By meritorious I mean cases that, if tried, would result in a verdict for the plaintiff. In other words, the charge of negligence would be vindicated.
Cases are settled because it makes economic sense to settle them. For all sides. Moreover, the release generally contains a denial of liability clause and a clause that states that the claim is merely being settled as a compromise. That preserves the good name of the inspector, doctor, lawyer or whatever professional is settling. You can even get a confidentiality provision.
Insurers try cases that have no merit. There is no financial upside to settling those cases. In twenty years of trying cases, I have never, repeat never, seen an instance where an insurance company settled a meritless case and I have the defense verdicts to prove it.
And that’s as it should be. If an insurer refuses to settle a case within the policy limits and the trial results in a verdict that exceeds the insured’s policy limits, the insurer is on the hook for the deficiency.
After reading this thread I think maybe Joe could provide some insight as to the differences in report disclaimers and report recommendations. I believe many inspectors do not realize the differences.
It is important to inform your client in writing of their other options that are outside of the SOP’s on each house inspected. This includes a general recommendation for mold inspections, radon inspections, termite inspections, video scanning of chimneys and sewer pipes and lead paint tests (on older homes). This leaves the decision soley with the client. Note that the above is not a disclaimer but a recommendation and will serve you and your clients much better than written efforts at “not being responsible”.
I think that they are two sides of the same coin. You certainly have to disclaim items not contemplated by the SOP and items that you are not qualified to opine upon. It is likewise a good idea and a good defense, should the need arise, to recommend further inquiries by a qualified professional in the appropriate trade.
I am with K. Swift on this.
I want to offer something to all of you to think about. Here in Arizona there is an interesting thing happening in legal matters against HI’s. The lawyers are finding several Hi’s that would know something because they use thermal imaging equipment or high tech equipment. All of the HI’s out here don’t have this equipment, But if you miss something that another HI would of found with High Tech equipment you loose even if you follow an SOP that says you don’t look at that.
It has come to the point that you can be sued for anything and if the opposing side can come up with several of your local HI’s that agree with them you will loose.
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Something does not equate. If you can be sued for anything what good is another disclaimer when you can be sued for anything? Disclaimers do not any good til it gets to the court to decide or there is comprimise before then.
People who sue most often have not acted on advice given. That is not the inspectors fault. Nor is the inspector at fault for people who do not read the report. It is amazing to see how the fault of the inspector can be embellished by an angry purchaser. Believe me they will think of everything they can allege, even though its in the report. It is nonsense, and I think it has to equate with common sense.
That’s a familiar situation that arises every time there is a technological advance in any profession. If the reasonable HI is using this equipment, then that becomes the standard.
RR has written extensively on his tiered pricing approach to inspections. If you want a regular old inspection, it’s going to cost X. If you want the super-duper inspection, it’s going to cost 3X.
You have to factor these cirumstances into your pricing. Otherwise, you are leaving yourself vulnerable to a lawsuit if the defect would have been found had you used this equipment.
I hope that this forum will become a place in which inspectors can learn the myriad ways in which they can avoid litigation, and not a place in which we debate legal and ethical issues. It really doesn’t matter what’s right and what’s wrong, it’s simply a matter of how we can hope to avoid litigation. In my article “Perfectly Legal Extortion,” I reported that I was sued over suspect grading and drainage in the common areas of a condominium complex that was disclaimed in my standards of practice and specifically disclaimed in my report, and by persons who were not my clients, had not paid for my services, and had no ethical or moral right to my report. In addition to that threat to my livelihood, a member of my defense team, sent me a letter warning me that if the full amount of the lawsuit was not covered by my insurance that the plaintiffs could “look upon” my “personal assets” to “satisfy a judgment.” Don’t think that didn’t get me nervous. Within a few months the insurance company rolled-over and paid $8000.00. Was the lawsuit justifiable, right or wrong? It really doesn’t matter, and that’s why we’ve got to stop debating the minutia, and start suggesting ways in which we can avoid litigation. I asked myself if the lawsuit could have been avoided. And, in retrospect, the answer was yes, it could have been, and I’ll tell you how. Realizing that my standards of practice and my contract are meaningless defenses against dishonorable people, I now evaluate anything that might result in a lawsuit, whether it is beyond my standards or disclaimed in my contract. I even warn my clients about the very real dangers of such things as diving boards, water-slides, ponds, fountains, and tree-houses, and recommend removing them. Also, anything that doesn’t meet current electrical standards is a potential safety hazard as far as I’m concerned, even a panel that is not neatly wired. The other day, I evaluated the roof of a top-floor condominium, because I noticed a one-inch bubble on the master bedroom ceiling. Sure enough, the roof was in poor condition and had been unprofessionally patched above the unit, and I could just imagine my client being woken up in the middle of the night by water dripping on the pillow next to her head; would she have drifted back to sleep, soothed by the memory of my disclaimers? I don’t think so. I’d be looking at another lawsuit. Rest assured, there are terrorists among us. Take care.
