When one has consulted on close to 200 home inspection claims, there is a powerful temptation to conclude that one has seen every goofy claim that there could possibly be and I was really beginning to think, back in the summer of 2009, that I had. Then I got a call from an inspector friend in a populous Mid-Atlantic state.
As sometimes happens, the first notice that the inspector had of the claim was when the county sheriff served him with the lawsuit. Now it is not impossible to persuade a lawyer to drop a claim against a home inspector once a lawsuit has been filed and I have succeeded in doing so a number of times but it is considerably more difficult once there has been a substantial calorie-burn on the part of the plaintiffs’ attorney, as there was in this particular case.
But before undertaking my own calorie-burn, I wanted to ascertain the plaintiffs’ attorney’s willingness to be persuaded. To my considerable delight, he vindicated my lofty notion of my personal charm by agreeing to forebear taking any adverse action against the inspector until I had assembled a compelling litany of reasons why he should drop the case against the inspector.
Then I took a closer look at the Complaint which revealed that what the Plaintiffs were aggrieved by was the inspector’s alleged failure to detect termite damage that the plaintiffs, themselves, did not discover until 11 days shy of a year after the original inspection.
Leaving aside the fact that you have to wonder how apparent this problem really was when the folks living in the house do not notice anything for close to a year but what was really remarkable about the Complaint, itself, was that it contained not only dispositive proof that the termite damage had been concealed at the time of the inspection but also assertions by plaintiffs that could not possibly be true, thus, impeaching their credibility in their very own words.
For reasons that I hope I live long enough to understand, there are a lot of lawyers who must think that they have to prove their cases in their Complaints. And so they include, as exhibits to the Complaint, every shred of evidence in their possession in the apparent belief that it makes their case more compelling. The reality is that it seldom does and, in an astonishingly large number of cases, can actually be quite damaging to the plaintiff’s case. It certainly was in this one.
For one thing, in their Complaint, the plaintiffs maintained that they “first learned of the severe termite infestation and . . . damages on or about March 8, 2009” when the plaintiff husband discovered “over five-hundred (500) swarming termites” in the lower level laundry room.
There’s one problem with that averment. It does not comport with the well-established behavioral ecology of termites. Termites require high temperatures and long days in order to “swarm”, two conditions that did not obtain in the date range averred.
Far more devastating, however, was the plaintiffs’ lawyer’s decision to include, as an Exhibit to the Complaint, a digital video disc of the plaintiffs’ “discovery” of the termite infestation that conclusively demonstrated that the damage could not have been discovered in a limited visual inspection. Indeed, the plaintiff husband, himself, twice remarks on the video that “I can’t believe it was all hidden.” Plaintiffs’ expert engineer also agrees with that observation, saying “ I can’t believe how they [the sellers] hid [the damage].”
Later in the video, the husband further opines that “There were no signs whatsoever!” And, again, the expert engineer agrees with that observation, stating “Yeah, [unintelligible] I call it [unintelligible]. That’s what people do.”
Those colloquies between the plaintiff and his expert witness demonstrated beyond peradventure that the damage was effectively concealed from both the plaintiffs and their inspector. They further demonstrated that the infestation would have remained “all hidden” because “there were no signs whatsoever” for ages had the plaintiffs not decided to remodel their home and that they were, in fact, not “victims” of a negligent inspection but bald-faced opportunists looking to stick the inspector with the tab for the renovation.
To be continued.
Monday, January 31, 2011
Friday, January 28, 2011
The Law of Damages (Part 2 of 2)
To be an effective advocate for his clients, a lawyer often needs to call upon skills quite apart from a thorough working knowledge of the substantive and procedural law. And if he practices in the northeastern section of the country, as I do, one skill that he will find to be of inestimable utility is a working knowledge of Yiddish. And, particularly so, if he is an Irish-Catholic.
With that bit of information as background, let us return to the most recent post, briefly. Please recall that I had responded to a claim from a home inspector’s client by informing the client that he had no claim because the inspector had executed his duty to him in a professionally reasonable manner, that the client had acted unreasonably in light of the inspector’s findings and that, in any case, his damages were, at best, de minimis.
A week or so later, I received a letter from the client’s lawyer. After reading the attorney’s letter, I immediately telephoned the attorney and greeted him thus:
“Wayne, it’s Joe Ferry.” Pause. “What . . . are you doing . . . with this farkakte case?”
His reaction was exactly what I expected. Like every other Jewish lawyer on whom I have essayed that gambit, he started laughing like hell. For two reasons. One, he knows that this is a very weak case. Two, he cannot believe that this son of Erin is telling him exactly how crappy it is in Yiddish!
Then, thrown thoroughly off balance by that disarmingly accurate assessment of his case, he immediately started walking back the size of the claim.
“Look”, he began, “I know that he’s not entitled to a new roof . . .”
Now at the time, there was a video on NACHI TV of me talking about the Law and Disorder seminars that were then upcoming. I told him to watch the video and call me back.
When he called back, he said “So. You handle these claims all over the country.” I told him that I did and, furthermore, if the claim actually had merit, I would be the first person to suggest to my client that it be settled.
He then asked me to see if my client was willing to throw “any money” to settle. I said that I would ask.
I asked the inspector if he was willing to give his ex-client “anything to go away.”
He replied “Joe, I trust you. I’m willing to give this guy up to $1,000 to go away.”
So I wrote to “Wayne” and basically repeated the letter that I had sent to his client: we were not negligent; you were negligent; even if we were, which we weren’t and even if you weren’t, which you were, you don’t have any damages . . . BUT . . . blah, blah, blah . . . GOOD WILL GESTURE . . . blah, blah, blah . . . CLOSURE, here’s $500.
