Kier Failed to Disclose This Disaster:
Cox vs. Shell Oil, et al. 1995


During Kier's rehab of this building in 1987, they had the entire building re-piped with Polybutylene pipe (poly tubing), which was later determined by the courts, to be defective. The legal battles fought over polybutylene pipe failures, have resulted in some of the nation's biggest class action settlements ever recorded.

Some of the more notable, Polybutylene related, class action lawsuits included:
  • Robert Beeman, et al. v. Shell Oil Company, et al., 
  • Spencer, et al. v. Shell Oil Company, et al., and 
  • Cox, et al. v. Shell Oil, et al. 
Combined, the settlements for these class action lawsuits totaled nearly $1.1 billion dollars.
To put that in to perspective: Sick 9/11 workers recently accepted a settlement of just $712 million dollars.

The final order approving the Cox class action took place on November 17th of 1995 and resulted in a total recovery fund of $950 million dollars, through which consumers could submit claims for a free re-pipe of any structure that had either been constructed, or re-piped with Polybutylene.

By 1995, an estimated 10 million structures across the Unites States, had defective Polybutylene plumbing systems installed. Consumers of the Polybutylene pipe were notified of these settlements through direct mailings, news and media saturation and by various other means also.

These pictures are a small sampling of the various consumer notifications that were distributed across North America between 1995 and 2003, notifying consumers and industry professionals alike, of the defective pipes and  the class actions also.

Ultimately, these class action lawsuits were settled and hundreds of millions of dollars were set aside to help consumers, by providing for the replacement of the defective pipes.

Although Kier could have had the entire building re-piped, free of charge, these settlements only provided for the replacement of the defective pipes. There was still the matter of relocating the 14 families that lived in the building to consider, as well as the loss of rent while the premises were vacated. 

In the end, Kier would have had to absorb the cost of: 
  • Providing housing for the 14 displaced families;
  • The loss of rent for 14 units; 
  • Making repairs to the walls and floors where access points would have been necessary.
Rather than absorbing these costs and having the defective pipes replaced, (which probably had not become a serious issue yet),  Kier likely concluded that the actual expense to have the pipes replaced was not cost effective and made the decision to do Nothing to address them.

BUT... It will likely make it come back to bite you later

For the next 20 years, Kier continued to manage, operate and maintain the building in their name, dealing with the occasional broken water pipe, until the frequency of these pipe breaks led Kier to conclude that it was time to unload a sinking ship... to me!

By 2005, when I bought the building, it would have been highly unlikely for anyone who had a property that had been piped with Polybutylene, to be unaware of their defects, or of the class action lawsuits and settlements associated with them.... especially in a region where these pipes were so widely used.

Also in 2005, for a large building, construction and property management company such as the KierCorporation, to claim that they were completely unaware of these defective pipes, or to deny having any knowledge of the class action suits and/or  their settlements, is probably the biggest lie ever told, since Adam told Eve that he got the apple from a street vendor named, "Snake".

During the purchase of the building, I employed the services of, National Property Inspections, to perform a comprehensive inspection of the building prior to buying it .  The inspector noted the presence of Polybutylene (PB) pipe and the fact that Polybutylene pipe had been been known to leak. Although there were no active leaks present at the time of inspection, the inspector did note evidence of water stains, in several of the units.
I questioned the Kier representatives that were present during the inspection, about the presence of the Polybutylene pipes. Kier's response, was that they had never had any problems with them.... A statement that I now realize was a lie.

The images below, are of work orders that Kier processed for repairs and maintenance of the building, for the entire 4 years that I had employed them managed it .  Note the red arrows down the right side of each page... each of those red arrows indicates a Polybutylene pipe related leak.... It appears that in total, there were 81 leaks over the 4 years that Kier ran the building for me.
Yes... that was a whopping 81 water leaks between 
November, 2005 and November, 2009.

(Kier work orders showing 81 water leaks since Nov. 2005)

  •  In most situations... 81 water pipe leaks in a 4 year period, is WAY over the number it should take for a competent property management company to determine that something isn't quite right with the plumbing and notify the property owner...