Keith,
After reading much of your articles and posts it would seem to me that you should have filed a counter suit in at least three of those lawsuits at the very instant you learned of the accusations.
Maybe Joe Ferry can offer some insight into going after frivolous attempts at extortion since litigation prevention is not working for you. It seems like time to take the offensive role of protecting yourself or consider getting out of the business. Maybe its just a California problem, I hope…
Don’t think I didn’t want to. I tried, and couldn’t get one attorney that would even entertain the idea. I hope to give a seminar on avoiding litigation at the next convention, and I’ll use actual cases that are so bizzare as to be comical, but they’re real and put a lot of hapless inspectors through the wringer. Remind me to tell you one about a water-slide and a veteran inspector who simply must be among the best in the world, and who is a decent, warm, and kind human being who was damn near driven to distraction by attorneys who should have been hung up by the thumbs.
PS As for going out of business, I’m working toward that day. Without tort reform, at least in California, inspectors don’t stand a chance. However, I’m looking at various way of protecting myself, and others like me, and will keep you posted…
You can not hope to avoid litigation in a world where everything adverse that happens has to be somebody else’s fault. This is not a legal problem; it is a cultural problem. I can not venture out socially - and I suspect that my experience is not atypical of the average lawyer’s - without someone button-holing me with a query about his likelihood of success in pressing some claim to redress a real or imagined grievance. And you would be astonished at how trivial some of these alleged grievances are. Or, perhaps, you wouldn’t be.
So I don’t think your beef is, or should be, with the legal system.
That’s a fairly typical action that stems from the insurer’s own desire to keep from being sued by its insured. Even though there is zero likelihood that the claim against you would ever get anywhere near your limit of liability, because of the litigious American culture, insurers feel compelled to ‘advise’ you that, in this unlikeliest of events, the claimant could look to your personal assets to satisfy his claim.
My brother got such a letter from his insurance company lawyer in an automobile case where he had zero liability. He, of course, got as nervous as Keith did and called me. I immediately wrote to the insurer and demanded that it immediately tender its policy limits to the claimant to avoid the potential of my brother’s assets being implicated. It was then the insurance company’s turn to get even more nervous than Keith got. Since my brother’s case was highly defensible - and resulted in a defense verdict for him - the insurance company lawyer called me and assured me that my brother’s personal assets would never be an issue in the case.
Say what??!! It matters immensely. Insurers are not in the business of “roll[ing] over”. They are in the business of paying legitimate claims and defending illegitimate claims. You don’t say what the size of the claim was, what the theory of liability against you was or whether there were any other defendants in the case. So it is difficult to analyze whether or not paying $8,000 was a responsible or irresponsible business decision to make.
They are not meaningless defenses; they are outstanding defenses and regularly defeat bogus claims. And going beyond the SOP will open you up to even greater exposure to lawsuits.
Hardly. The roof is part of the common area. If the scenario you posit had come to pass, the roof would have been covered under the condo association’s property coverage and the damage to your client’s unit would have been covered under her property coverage. No claim against you would ever have been asserted.
My opinion, if an Inspector were to Lose based upon a representation of Incompetence thru failure to employ extraordinary means, the Insured’s Attorney would be incompetent in the presentation of a defense.
I also offer a tiered approach to Inspections thru my Contract.
Services not performed are services Declined by the Client.
If this were true, it would be impossible for Home Inspectors to get E & O insurance in California or the rates would be outrageous, neither of which is the case.
How so? I would think it would lessen your liability. You are more liable to be sued by not meeting the SOP. By charging for more in depth inspections you are in fact exceeding the SOP as there are no home inspection standards that I am aware that exceed the current industry SOP’s.
If your Inspection Agreement says that you are only responsible for inspecting X and you opine on X+++++, you have effectively waived your disclaimers.
Would this statement in the agreement prevent waiving disclaimers?
In some cases the Standards may be exceeded as added value for the Client. This is at the Inspectors sole discretion and in no way will cause any deviation from this Agreement.
