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  1. #1
    Vincent Haller Smith's Avatar
    Vincent Haller Smith Guest

    Default Legal "stuff" Inspectors should know

    Guys and Gals:

    "Who is at fault?" "The inspector was negligent" "My E & O carrier would not defend me?" "I can't get insurance". "How do I shop for insurance rates?" "I hired this person and they screwed me, now I must defend the bas----"

    These questions have answers. I have been there and done that over the past 40 years. Now it is time to give back to my brother and sister inspectors.

    A bit about me so that you know where I am comming from. My whole life has been devoted to one type of inspection or another from home, commercial to insurance. Project engineer of public contracts and hold an engineering degree and am a Doctor of Law (JD). enough said. I intend to offer various relevant subjects of interest on this post as time permits.

    DISCLAIMER: (I have to do this folks) Any and all information I post is intended for general educational purposes only. You are advised to consult an attorney where legal advice is required. Ouch, that's done.

    Our first subject is VICARIOUS LIABILITY or otherwise known by your attorney and the court as RESPONDIAT SUPERIOR. This latin phrase comes from merry old England and under the law describes the relationship between the "Master" (employer) and the "Servant" the employee.

    Soooo, do you hire independents or employees? You may think you have an independent contractor which relieves you of liability in the event of their screw up but the Law may see it differently. Folks, what the IRS says in an independent and what the Law says is an independent are two different animals.

    How do you protect yourself? Well, on my next post, we will examine what you need to do to ensure you have an independent and NOT an employee.

    I am doing this in my spare time so please understand that I will post as time permits - thanks in advance.

    Vince

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  2. #2
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    Default Re: Legal "stuff" Inspectors should know

    Thanks Vince, I have tied up my subs in closet until your next post


  3. #3
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    Default Re: Legal "stuff" Inspectors should know

    I have mine tied up and water dripping on their heads as we speak.

    "It takes a big man to cry. It takes an even bigger man to laugh at that man". - Jack Handey

  4. #4
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    Default Re: Legal "stuff" Inspectors should know

    Heck, I wish I had enough business to hire another inspector!

    Truth be known, I'm very happy being a solo inspector. I have only one person to worry about and that is enough.

    Scott Patterson, ACI
    Spring Hill, TN
    www.traceinspections.com

  5. #5
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    Default Re: Legal "stuff" Inspectors should know

    A great site has just been made better. Welcome Mr. Smith.


  6. #6
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    Default Re: Legal "stuff" Inspectors should know

    So hiring sub-contractors that have generally liability insurance may not be good enough?


  7. #7
    Rodney Poynter's Avatar
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    Default Re: Legal "stuff" Inspectors should know

    Been on here only a few hours and already love it. I have been in other businesses and see already there is a lot in common.


  8. #8
    Ted Menelly's Avatar
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    Default Re: Legal "stuff" Inspectors should know

    I am trying to figure out the three name thing.

    Every great now and then I meet folks that use all three of their given names and often wonder.....why.

    Just curious.

    Is it just legal stuff.


  9. #9
    Rodney Poynter's Avatar
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    Default Re: Legal "stuff" Inspectors should know

    I guess we have to ask a lawyer.


  10. #10
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    Default Re: Legal "stuff" Inspectors should know

    Since I live in the land of "2" names I'm kind of use to it. But then the 2 names that I'm speaking about are just the first name, like; Billy Joe, John Thomas, Billy John, John Bob and on and on!

    Scott Patterson, ACI
    Spring Hill, TN
    www.traceinspections.com

  11. #11
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    Default Re: Legal "stuff" Inspectors should know


  12. #12
    Vincent Haller Smith's Avatar
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    Default Re: Legal "stuff" Inspectors should know

    Quote Originally Posted by Ted Menelly View Post
    I am trying to figure out the three name thing.

    Every great now and then I meet folks that use all three of their given names and often wonder.....why.

    Just curious.

    Is it just legal stuff.
    No, it is not legal stuff. The name "Haller" was my Grandfather's last name. I was given this middle name at birth. I used just two names (Vincent Smith) for most of my life because of false accusations of childhood abuse by my grandfather. I dis-owned him so to speak. When I found out the truth, I made a promise to my now deceased grandfather that I would publicly carry his name in honor for the rest of my life.

