June, 2019

Inspection News and Views from the American Society of Home Inspectors

Truth, Justice & Frivolous Lawsuits


In 2017, I wrote an article about truth and justice, the necessity for change and the challenges facing inspectors—not the least of which is change itself (ASHI Reporter, November 2017). Change rarely happens unless precipitated by a traumatic event such as a lawsuit. Truth and justice can be elusive, and they nearly always have a tale to tell.

In a single week many years ago, I was assaulted by two lawsuits that were not only frivolous, but also false and filled with inaccuracies. One lawsuit misidentified me as Ken Smith, owner of a termite company. I won’t go into details except to say I was innocent in both cases, and that the misidentification and misinformation in one case was corrected without explanation or apology and, significantly, both cases were settled out of court. More significantly, both were examples of perfectly legal extortion. By the way, “torture” comes from the same root word as “extortion” and I felt the pain. I also felt powerless.

My life slowly returned to normal. Then, one afternoon, I went to my mailbox and found a tin of homemade cookies, with a kind note from a client and a summons. The cookies were a surprise, but the summons was a shock. I consoled myself with the cookies, and then dug up the inspection report and reread the summons. This is what I learned: The report was more than a year old, and it confirmed that I was being sued over something disclaimed in industry standards and specifically disclaimed in my report, by persons I’d never heard of and who’d never paid for my service or report. 

I kissed my deductible goodbye and forwarded the documents to my insurance agent, who forwarded them to adjusters, and thus began another process of perfectly legal extortion. A week later, the adjustor invited me to an on-site meeting, which I declined. This must have seemed odd to him because I promptly received a call from my attorney who was equally surprised by my decision. Other inspectors must have been more docile, but I explained that I was indisputably innocent and had no intention of dignifying the process and wasting my time by participating in a legal charade that would end once a decent amount of money had been assured would change hands.

I was reminded of something Cool Hand Luke said in the movie of the same name. If you haven’t seen the movie or read the book, Luke is serving time for a civic offense when his mother dies and the sadistic warden believes that he might try to escape to attend her funeral, so he makes Luke strip down to his shorts and locks him in a small space overnight. As the guard hands Luke a latrine bucket before locking the door, he says, “I’m just doing my job, Luke,” to which Luke replies, “That don’t make it right, Boss.”

Are attorneys just doing their job when they file frivolous lawsuits and are insurance companies just doing their job when they settle them? With this latest lawsuit, the world indeed became a darker place for me, but I’d learned from Cool Hand Luke that it wouldn’t do any good to rail against the system. 

Mounting a Defense Against Frivolous Lawsuits

When I started out as an inspector, I hadn’t thought much about truth and justice. I believed that industry standards and inspection contracts offered the best defense against frivolous lawsuits. In fact, most inspectors still believe this, but it’s simply not true. In 2008, the Los Angeles Times reported that real estate led the nation in litigation. In my book Inspect and Protect (available at lulu.com), I summarized case histories, together with published statistics and testimony of several attorneys, that substantiated the Times report. 

Attorney Nigel Bonny, who was general counsel for FREA Insurance, reported in Florida’s Inspection Voice that “at least seventy percent of claims that reach my office are without merit,” and San Diego attorney Mark D. Stavros said the same thing in Mediation: Anecdote to Legal Abuse against Home Inspectors, declaring, “While there are a number of lawyers who prosecute actions with merit, there are nonetheless a significant number of cases pursued in bad faith.”

Attorney Chris Thompson, in an article published in the California Real Estate Association’s magazine The Inspector, stated, “You must be ready for a lawsuit even on an inspection where you did everything right.” Bleak news indeed, especially coming from attorneys, but notice how two of them camouflage the truth with euphemisms. Attorneys who pursue cases “without merit” or in “bad faith” are wicked, plain and simple, and one can only hope that the law of karma is at work and will eventually prevail.

These truths shouldn’t be muted, but they are. It’s like a family secret that we don’t feel comfortable talking about openly. We should not only talk about the threat to our family, but do something about it because inspectors continue to be ambushed. This wouldn’t matter if they could count on justice being served, but they can’t. 

What can be done? To answer this question, I first thought of industry standards and inspection contracts. You might think my first thoughts would be of errors and omissions insurance, but I’d concluded that carrying insurance gave me deep pockets and a target on my back.

