STATE OF FLORIDA DEPARTMENT OF LEGAL AFFAIRS OFFICE OF THE ATTORNEY GENERAL IN THE MATTER OF: JIM WALTER HOMES, Inc. CASE NO. L06-3-1073 Respondent. / ASSURANCE OF VOLUNTARY COMPLIANCE PURSUANT TO provisions of Chapter 501, Part II, the Florida Deceptive and Unfair Trade Practices Act, the State of Florida, Department of Legal Affairs, Office of the Attorney General (hereinafter referred to as Department ) caused an investigation to be made into certain business practices of Jim Walter Homes, Inc., a domestic corporation doing business in the State of Florida, with its principal place of business at Corporate Center Two, 4211 West Boy Scout Boulevard, Tampa, Florida (hereinafter referred to as Respondent. ) IT APPEARS THAT Respondent is prepared to enter into this Assurance of Voluntary Compliance (hereinafter referred to as AVC ) regarding Respondent s Florida operations without an admission that Respondent has violated the law and for the purpose of resolution of this matter with the Department, and the Department, being agreeable, does in this matter accept this AVC in termination of this investigation, pursuant to Section 501.207 (6), Florida Statutes, and by virtue of the authority vested in the Department by said statute.
I. FACTUAL BACKGROUND 1.1 Respondent is in the business of new home construction and related enterprises with operations in at least 16 states in the continental United States, including several regions in the State of Florida. 1.2 In 2005, the State of Florida was battered by four (4) named hurricanes (Dennis, Wilma, Katrina, and Rita) that caused upwards of an estimated $100 billion in property damages. 1.3 These severe climatic events, combined with the Federal Emergency Management Agency (FEMA) entering the construction marketplace, contributed to a general scarcity of both construction materials and qualified construction workers throughout the State of Florida. 1.4 By early 2006, the Department had received several complaints relating to Respondent s business practices in the State of Florida. These complaints generally fell into several categories; 1) significant delays in the length of the construction process, 2) unresponsiveness to customer complaints, and 3) the quality of the construction work. 1.5 On or about April 15, 2006, the Department initiated an investigation of Respondent s business practices relating to the sale and construction of homes in the State of Florida. Specifically, the investigation focused on complaints concerning: 1) misleading sales practices relating to Respondent s representations concerning the length of the construction process and 2) unresponsiveness of the Respondent to consumer complaints. 1.6 Respondent maintains, among other things, that the active Florida hurricane seasons and the resulting impact on the construction industry contributed to a significant backlog of homes classified as by Respondent as inventory as well as homes classified as under construction. 1.7 As of February 14, 2007, the Office of Attorney General received fifty-three (53)
consumer complaints relating to the Respondent s business practices. Of these, thirty-nine (39) related to the length of the construction process. Of these, five remain open because construction is not yet complete. The remaining fourteen (14) complaints related to construction related issues and all of these have been resolved 1.8 The Department has investigated these complaints with respect to potential violations of Chapter 501, Part II, Florida Statutes. Respondent and the Department desire to resolve the issues raised during the course of this investigation. 1.9 The Department shall not be estopped from taking further action against Respondent in matters not investigated. II. COMPLIANCE 2.1 IT IS HEREBY AGREED by the parties that Respondent and those representatives, agents, employees, or any other persons who act under, by, through, or on behalf of Respondents, directly or indirectly, or through any corporate or other device and who are charged with the implementation of this AVC, including but not limited to appropriate sales and construction division personnel, shall comply with and have actual knowledge of Chapter 501, Part II, Florida Statutes, the Florida Deceptive and Unfair Trade Practices Act. 2.2 IT IS FURTHER AGREED by the parties that Respondent shall make the terms and conditions of this AVC known to such employees and agents, officers, successors, and assigns engaged in Respondent s business in Florida as necessary to fully implement the terms of this AVC, including but not limited to appropriate sales and construction division personnel. 2.3 IT IS FURTHER AGREED by the parties that Respondent shall not effect any change in any form of doing business or organizational identity as a method of avoiding the
terms and conditions of this AVC. 2.4 IT IS FURTHER AGREED by the parties that Respondent shall a) Maintain the provision in its Florida sales contract relating to completion date in all caps and add additional language so that the paragraph now reads in a manner substantially similar to the following: NO COMPLETION DATE HAS BEEN REPRESENTED OR IS A PART OF THIS CONTRACT. THERE ARE MANY FACTORS THAT CAN AFFECT WHEN CONSTRUCTION WILL BEGIN. SOME OF THESE FACTORS ARE THE RESPONSIBILITY OF THE BUYER AND INCLUDE AMONG OTHER THINGS RESOLVING TITLE ISSUES OR PREPARING THE LOT. FACTORS THAT MAY DELAY CONSTRUCTION CAN INCLUDE AMONG OTHER THINGS BUYER RESPONSIBILITIES, PERMITTING ISSUES, DESIGN CHANGES, WEATHER, MATERIAL AND SUBCONTRACTOR AVAILABILITY. b) For a period of at least eighteen (18) months following the execution of this Agreement, Respondent shall include the following sentence at the end of the above paragraph: FLORIDA S 2004 AND 2005 HURRICANE SEASONS CAUSED SUBSTANTIAL DELAYS THROUGHOUT FLORIDA S CONSTRUCTION INDUSTRY. BUILDER WAS IMPACTED BY THESE STORMS AND EXPERIENCED AVERAGE COMPLETION TIMES THAT INCREASED TO APPROXIMATELY 18 MONTHS FROM THE DATE OF THE CONTRACT. c) Ensure that the language in sub-paragraphs (a) and (b) above is set forth clearly and conspicuously by using the same font and size as is currently used by Respondent in its contracts for notice relating to the Florida Homeowners Construction Recovery Fund. 2.5 IT IS FURTHER AGREED by the parties that, Respondent shall continue to maintain, promote and actively oversee its toll-free telephone hotline for, among other things, the
