Vermont Legislature SmartTranscripts:

[Rep. Martin LaLonde (Chair)]: This Friday morning, January 23, in the nineteenth. We're taking some additional testimony on H 589, and we have three witnesses this morning. This afternoon, we'll be returning to H 67 and 626. But let's get started. We have our first witness, Kenny Frost. If you could join us. Sure. If you could join us at the end

[Rep. Barbara Rachelson (Member)]: of the table, that would be great. Yeah.

[Rep. Martin LaLonde (Chair)]: And thank you very much for being here on such a short notice as well. Thank

[Rep. Barbara Rachelson (Member)]: you.

[Rep. Martin LaLonde (Chair)]: And if you could just identify yourself for the record as

[Tim Frost (Founder, Peregrine Design Build)]: you're Sure, ma'am. Good morning, everybody. Happy to be here. Thank you for allowing me to come in and testify and share my story. I'm Tim Frost, and I'm the founder of Peregrine Design Field. We're a company that does design build, primarily performs residential construction and design services. The company is based in Burlington. And I retired in 2024 and transitioned the business to two of our employees who are running it now. The company was founded in 1988, so we've been in business for thirty eight years. The company performs between thirty and forty jobs a year in the remodeling business. So we've done probably the vicinity of a thousand jobs over the company's career. And we've been sued once in that time, and that's an action that's currently in process. And I just wanted to say that I believe that consumers have the right to be protected against construction defects. I think that's all fair, and there should be some statute to address that. However, I think that the protections need to be fair for both parties and understood to manage expectations properly upfront so that we both know what we're getting into. And I think the homeowners also need to understand the need to implement regular maintenance on their homes and ensure that small maintenance items don't evolve into larger projects as time goes on. I also feel that reputable companies should be addressing legitimate issues that come up for their clients without litigation. And that's what good companies do. Stand behind their work and take care of their clients. That's what we've done over the years and how we've operated and become successful. So today, I know that we're discussing a possible statute change for Bill five eighty nine, and trying to arrive at what's the reasonable number of years for a statute to repose. As you know, currently, there's not one in Vermont. So I just have a good example, a case study for you to understand the current situation that we're in. I can just run you through the brief outline of that just to give you an understanding. So Peregrine contracting was contracted to do a large whole house renovation back in 2002. The project started in 2002. We partnered with TruX Collinson Partners. We did the construction. Worked with client on the design. So just not disclosing the names, we'll call them the Smiths. We finished the job as an eighteen month project, we achieved substantial completion in January 2004. And I know you guys were talking about substantial completion. For us, it's a formal process. It's written into the contract. So, you have a final payment that's in the contract that specifies that you'll be paid that payment at substantial completion minus whatever is left for just some punch list items. You'd be paid your final payment. That's maybe a couple thousand dollars for a list of items that you sign off on, maybe some paint touch up or a couple light fixtures or something like that. Just a bit of a formal process. Then when you finish that, you to your money and the job is a 100% complete. It's some issues.

[Rep. Martin LaLonde (Chair)]: Yeah, we have a quick question, I think, on that. Yes.

[Rep. Karen Dolan (Member)]: Sharing that, this is something that we covered yesterday. When there is a multi, what is the word for it, a phased project, is that spelled out in the contract too, of like, we hit the substantial completion for this part of it at this date? That was the question I had of when there's the multi phase projects.

[Tim Frost (Founder, Peregrine Design Build)]: Right. Guess an example would be a client that's engaged with us over the years. Maybe we've done six different projects for that client over the years with incremental renovations on But their each contract will be a separate contract for that scope of work. It might happen this year and you would have that process where you would have a substantial completion that would be signed off. That phase would be completely done. So maybe two years down the road, you may have done a master suite last time. Maybe they want to do their kitchen next, so then the kitchen renovation is a separate project. So I think it could easily separate out which project the defect happened under.

[Rep. Barbara Rachelson (Member)]: Right, Vicki.

[Tim Frost (Founder, Peregrine Design Build)]: January 2004, the project was complete. The Smiths sold the house on twelvetwentytwenty twenty to the Hills. We'll call them, that's because they hide their names. That was seventeen years after the substantial completion of that project. And on 02/2003, two years after they purchased the house, the Hills discovered a water stain on the kitchen ceiling. I know you guys spoke about examples of water on the ceiling yesterday, possibly. So that was nineteen years after substantial completion. And they hired a contractor to investigate. They discovered that the roof above was leaking somewhere and there was also a roof deck as part of that construction on top of the single story roof over that kitchen area. The Hills contacted me and asked me if I would look at it. My observations were that the deck was poorly maintained and had extensive rot. The deck posts were rotting and they had the cracks in the posts. It was seemingly obvious to me that water was infiltrated down through those rod posts. Hills disagreed. They said that the damage was a design issue, not having the roof didn't have that pitch and there was poor workmanship. Thus, we disagreed. They thought that I could do the repairs at no cost, which I was not willing to do. And I tried to get them help from another contractor, which they didn't take up my assistance on that. The Hills ended up suing the Smiths to secure an assignment of the original contract with them. So this allowed the Hills to be parties to the original construction contract. And so in June or July 2023, the Hills sued Peregrine

