BOISE — The latest act in a nine-year battle between Tom Hanks, his wife Rita Wilson and a high-end contractor played out before the Idaho Supreme Court on Friday.
The case revolves around the couple’s sprawling Sun Valley-area home, built by Storey Construction starting in 2000. Hanks and Wilson say the company’s shoddy workmanship left them out more than $2 million. The company, meanwhile, contends the couple is just out for revenge because they lost an earlier arbitration over the work.
Hanks, whose character in the 1986 movie “The Money Pit” dealt with a decaying house, didn’t attend the hearing, but Wilson, also a film producer and actress, was in the courtroom.
“We never expected it would come to something like this,” Wilson said after the hearing. “But we feel like it’s important to get this resolved, not just for us but for other homeowners who may not be able to get to the Supreme Court. This is defective work and it can happen to anyone, no matter what kind of house it is.”
The case began in 2000, when Hanks and Wilson — through their Sun Valley Trust — hired Storey Construction to build a high-end villa in the remote but tony central Idaho resort town. But there was a dispute over payment, and in 2002 Storey Construction filed a demand for arbitration. Hanks and Wilson, meanwhile, filed a counterclaim, contending the company did substandard and defective work on the complex, which includes the main residence and three guest cottages.
Storey won the arbitration in 2004, and the counterclaim was tossed. Hanks and Wilson paid the company $1.85 million for their contract balance, interest and legal fees.
But in 2007, the couple filed a demand for a second arbitration, saying they had discovered latent construction defects totaling $2.5 million in damages. Storey Construction responded by suing in district court, contending the couple was abusing the process and that the previous arbitration award barred Hanks and Wilson from bringing another claim of substandard work.
Fifth District Judge Robert Elgee agreed with the construction company and said the arbitration process had effectively already dealt with the matter.
But Hanks’ and Wilson’s attorney, Art Harrigan, told the Idaho Supreme Court justices Friday that the ruling was in error because it would essentially require homeowners to know instantly about any problems with their new construction — even if it meant ripping down the walls to discover them.
“Essentially, in order to achieve due diligence, a homeowner would have to tear the house apart looking for defects,” Harrigan said.
The couple didn’t have control over the timing of the arbitration — Storey Construction did, because it filed the arbitration demand shortly after construction was completed. That wasn’t enough time for many of the problems — such as a roof that wasn’t properly attached, and framing that wasn’t bolted to the foundations — to become apparent, Harrigan said.
“What reasonable person would go tearing the house apart and searching for latent defects simply because they were involved in an arbitration shortly after the construction was completed?” he said.
Idaho law requires a court to look pragmatically at what a party should have done based on what they knew at the time — not on what they may or may not know in the future, Harrigan said.
Miles Stanislaw, the attorney representing Storey Construction, countered that Hanks and Wilson have never offered any evidence showing that they even checked for any additional defects when they filed their original counterclaim. Stanislaw said such a check would have been required for basic due diligence as part of the first counterclaim.
To let Hanks and Wilson go back to arbitration in search of a better outcome now “would be giving Hanks a free pass,” Stanislaw said.
“What the Hankses did was allege a broad, all-encompassing counterclaim alleging substandard work,” Stanislaw said. Because the arbitrator rejected that claim, and because the couple has never presented any evidence showing they were actually unaware of any additional problems, the new claim should be barred, Stanislaw said.
The justices met Stanislaw’s arguments with skepticism, however, pointing out that the contract between the couple and the construction company didn’t specifically ban them from bringing claims for damages as new problems were discovered.
The high court took the matter under advisement, and a ruling could come in the next several months.
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