receipt of Jim Walter Homes homeowner complaints. Respondent shall continue to provide the hotline number with each new residential contract and with all correspondence provided to a customer. On materials containing the toll-free number, Respondent shall explain that this number should be used for all customer service issues and inquiries regarding construction. For a period of at least 18 months from the date of execution of this Agreement, (i) Complaints received through the hotline should be forwarded by the central office to the appropriate personnel to respond to the homeowner within three (3) business days of receipt. (ii) Respondent s central office will implement procedures to monitor the responsiveness of the regional offices; and (iii) Respondent further agrees to cooperate with the Department and, upon reasonable request, provide information within five (5) business days regarding the nature, status, and ultimate resolution of any future complaints the Department may receive. 2.6 IT IS FURTHER AGREED by the parties that Respondent shall designate a contact person from within Jim Walter Homes, Inc., to whom the Department may refer future consumer complaints for resolution and concerns relating to the terms of this Agreement. 2.7 IT IS FURTHER AGREED for a period of (2) years from the contract date, if a contract is not tendered to the customer within one (1) year from the date the house goes under construction or two years from the contract date, Respondent shall provide the customer with a written status of the construction as well as a specific estimated timetable of the remaining construction tasks. This notification shall be repeated every ninety (90) days until the contract is completed. Respondent shall implement the provisions of this paragraph for a period of two years from the execution of this Agreement. 2.8 IT IS FURTHER AGREED by the parties that Respondent shall take every
reasonable step to ensure that salespeople are not misrepresenting completion dates to prospective buyers, and that buyers and prospective buyers of homes are informed of known conditions that are reasonably likely to delay the construction of their home. 2.9 IT IS FURTHER AGREED, that, with regard to the fifty-three (53) consumer complaints against Respondent that have been received by the Department, Respondent will diligently work to resolve the outstanding five (5) complaints in a timely manner and will report the status of these complaints to the Office of Attorney General every ninety (90) days until the complaints are resolved. 2.10 IT IS FURTHER AGREED, that, Respondent may approach the Department in the future to demonstrate its compliance with the terms of this Agreement and seek the Department s consent to an earlier termination or modification of the terms of this Agreement. III. STIPULATED PAYMENT 3.1 IT IS HEREBY AGREED by the parties that the Respondent shall pay the Department investigative fees and costs in the total amount of FORTY FIVE-THOUSAND DOLLARS ($45,000.00) with their execution of this AVC. Respondent specifically agrees that time is of the essence in the performance of all terms and conditions of this agreement. Payment to the Legal Affairs Revolving Trust Fund shall be made by cashier s check payable to the Department of Legal Affairs' Revolving Trust Fund, and shall be delivered to Robert J. Follis, Assistant Attorney General, Office of the Attorney General, Concourse Center IV, 3507 E. Frontage Rd., Suite 325, Tampa, Florida 33607. The total amount shall be deposited in the Department of Legal Affairs' Revolving Trust Fund, in accordance with Section 501.2101(1), Florida Statutes.
IV. FUTURE VIOLATIONS 4.1 IT IS HEREBY AGREED by the parties that any subsequent failure to comply with any material terms and conditions of this AVC is by statute prima facie evidence of a violation of Chapter 501, Part II, Florida Statutes, and will subject Respondent to any and all applicable civil penalties and sanctions authorized by law, including attorney s fees and costs. V. ACCEPTANCE 5.1 IT IS HEREBY AGREED by the parties that this AVC shall become effective upon its acceptance by the Director of Economic Crimes, Office of the Attorney General, who may refuse to accept it at her discretion. The receipt of or deposit by the Department, and monies received will be returned if this AVC is not accepted. IN WITNESS WHEREOF, Respondent has caused this AVC to be executed by an authorized representative, as a true act and deed, in the County and State listed below, as of the date affixed thereon. BY MY SIGNATURE I hereby affirm that I am acting in my capacity and within my authority of Jim Walter Homes, and that by my signature I am binding the corporation to the terms and conditions of this AVC. STATE OF COUNTY OF JIM WALTER HOMES, INC. By: BEFORE ME, an officer duly authorized to take acknowledgments in the State of, personally appeared of Jim Walter Homes, and he/she acknowledged before me that he/she executed the foregoing instrument for the purposes therein stated, on this day of, 2007
Sworn to and subscribed before me this day of, 2007. NOTARY PUBLIC (print, type or stamp commissioned name of Notary Public) Personally known or Produced identification (check one) Type of Identification Produced: FOR THE OFFICE OF THE ATTORNEY GENERAL Robert J. Follis Assistant Attorney General OFFICE OF THE ATTORNEY GENERAL Department of Legal Affairs 3507 E. Frontage Road, Suite 325 Tampa, Florida 33607 (813) 287-7950 (813) 281-5515 (facsimile) Accepted this day of,2007. MARY LEONTAKIANAKOS Director, Economic Crimes Division Department of Legal Affairs OFFICE OF THE ATTORNEY GENERAL The Capitol Tallahassee, FL 32399-1050 (850) 245-0140