[Rep. Barbara Rachelson (Member)]: for

[Tim Frost (Founder, Peregrine Design Build)]: trying to get us to be responsible for what they saw with our defects. At that point, I engaged our insurance company, we had the liability policy, and they engaged their attorney. So now two and a half years later, the case is still ongoing and is set to go to trial when that gets you scheduled. To date, there's been about $31,000 in attorney's fees that we've incurred to defend ourselves. And then on a side note, Mr. Hill, he went to law school, so he's representing himself, so he's able to prosecute us with little expense. And they also have three other lawsuits going on. And they also sued the contract who ultimately ended up helping them on the job. So, for us, risk management as an ongoing business is typically addressed with liability policy, which carries coverage for these sorts of incidents. As well as if you're in a design business, have errors in emissions insurance, which is typically held by design professionals. These And policies typically pay for attorney's fees in your defense of a claim. So there's an additional concern for me as a retired contractor, because you still have that ongoing exposure from the past jobs that you have even you're retired. And you can get some insurance, which is called a tail policy, which will give you a certain amount of liability coverage for a period of time. But it's very expensive, about $35,000 a year. And there's a maximum time that you have that insurance. It's usually about three years. So, with an unlimited statute of repose, that's for a retired person, I have a personal exposure potential indefinitely at this point. I understand that I'm in the business, I do have a responsibility for what is reasonable if I made a mistake. But for it to be indefinite, that doesn't seem to be fair. And if you have to defend yourself, whether the case gets mirrored or not, it gets expensive. You have to pay for your defense, and you have to spend the time to do it. And even if it's dismissed, that's not what she knows from Truex. So just looking for consideration in the big picture to maybe help you with your overall decision on sports bets for the bill going forward. I appreciate you allowing me to share my story and take that into consideration. Thank you. Great.

[Rep. Martin LaLonde (Chair)]: Well, thank you. Questions, Angela and then Karen.

[Rep. Angela Arsenault (Member)]: Thanks for coming in. I'm curious if you can just say

[Rep. Martin LaLonde (Chair)]: a little bit

[Rep. Angela Arsenault (Member)]: about how I believe you said that this is the one time that you've been sued. Right. Are there other examples of times when homeowners have noticed some sort of flaw in 'fifty nine or Bill that you did address, that you also recognized and needed to address?

[Tim Frost (Founder, Peregrine Design Build)]: Yes. Yes. No, I think that you're learning things as you go sometimes, especially as a younger company, and sometimes you use different materials that don't work out as you had planned. We have a really severe climate, so things sometimes can prematurely fail. So our policy was always, if it was something that we felt that we did, that we would stand behind it with our clients.

[Rep. Angela Arsenault (Member)]: Do you and your clients have a signed contract, generally?

[Tim Frost (Founder, Peregrine Design Build)]: We do, yes.

[Rep. Angela Arsenault (Member)]: And is that policy a new contract?

[Tim Frost (Founder, Peregrine Design Build)]: We have a written one year warranty. Okay. But we have a So that's, I guess you have a red versus express warranty. So we always tell people that we always take care of issues. We have one year warranty, but if things come up, can ask any of our clients that we stand behind. That's our reputation out there that takes care of their clients.

[Rep. Barbara Rachelson (Member)]: Thank you. Welcome. Up here.

[Rep. Karen Dolan (Member)]: Yes. So thank you for bringing up the insurance piece. I feel like that's a piece that I haven't thought through. And so two questions on that is, curious, maybe you know this, maybe you don't, and maybe we can find somebody. I'm curious if Vermont insurance rates or insurance rates for Vermont contractors, designers, I don't know terminology, the folks that are involved in this, are higher because there's no repose, because you're liable forever. That's my first question. I don't know if you know anything to that or when you were looking for insurance, if they said, Oh, you're in Vermont, oh, it's gonna, you have to pick this one.

[Tim Frost (Founder, Peregrine Design Build)]: I actually had a conversation with our insurance agent that asked something similar to that. And he said, It's hard to know the impact of changing the repose, but currently, experience rating what drives the cost. So they kind of look at all the losses that they've incurred in the state from their insured, and that affects an experience rating, which determines the rates to make sure that they're covering all claims and taking it proper at the end of the day.

[Rep. Karen Dolan (Member)]: And then my other question is I heard you say that, which I guess is an interesting piece because you were retiring the business and then it sounds like you then sold it to? To employees, yes. But you as a person, you're only able to get, forget what you call the insurance.

[Tim Frost (Founder, Peregrine Design Build)]: It's the tail policy,

[Rep. Karen Dolan (Member)]: tail liability policy. That only goes for a certain number of years. You can't get that for the rest of your life.

[Tim Frost (Founder, Peregrine Design Build)]: Exactly.

[Rep. Karen Dolan (Member)]: So then you have to have personal insurance or something, or you just pay for it.

[Tim Frost (Founder, Peregrine Design Build)]: Exactly.

[Rep. Karen Dolan (Member)]: Are there policies that do last forever

[Tim Frost (Founder, Peregrine Design Build)]: or no? None that I'm aware of.

[Rep. Barbara Rachelson (Member)]: Thank you. That's helpful.

[Rep. Martin LaLonde (Chair)]: Have you had a chance to read the language of the bill, I assume? I'm just wondering, back to the earlier question we had regarding substantial completion date. And I'm just looking at the language and wondering if the last sentence in subsection C, I don't know if you have, does somebody have that? If that if that makes sense. We had some confusion about About how that right.

[Vicki (Legislative Counsel)]: And I just struck out the invitation to repose just so it matches that.

[Rep. Barbara Rachelson (Member)]: Right. Period.

[Tim Frost (Founder, Peregrine Design Build)]: I guess what would be an example of a phase project?

