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Appeals Court Rules in WB’s Favor in KB Home Suit

A three-judge panel unanimously ruled Dec. 17 that a class-action lawsuit may continue against KB Home Raleigh/Durham, Inc.

The class action alleges that KB, the defendant, improperly built homes without installing barriers behind the siding to prevent water from penetrating and damaging the structures’ interiors. Although the suit was filed in December 2008, the defendant waited three and a half years to seek arbitration and decertify the class.

In ruling for the plaintiffs in Elliott et al v. KB Home Raleigh/Durham, Inc., North Carolina Court of Appeals Judge Linda McGee affirmed the trial court’s denial of a motion to compel arbitration in the construction defect class action. Referring to the time period the defendant waited before raising the defense that it had contractual rights to arbitration, McGee said the court could not sanction such “gamesmanship.”

Whitfield Bryson LLP represents the homeowners who are seeking remediation of their houses, which would include removal of the exterior siding and placement of a weather resistant barrier such as Tyvek. Approximately 500 homeowners are in the class.

“We will continue to try to vindicate the rights of these homeowners,” said Jason Rathod, WB attorney. “We plan to get a trial date set, take this to trial in the next year and prevail.”

The plaintiffs have a right to trial, as arbitration denies aggrieved individuals their day in court and prevents consumers from joining together to hold corporations accountable, he said. “We were able to preserve the ability of these homeowners to band together and vindicate their rights in a public court of law, rather than in the closed corridors of a private arbitration,” Rathod said.