When I proof-read the draft of that letter, I suddenly had a WTF moment! If we were not negligent AND he was negligent AND he doesn’t have any damages . . . WHY ARE WE GIVING HIM ANYTHING?
So I didn’t.
I re-wrote the final paragraph thus:
“For $350, a home inspector does not take a house apart and put it back together again. No reasonable person expects that. My client put your client on notice of issues with this property that should have prompted him to seek a more intrusive inspection. His decision not to do so was unreasonable in light of those findings and would bar all recovery under familiar principles of the Law of Negligence. Accordingly, his claim is rejected.”
I never heard from “Wayne” or his client, again.
With that bit of information as background, let us return to the most recent post, briefly. Please recall that I had responded to a claim from a home inspector’s client by informing the client that he had no claim because the inspector had executed his duty to him in a professionally reasonable manner, that the client had acted unreasonably in light of the inspector’s findings and that, in any case, his damages were, at best, de minimis.
A week or so later, I received a letter from the client’s lawyer. After reading the attorney’s letter, I immediately telephoned the attorney and greeted him thus:
“Wayne, it’s Joe Ferry.” Pause. “What . . . are you doing . . . with this farkakte case?”
His reaction was exactly what I expected. Like every other Jewish lawyer on whom I have essayed that gambit, he started laughing like hell. For two reasons. One, he knows that this is a very weak case. Two, he cannot believe that this son of Erin is telling him exactly how crappy it is in Yiddish!
Then, thrown thoroughly off balance by that disarmingly accurate assessment of his case, he immediately started walking back the size of the claim.
“Look”, he began, “I know that he’s not entitled to a new roof . . .”
Now at the time, there was a video on NACHI TV of me talking about the Law and Disorder seminars that were then upcoming. I told him to watch the video and call me back.
When he called back, he said “So. You handle these claims all over the country.” I told him that I did and, furthermore, if the claim actually had merit, I would be the first person to suggest to my client that it be settled.
He then asked me to see if my client was willing to throw “any money” to settle. I said that I would ask.
I asked the inspector if he was willing to give his ex-client “anything to go away.”
He replied “Joe, I trust you. I’m willing to give this guy up to $1,000 to go away.”
So I wrote to “Wayne” and basically repeated the letter that I had sent to his client: we were not negligent; you were negligent; even if we were, which we weren’t and even if you weren’t, which you were, you don’t have any damages . . . BUT . . . blah, blah, blah . . . GOOD WILL GESTURE . . . blah, blah, blah . . . CLOSURE, here’s $500.
When I proof-read the draft of that letter, I suddenly had a WTF moment! If we were not negligent AND he was negligent AND he doesn’t have any damages . . . WHY ARE WE GIVING HIM ANYTHING?
So I didn’t.
I re-wrote the final paragraph thus:
“For $350, a home inspector does not take a house apart and put it back together again. No reasonable person expects that. My client put your client on notice of issues with this property that should have prompted him to seek a more intrusive inspection. His decision not to do so was unreasonable in light of those findings and would bar all recovery under familiar principles of the Law of Negligence. Accordingly, his claim is rejected.”
I never heard from “Wayne” or his client, again.
Monday, January 24, 2011
The Law of Damages (Part 1 of 2)
Whenever I read the Letters to the Editor of the New York Times or my local newspaper, the Philadelphia Inquirer, I often find myself wondering whether mathematics is still a requirement for graduation from high school. The overwhelming majority of those correspondents appear to truly believe with every fiber of their being that it is entirely possible for the government to provide massive new entitlement programs to tens of millions of previously unentitled individuals without increasing the size of government or affecting the national economy in any meaningful way.
Similarly, whenever a home inspector engages me to neutralize an unhappy client and I read the demand letter from the claimant’s attorney, I often find myself wondering whether the nation’s law schools are still teaching the Law of Damages. Consequently, I am continuously finding myself in the position of having to give short tutorials to professional colleagues on exactly what level of damages their clients might be entitled to in the altogether highly unlikely event that their claims have any merit in the first instance.
A couple of years ago, one of my inspector clients inspected a sixty-something year-old house and reported that the roof was “near the end of its life expectency” and really would need to be replaced in the not too distant future. As it happened, excessive clutter prevented any meaningful inspection of the attic. In fact, all the inspector was really able to do was to pop his head into the space and shine his flashlight around.
Sometime after taking possession, the buyer found that the roof was leaking in a spot just beyond the farthest rafter in the attic which the inspector could not have seen due to the attic’s inaccessibility at the time of the inspection.
The client sent the inspector a letter demanding a new roof and the inspector asked me to respond. I told the client “Fuhgeddaboudit!”
First of all, the inspector told you that the roof needed to be replaced. Secondly, he couldn’t get into the attic to inspect it and disclaimed any responsibility for that. Third, even if he had been negligent - which he wasn’t - you would not be entitled to a new roof. All that you would be entitled to is to have the “leak” repaired - a process that might require the replacement of a one square foot section of shingles. Finally, the cost of replacing that one square foot section would have to be depreciated by the sixty-something year age of the roof. In other words, next to nothing.
Sadly, he didn’t fuhgeddaboudit and a week or so later I heard from his lawyer.
That story next time.
Similarly, whenever a home inspector engages me to neutralize an unhappy client and I read the demand letter from the claimant’s attorney, I often find myself wondering whether the nation’s law schools are still teaching the Law of Damages. Consequently, I am continuously finding myself in the position of having to give short tutorials to professional colleagues on exactly what level of damages their clients might be entitled to in the altogether highly unlikely event that their claims have any merit in the first instance.