    Vincent Haller Smith


  13. #13
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    Default Re: Legal "stuff" Inspectors should know

    Quote Originally Posted by David Garton View Post
    So hiring sub-contractors that have generally liability insurance may not be good enough?

    Hiring "sub-contractors" creates its own liabilities, and not just legal liabilities ... as they are, by definition, "sub-contractors" you cannot place any restrictions on them for doing inspections on their own, marketing themselves for themselves, and all the other stuff that you as the inspection company owner would want to place on them - because if you did ... yep ... they would be "employees" and you would have to take care of all those tax liabilities and all the other stuff too.

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  14. #14
    Vincent Haller Smith's Avatar
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    Default Re: Legal "stuff" Inspectors should know

    VICARIOUS LIABILITY - RESPONDIAT SUPERIOR?

    First rule: If you have an employee, you will be held liable for his/her work performance as to negligence but more importantly you will be held vicariously liable for an employee's transgressions to include battery or assault on a client or the public where that employee transgresses within the scope of employment. I will explain the 'SCOPE OF EMPLOYMENT" on further posts. You are not liable for such transgressions by an independent contractor (generally).

    DO YOU HAVE AN EMPLOYEE OR AN INDEPENDENT?

    Here is what the court usually asks when determining whether you have an independent or an employee. It is important to remember that the court balances and kind of totals up your answers, known in law as the "TOTALITY OF THE CIRCUMSTANCES". Soooo, answer the following questions. Do your homework and see if you have an employee.

    1. Do you furnish any tools e.g. rotowheel,paper etc.? You have an employee.
    2. Do you control the method in which the hireee completes the job? You have an employee.
    3. Do you tell the hireee what times he/she should break for lunch, start work or finish work? You have an employee.
    4. Do you tell the hireee how to dress? You have an employee.
    5. Do you pay the hiree on a regular basis? You may have an employee.
    6. Do you leave control over the method in completing the job to the hireee? You have an independent.
    7. Do you tell the hireee exactly what you expect as to the completed job? You have an independent.
    8. Do you extend percs like gas money or lunch money? You may have either an employee or an independent.
    9. Do you have an oral or written contract with the hiree? Depending on the wording of the contract, you may have an independent or an employee. See above.
    10. Do you get pissed at the hireee and tell him/her their work sucks and this is how to do it right? You may have converted an independent to an employee.

    OK, these are some of the factors. If you are judged to have an employee and that employee punches somebody or steals from someone while performing within the scope of their work (this includes lunch breaks), you will be held just as liable as if you punched that person.

    Why? Because you are the MASTER under the common law. Now, you are entitled to what is called indemnity from that employee absolutely unless you negligently hired him/her (you knew they had a hot temper but hired them anyway - in such case you had knowledge).

    Soo, if a client sues the employee for a hundred grand. The client's attorney will automatically name you in the suit. If the employee can't pay, you will. Under the law you and the employee are held "JOINTLY AND SEVERALLY LIABLE" Your attorney will then have the burden of showing that this person was an independent, not an employee. Here, the above questions will come into play.

    Moral of the story....be very careful who you hire and the arrangements you make with the hireee. You may think you have an independent but under the law you may not.

    Vincent Haller Smith


  15. #15
    Vincent Haller Smith's Avatar
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    Default Re: Legal "stuff" Inspectors should know

    Quote Originally Posted by James Risley View Post
    Soooo Wayne it appears that by you doing this tyingup thing when your subs "come out of the closet" they will have been converted.......
    Jim: I know of situations where an independent has hired an otherwise legitimate sub who gets dragged into court for a tort (battery, tesspassing and the like). The Sub gets hit with a 20K judgement which he can't pay or does not wish to pay so he (his attorney) asserts "hey, I wasn't subbing, I was hired as an employee by James Risley". You have to show otherwise or you will be held jointly liable.

    Now, you will hopefully get out of any liability but you will have to go through the hell of litigation, court costs and attorney fees to defend yourself against this person's claim.

    The root point of my post as to vicarious liability is to remind folks that prevention is the best defense. Make sure the agreement between you and the hireee as to the hireee's status is clear and unambiguous. Get it in writing and keep it on file. Use the informational questions I have posted above to develop your agreement.

