• Report: #1112942

Complaint Review: G. J. Gardner Homes

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  • Submitted: Sat, January 04, 2014
  • Updated: Sat, January 04, 2014

  • Reported By: David — Citrus Heights California
G. J. Gardner Homes
660 Auburn Folsom Road, Ste 102 Auburn, California USA

G. J. Gardner Homes dba Sherlock Home Custom Builders, Inc, and Mr. Chris Hewell, Owner/Builder, individually. Alleged Contractor Fraud and Deceptive Trade Practices Auburn California

*REBUTTAL Owner of company: Bonding Co. response

*REBUTTAL Owner of company: Simple facts

*REBUTTAL Owner of company: Contractors Beware

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Beware Future Custom Home Builders!

 A copy of the following complaint has been filed with the California State License Board and is currently under administrative review. Complaint Number NA 2013 6009.

 To:                   California State License Board

 From:               XXXX

 Date:                October 10, 2013

 RE:                   Complaint of alleged unlawful, deceptive and unethical trade practices

 Contractor:        Sherlock Home Custom Builders, Inc, dba G. J. Gardner Homes

                         and Mr. Chris Hewell, Owner/Builder, individually.

 CA License:        #574***

 Contractor

 Address:            660 Auburn Folsom Road, Ste 102 Auburn, CA 95603   

 

Dear Sirs:

 On February 18, 2013, my wife and I consulted with Mr. Hewell, the owner/builder of Sherlock Home Custom Builders, Inc, dba G. J. Gardner Homes. The purpose of our consultation was to determine the cost feasibility to build a residence on a particular undeveloped lot we were considering to purchase.

 Mr. Hewell stated he had been a builder for 30 years and graciously spent more than an hour with us reviewing the basics to build a residence. However, in order to calculate a definite number he needed 45 days to develop a “build cost analysis”. Mr. Hewell then provided us with a conditional written phrase to add to an offer to purchase said undeveloped lot.   

 On February 24, 2013, we signed a conditional Vacant Land Purchase Agreement, for a lot in Auburn, California, “subject to a build cost analysis and final approval by the selected builder and purchaser within 45 days of offer acceptance”.

 On March 1, 2013, we paid Mr. Hewell the requested sum of $2,500 as a non-refundable deposit to complete a site plan, floor plan, front elevation and build cost analysis in order for us to make an informed decision whether to purchase said lot and enter into a construction contract to build a residence.       

 On April 29, 2013, in reliance upon Mr. Hewell’s build cost analysis and his repeated assurances he could build our proposed residence within our disclosed budget, we confidently purchased the lot.

 On May 24, 2013, we agreed to pay Mr. Hewell the requested sum of $22,500 as an initial construction deposit. We were promised an engineered set of plans including a site plan, completed floor plan, four elevations, foundation, roof and electrical drawings, truss calculation, engineering stamp and title 24 documents within 30 days. We specifically asked Mr. Hewell if there was any mark-up or profit incorporated in said initial construction deposits.  He assured us the deposits were strictly a non-negotiable “fixed cost” and he had no financial stake whatsoever in his design team or engineer’s fee. He further assured us his proposed construction contract price (formerly the build cost analysis) was the absolute lowest price he could calculate. Therefore, in reliance on Mr. Hewell’s representations, we signed a Home Construction Agreement. We then sought and obtained a construction loan from Umpqua Bank.   

 On June 17, 2013, Mr. Hewell produced a draft of our house plans for our review. Despite working diligently with Mr. Hewell’s design team for three months, the plans were deeply flawed, incomplete and unprofessionally drafted. Mr. Hewell acknowledged the work product was inferior and assured us he would promptly rectify the situation.       

 On June 25, 2013, we met with Mr. Hewell to discuss and make required corrections to our house plans. During said meeting Mr. Hewell suddenly informed us in order to properly develop our site he needed to construct a six ft. high retaining wall by at least one hundred ft. along the west boundary of our lot. To date, this was the first indication a retaining wall was required.

 On July 12, 2013, Mr. Hewell informed us he needed to recalculate our site development plan.   He now proposed a cost increase of $30,000 for a retaining wall and $21,000 for additional grading. We were stunned by Mr. Hewell’s proposed cost increase because our original contract price (which we thought was fixed) listed $20,000 for grading and $5,000 as a contingency grading cost.  