A couple of years ago, one of my inspector clients inspected a sixty-something year-old house and reported that the roof was “near the end of its life expectency” and really would need to be replaced in the not too distant future. As it happened, excessive clutter prevented any meaningful inspection of the attic. In fact, all the inspector was really able to do was to pop his head into the space and shine his flashlight around.
Sometime after taking possession, the buyer found that the roof was leaking in a spot just beyond the farthest rafter in the attic which the inspector could not have seen due to the attic’s inaccessibility at the time of the inspection.
The client sent the inspector a letter demanding a new roof and the inspector asked me to respond. I told the client “Fuhgeddaboudit!”
First of all, the inspector told you that the roof needed to be replaced. Secondly, he couldn’t get into the attic to inspect it and disclaimed any responsibility for that. Third, even if he had been negligent - which he wasn’t - you would not be entitled to a new roof. All that you would be entitled to is to have the “leak” repaired - a process that might require the replacement of a one square foot section of shingles. Finally, the cost of replacing that one square foot section would have to be depreciated by the sixty-something year age of the roof. In other words, next to nothing.
Sadly, he didn’t fuhgeddaboudit and a week or so later I heard from his lawyer.
That story next time.
Thursday, January 20, 2011
What You Need to Know About Pre-Sale Inspections
Reader Gary Baldridge writes: I have heard many comments on the pros and cons of pre-sale inspections and what liability may differ from doing a buyer inspection."
Now that sellers are being encouraged to obtain professional home inspections prior to listing their properties for sale, a development that I not only applaud but also believe will become increasingly popular and commonplace, home inspectors need to be careful of potentially exposing themselves to liability to non-client third parties.
Normally, actors are only potentially liable to individuals to whom they owe a duty of care. Motorists, for example, owe a duty of care to their passengers, other motorists and their passengers and bicyclists and pedestrians. They fulfill that duty by obeying traffic laws and conventions, maintaining their vehicles in a safe condition, maintaining adequate insurance and driving carefully.
When performing a service for a client pursuant to a contract, a service provider would normally owe a duty, and thus be potentially liable for professional lapses, only to her client. She fulfills that duty by performing her duties in a professional manner.
However, a service provider could also be held liable to third-parties if her negligence could foreseeably cause harm to others as, for example, when an auto mechanic’s negligence causes the unexpected failure of her client’s brakes resulting in injuries to an innocent third-party. That potential for being sued by unknown third-parties is why bartenders will refuse to serve obviously intoxicated customers, take away their car keys and call taxis for them.
When performing a home inspection for a buyer, a home inspector normally would only owe a duty and thus, be potentially liable, to his buyer-client for issues that she “unreasonably” fails to discover and/or report - that is, she failed to discover them but should not have - and that failure - that unreasonable professional conduct - caused her client damages. That’s certainly fair enough. I don’t know any professional home inspectors who have a problem with that.
A potential problem arises, however, when someone with whom the home inspector does not have a contract claims to have been harmed by the alleged negligence of the inspector. I recently had a case in Philadelphia involving an inspector who had performed an inspection for a young husband and wife in their twenties who were buying their first home. Some eighteen months later he got served with a lawsuit by the father of the wife claiming that he had conducted a negligent inspection that had caused this man damages.
The couple had apparently failed to qualify for a mortgage and so a new Agreement of Sale was drawn that listed the wife’s father as the sole purchaser and more than a year later, this purchaser, a stranger to the home inspection contract, was claiming that the inspector had failed to discover certain issues that were causing him damages.
Pretty ridiculous, right?
Sure but the problem is quite common and generally arises when the home inspector’s client exercises his right to terminate the Agreement of Sale based upon the inspector’s findings. When the property goes back on the market, the real estate agent will often hand the inspector’s report to a new prospect who does buy the property and then wants to sue the inspector some time down the road when problems inevitably arise.
The problem can be muted somewhat by prominently noting that only the individuals who hired the inspector may rely on the inspector’s findings and that anyone else who relies on his report does so at their own peril. The inspector my still get sued but will easily be able to demonstrate that the subsequent buyer’s reliance on the report was "unreasonable."
And that brings us to Gary's question regarding pre-listing inspections conducted on behalf of a seller. The purpose of these types of inspections is to make the seller aware of issues that he either needs to correct or disclose to a potential buyer or perhaps both. The idea is to reduce the seller’s exposure to suit, not to reduce the buyer’s anxiety.
Hence, to avoid any surprises, Inspectors should make sure that their pre-listing inspection clients know that this report is for their information only and that they may not use it to allay their buyers’ anxiety. Pre-listing inspection agreements should also stress this point and include a provision requiring the seller to defend and indemnify the inspector should a buyer subsequently claim that he relied on the inspection report to his detriment.
Now that sellers are being encouraged to obtain professional home inspections prior to listing their properties for sale, a development that I not only applaud but also believe will become increasingly popular and commonplace, home inspectors need to be careful of potentially exposing themselves to liability to non-client third parties.
Normally, actors are only potentially liable to individuals to whom they owe a duty of care. Motorists, for example, owe a duty of care to their passengers, other motorists and their passengers and bicyclists and pedestrians. They fulfill that duty by obeying traffic laws and conventions, maintaining their vehicles in a safe condition, maintaining adequate insurance and driving carefully.
When performing a service for a client pursuant to a contract, a service provider would normally owe a duty, and thus be potentially liable for professional lapses, only to her client. She fulfills that duty by performing her duties in a professional manner.
However, a service provider could also be held liable to third-parties if her negligence could foreseeably cause harm to others as, for example, when an auto mechanic’s negligence causes the unexpected failure of her client’s brakes resulting in injuries to an innocent third-party. That potential for being sued by unknown third-parties is why bartenders will refuse to serve obviously intoxicated customers, take away their car keys and call taxis for them.