[Vicki (Legislative Counsel)]: That was kind of Karen's question.

[Tim Frost (Founder, Peregrine Design Build)]: Yeah. I have no idea. Right. Typically, have one project. If it's phased, may have phase two. It's got a separate project. It's not like one project that's phased.

[Rep. Martin LaLonde (Chair)]: Isn't really how this works. No, I mean, it's what it's on. It's

[Tim Frost (Founder, Peregrine Design Build)]: an easy You have an example that Doctor. Dix had, and that's my experience.

[Rep. Angela Arsenault (Member)]: I feel like I'm thinking about developers who build large scale residential projects. And this building is phase one, this building is phase two. I think that

[Rep. Martin LaLonde (Chair)]: Would those be independent contracts or separate contracts?

[Tim Frost (Founder, Peregrine Design Build)]: I would think that you would have If a developer was building it, typically the developer is selling the homes to a homeowner who has a developer as a

[Rep. Thomas Burditt (Vice Chair)]: contractor for that homeowner, they would

[Tim Frost (Founder, Peregrine Design Build)]: have that same substantial completion process. So if you had a multiple home development, your particular home was the only one that has this issue, you'd have a contract with a substantial depletion, which would start the statute or oppose.

[Rep. Angela Arsenault (Member)]: Yeah. I guess I'm thinking of a development of apartment buildings where there's not a single homeowner or anything. That's how that works. Sarah might have something to say.

[Rep. Martin LaLonde (Chair)]: Well, have you testified? Are you available to testify after?

[Rep. Karen Dolan (Member)]: I can jump in to

[Matt Bushey (Managing Principal, TruexCullins Architects)]: Identify yourself in the Yes.

[Sarah Merhof (Associated General Contractors of Vermont)]: For the record, Sarah Merhof with the Associate General Contractors of Vermont. There are, large multi family homes are certainly the kind of circumstance that you're thinking of. And I've had members who have built large apartment buildings and moved people in phases while construction is still on going, or thinking well that the Burlington project, where there are two towers, and once complete, when it's still ongoing, I'd be happy to run this language by those members who are developers, and they can come to that. We'd be happy to clarify. Okay, great. Or help tweak the language.

[Rep. Martin LaLonde (Chair)]: Yeah, if you could suggest a witness on that,

[Matt Bushey (Managing Principal, TruexCullins Architects)]: that would great. Thank you.

[Rep. Barbara Rachelson (Member)]: All right, yeah. So I think one thing that is important to us, or at least I can speak for myself, is and I've been involved with managing profits, projects at nonprofits, active in phases, really familiar with tail insurance from a human service delivery standpoint and know how pricey and hard those are to get, so I appreciate everything that you're saying. I think the bottom line is, what do we think it would look like for again, we need these protections for the architects and contractors. For the consumer or the customer, what do you think could be different? Customers, consumers, whatever, be losing something if we move to this? I guess it's just good to hear what, from your standpoint, you think that would be like, not from your viewpoint.

[Tim Frost (Founder, Peregrine Design Build)]: I guess you would be losing an unlimited ability to go back on a project. You would have to be comfortable that whatever the time period that was determined was fair and reasonable, and that you had the trust that you're working with somebody who's reputable and who's gonna stand behind what they're doing and you're not gonna have issues within that period of time. If they do, they're gonna take care of it.

[Rep. Barbara Rachelson (Member)]: So sort of having consumer protections that we put in place for contractors and the list that we have of people who have done the fraudulent I'm trying think what the name of that list is but somebody comes and they collect money to have driveways paved, then they don't do the work. I know the AG's office has been trying to do consumer education. Right. And I'm curious, when you talked about the current homeowner going to court to assume the contract. Do you know if that happens frequently? That seems odd, and I don't know if that homeowner, the new homeowner If the court just ordered it and it's like, Okay, there's nothing that can be done, it seems like a quirky avenue to go down.

[Tim Frost (Founder, Peregrine Design Build)]: I think that's just in the technicality of the law that it's allowed. I think that you potentially address that in your contract if you write specifically that the contract can't be assigned, which we didn't do. But I think if

[Rep. Barbara Rachelson (Member)]: you do that upfront, it's not possible to do. Which is sort of the norm, right? Like, know I have a lifetime warranty water heater, but apparently that was the former owners that have that, not yeah. So are you aware from your colleagues? Is that kind of happening a lot, that people are going in and trying to go after mistakes? Technology changes. My house was built in 'sixty four, and it is so quirky for today's standards. Wouldn't even think of going back to suing the architect. Right.

[Tim Frost (Founder, Peregrine Design Build)]: I think reputable companies with a good reputation, typically, you're in good hands, so they're going to take care of things. Maybe it's more of the less reputable companies that you have issues with. In that case, you're probably less likely to recover anything anyway in the long run because you don't have the assets to attach.

[Rep. Barbara Rachelson (Member)]: You're certified as a You could get a better business bureau rating for a company. Well,

[Tim Frost (Founder, Peregrine Design Build)]: there was. I don't know how that was introduced, but I know there's a process through the state where you can have it be a registered contractor. That's a recent bill that came through, and that's a good start. Companies who are actually registering this, they're more professional than companies that aren't registering, and I think that you have some backup as far as references and information about those companies that

[Rep. Barbara Rachelson (Member)]: are registered. So that could be a good if this becomes law, that would be a good thing to me, and you all know to do that. Makes sense to do anyway, but yes, Right, thank welcome. Okay.

