Limitation of Liability is Legally Acceptable....(except in Kansas)

[James H. Bushart]

You and the Law: 'Just wait a few years - the glue will eventually go away'

By Dennis Beaver
Judd Lawrence never thought that he would need to become an expert in glue removal when he phoned San Joaquin Pest Control for help in getting rid of termites which had set up housekeeping in his garage. "All I wanted was to have my garage fumigated, not to pull out what little hair I have remaining, learning about glue!" the Hanford, California, resident explained in an e-mail.

"Glue? Somehow glue and termites did not seem to quite go together, and curious as to what this was about, I phoned him. No, it wasn't a new method of termite eradication, but a rather "sticky" problem which sent Judd's blood pressure sky high. Here is what he told me:

"Several years ago I hired San Joaquin Pest Control to tent our home and garage. They did a good job, but the little critters re-appeared in the garage a few months ago. I phoned San Joaquin again, they sent out a sub-contractor who tented the garage." Tenting is an extremely important part of the process, requiring complete sealing of the structure, so that the gas will not escape. After they removed the tent and we were free to come near the garage, I noticed something strange," Judd continued.

"It was an 8 inch wide gold and brown stripe going up and down the side of the block wall which separates my yard from my neighbors. Last year I had the wall nicely covered with stucco, and it does not just look like an ordinary masonry block wall, but compliments our house color. I discovered it was glue from tape used to seal the garage."

"I figured I could remove the glue given enough time. But no matter what I did, the glue would not come off and I researched every possible way of removing adhesives," he explained.

"San Joaquin sent out the subcontractor who did my job, but he refused to do anything. I was told, in a few years it will just wear off and besides, you signed our contract relieving us from liability. But I pointed out to him the paragraph dealt with old, painted surfaces which are oxidized or improperly applied, and not a stucco surface!" my frustrated reader added.

"My wall must be re-textured back to its original color, at a cost of $450. I do not feel that I should have to pay. I really don't know where to turn. What is your take on this matter?" he asked.

The Law?

My reader hired a company to fumigate his garage, and did not ask for nor expect damage to his property. Unless the contract reasonably lets them off the hook, then it is clear they must repair the damage or pay to have it fixed.

The "Terms, Conditions and Liabilities" section of his contract did refer to masking tape, not in language which would offer them any protection, in my opinion. Here is what it stated:

Fumigation requires the use of masking tape. Where the painted surface is old, oxidized or improperly applied, peeling or chipping may occur. We assume no responsibility for any damage. There was no mention of stucco.
San Joaquin Pest Control have been around for a long time and do business throughout the San Joaquin Valley. They have a good reputation. So, why would they refuse to take care of my reader's legitimate problem? I'll give you the answer in a moment.

But first, this very same issue-damage to stucco-is addressed in the contracts used by a number of fumigation companies. Beneficial Exterminating, located in the Riverside area, deals with the problem this way:

The fumigation process requires the use of masking tape and spray adhesive. Residue from the adhesive may result in discoloration on painted or stucco walls. We assume no responsibility for such damage.

It is Legal To Limit Liability In Some Cases

It is perfectly legal for a company to limit its liability for damage to property or injury in some circumstances. For example, where there is an obvious and unavoidable risk of injury or property damage-no matter how careful-liability can be limited or completely excluded, giving the customer a choice: sign, go elsewhere, cross it out, or forget it.

This is common in various kinds of sports or high risk activities, such as skydiving. The contracts used by virtually all parachuting companies contain a clause which states: Warning! Parachuting is inherently dangerous.

Accidents causing serious injury or death can and do happen. I understand the risks and assume all responsibility for injury.

When these kinds of issues get into court, language used in the contract is carefully examined. It is clear that whoever drafted that release of liability for San Joaquin made an expensive mistake as stucco wasn't mentioned. If it were, my reader would have had a choice: Cross the language out, find another fumigation company, or see if there was some way to eradicate the termites. In fact, there are several ways of getting rid of them.