  •  In THIS situation... where building construction, repair and maintenance is the primary business function and description of the Kier Corporation, who should be better informed on this topic than most people... Having 81 water leaks in 4 years and claiming to have no knowledge that the pipes in question were found to be defective is an embarrassment

Evidently during the inspection, when Kier's representative stated that they had never had a problem with the Polybutylene pipes, what he really meant to say was that, they never had a problem getting water out of them once they broke... 
and apparently they broke often.

In 1995, when Polybutylene pipes were declared to be defective, the pipes in the building were just 8 years old. Studies have shown that Polybutylene pipes typically began failing at around 10 - 12 years of age.

Kier likely determined that the loss of rent on 14 units, plus the expense of relocating 14 families for a month or more while the work was done, far outweighed the benefits of replacing pipes that weren't even having problems yet and decided to hold onto the building until it was no longer cost effective for them to keep repairing water leaks and chose to sell it, without making a full disclosure regarding the defective pipes.

After several months were spent at the building making repairs, I discovered that Kier had been inside many of the same walls 2, 3 and 4 times, to repair leaks and broken water lines, yet they couldn't even be bothered to let the space dry out before sealing it back up again, resulting in the growth of black mold inside the wall cavities of several units.  

A perfect example of this can be seen in this video, after the 82nd water pipe
break in 4 years, occurred in unit #13, in February, 2010.
Surely, after experiencing 81 water leaks in only 4 years, simple everyday common sense would have told Kier that these pipes were in a very fragile state and that any unnecessary movement of them could only lead to more leaks and property damage?   Apparently, Kier failed employ the use of much common sense in the day to day management and maintenance of my property, as you can see from this video that was taken on November 30, 2009.

I wonder what THIS was code for?
Incompetence would be my guess. 

Yes, that grey tube looping down, is a defective Polybutylene pipe AND it's a live hot water line also.  Every time a resident turned on their hot water, that pipe would whip around like a snake.  So much for those, "up to code" repairs that Kier was required to make under our contract together...

It's obvious that Kier was well aware that these pipes had been declared defective, yet they did nothing to help prevent them from future ruptures. Plumbing repairs at the building can only be described as haphazard (if not illegal) at best.  Kier had also been in continuous contact and control of the building from the day these pipes were installed, until November 30, 2009, so any improper or illegally made repairs, can only be attributed to their negligence.   

It would be all but impossible for any company the size of Kier Corporation, whose primary business is building and construction, to be completely oblivious to three of the largest class action settlements in U.S. History, which were all headline news for weeks on end and which directly affected the building and construction industries as well as an estimated 10 million households nationwide.

Another point of suspicion, is how knowledgeable and well informed Kier's maintenance man, Kelly is about this  "JUNK PIPE". (as he put it).   In fact, he was so well informed, that he not only knew the exact cause of the defect in Polybutylene pipe, he was also well versed in their repair and what materials worked better than others in making those repairs.  
(Listen to the audio portion of our conversation)

Listen to Terri Muchmore admit that Kier knew about the defective pipes.
ME:"...I didn't find out about it for a few more months."
TERRI: "Neither did we.

Strange, when you consider Kier claimed to be totally unaware of any pipe defects at all.    

A more likely scenario, is that Kier was well aware that these pipes were defective and had been recalled. Kier  was also beginning to see the signs of things to come, (as evidenced by the water staining noted in the property inspection report).  However, in weighing their options, Kier likely concluded that the actual expense of relocating 14 families, for what would likely be a month or more and absorbing the loss of rent at the building, far outweighed the benefits of replacing the pipes. Kier willfully chose not to address the defective pipes, opting to take a "wait and see" approach instead. 

Time passed and when it finally became clear that it was no longer cost effective to continue repairing the ever more frequent water leaks in the building, Kier chose to sell it.... Intentionally and willfully failing to disclose this information at the time of the sale.

(The picture below is a clipping taken from Ogden City's own website)
Makes you wonder what the inspectors that signed off on Kier's work
were looking for... Benjamin Franklin and friends perhaps???

Kier Corporation knew EXACTLY what they were doing...
... They just weren't EXACTLY expecting to get caught