[Rep. Karen Dolan (Member)]: Yes, thank you. Another question. Sure. So we are going from zero years of proposed to this is proposing six years for it. Yesterday, our legislative council shared a chart with us of all other states and what they have. And so in reviewing that, it looks like sticks tends to be kind of towards the lower end. And so for me, I think going from zero, I would want to maybe give more of a buffer, maybe go 10, something higher. Why is six the right number for you? Or what do you think is the right number?

[Tim Frost (Founder, Peregrine Design Build)]: Less than none. And I realize that states have all different networks. Six to 10 is probably where other states are. So what's fair for us? Guess it's a matter of debate and compromise and come up with the best

[Rep. Barbara Rachelson (Member)]: thought to be. Thank you.

[Rep. Karen Dolan (Member)]: I just appreciate that. I think it's important for us to use data and also take into balance the fact that we're at zero now. So where is that line?

[Rep. Barbara Rachelson (Member)]: So thank you for that. You're welcome.

[Rep. Martin LaLonde (Chair)]: Questions. Just one more. Could you expand a little bit more on the alternative if there is a statute of repose as far as homeowner responsibility. You just mentioned that very briefly in your testimony. If you could kind of expand a little bit on that.

[Tim Frost (Founder, Peregrine Design Build)]: Well, think taking care of your home is like taking care of a car. You can't just ignore the maintenance. Think you have to have a well organized homeowner who's going to have maybe a spreadsheet with a maintenance plan that I've got paint to every five years or eight years. I need to pump the septic tank every three years. I need to clean the boiler every one year. I should do an annual walk around the house just to make sure that I'm not seeing any sign of decay. If it is, making sure that that's addressed. Knowing the longevity of your roof shingles, If you have a twenty five year roof shingle, keeping an eye on that. Checking chimney flashings and chimney caps to make sure that those are intact and well maintained.

[Rep. Martin LaLonde (Chair)]: I should be writing all this down. Once

[Tim Frost (Founder, Peregrine Design Build)]: you build a home, you can't just leave it. I live in a severe climate with extreme weather, and it needs constant attention to be well maintained. So the projects you did in the past where somebody called and there there was an issue

[Rep. Barbara Rachelson (Member)]: and and you went out

[Tim Frost (Founder, Peregrine Design Build)]: and took care of the issue, what were the timelines on those? I mean, was it six months after, fifteen years after, or I guess what I'm asking is is were they all under six years would be real interesting to me, but that that then you might not be able to remember all of them. I don't think like that. I guess what were the the timelines as far as once the substantial piece was done up until somebody called? I think most of those are within a year or two, and you usually see something fairly quickly. When you get out further than that, I think sometimes it's a little bit blurred, it's kind of what was the cause of it. Was it neglect or was it a bad detailing or poor choice of materials? But we've come back and If there's some ambiguity, we'll just take care of it. So we've taken care of things six, seven years after the fact as well. So from the sounds of it, is for you anyway, your company, six years would cover almost everything, right? Other questions? Yeah, go ahead.

[Vicki (Legislative Counsel)]: There been an example in your time in this industry where you've had a defect that you have discovered after six years?

[Tim Frost (Founder, Peregrine Design Build)]: Not that I can think of. No.

[Rep. Barbara Rachelson (Member)]: Yeah.

[Rep. Martin LaLonde (Chair)]: The one that you're dealing with right now is seventeen years, eighteen years ago, something to that, I think.

[Vicki (Legislative Counsel)]: Yeah. And guess, in that case, ultimately, the question is really what is the cause of the damage? And the protection you have is in in that ways that, like, they have to show, and there's a ton of time and all that stuff. But your points won't take in that. It's costing you 100 thousands and thousands of dollars in training fees to protect yourself. And so, yeah, the balance there is real.

[Tim Frost (Founder, Peregrine Design Build)]: Thank you very much. We'll have Matt join us next. Great.

[Rep. Angela Arsenault (Member)]: Thank you. Thank you.

[Tim Frost (Founder, Peregrine Design Build)]: Thank you, Jean. I appreciate it. Thank you.

[Rep. Martin LaLonde (Chair)]: Thank you for being here. Identify yourself for the record and and seek the call.

[Matt Bushey (Managing Principal, TruexCullins Architects)]: Sure. Thank you for having me. My name is Matt Bushey. I am the managing principal of TruexCullins Architects in Burlington. I am a licensed architect in Vermont and four other states. I have been with Truex Cullens for just about twenty years. It'll be twenty years this spring. I started in 2006. I have been a partial owner or an owner for a little bit less than half of that time. I have a few partners. I've I have a few partners that work with me, and they're all about my age. I'm 52. So in a sense, we are the kind of third generation of ownership of Truex Collins. The firm was founded in 1968. Some of you may know or may remember Bill Truex, who was the man behind the Church Street marketplace. So we were founded in 1968, which makes Truex Collins one of the lar one of the oldest not the oldest, but one of the older architecture firms in the state. We have 30 staff, architects, interior designers, and administrative staff. So with 30 people, that makes us, I think, one of the larger architecture firms in the state. Although I think at that size, we still think of ourselves as a small business. Liability insurance is one of our biggest expenses. After payroll, we pay an annual premium of $90,000 for our liability insurance, which is a big number for us. To try to keep those costs low, we have a very high deductible.

[Rep. Martin LaLonde (Chair)]: How many is that?

[Tim Frost (Founder, Peregrine Design Build)]: I'm sorry.

[Matt Bushey (Managing Principal, TruexCullins Architects)]: So our our premium is 90,000 a year for liability insurance.