It is surprising how many business owners or managers are unaware of what their contract states. So, reading and understanding what's in a contract applies just as much to the customer as it does the business.

What Did San Joaquin Pest Control Say?

I spoke with Gene Bryan, San Joaquin's General Manager in the Fresno area. "We have a release of liability for these kinds of problems," he confidently told me. "I'm sorry it happened, but we are not responsible."

"Gene, have you read your own contract lately?" I asked. After a few seconds of silence, I read the paragraph aloud. I then heard an embarrassed, "Holy Cow, you're right! I thought we had that covered! I could have sworn we had that in our contract!"

And then, without any prompting from me, he said the right thing:
"We will pay for the repairs to his wall. Get us the bill." A few days later, I heard from San Joaquin's Fumigation Manager, Mike Kulzer.

"We really need to thank Mr. Lawrence and you for bringing this to our attention. We feel sorry about the situation and the way in which the customer was initially treated by our sub-contractor."

Final Thoughts

Limitations of Liability are extremely common in all sorts of contracts. They are standard in Home Inspection Contracts, limiting the financial responsibility of a negligent home inspector to only a few hundred dollars. Some courts uphold the clause, while others feel a negligent home inspector should be responsible for the damage caused a home buyer.

As we've seen from Judd's case, it is critical to read every contract. The excuse: "Well, I didn't read what I signed," won't fly. If you find something which seems unfair, speak up, cross it out on the original and your copy. If the company goes ahead with the job and causes you damage, they won't be so smug.

Dennis Beaver practices law in Bakersfield and welcomes comments and questions from readers, which may be faxed to him at (661) 323-7993, or e-mail lagombeaver@hotmail.com.

(Aug. 28, 200

[Dan Bowers, CMI]

That sort of article is disgusting. The very idea that a home inspector could limit his or her liability OR negotiate with their customers as to how much liability they are willing to accept for the outrageous fees they charge is totally against a used house commissioned salespersons motto in Kansas.

Thankfully in Kansas, our legislators (with the Realtor & trial attorneys guidance and campaign contributions) have chosen to ignore 3-4 appellate court rulings in Kansas allowing businesses to contract with their customers regarding time or $$$ in establishing limits of liability and DICTATE to home inspectors that for the average fee of $275 - $325 we can't limit liability to anything under $10,000 per job.

Notice that decision does not include any other profession except home inspectors. But thats the way it should be, because any other business or profession should be able to negotiate their own contracts with their customers - but home inspectors aren't capable of doing that.

[William J. Decker]

In license states, usually, there is no limitation of liability. There is not in Illinois. (for HIs, Realtors, Lawyers, Doctors, i.e., anyone with a state license).

[Joe Farsetta]

Will,

I'll go one better. In Mass, if you have a limitation of liability on your contract documents, it can cost you your HI license.

[Dan Bowers, CMI]

I'll go youse 1 better:

In Kansas City the Realtor Board's promulgated contract has at least 7 clauses with limits of liability; the engineers use contracts with limits of liability clauses; the doctor that did my lasik surgery used a 16 page disclaimer with several limits of liability in it; at a recent USMC reunion held on a military base - the base commander gave out forms to fill out and sign where the guys agreed to hold the government or USMC harmless if they got hurt on base; when sending the grandkid on a school outing, the school gives us forms limiting the schools liability if kid gets hurt on the outing.

A LOL clause is basic in literally hundreds of business situations.

[William J. Decker]

But, even though the state does not allow LOL for HIs, the insurance companies ask for it in the contracts.

Seems like some judges are aware of this and some are not, so you do the best you can.

[Nick Gromicko]

One cannot unilaterally limit one's liability from being grossly negligent anyway.

[Joe Farsetta]

Agreed, Nick.

LAws cut both ways. here in NY, the state-mandated SOP now specifically states that HIs are NOT required to inspect or discover mold or toxins. That helps limit our liability.