When performing a home inspection for a buyer, a home inspector normally would only owe a duty and thus, be potentially liable, to his buyer-client for issues that she “unreasonably” fails to discover and/or report - that is, she failed to discover them but should not have - and that failure - that unreasonable professional conduct - caused her client damages. That’s certainly fair enough. I don’t know any professional home inspectors who have a problem with that.
A potential problem arises, however, when someone with whom the home inspector does not have a contract claims to have been harmed by the alleged negligence of the inspector. I recently had a case in Philadelphia involving an inspector who had performed an inspection for a young husband and wife in their twenties who were buying their first home. Some eighteen months later he got served with a lawsuit by the father of the wife claiming that he had conducted a negligent inspection that had caused this man damages.
The couple had apparently failed to qualify for a mortgage and so a new Agreement of Sale was drawn that listed the wife’s father as the sole purchaser and more than a year later, this purchaser, a stranger to the home inspection contract, was claiming that the inspector had failed to discover certain issues that were causing him damages.
Pretty ridiculous, right?
Sure but the problem is quite common and generally arises when the home inspector’s client exercises his right to terminate the Agreement of Sale based upon the inspector’s findings. When the property goes back on the market, the real estate agent will often hand the inspector’s report to a new prospect who does buy the property and then wants to sue the inspector some time down the road when problems inevitably arise.
The problem can be muted somewhat by prominently noting that only the individuals who hired the inspector may rely on the inspector’s findings and that anyone else who relies on his report does so at their own peril. The inspector my still get sued but will easily be able to demonstrate that the subsequent buyer’s reliance on the report was "unreasonable."
And that brings us to Gary's question regarding pre-listing inspections conducted on behalf of a seller. The purpose of these types of inspections is to make the seller aware of issues that he either needs to correct or disclose to a potential buyer or perhaps both. The idea is to reduce the seller’s exposure to suit, not to reduce the buyer’s anxiety.
Hence, to avoid any surprises, Inspectors should make sure that their pre-listing inspection clients know that this report is for their information only and that they may not use it to allay their buyers’ anxiety. Pre-listing inspection agreements should also stress this point and include a provision requiring the seller to defend and indemnify the inspector should a buyer subsequently claim that he relied on the inspection report to his detriment.
Monday, January 17, 2011
Is Your E&O Insurance Company Stuck on Stupid?
One of my home inspector clients in California recently wrote to me about a claim that was being brought by a client for whom he had performed an inspection about three months earlier. The client was experiencing some leaks due to recent heavy rains. The leaks were discovered only after removing baseboard and flooring to do some remodeling. After opening the walls they found that the leaks were due to the fact that the vapor barrier had been torn in several areas.
A review of the inspection report demonstrated that the inspector had noted that “stains were observed at baseboard, dry at time of inspection, unable to determine cause, advise review with seller.” Photos of the area taken at the time of the inspection completely support the inspector's position.
The clients were quite upset and were unwilling to grasp the fact that, since the defect was not visible during the inspection, the inspector was not liable. They subsequently threatened to file suit if the inspector did not refund the fee.
Since he was clearly not responsible for the clients' problem, he refused to refund the fee and the client followed through on the threat and filed a claim in small claims court.
In addition to being an extremely capable professional, the inspector is also a sophisticated businessman who carries E&O insurance for this very contingency and he reported the claim, as required, to his insurer.
Unfortunately for this inspector, his insurance company - a major player in the home inspection professional liability insurance market - is both brain-dead and stuck on stupid.
The inspector understandably wants to defend the claim because a. the claim is completely defensible and b. he doesn't want to lose his deductible which is substantial.
The clients are demanding $6500 and the insurer has offered $1500 - easy for it to do, since that is well within the insured's deductible.
The inspector wants to defend the claim himself and the insurer has taken this position: The inspector can withdraw the claim and handle it himself. However, if he wins and the plaintiffs appeal to a higher court and he then seeks coverage from the insurer, the insurer will treat it as a late report and deny coverage under the policy.
The inspector forwarded to me the insurer's response for my information. I wrote back to the inspector:
"Why [this insurer] would even consider offering $1500 to settle a claim that has absolutely NO merit whatsoever is a locus classicus of the very thing that is wrong with the home inspector professional liability insurance marketplace, to wit, a facile willingness to throw money at bogus claimants as long as it is within the insured's deductible and a pathological unwillingness to take meritless cases to verdict, if doing so would cost more than knuckling under to meritless claims.
"For [this insurer] to present you with the Hobson's choice of a. personally defending a completely meritless claim in order to save your deductible and, thereby, ensuring that, if the claimant appeals the verdict, [the insurer] will deny coverage or b. allow [the insurer] to dangle your deductible in front of these meritless claimants to rid itself on any responsibility is the quintessence of bad faith."
Fortunately, home inspectors no longer have to find themselves in this situation. In August of 2009, program administrator Lockton Affinity, an affiliate of Lockton Companies, LLC, the largest independently-owned commercial insurance broker in the world, approached me about developing a professional liability program exclusively for Home Inspectors. The program launched in April of 2010 and the insurer, whose financial strength is rated A+ XV by A. M. Best, completely supports the bogus claim preemption techniques that I have perfected over the last four years.
If you are enrolled under the Lockton Affinity program for Errors & Omissions Insurance, you are assured that I will be the one responding in the first instance to any claim filed against you. For a quote visit: http://inspectors.locktonaffinity.com or call 800-803-9552.
A review of the inspection report demonstrated that the inspector had noted that “stains were observed at baseboard, dry at time of inspection, unable to determine cause, advise review with seller.” Photos of the area taken at the time of the inspection completely support the inspector's position.
The clients were quite upset and were unwilling to grasp the fact that, since the defect was not visible during the inspection, the inspector was not liable. They subsequently threatened to file suit if the inspector did not refund the fee.