[Tim Frost (Founder, Peregrine Design Build)]: And how how many how many dollars does that cover for liability? That is

[Matt Bushey (Managing Principal, TruexCullins Architects)]: a $5,000,000 policy. So because of the work we do with large clients like UVM, they require $5,000,000 of liability insurance coverage. So reducing our coverage is not an option for us. Okay. Thank you. Yeah. But so to keep the cost low as low as we can, we have a very high deductible. So we have a deductible of $75,000 per plane or $225,000 per year. And we have never reached those numbers. But what it means is that these cases that we're talking about like today are expenses that have to come out of our pocket. So we have had to deal with, I think, three or four legal situations in the past ten years or so. And they were all I believe they were all related to projects that were before my time. And they were all either dismissed or dropped or settled or or you know, we were not found guilty or liable in any of those situations, but yet they still incurred costs and time and were a real drag on the firm. So that's a little bit of background with the insurance thing. So talking a little bit about this case, I I won't repeat a lot of what Tim said, but just cover the basics. We were hired. The firm was hired to design an addition to this house on Grand Isle in 2002.

[Rep. Thomas Burditt (Vice Chair)]: And as as Tim said,

[Matt Bushey (Managing Principal, TruexCullins Architects)]: it was constructed in 2003. Eighteen years later in 2020, a new owner bought the property, and these are folks who are California residents. That's their primary home. This is their second or at least their second home. And they discovered water in the kitchen ceiling as Tim described. The new owner is not a lawyer, but he has some amount of legal training, so he was representing himself. He acted as his own attorney. He filed suit against the original owners, and then he filed suit against Peregrine and Truex Collins as codefendants. Let's see. So there was leaking above the kitchen ceiling. There was a roof deck above. The claim against Truax Collins was not that our design was faulty. It was not that our details were wrong. The claim was actually that the work wasn't carried out according to the drawings and we failed to catch it. That was basically the claim against us, which has no merit for a number of reasons, which we paid our lawyer to get into. So they filed a claim against Truex Collins for about $270,000 plus punitive damages plus attorney's fees. So like I said, the claim did not say that our details were at fault. So I was not personally involved in this project. I started at the firm in 2006, and this project was complete in 2003. So I have no direct experience with this project. Partner in charge of the project was Bill Truex. Bill passed away in 2022, so there's that. The architect who worked under Bill on the project retired from the top from the firm in 2008. He still lives in town, but he has not been with

[Rep. Thomas Burditt (Vice Chair)]: the firm for a number of years.

[Matt Bushey (Managing Principal, TruexCullins Architects)]: So this whole thing stretched out longer than I ever expected it would. I would have thought that we could have just filed a motion and laid out these facts and that it would be dismissed. But as you all know, justice travels slowly. So, basically, it was a period of almost a year from the time that we received the summons to when ultimately the plaintiff dropped the case against us. And over that time, we incurred about $35,000 in attorney's case. So it started in '20 in the 2024 when we received the complaint. We filed a response to the complaint. The case entered into discovery. We responded to the plaintiff's set of interrogatories, which included requests for us to produce all the material related to the project, including drawings, contracts, correspondence. Now this is twenty years ago, so we had to kind of dig into our archives. Nobody in the office had worked on the project, so that that took time and resources. We actually, over the past number of years, we have maintained two off-site storage units, which we rent in South Burlington, which are chock full of blueprints that are thirty, forty, and 50 years old because we can't get rid of the stuff. So let's see. Our attorney reached out to the two living former employees who worked on the project, and our attorney entered into depositions with the plaintiff. The plaintiff was going. The plaintiff offered a a settlement offer of 75,000 and asked us to schedule mediation. And that puts us into a really tough spot because you weigh we were not at fault. And so you have you have to weigh paying us a a settlement offer that you know you're not at fault for versus the costs of the attorney's fees. And so that's we kind of grappled with that, that we ultimately did offer a small settlement offer, which they rejected. So then it was looking like it was gonna go to mediation. We had to retain a local architect to act as an expert witness in preparation for mediation. We filed a motion for summary judgment in March 2025 with a number of reasons why we believe this claim against us should not stand. Some of them were technical reasons, and some of them were kind of practical reasons. For example, I I said that the the the argument against us was that we didn't catch the the the the fault of the installation on-site, but we produced an email from the clients in which they asked us not to come to the site anymore, which happens sometimes. Sometimes architects are hired to do the drawings, and the owner says, we don't need you to observe the construction. We can take it from here. And, apparently, that's what happened here. So that's just one of a list of reasons why we believe this case is the next day. Did

[Tim Frost (Founder, Peregrine Design Build)]: you say there's documentation for that?

[Matt Bushey (Managing Principal, TruexCullins Architects)]: Yes. There's an email from the client to the to us, the architect, saying, please don't come to the site anymore. Don't need to anymore. But so when the court read this motion for summary judgment actually, no. What happened was when the plaintiff read the motion for summary judgment, they decided to drop the claim against us. So that's how it ended for us.

[Rep. Martin LaLonde (Chair)]: Can you tell us how much you spent on legal fees?

[Matt Bushey (Managing Principal, TruexCullins Architects)]: It was about $35,000 which is about half of our deductible.

[Tim Frost (Founder, Peregrine Design Build)]: But you also have other, I'll call them administrative fees with people doing the searching for documents and all that.

[Matt Bushey (Managing Principal, TruexCullins Architects)]: Yep. I spent a fair amount of time on it myself. That we never tracked that, but certainly that was an expense.

