Poway pool builder in trouble

By: QUINN EASTMAN - Staff Writer | Thursday, October 4, 2007 10:32 PM PDT ∞

POWAY ---- A swimming pool builder's recent financial implosion has left dozens of North County homeowners with partly built pools and its subcontractors with millions in unpaid bills, several of the homeowners said this week.

Arvinder Malhotra, a Sabre Springs resident, said he visited Hallmark Pools & Spas' offices on Stowe Drive in Poway on Wednesday morning to find a locksmith changing the locks.

With $15 million in revenue and 217 pools built last year, Hallmark was ranked as the 18th-largest swimming pool builder in the United States by Pool & Spa News as recently as 2004.

A co-owner told the North County Times that he was trying to salvage the company.

"The goal is still to get everybody's pool done," said Kelly Shawhan, who is listed as co-owner and lead pool designer on Hallmark's Web site and said he was general manager from 2002 to 2004.

In a phone interview, Shawhan said he was upset by the company's financial difficulties and wanted to correct them.

"I'm torn by that," he said. "It's a difficult time."

For now, Hallmark's answering machine refers customers to two employees whose cell phone numbers have been shut off and informs them that the service and repair department closed in mid-September. Hallmark's Mira Mesa store closed in February.

Malhotra said he has paid $43,000 for a pool that was almost finished, except for equipment and plastering. He posted a note on a home and garden Web site and soon heard from several puzzled homeowners by e-mail, he said.

Based on talking with them and subcontractors, Malhotra estimated that Hallmark has left more than 60 pool jobs unfinished and $2 million in subcontractors' bills unpaid.

The company's closing at the end of September took people such as Rodger and Tina Van Kirk by surprise.

They only found out when more than one of their subcontractors said last week that because of Hallmark's failure to pay them, they would place a mechanic's lien on the Van Kirks' Calavera Hills home.

"I was talking with our construction manager and just happened to ask him: Did the gunite guys get paid?" Rodger Van Kirk said. "Then it all unraveled from there. It started out so well."

Gunite refers to concrete delivered with a compressed air gun.

The construction manager told Van Kirk that he was soon to lose his job, Van Kirk said.

The Van Kirks met with another contractor Thursday to get an estimate on what it would cost to complete the partly built pool in their backyard. They said they had already paid $37,000 and were about 70 percent done.

Hallmark's specialty swimming pool contractor's license is listed as valid until April, according to the Contractor's State Licensing Board.

However, a notice on the board's Web site says that Hallmark's license may be suspended at the end of October if the company does not file a workers' compensation insurance policy.

Board spokeswoman Pamela Mares called the notice a "red flag," indicating that Hallmark may have had trouble paying its bills.

"With some of these companies, you don't know they're in financial difficulty until they crash," she said.

As of Wednesday, Hallmark had not filed for bankruptcy, according to the Southern District of California's Bankruptcy Court.

"Frontloading" is a common source of complaints against swimming pool contractors, Mares said. Frontloading occurs when contractors take excessive down payments (more than 10 percent, or $1,000) or payments for work not completed.

The ideal practice is to pace payment along with completion of the pool step by step, she said.

Mares said the licensing board has opened an investigation of Hallmark and urged customers with unfinished jobs to call the board staff at (800) 962-1125.

Hallmark's "responsible managing officer" is Marsha Harrison, widow of its founder, according to the licensing board.

Shawhan said that he is a 40 percent partner.

Mortgage records show that in February, he took out a $300,000 loan on his home to benefit the company. Harrison took out a loan of equal amount from the same bank on the same day.

Her husband, Ted, founded Hallmark in 1986 and died in June 2005, according to an obituary in Pool & Spa News. He was described in the obituary as family-oriented and involved in community service.

More information is available at www.cslb.ca.gov/consumers/swimpool.asp.

Contact staff writer Quinn Eastman at (760) 740-5412 or qeastman@nctimes.com.