Clarify Specialist Versus Generalist:

Most industry standards and inspection contracts were written by the best minds in the business, typically with the aid of attorneys. They’re meant to protect inspectors by defining them as generalists whose duty it is to defer to specialists, but is that true and do they work? I’ve not come across one lawsuit that charged an inspector with failing to meet standards. Based on lawsuits with which I’m familiar, I assure you that clients, attorneys and courts regard inspectors as “specialists”—the opposite of “generalists”—and not without good reason. 

Many inspectors describe themselves as “master inspectors.” The truth is that most of us become specialists in a sense, although not “licensed” as such. We’ve studied and worked to become professional inspectors, and we’ve invested in specialized equipment. Regardless, calling ourselves “generalists” never stopped us from being named in or dragged into a lawsuit. Attorneys don’t care what we call ourselves. As I said earlier, I was dragged into a lawsuit in which the attorney couldn’t get my name right, misidentified me as the owner of a termite company and omitted material facts that confirmed my innocence, and yet still was able to legally extort thousands of dollars from my insurance company, and the cost was passed on to other inspectors. Business is business, I suppose, but as Luke said, “That don’t make it right!” Besides, I was innocent and told the truth, and that didn’t matter either. (If you care to read the case, it’s on file in the Superior Court of Los Angeles, case BC 263791.)

Identify Industry Standards:

This is not to say that I abandoned industry standards—I didn’t. I gave them the respect they deserve and referred to them specifically, stating how to access and download them. I wrote a detailed description of my service, in which I defined myself as a “generalist” and accounted for what I did and didn’t do. My contract included a slightly overwritten clause at the end, which read as follows:

I agree and understand that I should follow every recommendation for documented service or a second opinion from a licensed specialist, and that by failing to do so I will violate the terms of this contract and agree to hold Keith Swift Inspections harmless for any subsequently alleged defects or deficiencies involving the component, the system, or the condition recommended for service.

I wrote this clause thinking that it might stop a client from calling an attorney, but realizing that it wouldn’t stop an attorney from charging me with negligence and not breach of contract or standards. 

Set Expectations:

Another thing I did was raise my fee as my service evolved. I began to arrive at inspection sites up to 90 minutes early so I could study the structure and its components in relation to its age, and assess the lay of the land and contemplate what might happen if it rained for 40 days and 40 nights. Most serious lawsuits involve age or moisture.

Few sites met the ideal site preprinted in all my reports, including drainage systems. If a site failed to meet that ideal, I described it and its limitations, recommended a second opinion and disclaimed any further responsibility. On the rare occasions when I did approve a site, I did so with a logical disclaimer and the recommendation that the area drains be tested and confirmed to be functional before close of escrow. I say a “logical” disclaimer because I pointed out that testing the concealed portions of area drains was not part of my service, and that testing them could take hundreds of gallons of the property owner’s water and several hours. I repeated the limitations of my service throughout my report, with full awareness that repetition can be annoying, but it can have meaning and legal purpose.

Use Proper Equipment:

I added sophisticated equipment to my toolkit. For example, I surveyed any structure with stress fractures (or that had settled even slightly out of level) with a self-leveling laser-level, photo-documented contrasting elevations in fractions of an inch or more, and included details and recommendations for service or second opinions in my reports, which absolved me of any further responsibility. Not one client objected to my professional observations or disclaimers, and I’ll never know how many complaints or potential lawsuits they prevented. Some clients consulted me “off the record” to hear my private observations and perhaps spare themselves the expense of a licensed specialist.

Talk to Clients:

I made a point of interviewing my clients on site, at which time I assured them that I represented them, and only them, and their best interests. I’d ask questions about their general health, their experiences in real estate and what concerns they had about the property. I referenced their responses in my report and made sure they understood that I was a generalist whose duty was to defer to licensed specialists for service or second opinions, but that I was proud and defensive of my service, which included indefinite consultation. I included a letter with my report, assuring my service and warning about mercenary specialists and the use of inflammatory language and spurious claims made by some real estate agents about the worth of home protection policies. I know that my “indefinite consultation” earned my clients’ respect and likely prevented litigation. There’s nothing more disarming than the truth!