[Tim Frost (Founder, Peregrine Design Build)]: You could to me, you could include a portion of the storage unit that feeds too because Oh, cost because

[Matt Bushey (Managing Principal, TruexCullins Architects)]: Yeah. Yeah. Maybe

[Rep. Thomas Burditt (Vice Chair)]: I missed you, but do you do the whole contract, or do you have any contractors involved in the?

[Matt Bushey (Managing Principal, TruexCullins Architects)]: For the architectural design, I don't believe this contract would have had sub consultants.

[Rep. Thomas Burditt (Vice Chair)]: So you're you're the actual designer. We're the architect. Then take that building. Right. Right. Design that had maybe the flaw is

[Matt Bushey (Managing Principal, TruexCullins Architects)]: Right. If if they if we had detailed the roof incorrectly, for example, which we didn't do, but, yeah, we're the architectural designers in that

[Rep. Thomas Burditt (Vice Chair)]: Are you contracted by a general contractor? No. By the owner. Oh, the owner's line.

[Matt Bushey (Managing Principal, TruexCullins Architects)]: I

[Rep. Karen Dolan (Member)]: don't know if we have more to share. I can pull up my question.

[Matt Bushey (Managing Principal, TruexCullins Architects)]: No.

[Rep. Karen Dolan (Member)]: Since the same question I asked previous person, why six years? Excuse me. It seems like Ken could have addressed this situation. And so I'm just trying to think if there's a conversation. We haven't yet heard from somebody that's saying that we should push it out more, but so far, I'm not hearing an argument of why it has to be six. So that's what I'm trying to understand. Is there room for it? I mean, we're at zero now.

[Matt Bushey (Managing Principal, TruexCullins Architects)]: Yeah. I'm not sure where the number six came from. It it makes sense to me, but it's not the main I think it could be a different number.

[Rep. Barbara Rachelson (Member)]: It could be fine with four too, but we could be

[Rep. Karen Dolan (Member)]: like, 14. Like, so it could be all over. Yeah.

[Vicki (Legislative Counsel)]: Same question I asked the other witness. Do you have any examples of defects that you've discovered in designs that you've done after six years?

[Matt Bushey (Managing Principal, TruexCullins Architects)]: So, typically, for the for the design side of this, if there are errors and omissions is the term, those would be discovered during construction. Yep. And a design solution would be developed during construction, and there may be a change order during construction. And there may be a dispute who owes money for that change order for that expense. But I don't I can't think of that happening after the project is done.

[Vicki (Legislative Counsel)]: Yeah. And then are but you could be sued for the construction side of it, which is what happened here, I guess. Like I guess so could you are there any examples of, like, after the design a design is implemented, have there been discovered defects set more than six years out that you guys had to correct?

[Matt Bushey (Managing Principal, TruexCullins Architects)]: I mean, like I said, there were three or four. This was one of them for the past ten years. But in all those cases, we weren't found to be at fault. So I guess the answer is no. Things may come up, but it it in in our experience, they didn't result in us being found

[Rep. Thomas Burditt (Vice Chair)]: with my language.

[Vicki (Legislative Counsel)]: Yeah. But yeah. So so things have come up, but they've resolved in some way mediated or Like this one. Like this one.

[Rep. Angela Arsenault (Member)]: I guess I'm sort of a I'm gonna ask the same question that I asked earlier about your general practice and policy. Both practice and policy, I guess, for bone defects are found that things that don't end up in a lawsuit. Just to get a sense of or contemplating the idea of sort of restricting protections for consumers. I'm curious to know what your general policy what your policy is for.

[Rep. Barbara Rachelson (Member)]: So

[Matt Bushey (Managing Principal, TruexCullins Architects)]: we have different kinds of contracts and agreements with different clients depending on what they would like to do. Sometimes we use AIA contracts, and sometimes for residential work, it's a simpler agreement with a client if it's a small project. We we we have some language that in our agreement that defines errors and omissions, which is a standard term in the industry because we are not perfect. And it it it kind of defines that there may be an amount that is, like, three to 5% of a contract that could be measured to as potential errors and omissions. So in other words, if if if there is a mistake in the design that leads to a cost, if those costs start to get higher than a certain amount, then we pay for it. So there's that. We also have language in our standard terms and conditions. If a client decides not to engage us for construction administration, there's some language that explains we cannot oversee construction or provide not inspections, but oversee construction to ensure that it's done for the design intent. We can't do that if we're not

[Rep. Thomas Burditt (Vice Chair)]: hired to do that. So there's some language in there that defines that for the client.

[Rep. Barbara Rachelson (Member)]: Okay. Cool. Thank you.

[Vicki (Legislative Counsel)]: So you had you're in four states?

[Matt Bushey (Managing Principal, TruexCullins Architects)]: I personally am licensed in in Vermont and four others four other states.

[Vicki (Legislative Counsel)]: Do you do you design in those states as well?

[Matt Bushey (Managing Principal, TruexCullins Architects)]: We do work in multiple states.

[Vicki (Legislative Counsel)]: Is the do you is your insurance policy kind of cover all of that, or do you have separate insurance for those states? No. It's one policy. And have do you get sort of a sense of I'm assuming those states have repo some sort of protected law like this.