 On July 14, 2013, we sent Mr. Hewell an email objecting to his proposed cost increase of $51,000. Prior to providing us with his build cost analysis, Mr. Hewell told us he walked our lot two times and consulted with a landscape engineer. As a builder with 30 years of experience, we relied on his expert opinion the cost of grading would be no more than $25,000. Clearly, Mr. Hewell’s proposed cost increase was not based on any unforeseen issues such as encountering lava cap or granite rock beneath the soil during grading or some other unforeseen contingency.  Instead his proposed cost increase was based solely on factors readily identifiable to him in calculating his original build cost analysis, including but not limited to the approximate size of our proposed house footprint before we purchased our lot. Because Mr. Hewell’s proposed contract price was reasonably close to our stated budget, we agreed to purchase the lot and confidently signed a construction contract. If we had been advised otherwise we would not have purchased the lot or entered into a construction contract to build a residence we can not afford.   

 On July 19, 2013, Mr. Hewell responded to our objections by stating he had recalculated our site development plan again.   His new proposal suggested an increase to our original contract price of $29,000 for additional grading. Oddly, a retaining wall was no longer necessary. 

 On July 30, 2013, in order to salvage the construction of our residence, we reluctantly cashed a medical savings plan and paid an additional sum into escrow to cover the proposed increased cost. 

 On August 9, 2013, we went to Mr. Hewell’s office and requested a consultation with him and the landscape engineer to clarify several critical issues before grading of our lot commenced. Furthermore, we requested a copy of the new grading bid for our review and verification of the proposed cost increase. Despite repeated assurances, Mr. Hewell failed and/or neglected to produce a copy.

 On August 10, 2013, we discovered our house plan corrections had been subcontracted to someone in the state of Nevada. We tried to contact said individual but he refused to speak directly with us stating “you are not my clients”. We complained to Mr. Hewell and he assured us he would promptly rectify the situation.

 On August 12, 2013, we sent Mr. Hewell an email advising him under no circumstances is a grader or anyone else to set foot on our lot until we met with the landscape engineer to resolve certain issues and confirm site elevations. 

 On August 13, 2013, Mr. Hewell responded by email stating “it's to late for that we are starting to grade today”.

On August 13, 2013 and August 14, 2013, I tried to contact Mr. Hewell by telephone but he was unavailable.  

On August 15, 2013, I contacted the city of Auburn to inquire if a grading permit had been issued. I was advised Mr. Hewell had attempted to obtain a grading permit a few days earlier but his request was denied because we had not yet submitted a Tree Mitigation Plan and/or posted a Tree Bond with the city. Later that morning I went to our lot and confirmed Mr. Hewell had not commenced grading.

On or about August 16, 2013, Mr. Hewell directed the clearing of trees from our lot without our knowledge, permission and most importantly without a permit from the city of Auburn. In addition, despite specific knowledge of our Home Owners Association’s CC&R’s Mr. Hewell failed to obtain their authorization to remove trees from our lot and failed to submit our house plans to the Architectural Review Committee before commencement of site development.  

On August 18, 2013, we received a written demand from the Home Owners Association to cease construction activity on our lot until all required authorizations have been obtained.

On August 19, 2013, I visited our lot. Even though we discussed the possibility certain trees may need to be cleared to develop the site, I was shocked to discover Mr. Hewell had cleared the entire acre of land, including several trees I believe did not need to be removed. Later, I discovered the severed trees were allegedly resold as firewood in Tahoe, Nevada for an estimated price of $2,500. Despite repeated demands we have not received any compensation for our trees.  

On August 23, 2013, I met with Mr. Hewell to seek an explanation why he cleared our trees without a permit from the city of Auburn and authorization from the Home Owners Association. Mr. Hewell tried to mitigate the severity of the situation alleging it was just a “simple misunderstanding”.

On August 24, 2013, my wife and I contacted the city of Auburn and our Home Owners Association to express our apologies site work had begun without proper legal authorization.  