Since he was clearly not responsible for the clients' problem, he refused to refund the fee and the client followed through on the threat and filed a claim in small claims court.
In addition to being an extremely capable professional, the inspector is also a sophisticated businessman who carries E&O insurance for this very contingency and he reported the claim, as required, to his insurer.
Unfortunately for this inspector, his insurance company - a major player in the home inspection professional liability insurance market - is both brain-dead and stuck on stupid.
The inspector understandably wants to defend the claim because a. the claim is completely defensible and b. he doesn't want to lose his deductible which is substantial.
The clients are demanding $6500 and the insurer has offered $1500 - easy for it to do, since that is well within the insured's deductible.
The inspector wants to defend the claim himself and the insurer has taken this position: The inspector can withdraw the claim and handle it himself. However, if he wins and the plaintiffs appeal to a higher court and he then seeks coverage from the insurer, the insurer will treat it as a late report and deny coverage under the policy.
The inspector forwarded to me the insurer's response for my information. I wrote back to the inspector:
"Why [this insurer] would even consider offering $1500 to settle a claim that has absolutely NO merit whatsoever is a locus classicus of the very thing that is wrong with the home inspector professional liability insurance marketplace, to wit, a facile willingness to throw money at bogus claimants as long as it is within the insured's deductible and a pathological unwillingness to take meritless cases to verdict, if doing so would cost more than knuckling under to meritless claims.
"For [this insurer] to present you with the Hobson's choice of a. personally defending a completely meritless claim in order to save your deductible and, thereby, ensuring that, if the claimant appeals the verdict, [the insurer] will deny coverage or b. allow [the insurer] to dangle your deductible in front of these meritless claimants to rid itself on any responsibility is the quintessence of bad faith."
Fortunately, home inspectors no longer have to find themselves in this situation. In August of 2009, program administrator Lockton Affinity, an affiliate of Lockton Companies, LLC, the largest independently-owned commercial insurance broker in the world, approached me about developing a professional liability program exclusively for Home Inspectors. The program launched in April of 2010 and the insurer, whose financial strength is rated A+ XV by A. M. Best, completely supports the bogus claim preemption techniques that I have perfected over the last four years.
If you are enrolled under the Lockton Affinity program for Errors & Omissions Insurance, you are assured that I will be the one responding in the first instance to any claim filed against you. For a quote visit: http://inspectors.locktonaffinity.com or call 800-803-9552.
Thursday, January 13, 2011
Home Inspection Claims and the Legal System
If you read home inspection industry message boards with any level of fidelity, you cannot fail to notice a general lack of confidence in our legal system among home inspectors. They never expect to get a fair shake in court. And especially in Small Claims Court.
To someone who has spent most of his adult life upholding the legal system, I find this overarching despondency troubling. And quite unwarranted in my experience. Nevertheless, I completely understand why home inspectors feel that way.
In the overwhelming majority of cases against home inspectors that I have handled, claimants and their lawyers are not only constantly vastly overestimating the level of their damages, they do not even recognize that they do not have a case in the first place. While I am not surprised that claimants might make those mistakes, I am continuingly astonished that their attorneys do.
As I stress in the Law and Disorder Seminar, the only cases that actually get to trial are those that are being erroneously evaluated by one or more parties and/or their lawyers. Either the plaintiff thinks that the case is worth a lot more than it actually is or the defendant thinks that it is worth a lot less than it actually is. If a case is being properly evaluated on the basis of established incontrovertible facts, it should either settle or be abandoned.
In my practice, I represent both plaintiffs and defendants and my cardinal rule when representing plaintiffs is this: I do not take plaintiff cases that a. I am not going to win and b. do not have enormous damages. That’s one for the “Duh File”, right? You would be surprised.
As an attorney, when representing a plaintiff, what you want to do is send a demand letter and get a check back by return mail. That is why demand letters from attorneys always stress that you should turn the letter over to your insurance carrier. They don’t want to deal with you, they want to deal with the guy who is going to roll over and send them a check. And if they can send a check that is within your deductible, well, it really doesn’t get better than that for an insurance claim examiner.
So hearing from me, rather than a claims examiner with a checkbook, really gums up the works. Fortunately, when I advise claimants’ attorneys that they do not have a case, generally for a litany of compelling reasons, for the most part their reaction is one of gratitude that I have spared them the trouble of pursuing a worthless claim.
To someone who has spent most of his adult life upholding the legal system, I find this overarching despondency troubling. And quite unwarranted in my experience. Nevertheless, I completely understand why home inspectors feel that way.
In the overwhelming majority of cases against home inspectors that I have handled, claimants and their lawyers are not only constantly vastly overestimating the level of their damages, they do not even recognize that they do not have a case in the first place. While I am not surprised that claimants might make those mistakes, I am continuingly astonished that their attorneys do.
As I stress in the Law and Disorder Seminar, the only cases that actually get to trial are those that are being erroneously evaluated by one or more parties and/or their lawyers. Either the plaintiff thinks that the case is worth a lot more than it actually is or the defendant thinks that it is worth a lot less than it actually is. If a case is being properly evaluated on the basis of established incontrovertible facts, it should either settle or be abandoned.
In my practice, I represent both plaintiffs and defendants and my cardinal rule when representing plaintiffs is this: I do not take plaintiff cases that a. I am not going to win and b. do not have enormous damages. That’s one for the “Duh File”, right? You would be surprised.
As an attorney, when representing a plaintiff, what you want to do is send a demand letter and get a check back by return mail. That is why demand letters from attorneys always stress that you should turn the letter over to your insurance carrier. They don’t want to deal with you, they want to deal with the guy who is going to roll over and send them a check. And if they can send a check that is within your deductible, well, it really doesn’t get better than that for an insurance claim examiner.