    Now, I know it is a pain in the ass to do all this legal stuff of a formal agreement. You will never know how important it is until out of the blue on a nice Summer morning you get hit with a summons. By the way, my firm uses strictly subs with ironclad agreements.

    Hope the information helps,

    Vince

    Last edited by Vincent Haller Smith; 08-11-2010 at 09:54 PM. Reason: need to add information

  16. #16
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    Default Re: Legal "stuff" Inspectors should know

    Vince,

    Thanks for the info!

    It does not apply to most inspectors since we would never trust anyone to do inspections for us. We need some good info on other subjects though if you can find the time.

    Here is one that many of us may need one day.....

    Can you give us some tips on how to go about filing a complaint against an attorney who trys to extort money from an inspector or his insurance company when there is absolutley no basis for any action based on the inspection agreement?

    Even if an insurance pays out money to make a claim go away, the fact that it was insurance fraud to begin with does not go away and the fact that the attorney used his legal practice in an unethical way and without proper research does not go away.

    Personally I would go after an attorneys license and sue the client for breach of contract without hesitation if this ever occurred to me.

    Just looking at the possibilities here, nothing to worry about for any attorneys so far.

    Bruce King, B.A. King Home Inspections, LLC
    www.BAKingHomeInspections.com
    Certified Master Inspector, Independent Inspectorwww.IndependentInspectors.org

  17. #17
    Vincent Haller Smith's Avatar
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    Default Re: Legal "stuff" Inspectors should know

    [quote=Bruce King;141210]Vince,

    Thanks for the info!

    It does not apply to most inspectors since we would never trust anyone to do inspections for us. Here is one that many of us may need one day.....

    Can you give us some tips on how to go about filing a complaint against an attorney who trys to extort money from an inspector or his insurance company when there is absolutley no basis for any action based on the inspection agreement?

    Bruce: Sooner or later there will be a time when you have to trust another to do an inspection for you. Take it you are a "one man show". Not a good thing. Most of us run a "one person operation". What happens to your company and family should you break a leg or catch a bad case of the flu. Would you trust others on this site to fill in and do inspections for you until you are back on your feet? "No man is an island". The purpose of this site is to network. We are in this thing together. Enough said.

    Now as to your question. If you (or others) believe an attorney is practicing EXTORTION, file a complaint with the DA. This is a criminal offense. However, most cases involve contract disputes between the buyer and seller where the inspector gets caught in the middle. As I said on my initial post, inspectors are extremely vulnerable because they put their ass on the line.

    Having said as much, it is a rare case where the home inpector is sued on a buyer seller dispute.

    On another note, some intersting stuff. I remember a case where the seller of a single family home had kowledge of a severely defective oil fired heating system (think it was Vermont). The buyer failed to hire an inspector. The buyer closed on the home and two months later the house burned down killing the "buyer". The buyer's estate said the hell with disclosure (torts-contracts). They filed criminal charges. The seller was convicted of voluntary manslaughter and sent to prison. Wow! rare but one never knows.

    Vince


  18. #18
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    Default Re: Legal "stuff" Inspectors should know

    If I can't do an inspection I simply send it to someone else, I don't "hire" them to do it. They send me some in return at times too. I would not have any major issues with lost time from work, my income is insured.


    On the other question......

    I have heard of inspectors getting named in lawsuits due to disputes that really only involve the sellers and agents where the inspector was not even told why he was being sued. Why is this allowed and what can be done about it?

    Bruce King, B.A. King Home Inspections, LLC
    www.BAKingHomeInspections.com
    Certified Master Inspector, Independent Inspectorwww.IndependentInspectors.org

  19. #19
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    Default Re: Legal "stuff" Inspectors should know

    Probably ther best remedy to resolve alleged inappropriate conduct by an attorney is to report the matter to the State Bar association - in the State which holds the attorney's license and where he/she is licensed to practice law.

    They have a grievance procedure (investigation) and their findings may provide evidence or information which might lead to a malpractice suit. Of course you would need another attorney to take the case. But the State Bar can also withold or suspend the offending attorney's license with just cause. Few attornies relish the idea of being investigated by their SBA or having it on their record.