[Rep. Martin LaLonde (Chair)]: Can you tell us what states you operate in? Actually, that's

[Matt Bushey (Managing Principal, TruexCullins Architects)]: Well, we for the for the firm to do work in state, at least one person in the firm has to be licensed. And so I'm licensed in four states, but there are other people in my firm that are licensed in other states. But we do work in New Hampshire, all across New England, a lot of work in Jackson, Wyoming, Florida. There's certain certain areas that we do work in.

[Vicki (Legislative Counsel)]: Yep. Does the has it kind of the laws in those states and kind of protective statute of limitation things? Like, have you seen an impact on and, like, how you've done work in those states versus how you've done work in Vermont?

[Matt Bushey (Managing Principal, TruexCullins Architects)]: I mean, most of our architectural work is in Vermont. Some of the work that we do in other states we also run an interior design firm. So some of the work that we do in other states is not we're not the architect of record for. But I agree with Tim's response to this kind of to this train of thought, which is that I think our insurance rates are based on our past kind of experience and our past the amount of kind of legal expenses that have occurred, etcetera. So I think that a statute to propose may not have a direct effect on the rates, but I could certainly expect it to have at least an indirect effect. In other words, if we if there was a statute to propose, this case may never have been filed against us or at least it would have not lasted a year and incurred so much costs. And so if that were to happen a number of times, I could expect that our rates would go down because our risk would go down. Does that make that answer your question?

[Vicki (Legislative Counsel)]: No. I think it does. Yeah.

[Rep. Martin LaLonde (Chair)]: I

[Rep. Thomas Burditt (Vice Chair)]: think you got it, but I Well, clear for me. If a state has a lot of a lot more claims than, say, another, is your insurance agent calculate that into your thing if you're operating in that state. I don't know specifics of how to calculate that rate.

[Rep. Martin LaLonde (Chair)]: So you mentioned three cases that have come up in New York Times that didn't appear older cases. Did they involve personal injury or property damage?

[Matt Bushey (Managing Principal, TruexCullins Architects)]: I don't know the specifics of all of them because again, were before my time. I think one of them was another roof issue. And I think there was one where there was a someone fell on a sidewalk and we were somehow involved. I know that they were all dismissed or settled or we were not found and liable, but I don't know the details.

[Rep. Martin LaLonde (Chair)]: Okay. Any other questions? Thank you very much for being here as well. We really So appreciate we'll go to Michael Goodrich who is joining us by Zoom. Thank you for joining us and thank you for your flexibility and being able to be available in such short notice. We appreciate it. If you could identify yourself for the record and proceed.

[Michael Goodrich (Owner, Michael Goodrich Custom Builder)]: My name is Michael Goodrich. I'm the owner of Michael Goodrich Custom Builder in Norwich, Vermont. I've been a builder for forty years and my grandfather was a builder before me. I'm a lifelong Vermonter. This is in our blood and I've been working in the Upper Valley in Hanover, New Hampshire, Norwich, Vermont primarily for the last forty years. It's been a great, great living. I want to thank Rebecca Holcomb for mentioning that this is a very good item to have. The statute repose is very useful. And the reason I asked her to look into this is I was I built a house in New Hampshire in 1998, and I ended up doing a remodel on this house in 2001 and then a second remodel in 2015. And the client talked to me in 2015 about her Pella doors, which had a ten year warranty, which were installed fourteen years earlier, and Pella would not warranty the doors. Okay. So okay. Fine. It came to be 2,022, seven years after I did the remodel in 2015, and she had sent me an email about the doors again. So she would like to replace these doors, which are no longer covered under warranty, and can you replace the doors? And I I said that was a possibility. Let's let's figure that out. The next couple years, I kinda ran out of time, and I did not install I didn't even address the project. I was too busy. And she had another builder come in, and he removed the door, and he noticed there was a little bit of a tiny leak up above. And we started looking into the thing. It was a tiny piece of flashing that was missing from our 2015 job. This was discovered in 2025. Ten years later. So I've never had an insurance issue until this issue, where her insurance wouldn't cover it because it was inferior as a defect. So her homeowners insurance didn't cover it. And my insurance wouldn't cover it because it was beyond the statute of repose in New Hampshire. So I looked into it more. We pursued it in my insurance company, and they said, well, actually, she contacted you about these doors three years ago. That's within the statute of repose in New Hampshire. So we're going to pay for it. You're liable for it. And we did, and they fixed it. And so as I'm thinking about this, I was shocked to find out that Vermont had no statute to repose. And without a statute to repose, I could be paying for this well into my retirement as the other fellow suggested. To have never you know, I'm a small time builder. We do two houses a year with three or four remodels, and we have a million dollars of liability that we pay for. And I'm planning on retiring in the next couple of years. As we've discussed here, it would be shocking what my insurance bills would become if I retire. But anyway, I'm still planning on doing this. One of the interesting things that came up about this issue is when the defect was discovered, I only keep tax records and on my client's records for seven years for tax reasons. So I'd thrown away all my tax records. So I didn't have any information about who even did the siding on this job in 2015. I it's just not something that's in my focus. The doors warrantied for for ten years, which makes sense. That's Pella's idea of a long warranty. Our cars are warrantied for three years. It makes sense to create a finite opportunity. So one thing that I've heard a couple of times is the statute of repose in Vermont right now is zero years. I wanna correct you. It's infinity years right now. There's there's no limit to the statute in Vermont right now. And, you know, the statute would help hone over homeowners by providing a clear and final deadline to discover defects and create a reasonable time frame to contract the contractor and contact the contractor and have him repair stuff. As the other gentleman, I have also always come to my client's aid. I've always helped people get through any issues, any sort of rot, anything that happens. I do it for a long, long time. To have it six years, that's great. I've always done it pro bono. I've always fixed stuff that I've built. My my interesting thing is even medical malpractice statute has a limit of seven years. So if, for example, someone dies because of what I did as a doctor, seven years is all you get. No one's gonna die because the flashing was incomplete on my house in Hanover, New Hampshire. But you know, I I understand the the logic here. Any any questions?