On August 26, 2013, Mr. Hewell finally produced an engineered set of plans. Nonetheless, the plans were still deeply flawed and inaccurate. (many of the original corrections were never addressed) Mr. Hewell assured us there was no need for his design team to redo the plans again. Instead he promised to “red line” the plans into compliance during the construction process.

On August 31, 2013, I began micromanaging the construction of our residence to insure compliance with the law. Specifically, I started working directly with the city of Auburn and our Home Owners Association to secure the necessary legal authorizations to develop our lot.

During the first two weeks of September, I continued to press Mr. Hewell for written details concerning his proposed cost increase and other construction costs set forth in our contract. He has steadfastly refused to provide any details. 

One particular area of contention was the fee charged by Mr. Hewell’s design team. I suggested their fee should be renegotiated due to their negligent work product. Mr. Hewell agreed the design team’s work was unprofessional and admitted he was going to pay them only 80% of their fee. I requested Mr. Hewell refund the unpaid portion of the fee to me. However, he refused and justified his retention of the unpaid portion because the design team had cost him too much time and money.  

In a rare candid moment, Mr. Hewell confessed the actual cost to design our residence, including the engineered plans and landscape engineer was only $10,000. I immediately reminded Mr. Hewell he previously alleged he had no financial stake or profit incorporated in his design team or the engineer’s fee of $25,000. If I had known said construction deposits were not “fixed costs” as he alleged, I would have negotiated a lower contract price (including Mr. Hewell’s line item profit of $75,000). I requested Mr. Hewell give me a refund or credit of $15,000, but he refused. He claimed he was entitled to keep the surplus money because he had to spend a lot of extra time chasing his people around to do their jobs.

On September 10, 2013, the city of Auburn issued a letter to Mr. Hewell assessing a civil penalty in the sum of $7,376.25 for clearing trees from our lot without a permit. The city of Auburn’s Tree Preservation Code, §161.09(c), also states violations of the code shall be punishable as a misdemeanor.  Mr. Hewell assured me he would promptly pay the civil penalty.

On September 17, 2013, we terminated the services of Sherlock Home Custom Builders, Inc, dba G. J. Gardner Homes and Mr. Chris Hewell, Owner/Builder, individually.

Since the termination of Mr. Hewell’s services, we obtained a copy of his recalculated bid from the grader and discovered the actual bid was approximately $8,650 less than he represented to us.

To date, Mr. Hewell has refused or neglected to pay the civil penalty to the city of Auburn.

Our total damages incurred due to the conduct of Sherlock Home Custom Builders, Inc, dba G. J. Gardner Homes and Mr. Chris Hewell, Owner/Builder, individually is estimated at $25,086.25.

Since the filing of our complaint with the Contractors State License Board we have learned there are at least two other homeowners in 2013 with similar complainants against Sherlock Home Custom Builders, Inc, dba G. J. Gardner Homes and Mr. Chris Hewell, Owner/Builder, individually.

In addition, we have since discovered our fixed contract price was grossly understated in every category and it would be impossible to build our home without at least an additional 20% in hard costs and additional profit to the contractor.

For example our fixed contract price listed only one HVAC unit for a two story 3,200 sq ft. floor plan. Whereas we have confirmed two units are required to properly service both levels of the house. Clearly a builder of 30 years experience should know better.

Another example our fixed contract price listed $4,000 for rough electrical work. The true cost is closer to $18,500.  Clearly a builder of 30 years experience should know better.

We could go on and on with more examples but hopefully future custom homeowners will take notice herein. Do your homework and remember a fixed contract price means nothing to some contractors. It is simply a starting point for them to get a claw in your pocket and to start digging.


This report was posted on Ripoff Report on 01/04/2014 02:38 PM and is a permanent record located here: http://www.ripoffreport.com/r/G-J-Gardner-Homes/Auburn-California-95603/G-J-Gardner-Homes-dba-Sherlock-Home-Custom-Builders-Inc-and-Mr-Chris-Hewell-OwnerB-1112942. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.

Ripoff Report has an exclusive license to this report. It may not be copied without the written permission of Ripoff Report.