So hearing from me, rather than a claims examiner with a checkbook, really gums up the works. Fortunately, when I advise claimants’ attorneys that they do not have a case, generally for a litany of compelling reasons, for the most part their reaction is one of gratitude that I have spared them the trouble of pursuing a worthless claim.
Monday, January 10, 2011
Follow Your Standard of Practice
Something that I emphasize quite heavily in the Law and Disorder seminar is the importance of adhering to whatever Standard of Practice you happen to be following when you are conducting your inspection. In fact, it is one of the six key strategies that I teach for diminishing a home inspector's chances of being sued successfully.
I do not know how often inspectors have occasion to read their SOPs but I read them quite often in order to respond to the demand letters that my home inspector clients have received from their clients or their clients’ lawyers. And one thing that you cannot help noticing when you read those SOPs as often as I do is this: there are an awful lot of sentences in the SOPs that begin thus: “The home inspector is not required to:” followed by a whole host of matters for which the home inspector is not responsible.
Anyone who has ever attended the seminar will remember my saying, “Stay within the lines. The lines are your friends.” It is a line from an old Toyota automobile commercial from the early ‘90s that no one ever seems to recall. I only remember it, I suppose, because I once had a tennis partner who always seemed to be saying that to me, generally when one of my errant 100 mph returns went sailing over the opponents’ base line.
The reason I advise inspectors to “stay within the lines” - the SOP - is because in order to establish that the inspector had been negligent in conducting his inspection, a claimant has to show that the inspector did not act “reasonably”, that is, he did not perform his inspection in the manner that a “reasonable” inspector would have. In other words, he would have to demonstrate that the inspector failed to follow his own SOP.
A frequently asked question at the seminars is what effect does exceeding the SOP in one area or another potentially have on an inspector’s liability. The answer is: it increases it. Exceeding the SOP can and often does make you responsible for something that you otherwise would not have been.
So always follow your SOP. Your SOP is your friend.
I do not know how often inspectors have occasion to read their SOPs but I read them quite often in order to respond to the demand letters that my home inspector clients have received from their clients or their clients’ lawyers. And one thing that you cannot help noticing when you read those SOPs as often as I do is this: there are an awful lot of sentences in the SOPs that begin thus: “The home inspector is not required to:” followed by a whole host of matters for which the home inspector is not responsible.
Anyone who has ever attended the seminar will remember my saying, “Stay within the lines. The lines are your friends.” It is a line from an old Toyota automobile commercial from the early ‘90s that no one ever seems to recall. I only remember it, I suppose, because I once had a tennis partner who always seemed to be saying that to me, generally when one of my errant 100 mph returns went sailing over the opponents’ base line.
The reason I advise inspectors to “stay within the lines” - the SOP - is because in order to establish that the inspector had been negligent in conducting his inspection, a claimant has to show that the inspector did not act “reasonably”, that is, he did not perform his inspection in the manner that a “reasonable” inspector would have. In other words, he would have to demonstrate that the inspector failed to follow his own SOP.
A frequently asked question at the seminars is what effect does exceeding the SOP in one area or another potentially have on an inspector’s liability. The answer is: it increases it. Exceeding the SOP can and often does make you responsible for something that you otherwise would not have been.
So always follow your SOP. Your SOP is your friend.
Thursday, January 6, 2011
Follow-Up Inspectors: Don't Ruin Your Credibility
I get a lot of mail from home inspectors offering their services, should the need ever arise, as expert witnesses in negligence cases against home inspectors. Fortunately, I never have a need for their expertise because the cases that I get asked to squash almost all go away secondary to a compellingly written letter that explains a. why the claimant has no case, despite what his expert claims; b. why, even if he had a case, he has no damages: c. why, even if he had a case and had damages, his claim would be barred because of his own conduct; d. why, even if he had a case and had damages and his claim were not barred due to his own conduct, his recovery would be contractually limited; e. that the claim, if brought, will be vigorously defended; and f. the retaliatory action that will ensue following the certain defeat of the claim.
Nevertheless, I do get to see a lot of reports from would-be “experts” for claimants. Usually, these individuals are not experts at all - that is they were not hired to give an “expert opinion” on established facts. They are merely professionals re-inspecting the same property several weeks and often several months after the original inspection and not infrequently after the massive destructive probing that first allowed the defect to be, literally, “uncovered”.
By and large, they have done no spadework whatsoever, such as reading the original inspection report, ascertaining weather conditions in the weeks preceding the original inspection and subsequent thereto, ruling out other causative factors, ascertaining the condition of the property at the time of the original inspection or even mentioning the Standard of Practice that is implicated in the case.
And there is nothing these would-be experts like more than impugning the competence of the original inspector. Their reports are riddled with absurd credibility-destroying observations like this one made in a case I squashed in Washington state: “the magnitude of floor structure damage to this home would have been difficult to overlook during an inspection, even to the most untrained observer”.
Really? Well, if that’s the case, Mr. Expert, shouldn’t the presumably very “untrained observers” who had been living in the house lo, those many years have not “overlooked” the “magnitude of floor structure damage” and noted it in their sellers’ disclosures? Or - here’s an idea - shouldn’t they have repaired it while they, themselves, were living in the house?
What this would-be expert should have done after seeing the “magnitude of damage” that “would have been difficult to overlook” by even the “most untrained observer” is ask himself this question: how the hell did this inspector ever miss this defect? what could have prevented this inspector - duly licensed by the State of Washington - from seeing this defect? Was it concealed somehow? Were there any signs that would warrant invasive probing? Was the area accessible at the time of the original inspection?