[Rep. Martin LaLonde (Chair)]: Questions? I'm not seeing any, that's very helpful. I appreciate your testimony. But I guess we have been kicking around whether what we should do as far as time. And you mentioned that New Hampshire in eight years.

[Matt Bushey (Managing Principal, TruexCullins Architects)]: Yes. And

[Tim Frost (Founder, Peregrine Design Build)]: do you have

[Rep. Martin LaLonde (Chair)]: any opinion of that? Because my quick research into what was sent by your legislative councils is it is even in New England kind of all over the place. It's ten years in eight years in New Hampshire, six in Massachusetts in Maine and seven years in Connecticut. Any opinion on what's a good number other or any basis, I guess, us to look at what the right number should be? You mentioned the warranty ten years, is that a kind of a common standard for the materials that are put into homes? We heard that there's a one year kind of warranty that I think one of the earlier witnesses mentioned. I'm trying to attach other than just picking it out of the air in appropriate timeframe.

[Michael Goodrich (Owner, Michael Goodrich Custom Builder)]: I would say I agree with the other gentleman that most every issue has always come up within a couple of years, within a year. I've always given my clients I've always come back for the first year with no question. I always come back anyway. You know, it's a small town. I do everything here locally. I volunteer. I'm part of this place, and we've been part of this place for years. So I've always taken care of people around here. But somebody sells a house to someone else twelve years from now and Jeepers, that flashing doesn't look right to me. Goodrich has to fix it. Well, Jeepers, that doesn't really make sense. I do like the idea of I was delighted to see the number as six years. That's that's a great number. Most everything has happened by then. In my case, in New Hampshire, it was actually it was seven years that the defect was found or that was actually talked about something that was unrelated, but it was seven years, notification. So I don't have a good answer, but I think that the client does have responsibility in maintaining their house. So if I've allowed the paint to peel off in certain areas near windows, there are responsibilities to take care of this. And if you have a six year timeline, the client will be more active in thinking about that number. It's very important to have a strict timeline regardless what the number is to make sure the clients can address their needs with their builder before it expires.

[Tim Frost (Founder, Peregrine Design Build)]: I appreciate that. Yeah, not really a question, but I went through the literature we have with all the timelines on it and added up. It's I got an average for the country. That full transparency, I dropped the the the high number and the low number, and it just makes things makes for a better average when you do that with numbers. But I I came up with a an an average in the country, which at 8.365. And Here's your

[Rep. Martin LaLonde (Chair)]: number. So so it's 035. I mean, I wouldn't have

[Tim Frost (Founder, Peregrine Design Build)]: been probably one state or just New England. And and, I mean, and and the numbers are, like, representative Dolan was saying, the numbers are all over the place. I mean, there there's fours and fives and sixes and tens and twelves and

[Rep. Barbara Rachelson (Member)]: I don't know. I think we have

[Rep. Martin LaLonde (Chair)]: the opportunity here to

[Tim Frost (Founder, Peregrine Design Build)]: meet a fair fair number just because it's average of the country. I would like to see it stay at six myself, but I I I don't think it's gonna stay there.

[Michael Goodrich (Owner, Michael Goodrich Custom Builder)]: I think we have an opportunity to stay better than the state of New Hampshire here.

[Rep. Barbara Rachelson (Member)]: There

[Tim Frost (Founder, Peregrine Design Build)]: we go.

[Rep. Barbara Rachelson (Member)]: So it's

[Rep. Martin LaLonde (Chair)]: kind of interesting. I guess the the top of the table here has similar thoughts because I added up things and did an average, but I did New England. And for New England it was 7.4. We have two things like that. Split that. May, to have some sort of basis we can do either seven or eight years.

[Rep. Karen Dolan (Member)]: If I may add, Chair. Yeah. Go ahead. So New York, who's right next to us, I think has zero.

[Tim Frost (Founder, Peregrine Design Build)]: That has zero. I didn't

[Rep. Martin LaLonde (Chair)]: I didn't call it. I didn't

[Matt Bushey (Managing Principal, TruexCullins Architects)]: call it.

[Rep. Karen Dolan (Member)]: I'm just putting that out there. In many ways, could be calculated. Right. And it's Absolutely.

[Tim Frost (Founder, Peregrine Design Build)]: The philosophy your own suggestion, though. I think.

[Vicki (Legislative Counsel)]: I I could see also there's something to six being, like, the surf standard statute of limitations in Vermont being six years So you're just thinking, like, okay. Yeah.

[Rep. Martin LaLonde (Chair)]: There'll be further discussion. Mean, I'm sure we can have some additional witnesses as well. Thank you very much, Michael, for joining us. I appreciate it. And thank you to the other witnesses as well. Committee, I think we'd like to have input from you folks on who else we might want to hear from, whether we want to continue working on this bill. I'm kind of gathering from where the questions were that we probably do. And if you have suggestions on witnesses, let me know and try to schedule some additional folks. So we're adjourned until 01:00. We'll have some additional witnesses. Thank you so much.

[Michael Goodrich (Owner, Michael Goodrich Custom Builder)]: And thank you to Rebecca Holcomb too.