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Updates & Rebuttals

#1 REBUTTAL Owner of company

Bonding Co. response

AUTHOR: Bonding Co. Response - ()

Via Regular and Electronic Mail

 

 

February 24, 2014

 

 

David J. Barber

 

Re:                   Principal         :           Sherlock Home Construction

                        Bond No.         :           SC493889 - Contractor’s License Bond

                        License No.     :           574***

            Claim No.        :           AC 45064

 

Dear Mr. Barber: 

 

This is in regard to your claim against the referenced contractor’s license bond.  We write to inform you of our determination.  Based on the reasons set forth below, we are unable to honor your claim at this time. 

 

The bond in question is governed by the provisions of the Contractor’s License Law, commencing with Sections 7000 et. seq., of the California Business and Professions Code.  Liability under the bond is premised upon proven violations of those same codes.  Furthermore, as this surety’s liability is established by statute, no burden may be imposed on this surety than what is specifically set forth by statue.

 

The statutory Contractors License Bond which you have made a claim upon is not a cash, payment or performance bond.  It is not an insurance policy.  By its express terms, to qualify to recover on the license bond, you must prove violations of the applicable California Business and Professions Code.  American Contractors Indemnity Company’s liability under the bond is limited by those statutes.  

 

As a reminder, the conditions for your recovery of damages are set forth in section 7071.5 (a) of the California Business and Professions Code which states that the bond shall be for the benefit of the following:

 

(b) A property owner contracting for the construction of a single-family dwelling who is damaged as a result of a violation of this chapter by the licensee. That property owner shall only recover under this subdivision if the single-family dwelling is not intended for sale or offered for sale at the time the damages were incurred.

 

In other words, in order to recover from the bond, the surety must be able to reasonably confirm that you have been damaged as a result of a violation of the license law by the licensee.

 

In this regard, your claim pertains to an alleged diversion of contract funds and failure to follow building code requirements by the bond principal in the execution of a new home construction contract.  The California Business and Professions Code sections most relevant to your claim are as follows:

 

7108. Diversion of funds or property received for prosecution or completion of a specific construction  project or operation, or for a specified purpose in the prosecution or completion of any construction  project or operation, or failure substantially to account for the application or use of such funds or  property on the construction project or operation for which such funds or property were received  constitutes a cause for disciplinary action.

 

7110.  Willful or deliberate disregard and violation of the building laws of the state, or of any political  subdivision thereof, or of Section 8505 or 8556 of this  code, or of Sections 1689.5 to 1689.8, inclusive, or

Sections 1689.10 to 1689.13, inclusive, of the Civil Code, or of the safety laws or labor laws or compensation insurance laws or Unemployment Insurance Code of the state, or violation by any licensee of any provision of the Health and Safety Code or Water Code, relating to the digging, boring, or drilling of water wells, or Article 2 (commencing with Section 4216) of Chapter 3.1 of Division 5 of Title 1 of the Government Code, constitutes a cause for disciplinary action.


Based on the documentation you submitted, you alleged that after you entered into a new home construction agreement with bond principal, the principal diverted contract funds and violated building code requirements by removing trees from your property without a permit, which resulted in a civil penalty being filed against the principal by the City of Auburn. You also alleged that your Homeowners Association (HOA) incurred attorney’s fees in the amount of $210.00, which resulted from the principal removing the trees from your property. You further alleged that the principal sold the trees that he removed from your property and kept the profits.

 

With regard to your claim for civil penalties and your HOA’s attorney’s fees, it is not reasonably clear how you have been damaged. Specifically, with regard to the civil penalties it is your position that these were assessed directly against the principal, and it is not clear that you will be liable for any portion of the penalties.  Additionally, it is the principal’s position that the removal of the trees, which lead to the civil penalties, was performed by another contractor. In our email of January 29, 2014 we requested documentation demonstrating a violation of building code requirements by the principal relative to the tree removal.  To date, we have not received any additional documentation to support your allegations or damages relating to this issue.  Similarly, you have not provided any documentation demonstrating that you have been damaged in connection with you HOA’s attorney’s fees as it is our understanding that these fees were paid directly by your HOA and you are not being charged for them.  Based on the foregoing, we are unable to honor the portions of your claim relating to attorney’s fees or civil penalties.

