The Prince William County Board of Supervisors this week asked state officials to investigate homeowner complaints that Battlefield Builders, the county's largest developer, has failed to complete roads and other work, honor warranties and make repairs in their subdivisions.
The action came after revelations that Battlefield owes $25 million to about 100 banks, savings and loan instititutions, subcontractors and suppliers and is facing several lawsuits involving its work, including two suits filed by the county.
Nearly 30 homeowners from the Riverview Estates and Fernbrook developments near Manassas, meeting in a Riverview home this week, appealed to two county officials for help in ensuring that work in their subdivisions is completed. The owners said many of their problems with the developer dated back two years or more when they first moved into their homes.
Representatives of Battlefield Builders, their creditors and title insurance company are attempting to put together a plan that will enable the company to pay its bills and avert bankruptcy, according to Ronald L. Walutes, the developer's attorney. The company expects to be able to pay most of its debt by selling the houses that it still has under construction, as well as construction equipment and undeveloped land, he said. Under an interim agreement, the title insurance company has guaranteed that it will pay bills incurred by subcontractors and suppliers between Nov. 19 and Dec. 21, if Battlefield does not pay them, according to Walutes.
Whether a plan "is feasible depends on a number of factors. Part of those are economic; and there are practical considerations such as whether or not the houses can be finished in the appropriate time," said Michael R. Vanderpool, an attorney and head of a committee of creditors. "Obviously, it's a very difficult situation. I think there's a potential for reaching a final agreement and also a potential for it not occurring."
Mary Ann Ghadban, Battlefield's vice president for sales and marketing, did not return a reporter's telephone calls this week. Her secretary referred the reporter to Walutes. Her brothers, Harry Ghadban, who is vice president of the Battlefield, and James Ghadban, president, also did not return phone calls.
Homeowners at the Riverview Estates meeting this week complained that the state and county governments' regulation of the building industry is not tough enough.
"What I don't understand is why the county can't pull these people in and say, 'Hey, you want to keep building in this county? Do the things you ought to do,' " said Dennis Mulhearn, a Riverview Estates resident.
Edward Luckett, deputy director of the Department of Development Administration, told the homeowners the county government has no authority to refuse building permits to developers who hold state licenses, as Battlefield does. Licenses can be suspended only by the state Board of Contractors, he said. Later in the meeting, however, he said that "if Battlefield asked for building permits [now] we'd first consult the county attorney" before issuing them. Luckett asked the homeowners to "write these things their complaints down" and said he would see they were sent to the Virginia Department of Commerce, which investigates all complaints about individuals and companies, including builders, that hold professional licenses.
County Supervisor G. Richard Pfitzner, whose district includes Riverview Estates and Fernbrook, told homeowners at the meeting the county has asked for the authority to withhold site plans or building permits from developers but "we don't even get it out of committee" when a bill is submitted to the state legislature.
The supervisors approved a resolution the day after the homeowners' meeting asking the Board of Contractors to investigate the complaints.
Luckett said his office gets complaints about developers "from time to time." But, he said, "nothing, I think, compares" with the complaints about Battlefield, "where a whole community [Riverview Estates residents] feels there's been a breech of contract."
Two homeowners at the meeting said mechanic's liens have been filed on their homes by Battlefield subcontractors and suppliers who have not been paid for their work. A mechanic's lien asks a court to order sale of the property to pay the debt, leaving the homeowner the choice of paying the bill or losing his house. The owner can then sue the builder who incurred the debt, but a mechanic's lien usually is filed because the builder is unable to pay, one attorney explained. In practice, however, it is rare for a court to order a home sold unless the lien involved is very large, attorneys said.
A. Frederick Milbert, whose house has four liens against it, said he "was denied warranty service by a company . . . because Battlefield had not paid them on an appliance in my home. . . . I paid for my home Oct. 31. . . . How can somebody sell me a house when they haven't paid the bills." Milbert said the liens ask for a total of $5,000.
Several Riverview Estates residents said they were assured by Battlefield that roads in the subdivision would be completed and paved by last fall, but that the work has not been done yet.
Luckett and Pfitzner told the homeowners that bonds posted by the developer would pay for completing the road work. The work, however, probably would not be finished until next year.
Nearly 20 lawsuits have been filed against the developer since 1980, most of them by the company's creditors, two by Prince William County and at least two others by homeowners. At least eight of the legal actions are still in court. The county government sued Battlefield this year in an attempt to force the developer to clean up an illegal dump in the Riverview Estates development near Manassas. In the other action, the county is asking for $24,564.54 from Battlefield to cover water damages in offices it leases from the developer.
Assistant County Attorney Stephen A. MacIsaac said that Battlefield's attorney has asked for some minor changes in a settlement agreement in the suit over the dump that would specify how the developer is to clean it up. MacIsaac said he hopes to meet with the attorney soon but added, "If I can't get action from him, I will have to ask for a trial date."
In the other suit, the county charged that Battlefield "knew or should have know the condition" of a pipe that caused flooding in December 1983 of the first and second floors occupied by the Department of Development Administration. The developer has denied that it was negligent or that the damage was as extensive as the county claims, according to court documents.
Battlefield is about $20 million in debt to 10 banks and savings and loan companies who are financing construction in 12 residential developments and two office condominium projects, according to Walutes, an Annandale attorney who specializes in bankruptcies. Walutes said, however, he was hired Nov. 1 by Battlefield to devise a plan that will avert bankruptcy.
The majority of the developer's estimated 100 creditors are subcontractors and suppliers, who are owed an estimated $5 million, Walutes said. Vanderpool, head of the creditors' committee, said his estimate of the amount "is closer to $5.5 million."
An estimated $4.5 million to $5 million still available from previously approved construction loans is more than enough to finish work on 200 houses and two office projects still under construction, Walutes said. About $1.5 million will remain, he estimated. This sum, along with proceeds from the sales of the 200 homes and of 316 empty lots the developer owns, and sale of construction equipment will pay off the construction loans and much but probably not all of the debt to subcontractors and suppliers, he said.
"The important thing" is to ensure that "all the homes under construction be completed. Unless that happens, there is no . . . fund to pay" creditors, Walutes said.
To be sure that subcontractors keep working, District Realty Title Insurance Corp., Battlefield's title insurer, has guaranteed to pay all contractors for work done and supplies provided between Nov. 19 and Dec. 21, if the developer does not pay them, Walutes said. The deadline was extended from the original one of Dec. 5 to give the lawyer more to work with the title insurance company and a committee of Battlefield creditors and come up with a "plan of action" for the developer, he said.
About 120 of the houses under construction have been sold, and the remaining 80, "we hope, will be sold over the next six to nine months," Walutes said. "Three were sold last week. Battlefield has always built a quality home . . . and that bodes well for the sale of the homes."