Arbor then sued Willmez in the State Court, accusing him of negligence, breach of contract, breach of transaction contract, defamation of the property and constructive fraud. On October 12, 2007, Arbor`s counsel sent a copy of the complaint to West Bend, in which he indicated that Arbor was an additional insured in the corresponding insurance policies and asked West Bend to discuss the resolution of the dispute. West Bend denied liability for insurance policies in the state`s legal proceedings and ultimately filed a declaration appeal in federal court against Willmez and Arbor.1 West Bend asked the Federal Court to declare that under the insurance policies, it had no obligation to defend and compensate Arbor against the Lorches` rights and the transaction contract. West Bend had not experienced a problem with Lorches` house until May 4, 2007 and did not learn of Willmez`s agreement until October 2007 to cover much of the damage, when he received a copy of Arbor`s complaint against Willmez. The insurer was not aware of the terms of the comparison with the Lorches until April 2008. It is not surprising that the Lorches, who had bought a brand new house, were not ready to accept a brand new house, filled with sewage, and then cleaned. On April 18, 2007, they sent a letter to Arbor requesting, among other things, that Arbor buy the house and build them a new home. In April and May 2007, Arbor and Willmez discussed possible decisions on Lorches` applications. Arbor asked Willmez to inform his insurer West Bend of the Lorches` claims.
On May 4, 2007, Arbor also sent a letter to Willmez reminding the parties of the understanding of an agreement with the Lorches and willmez`s solicitation. In that letter, Arbor asked Willmez or West Bend to contact Arbor immediately if Willmez or the insurer needed additional information about the transaction. Willmez then announced to Arbor that he had forwarded the letter to West Bend. When Arbor did not hear about West Bend, he considered that the insurer was not opposed to the transaction. On June 6, 2007, Arbor signed a transaction agreement with the Lorches, which granted homebuyers a complete remedy. Among other things, Arbor agreed to buy the damaged house in the Lorches, build another new home for them (along with another plumbing company), pay all acquisition and relocation costs related to the new home, and compensate the Lorches for any increase in their mortgage rate when purchasing the second-class home. In fact, it keeps some of the city`s top employees away from new housing. « It would expose police officers, nurses and firefighters, » Hatchel says. « It`s going to make it harder for them to find a place in Greenwood. » While the city has negotiated exceptions with some of the largest national builders, there has been no discussion with a leading company – Indianapolis`s No. 2 contractor, Arbor Homes.
Greenwood says other builders have approached the city, but Arbor, a beginner who makes vinyl houses among others, has never done so. « We reached an agreement with any other prime contractor who had an objection to the settlement. Arbor is the only one who hasn`t tried to sit down with us and negotiate with us, » says Mark Richards, Director of Municipal Services and Municipal Engineer at Greenwood. Richards argues that the affordability of the area means that homes remain affordable. « Fischer [Homes] had much more expensive homes in the Hamilton urban area on the north side of Indiana, and it certainly doesn`t cost teachers and house firefighters, » he says.