Leverage Technology:

Another significant thing I did early in my career was invest in computer technology, which revolutionized report writing and enabled endless amounts of information to be retrieved easily. Unable to find a report-writing program that suited my needs, I designed one myself that allowed me to create sophisticated reports while doing inspections. I also created a dozen independent libraries containing thousands of narratives that I could retrieve to avoid litigation and save time. Inspectors remain vulnerable to lawsuits on the properties they inspect for as long as four years, and yet they’re only on site for a few hours. 

Furthermore, although inspecting a property can seem simple, it’s a complicated process that can take years to master. In fact, the knowledge necessary to perform a competent inspection has filled many books. (I’ve written one myself: A Practical Guide to Residential and Commercial Building Inspections [available at lulu.com]). Even if all inspectors possessed encyclopedic knowledge, such knowledge is useless unless they can instantly recall every detail and communicate the information effectively. Of course, no one possesses the memory or skill to do that, but a sophisticated report-writing program can. 

Two Noteworthy Cases

Two California lawsuits illustrate the power of a report-writer and a sophisticated library. The first involved an inspector who was sued after the death of a child who’d climbed on a tall fountain and pulled it down on herself. The inspector’s standards disclaimed an evaluation of landscape components, but that didn’t prevent the lawsuit. I was haunted by this tragedy and began to think about the hundreds of properties I’d inspected that had similar fountains, particularly birdbaths with heavy concrete basins resting on concrete pedestals, about which I’d said nothing. I took comfort in realizing that I could avoid a similar tragedy and lawsuit by adding a disclaimer, and identifying every imaginable and potentially dangerous item, including this one for concrete fountains: 

The landscaping includes a precast concrete fountain, which I did not evaluate and disclaim. It consists of heavy, stacked components that pose a safety hazard, particularly to children. Therefore, the fountain should be adequately secured or removed. 

I stored similar narratives in my report-writer for ponds, cascades, birdbaths, concrete benches and statuary, treehouses, tree swings and play structures, many of which stipulated the need for service and disclaimed any further responsibility. To repeat, I was not content to rely solely on industry standards. I wanted to alert my clients to potential hazards and possibly avert a tragedy, not hear about it later from an attorney.

The second example is drawn from a case that was certified for publication by an appellate court in California (Moreno vs. Sanchez, case B145698). An inspector was sued by a client/attorney for illnesses or allergies allegedly caused by a dirty, rust-contaminated, forced-air furnace, which the inspector had reported needed to be cleaned. Whatever the perceived merits of the case, I thought it was a bogus case of legal extortion. As I finished reading it, I checked the narratives in my report-writer that recommended a cleaning service and added this one, under “Health and Safety”:

We do not test for indoor air pollution, which the Consumer Product Safety Commission rates fifth among potential contaminants. Nevertheless, inasmuch as health is a personal responsibility, we recommend that you have the indoor air quality tested as a prudent investment in health and environmental hygiene, and particularly if you or any member of your family suffers from allergies or asthma.

It’s a shame that we have to remind adults that they’re responsible for their own health, but some clients and most attorneys need to be reminded. There are thousands of narratives, including several for mold, like this in my libraries. You’re welcome to use any that appear here. 

I could go on indefinitely about my reports, which became reports written for people I’d met and cared about, and not just reports written for clients. All were designed to address issues with the potential to invoke lawsuits and they became a work in progress. In fact, I added to and edited them almost daily. 

By contrast, a great deal of time has passed since I wrote Inspect and Protect, during which time I’ve learned not to say too much about politics or religion and the powers that be. Also, I confess that I don’t always say everything I believe in print. But, like Cool Hand Luke, once in a while I feel compelled to say something and I trust that the truth will be a light unto itself.

If you’d like to share your stories, please contact me ([208] 916-8263, email keithswift2@gmail.com). If you’re a seasoned home inspector or just starting out, I wish you well, fair weather and wind in your sails. 

Keith Swift was born and raised in England, and after traveling through the Mideast and the Far East, he immigrated to the United States. He earned a doctorate in 1982, with a dissertation on the work of W.S. Merwin, who was appointed poet laureate in 2010 and died in March 2019. After teaching at California State University for a few years, Keith obtained a general contractor’s license, together with a certification in asbestos, and embarked on a career as a residential and commercial building inspector until retiring in 2016. He enjoys reading and writing and working with his hands, and sharing what he has learned with others. 

The opinions expressed in this article are those of the author only and do not necessarily reflect the opinions or views of ASHI. The information contained in the article is general, and readers should always independently verify for accuracy, completeness and reliability.