 

Moreover, with regard to your allegation that the principal sold the trees that he removed from your property and that he kept the profits, per our letter of January 29, 2014, we informed you that based on the documentation available, it was not reasonably clear which B&P Code this allegation pertains to. We also informed you that based on the evidence available, your damages stemming from this item were not reasonably clear. We requested additional documentation clarifying which B&P Code section your allegation pertained to and documentation demonstrating your damages that directly resulted from this item. To date, we have not received the requested documentation. Additionally, the principal disputed liability for the trees and alleged that this work was the responsibility of another contractor.  To date, we have not been provided with any evidence that this work was performed by the principal.  Therefore, it is not reasonably clear that you have been damaged as a result of any violation of the licensing law by the principal with regard to the trees.

 

With respect to your allegation that the bond principal violated B&P Code Section 7108, as you paid the principal $25,000.00 and he failed to provide an accounting of the funds received, it is not reasonably clear whether the principal violated the referenced section.  Specifically, the principal disputed your allegation and alleged he is entitled to retain the funds you have paid pursuant to the terms of your contract. In this regard, the principal referenced Section 22(b)(i) of your contract, which states as follows in relevant part:

 

"Liquidated Damages for Breach Prior to Commencement of Construction. If owner breaches this Agreement prior to the commencement of construction of the residence… Contractor shall be entitled, as its sole and exclusive remedy, whether at law or in equity, to terminate this Agreement and retain the liquidated damages described in this subsection… Owner and Contractor therefore agree that a reasonably present estimate of the net detriment that the contractor would suffer in the event of Owner’s default of breach in those circumstances is an amount of money equal to the Initial Construction Deposit plus the Pre Construction Agreement Deposit, which shall be the full, agreed and liquidated damages."

 

It is the principal’s position that your termination of the contract represents a breach of the contract on your part. While we acknowledge your position that you terminated the principal because he provided flawed plans and due to a change order he issued that increased your contract amount, the principal’s alleged breach of the contract is not reasonably clear.  Specifically, with regard to the principal’s change order, we note that your contract also has a provision relating to potential cost escalation in which both you and the principal agreed that the original contract amount was an estimate only and subject to increase following the commencement of the job.  Therefore, it appears the principal submitted a change order after obtaining the plans pursuant to the terms of your contract.  Moreover, regarding your position that the plans were "deeply flawed", we have been provided with no evidence to date demonstrating the same, nor have we been provided with any information clarifying the flaws you are alleging.  Therefore, your position regarding the plans is not reasonably clear. Consequently, it is not reasonably clear who ultimately breached the contract. 

 

Moreover, in order to obtain additional information regarding the cost the principal incurred in connection with the plans, we contacted an independent construction consultant, DeWald Construction Co. Inc. (DeWald) and confirmed that a set of architectural plans will typically cost approximately $3.00 per square foot of the home including the garage, or 3% of the total contract amount. Based on the square footage of your future home, 4,454 square feet, it appears that the cost to obtain plans would be approximately $13,362.00.  Likewise, if we were to consider 3% of the contract amount to calculate this cost, it would be approximately $13,500.00. Additionally, the DeWald informed us that the principal would reasonably incur another $5,000.00 to $6,000.00 in his own costs relative to his time spent on preparation of the plans. Therefore, it appears that the principal potentially could have spent up to $19,500.00 preparing the plans alone.

 

Based on the foregoing, we are currently unable to honor your claim at this time as it is not reasonably clear that you have been damaged as a result of any violation of the license law by the bond principal.

 

If you would like us to reconsider the claim, in order to do so, we request that you provide us with facts and/or documentation proving that you have been damaged as a result of the principal’s violation of the contractor’s license law. Should you submit the requested documentation, we will gladly reconsider our position provided that we receive your documentation prior to the expiration of the statute of limitations and the bond has not been depleted by other claims.

 

Additionally, please be advised that California Business and Professions Code §7071.11(c), which establishes the statute of limitations period within which claims against the bond must be filed, states as follows:

 

"(c) Except for claims covered by subdivision (d), any action against a bond required under this article, excluding the judgment bond specified under Section 7071.17, shall be brought in accordance with the following:

 (1) Within two years after the expiration of the license period during which the act or omission occurred. The provisions of this paragraph shall be applicable only if the license has not been inactivated, canceled, or revoked during the license period for which the bond was posted and accepted by the registrar as specified under Section 7071.7.