As a follow-up inspector you have to recognize that you are inspecting an entirely different house than the original inspector. The vast majority of claims against home inspectors, in my experience, are for after-discovered defects that were concealed at the time of inspection but are not concealed when inspector # 2 conducts his inspection.
And the real problem for inspector # 2 - and the poor sap who hires him - is the nigh universal inability of such "experts" to resist such credibility-destroying dudgeon as “the magnitude of floor structure damage to this home would have been difficult to overlook during an inspection, even to the most untrained observer”.
If you're the "expert" inspector and you're uncovering "obvious" defects, someone is definitely leading you into a pick. And you should make sure that your "expert" report is laden with disclaimers so you don't undermine your credibility with reckless statements about the original inspector's ability because chances are that, had you been the original inspector, you very well might have been prevented from seeing them, too.
Nevertheless, I do get to see a lot of reports from would-be “experts” for claimants. Usually, these individuals are not experts at all - that is they were not hired to give an “expert opinion” on established facts. They are merely professionals re-inspecting the same property several weeks and often several months after the original inspection and not infrequently after the massive destructive probing that first allowed the defect to be, literally, “uncovered”.
By and large, they have done no spadework whatsoever, such as reading the original inspection report, ascertaining weather conditions in the weeks preceding the original inspection and subsequent thereto, ruling out other causative factors, ascertaining the condition of the property at the time of the original inspection or even mentioning the Standard of Practice that is implicated in the case.
And there is nothing these would-be experts like more than impugning the competence of the original inspector. Their reports are riddled with absurd credibility-destroying observations like this one made in a case I squashed in Washington state: “the magnitude of floor structure damage to this home would have been difficult to overlook during an inspection, even to the most untrained observer”.
Really? Well, if that’s the case, Mr. Expert, shouldn’t the presumably very “untrained observers” who had been living in the house lo, those many years have not “overlooked” the “magnitude of floor structure damage” and noted it in their sellers’ disclosures? Or - here’s an idea - shouldn’t they have repaired it while they, themselves, were living in the house?
What this would-be expert should have done after seeing the “magnitude of damage” that “would have been difficult to overlook” by even the “most untrained observer” is ask himself this question: how the hell did this inspector ever miss this defect? what could have prevented this inspector - duly licensed by the State of Washington - from seeing this defect? Was it concealed somehow? Were there any signs that would warrant invasive probing? Was the area accessible at the time of the original inspection?
As a follow-up inspector you have to recognize that you are inspecting an entirely different house than the original inspector. The vast majority of claims against home inspectors, in my experience, are for after-discovered defects that were concealed at the time of inspection but are not concealed when inspector # 2 conducts his inspection.
And the real problem for inspector # 2 - and the poor sap who hires him - is the nigh universal inability of such "experts" to resist such credibility-destroying dudgeon as “the magnitude of floor structure damage to this home would have been difficult to overlook during an inspection, even to the most untrained observer”.
If you're the "expert" inspector and you're uncovering "obvious" defects, someone is definitely leading you into a pick. And you should make sure that your "expert" report is laden with disclaimers so you don't undermine your credibility with reckless statements about the original inspector's ability because chances are that, had you been the original inspector, you very well might have been prevented from seeing them, too.
Monday, January 3, 2011
How This Niche Became a Voice for All Home Inspectors
A couple of years ago, Lady Agag (my lovely wife) and I were invited to a cocktail party that was being held at a restaurant in the Chestnut Hill section of Philadelphia. The restaurant was actually closed that evening to all but those who had been invited to the party. The hosts of the party had “won” it by outbidding others at a silent auction to benefit Norwood-Fontbonne Academy, the private Catholic grade school that our two boys had attended.
Because of that provenance, the guests were, by and large, well-established habitants of the middle-class with a vast overrepresentation of lawyers. Lady A and I, about fifteen years senior to the gathering’s statistical mode, were clearly skewing the assemblage geezerish. Nevertheless, due to our surpassing young-at-heartness and preternatural gregariousness, we were warmly received by our fellow guests.
I was introduced to a couple, whose male component I had been reliably informed, was also a lawyer. After establishing that I was a colleague, he asked me what sort of law I practiced. My spontaneous response surprised even me.
“I’m a cult figure in a niche industry” I answered. It was a response that not only has the twin attributes of being both whimsical and accurate, but absolutely mandates explication.
Here it is.
The day before Thanksgiving in 2006, I received a call from a home inspector in Florida who had just received a demand letter from an attorney representing one of his clients that was seeking damages from an inspection that he had conducted some 22 months before. He wanted to know what to do.
I asked him if he had E & O Insurance. He said that he now had it but did not have it then. He then asked if this was something that I could handle or did he need to get a lawyer in Florida. My mind reeled at the thought of this inspector having to seek an attorney in Florida at random, explain to him exactly what a home inspection is - and isn’t - and then explain why he was not responsible for the claimed damages. So I said “Why don’t you send me the demand letter together with your pre-inspection agreement and your inspection report? After I review those documents, I’ll be in a better position to advise you.” So he did.
I got the documents the day after Thanksgiving. After reading the attorney’s letter, which was rather substantial and included a supporting report by a subsequent inspection company, I noted all of the issues that his client was aggrieved by.
I then took up the inspector’s original report to read and began to experience déjà vu all over again. Every issue that the claimant was complaining about had been pointed out by the inspector in his report.
I was incredulous and called the inspector and said “This is unbelievable. Everything that they’re complaining about, you found!!” He said, “I know.”
So I suggested that he let me write a letter to the attorney which I would run by him. If he liked the letter, I would send it out and charge him for my time accordingly. If he didn’t like the letter, I would not charge him and he could find his own attorney in Florida.
