be made. Given the long history of this case and the fact that Ms. Ballagh had already lost one jury trial, she decided to resolve the case for $40,000 in two cash payments and the Defendant was obligated to finish the basement to it’s condition as of the date of the sale of the property, at his own cost. We figured this to be about a $50,000-$55,000 total settlement.
Here is a video of the before and after of Debbie Ballagh’s basement:
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