NAHB Legal Action Fund Helps HBA ‘Band Together’

cvhba logoAt first, it was just annoying. But then it turned into threats and a lawsuit. And then ironically, it became a turning point for one Utah HBA and a membership rallying cry.

It started like this: A radio station in Logan, Utah, began airing ads about a new company that promised to “cut out the middleman” for families who wanted to live in a brand new home.

Potential home buyers could contact the company and, for a price, download an estimating sheet and a step-by-step home building manual and submit plans. The company, headed by one of the radio station’s ad salesmen, would churn out a list of the plumbers, framers and other subs who could bid on putting the house together. The company expected to take a percentage from each trade chosen by the home buyer from the list it provided.

Once they heard the ads, builder members of the Cache Valley Home Builders Association talked with a few of their subs.

“In Utah, we have pretty aggressive licensing standards,” said Cache Valley HBA president Trent Cragun, president of Lifestyle Homes. “If you are going to conduct business as a contractor, you need to be regulated.”

The HBA members were concerned the business was not legal in light of the standards and could expose home buyers to significant risks. Some subs decided not to participate once they had more information about the company and the public health and safety implications of what it was doing.

The ad salesman didn’t see it that way. Instead, he sent a text complimenting Cragun for a speech he’d given at an HBA meeting on the matter. Only Cragan hadn’t given a speech, or even discussed the company at an HBA meeting.

Then the salesman had his attorney send a threatening letter to Cragun and other builders, telling them if they didn’t stop interfering with his business, he’d sue each of them.

And then he made good on his threat.

“We get a letter saying he’s suing the association for violating the Sherman Antitrust Act and interfering with his contracts,” Cragun said.

Then the salesman tried calling builder members, offering to settle each case individually for tens of thousands of dollars each.

cvhba board

The Cache Valley HBA board gathers for a group photo.

“We considered whether it would be better to settle to be done with the nuisance, even if we were right,” Cragun said. But then the members had a change of heart. “I said, ‘Guys, we need to stand up and fight this and get case law and protect other associations,'” Cragun said. “What this company was doing was wrong, and if we didn’t fight this, it would be up to the next association to have to deal with it.”

Together, the members raised about $100,000 to fight the accusations in court. And then Cragun called NAHB.

First, he contacted 2014 Chairman Kevin Kelly, who immediately put him in touch with NAHB legal staff, who explained how to apply for the NAHB Legal Action Fund, which provides financial assistance to HBAs facing important member issues or legal threats with implications to the home building industry at large. “They were very supportive and encouraging,” Cragun said.

Staff members walked him through the application process, and in January at the International Builders’ Show, Cragun presented the HBA’s case to the NAHB Legal Action Committee.

The committee recommended, and the board of directors approved, $25,000 to help the association advance its fight.

“I think they want to see us win this thing,” Cragun said. “I was super impressed with how much support they gave us. And Kevin – he’s a class act.”

The news of the grant electrified his HBA board back home. Builders who had stayed on the sidelines started recruiting new members. “The biggest builder in town, who before just paid his dues, is now saying we can get 200 members by the end of the year. He’s already texted 15 people himself,” Cragun said. Other HBAs in the state began to raise money for Cache Valley.

“[The salesman] wanted us to settle individually, and instead, we decided to band together to fight to protect home buyers. And now we have national and the rest of the state on line. If other people believe in the fight, it’s worth the fight,” Cragun said.

The HBA will find out in March the result of its motion to dismiss the salesman’s lawsuit. Even if it is dismissed, it’s likely not going to be the end of the fight.

But that’s okay, in a way. “It’s kind of exciting. As crazy as it sounds, it’s been a positive thing,” and a demonstration of the real value of HBA and NAHB membership, Cragun said.

“I know I’ll be a member for life.”

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  1. Marsha Binder says:

    As an EO of a small HBA this is one of those ‘true’ stories that hit home and could happen anywhere. Many times because members are far removed from the day to day inter-activity with NAHB they question their worth.

    The reason the HBA’s were started was to work as one voice and this proves how important that is.

    This and reports of how many dollars have been saved on each home built due to NAHB work, can never be shared too often with the members.

    Thank you!

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