The home inspector loved the letter that I had written and it went out on December 1, 2006. We never heard from that attorney again. Following that success, I began to hear from home inspectors all over the country asking for my help in responding to the ridiculous demands that were being made upon them by former clients.
Close to 200 claims later, I am batting .970 at terminating them with just a letter.
Because of that provenance, the guests were, by and large, well-established habitants of the middle-class with a vast overrepresentation of lawyers. Lady A and I, about fifteen years senior to the gathering’s statistical mode, were clearly skewing the assemblage geezerish. Nevertheless, due to our surpassing young-at-heartness and preternatural gregariousness, we were warmly received by our fellow guests.
I was introduced to a couple, whose male component I had been reliably informed, was also a lawyer. After establishing that I was a colleague, he asked me what sort of law I practiced. My spontaneous response surprised even me.
“I’m a cult figure in a niche industry” I answered. It was a response that not only has the twin attributes of being both whimsical and accurate, but absolutely mandates explication.
Here it is.
The day before Thanksgiving in 2006, I received a call from a home inspector in Florida who had just received a demand letter from an attorney representing one of his clients that was seeking damages from an inspection that he had conducted some 22 months before. He wanted to know what to do.
I asked him if he had E & O Insurance. He said that he now had it but did not have it then. He then asked if this was something that I could handle or did he need to get a lawyer in Florida. My mind reeled at the thought of this inspector having to seek an attorney in Florida at random, explain to him exactly what a home inspection is - and isn’t - and then explain why he was not responsible for the claimed damages. So I said “Why don’t you send me the demand letter together with your pre-inspection agreement and your inspection report? After I review those documents, I’ll be in a better position to advise you.” So he did.
I got the documents the day after Thanksgiving. After reading the attorney’s letter, which was rather substantial and included a supporting report by a subsequent inspection company, I noted all of the issues that his client was aggrieved by.
I then took up the inspector’s original report to read and began to experience déjà vu all over again. Every issue that the claimant was complaining about had been pointed out by the inspector in his report.
I was incredulous and called the inspector and said “This is unbelievable. Everything that they’re complaining about, you found!!” He said, “I know.”
So I suggested that he let me write a letter to the attorney which I would run by him. If he liked the letter, I would send it out and charge him for my time accordingly. If he didn’t like the letter, I would not charge him and he could find his own attorney in Florida.
The home inspector loved the letter that I had written and it went out on December 1, 2006. We never heard from that attorney again. Following that success, I began to hear from home inspectors all over the country asking for my help in responding to the ridiculous demands that were being made upon them by former clients.
Close to 200 claims later, I am batting .970 at terminating them with just a letter.
New Problem For HIs: Disgruntled Sellers
I am starting to see a disturbing number of claims brought against home inspectors by non-client home sellers who are blaming home inspectors for the failure of their clients to follow through on the Agreement of Sale as a consequence of the inspector's findings. I am hoping that this trend is secondary to the very depressed real estate market that we are currently experiencing and will not survive beyond the eventual market recovery.
Some of these frustrated sellers completely lose control of their senses and foolishly decide to vent their fury at the home inspector in inappropriate ways. In one case, for example, the aggrieved home seller filed a complaint against the home inspector with the state board that oversees the licensure of home inspectors claiming that the home inspector had “several false finding and inaccurate statements of the existing condition on his home. In your report you stated a retaining wall was on his property which is not, you also reported an HVAC unit as hazard when it is in excellent working condition. You further listed termite infestation which owner states there is no infestation.” Sic.
Needless to say, for a home inspector this can be an agita-inducing development. And one that has to be squashed with extreme prejudice. As a professional, you can not indulge a hothead home seller who is making false accusations about you before a licensure board. And this inspector did not.
I wrote to the seller’s attorney and advised him that, although his client may have been disappointed that the result of the inspector’s report - which had catalogued the property’s myriad defects - was that the inspector’s client exercised his right to abrogate the Agreement of Sale, the seller’s ill-advised and vindictive filing of a false complaint against the inspector was an inappropriate way of venting his anger.
I also pointed out that, if the complaint was not immediately withdrawn with prejudice, it would also prove to have been a very foolish and expensive indulgence on the seller’s part, as well, because of the magnitude of damages that are available to business professionals in defamation cases.
The letter had an immediate sobering effect on both the seller and his attorney who faxed me upon receipt a letter advising me that the complaint would be withdrawn.
Some of these frustrated sellers completely lose control of their senses and foolishly decide to vent their fury at the home inspector in inappropriate ways. In one case, for example, the aggrieved home seller filed a complaint against the home inspector with the state board that oversees the licensure of home inspectors claiming that the home inspector had “several false finding and inaccurate statements of the existing condition on his home. In your report you stated a retaining wall was on his property which is not, you also reported an HVAC unit as hazard when it is in excellent working condition. You further listed termite infestation which owner states there is no infestation.” Sic.
Needless to say, for a home inspector this can be an agita-inducing development. And one that has to be squashed with extreme prejudice. As a professional, you can not indulge a hothead home seller who is making false accusations about you before a licensure board. And this inspector did not.
I wrote to the seller’s attorney and advised him that, although his client may have been disappointed that the result of the inspector’s report - which had catalogued the property’s myriad defects - was that the inspector’s client exercised his right to abrogate the Agreement of Sale, the seller’s ill-advised and vindictive filing of a false complaint against the inspector was an inappropriate way of venting his anger.
I also pointed out that, if the complaint was not immediately withdrawn with prejudice, it would also prove to have been a very foolish and expensive indulgence on the seller’s part, as well, because of the magnitude of damages that are available to business professionals in defamation cases.
The letter had an immediate sobering effect on both the seller and his attorney who faxed me upon receipt a letter advising me that the complaint would be withdrawn.
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