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Chester County Press

Hopewell Ridge homeowners file lawsuit against developer and homebuilder

09/18/2013 12:44PM ● By Acl

By Steven Hoffman

Staff Writer 

Twenty-three homeowners in the Hopewell Ridge community in East Nottingham Township have filed a federal lawsuit in the U.S. District Court against the developer and homebuilder of the 29-lot subdivision as long-simmering sewage issues continue to be unresolved more than five years after residents started moving into the homes.

The defendants named in the filing include the developer, Wilmer and Joyce Hostetter, and builder, Keystone Custom Homes, as well as Willow Creek Holdings, LLC., which is a subsidiary of Keystone Custom Homes.

The plaintiffs are all represented by the law firm of Feldman Shepherd Wohlgelernter Tanner Weinstock & Dodig, LLP.

Keystone Custom Homes entered into an agreement with Hostetter to buy lots in Hopewell Ridge and then sell the lots with homes built on them. All the plaintiffs except for one are original purchasers of the homes in Hopewell Ridge. The one plaintiff who is not an original purchaser bought the home from the original purchaser.

When the community was being planned, the Hostetters prepared a Sewage Planning Narrative that stated that all lots will be serviced by on-lot sewage disposal and water wells.

The lawsuit asserts that Hostetter and Keystone Custom Homes “had long been aware that serious issues existed with the feasibility of using on-lot sewage systems and private on-lot wells.”

According to the filing, “The Sewage Planning Narrative further noted that 20 of the 29 lots in Hopewell Ridge were unsuitable for standard septic systems due to groundwater nitrogen plume migration off-site and that a workable solution proposes the use of individual on-lot nitrogen control treatment systems on these 20 lots.”

Instead of standard septic systems, the developer or homebuilder proposed using individual on-lot nitrogen control treatment systems called MicroSepTec EnviroServer wastewater treatment systems on 20 lots.

The homeowners contend that the nitrogen control treatment systems have not worked. High levels of nitrates in drinking water pose various health risks, including being a contributing factor to methemoglobinemia, also known as blue baby syndrome, a condition that children under the age of six months can be susceptible to. The lawsuit notes that pregnant women, adults with reduced stomach acidity, and people deficient in the enzyme that changes methemoglobin back to normal hemoglobin are all susceptible to nitrate-induced methemoglobinemia. Prolonged intake of high levels of nitrates is also linked to gastric problems. Nitrates are tasteless, colorless, and odorless compounds and can't be detected unless the water is chemically analyzed.

The Sewage Planning Narrative further states that the EnviroServer technology had not been approved by the Pennsylvania Department of Environmental Protection (DEP) for nitrogen control, and consequently an Experimental Water Quality Management Part II permit would be needed, as well as another backup alternative if the systems failed.

According to the lawsuit, the Hostetters reached an installation and maintenance agreement for on-lot sewage disposal systems with East Nottingham Township in October of 2005. It was noted at that time that the Chester County Health Department required Hostetter “to maintain repair and replace the system in perpetuity, at their sole cost and expense, in good and adequate condition and repair, so that the system functions at all times hereafter in accordance with its intended purpose and in accordance with the regulations of the {DEP and Chester County Health Department}.”

The DEP subsequently approved a revision to the Township Official Sewage Facilities Plan regarding the Hopewell Ridge community, and the state agency noted at the time that “The DEP considers the EnviroServer to be experimental technology for this use. Therefore, a conventional backup sewage disposal method is required. The department acknowledges that the subdivision will be connected to public sewage facilities tributary to the Oxford Area Sewer Authority, in the event the experiment is deemed a failure.”

According to the lawsuit, on or about March 2007, the Hostetters began conveying the lots in Hopewell Ridge to Willow Creek, LLC. Willow Creek acted as a seller of the homes to third parties. The Public Offering Statement filed by Hostetter did not disclose either the existence or the role of Willow Creek, LLC, and did not mention the entity at all.

In April of 2008, representatives from the Department of Environmental Protection conducted an inspection of the Hopewell Ridge sewage systems. During this inspection, several areas of concern were identified, according to the lawsuit. They included the following:

“Several of the systems showed evidence of erosion problems resulting in soil deposits around treatment unit risers and across drain fields.”

“There was unauthorized access to the treatment units and several of the lids were secured on the treatment unit risers with standard screws allowing unauthorized access.”

“To date, the DEP has not received any sampling results from the functioning units. However, it was learned that five of the units that are operational have reverse osmosis units on the house water supply. The units appeared to be unexpected and have the complicating effect of removing the alkalinity from the water. Alkalinity is essential to allow the treatment process to occur properly.”

Then, on July 23, 2009, the DEP notified Hostetter that they had received the influent and effluent sampling data associated with the EnviroServer units in the Hopewell Ridge Subdivision and, according to the data, the EnviroServers were not consistently meeting the effluent limit of 10 milligrams per liter.

According to the lawsuit, prior to closing on their homes, the plaintiffs were told that the EnviroServers were “state-of-the-art,” “green,” and “no maintenance.” At or just prior to the pre-closing walk-through  on the homes, many plaintiffs discovered an additional faucet in their kitchens and were told by Keystone employees that it was a “free upgrade” for filtered water.

In truth, the additional faucet in the kitchen was actually a reverse osmosis system required by the Chester County Health Department due to elevated nitrate levels in the well water. These elevated nitrate levels in the water were not disclosed to the plaintiffs, the lawsuit contends.

Furthermore, the plaintiffs were not told that the experimental EnviroServers were required in an attempt to reduce nitrate levels or that there were inadequate funds for a backup system for public sewer and water in place.

On Feb. 28, 2012, the DEP sent correspondence to Hostetter and the township advising that it received a report indicating that the EnviroServers had demonstrated continued non-compliance with the nitrogen limit contained in the sewage permit and, as required by the Special Conditions in the permit, public sewers must be extended to serve the residences in Hopewell Ridge.

The lawsuit notes that there is no connection to public water or sewer systems readily available for Hopewell Ridge, and that homeowners depend on well water. The cost to connect the plaintiffs' homes to public sewers and water is believed to be in excess of $10 million. The township does not have enough money held in escrow to pay for the cost of getting public sewers and water to Hopewell Ridge.

The lawsuit says that “The defendants knew no later than 2008 that the EnviroServers were not performing as required by the Sewage Permit. Despite this knowledge, the defendants caused declarant control to be turned over to the Homeowners Association of Hopewell Ridge, and the executive board of the homeowners association—comprised of Keystone Custom Homes employees—resigned, effectively leaving the residents of Hopewell Ridge with drinking water that has elevated nitrates. There are no properly functioning septic systems, no access to public water and sewer systems, and insufficient funding held in escrow to connect to public water and sewer systems. Without being connected to public water and sewer systems, residents can't sell their homes, and the home values have fallen.

“As a direct and proximate result of the defendants' conduct as described throughout this complaint, the plaintiffs have suffered the diminution in value of their homes, the loss of marketability of their homes, and expenses related to high nitrates in their water, including adding maintenance costs in order to achieve functioning septic systems, and plaintiffs will continue to incur damages indefinitely into the future.”

The Hopewell Ridge community is now known as Wyndham Creek. In August, the East Nottingham Township Board of Supervisors approved a feasibility study to look at possible options to address the unresolved sewage and water issues in the Wyndham Creek community. One resident responded that a feasibility study at this point is too little, too late. The lawsuit was filed a few weeks later.