Lowcountry neighbors sue HOA, Hargray for alleged illegal kickback deal

Some Lowcountry neighbors are taking their cable company, Hargray, and homeowner’s association’s (HOA) officers at D.R. Horton to court. They’re suing the two companies, accusing them of an illegal kickback deal.

Neighbors of the D.R. Horton-built communities claim the company acted “unjustly” in making the said agreement with Hargray to charge homeowners “unfair” prices.

“We’re not a big million-dollar-home-community,” neighbor Cassie Clayshulte tells NEWS 3. “These aren’t our second homes. These are working class people,” she says of herself and her neighbors in the Mill Creek subdivision of Cypress Ridge in Okatie.

The neighbors’ attorney, Badge Humphries, says the alleged kickback deal was discovered when it was renewed recently.

“The purpose of this lawsuit is to vindicate the rights of the association and its members, who have been forced to participate in contracts that serve the interests of D.R. Horton and Hargray, not their own,” Humphries said in a news release.

In the complaint filed, plaintiffs state their purpose, “against D.R. Horton for its role in contriving, directing, and unjustly benefiting from these illegal agreements and the associated D.R. Horton employees’ fiduciary violations to the Association.”

Homeowners like Clayshulte, though not directly involved in the civil suit’s filing, say the rates for cable services have increased.

Clayshulte says she and her neighbors were not made aware of the agreement when they moved into the community; only after they moved in were they given notice they must pay for the services, even if they did not desire to use them.

“You know, it’s a really big deal,” she says, “it’s a really big expense on top of our mortgages and our bills…and everyone has told us that the different things that can happen to you, you can lose your amenities, they can put a lien on your house, they can send you to collections, they make it clear that no matter what, they’ll collect on it.”

Humphries says D.R. Horton receives 3% of Hargray’s profits from the homeowners, under their agreement, with the D.R. Horton neighbors’ rates differing from other customer rates.

Clayshulte says the lowest package available to them averages at about $100 per month, totaling about $1200 per year.

“You know, $100 a month is ballet lessons for a little girl, or braces for a little boy. It’s coming off of people’s mortgages and out of their savings,” she says.

She hopes the contract can be terminated and the damages paid, as result of the civil suit that’s been filed.

Hargray has released a statement to NEWS 3, saying:

“We have not had an opportunity to review the lawsuit in any detail but our understanding is that it is primarily between some residents of Mill Creek and D.R. Horton. What we can say definitively is that we always act with absolute integrity and with our customers at the forefront of everything that we do. We categorically reject any claim that our relationship with Mill Creek and D.R. Horton was inappropriate in any way.

That said we would like to share some background regarding Mill Creek.

When originally constructing Mill Creek, D.R. Horton selected a company called YRT2 to construct, own, and operate the telecommunications infrastructure. D.R. Horton and YRT2 entered into an agreement which provided that YRT2 would pay D.R. Horton a fee.

In the midst of the economic recession in 2009, YRT2 became insolvent and phone, cable television, and Internet services to residents in Mill Creek were suddenly turned off. D.R. Horton contacted Hargray, and we responded immediately to restore services. Since then, we have invested over $1 million in the network serving Mill Creek.

In 2010, we entered into a new 10-year agreement with D.R. Horton, which was fashioned after the YRT2 agreement. This agreement is unlike any other that we have with other residential communities in that it required all Mill Creek residents to pay, as part of their POA dues, for phone, cable television, and Internet services and in return provided for a 10% discount off non-promotional retail rates. It also included a fee for D.R. Horton, which is common in the industry.

From time to time, some Mill Creek residents have expressed a desire for more choice because they did not want all three services. As a result, we provided residents a two-service option without cable television; only those residents that purchase all three services would continue to receive the 10% discount.

Over the past several years, we have conducted multiple meetings with Mill Creek residents to explain this additional choice and YRT2 history. In fact, today approximately 50% of Mill Creek’s residents have selected the two-service option.

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NEWS 3 has not been able to reach HOA officer, LaShea DuBois.

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