 (2) If the license has been inactivated, canceled, or revoked, an action shall be brought within two years of the date the license of the active licensee would have expired had the license not been inactivated, canceled, or revoked. For the provisions of this paragraph to be applicable, the act or omission for which the action is filed must have occurred prior to the date the license was inactivated, canceled, or revoked."

 

You may contact the following:  California Department of Insurance, Claims Services Bureau, 300 S. Spring St., Los Angeles, CA, 90013, (800) 927-4357.

 

We reserve all of our rights and defenses under the bond(s), the law or otherwise.

 

Very truly yours,

 

 

 

Sylvia Hernandez, Bond Claims Examiner

On behalf of American Contractors Indemnity Company

HCC Surety Group

Direct Line & Fax: 310-957-3188

Email: shernandez@hccsurety.com

 

Cc:       Sherlock Home Construction

 

 

Sylvia Hernandez

 

Bond Claims Examiner

HCC Surety Group

A division of HCC Insurance Holdings, Inc.

40 Years of Conquering Risk

Tel: 310 6490990

 

This e-mail contains confidential information, and may contain privileged information, which is the property of the sender, and is intended solely for the attention and use of the addressee.  If you are not the named addressee, you must not disclose, copy or retransmit this transmission or take any other action in reliance upon this transmission, and you should notify us as soon as possible.

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#2 REBUTTAL Owner of company

Simple facts

AUTHOR: Chris - ()

(a)      On May 24, 2013, we agreed to pay Mr. Hewell the requested sum of $22,500 as an initial construction deposit. We were promised an engineered set of plans including a site plan, completed floor plan, four elevations, foundation, roof and electrical drawings, truss calculation, engineering stamp and title 24 documents within 30 days. We specifically asked Mr. Hewell if there was any mark-up or profit incorporated in said initial construction deposits.  He assured us the deposits were strictly a non-negotiable “fixed cost” and he had no financial stake whatsoever in his design team or engineer’s fee. He further assured us his proposed construction contract price (formerly the build cost analysis) was the absolute lowest price he could calculate. Therefore, in reliance on Mr. Hewell’s representations, we signed a Home Construction Agreement. We then sought and obtained a construction loan from Umpqua Bank.  

Mr. Barber

Please refer to this section of the contract page 12 which clearly states liquidated damages if there is a breach of contract by the Owner which there was. Please provide written documentation to support you verbal claims highlighted above.  As a former Attorney you obviously realize the need to provided documentation to support your verbal claims especially when it relates to a contract.

“  Breach by Owner.

(i)             Liquidated Damages for Breach Prior to Commencement of Construction. If Owner breaches this Agreement prior to the commencement of construction of the Residence (which, for purposes of this Section 22 shall be deemed commenced upon attainment of the initial grading, foundation or other building permit for the construction of any portion of the Residence), Contractor shall be entitled, as its sole and exclusive remedy, whether at law or in equity, to terminate this Agreement and retain the liquidated damages described in this subsection. Owner and Contractor agree that it would be impractical and extremely difficult to estimate the damages which Contractor may suffer in the event Owner defaults under this Agreement prior to the commencement of construction. Owner and Contractor therefore agree that a reasonable present estimate of the net detriment that Contractor would suffer in the event of Owner’s default or breach in those circumstances is an amount of money equal to the Initial Construction Deposit plus the Pre Construction Agreement Deposit, which shall be the full, agreed and liquidated damages pursuant to California Civil Code Section 1671 and shall not constitute forfeiture penalty within the meaning of California Civil Code Section 3275 or 3369. “

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#3 REBUTTAL Owner of company

Contractors Beware

AUTHOR: Justice - ()

David/Veroncia,

It is obvious from your time line that we spent endless hours on the preliminary design and costing of your home. Let the reader decided for them shelves who is right but, I am sure as you already know that you cannot build for the price I quoted and you are using this forum to lash out. By now would have had your house framed, you would have been picking granite colors, cabinet details and so on…now your stuck realizing that no contractor is even close to my price.

All that being said I wish you luck in your build.

Kind regards,

Chris

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