By Keith Swift, PhD
InterNACHI member/InterNACHI Report Writing Consultant
President, Porter Valley Software
Two articles on the subject of litigation were published in The Inspector, a magazine published by the California Real Estate Inspection Association: one of mine called The Death of Common Sense, and one by attorney Kris P. Thompson. My article reported that I was being sued over something that was specifically disclaimed in my report and by persons who were not even my clients. I didn’t relish announcing that I’d been sued, but I did want to warn other inspectors in California about the threat to their livelihoods. Anyway, I characterized the lawsuit as being “legal extortion,” which it is, and predicted that it would be settled for economic reasons, which it was, a few days after the article was published. Attorney Kris Thompson’s article contained a similar warning, only in this instance inspectors didn’t even have to read beyond the title to get the message: Wrong Place, Wrong Time: Why Inspectors Get Sued (Even When They Haven’t Done Anything Wrong.) Two articles with almost identical themes is not a mere coincidence; it is a meaningful coincidence that speaks of a legal system that has been corrupted by greed. However, people don’t always see things in the same way. Kris Thompson concludes from the wild-west tale in his article about the legendary Judge Bean that the people who happened to be in his frontier saloon/courtroom “were simply in the wrong place at the wrong time,” whereas I concluded they were actually the victims of Judge Bean, who was corrupt and should have been hung up by the thumbs behind his own saloon/courtroom. Regardless, I yearn for a judicial system that is worthy of respect, and have only a passing interest in apologia for one that has been corrupted.
The sad truth is, if you’re an inspector with insurance you’re going to be sued, even when you’ve done a professional inspection to industry standards, and are innocent of any wrongdoing. And when that happens, it’s going to cost you your deductible, and possibly a lot more in lost time, tarnish your reputation, jeopardize your standing with your insurance company, threaten not only your livelihood but also your personal assets, and make a mockery of justice. As an attorney, Kris Thompson certainly understands this, and is sympathetic to the plight of inspectors. He even suggests ways in which they can lower the risk of litigation: “First, having good Errors and Omissions insurance is a key safeguard,” he says. Sounds good, but the exact opposite is true. Having insurance is what gets you sued, plain and simple, and having no insurance is truly the best safeguard; not that I’m advocating against having insurance, but I think about it once in a while. Second, he suggests that our contracts should be signed prior to the inspection. But isn’t that the reason why they’re termed “pre-inspection agreements,” and don’t the vast majority of us get them signed up-front anyway? It didn’t help me, and that’s for sure. Regardless, the truth is that our contracts and standards offer very little real protection, and are no better than paper shields. And I’d be happy to prove that to anyone at anytime, with the indisputable testimony of actual lawsuits.
So, what are we to do? Well, rest assured, there’s no way to prevent litigation,
but there are hundreds of ways by which we can attempt to avoid it, many of which
I’ve suggested in twenty or so articles that I’ve written over the years. Regardless,
inspectors in California are literally being terrorized by its legal system. And
what I’d really like to see is an article by an attorney who truly champions justice,
respects the rights of inspectors, and reminds them in plain English that they’re
responsible for the properties that they inspect for as long as four years, and
warns them that the legal precedent of “equitable indemnity” virtually guarantees
that innocent inspectors will be dragged into endless lawsuits, and by persons
who have no ethical or fiduciary rights to their reports, and that their insurance
companies can be expected to roll over and pay rather than defend them, even when
they’re clearly innocent. “Equitable indemnity” may seem like a worthy legal precedent,
but so does the three-strikes-and-you’re-out law, until you realize that a hungry
felon could spend the rest of his natural life in prison for stealing a loaf of
bread. And that’s not right, not here in America, not here in the land of the
free. What we desperately need is what we think we are guaranteed, which is liberty
and justice for all. And that’s always been worth fighting for.