  20. #20
    Vincent Haller Smith's Avatar
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    Default Re: Legal "stuff" Inspectors should know

    On the other question......

    I have heard of inspectors getting named in lawsuits due to disputes that really only involve the sellers and agents where the inspector was not even told why he was being sued. Why is this allowed and what can be done about it?[/quote]

    Good Question! Now we are getting into the roof of my discussion.

    The fact is that "Anybody can sue Anybody" - Blanket statement. Lets analyze this a bit..... When a suit arises, the Plaintiff's attorney will bring in most unusual suspects including the home inpector. Why?

    There are two things the plaintiff must prove by a preponderance of the evidence a) Actual cause and b) proximate cause.

    ACTUAL CAUSE - Let's say the seller and the agent have a dipute as to the commission, the seller or the agent is the ACTUAL CAUSE of the breach of contract as between those two parties. So why the hell should the inspector be involved? OK so far? The inspector will not likely be pulled into the suit. But wait!

    PROXIMATE CAUSE - The Plaintiff may also win on Proximate cause. Now, the Plaintiff can bring in anyone and everyone. What is proximate cause?

    In the law, this is otherwise called the 'but for" Doctrine. BUT FOR, John inspector getting a bad breakfast at Bill's deli and but for John Inspector listening to Obama's speech in his truck, John inspector whould have arrived at a different conclusion as to his report which was a proximate cause in the commission dispute. That is why you can be named in a suit even though you had nothing to do (in the real world) with the seller/agent dispute. As I said above, these summons can come out of the blue.

    I cannot stress enough that we are extremely vulnerable to attack because we put our asses on the line. DOCUMENT, DOCUMENT AND DOCUMENT.

    The point is that in a professional liability or products liability suit it makes common sense for the litigating attorney to bring all possible proximate causes of the subject suit into court, sort them out and let the judge decide. A damn shame on our part, but that is the law.

    Vince


  21. #21
    Vincent Haller Smith's Avatar
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    Default Re: Legal "stuff" Inspectors should know

    Quote Originally Posted by Ian Page View Post
    Probably ther best remedy to resolve alleged inappropriate conduct by an attorney is to report the matter to the State Bar association - in the State which holds the attorney's license and where he/she is licensed to practice law.

    They have a grievance procedure (investigation) and their findings may provide evidence or information which might lead to a malpractice suit. Of course you would need another attorney to take the case. But the State Bar can also withold or suspend the offending attorney's license with just cause. Few attornies relish the idea of being investigated by their SBA or having it on their record.
    Thanks for the information. This is a possible route in some circumstances but it does not produce positive results for the inspector who's reputation is tarnished. I say sue the Bast.... attorney and let the truth be made public. Most "in house" bar investigations are kept very non public.

    Vince


  22. #22
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    Default Re: Legal "stuff" Inspectors should know

    Can we include a clause in our inspection agreements like this:

    If the client allows an attorney to include the inspector in legal proceedings under "proximate cause" the client must reimburse the inspector for all lost time and expenses regardless of any insurance payments made to anyone.

    Bruce King, B.A. King Home Inspections, LLC
    www.BAKingHomeInspections.com
    Certified Master Inspector, Independent Inspectorwww.IndependentInspectors.org

  23. #23
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    Default Re: Legal "stuff" Inspectors should know

    Everyone knows that naming inspectors in suits occurs because the inspector has E&O and/or because they know the insurer may cough up some dough. Its called extortion.


  24. #24
    Elliot Franson's Avatar
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    Default Re: Legal "stuff" Inspectors should know

    Quote Originally Posted by Vincent Haller Smith View Post
    Most "in house" bar investigations are kept very non public.
    Mr. Smith: And, in my experience, most are ruled in favor of the defendant. Such is also the case with engineers and Boards of Engineers. These sorts of "investigations" amount to little more than a stylized circling of the wagons.


  25. #25
    Vincent Haller Smith's Avatar
    Vincent Haller Smith Guest

    Default Re: Legal "stuff" Inspectors should know

    Quote Originally Posted by Bruce King View Post
    Can we include a clause in our inspection agreements like this:

    If the client allows an attorney to include the inspector in legal proceedings under "proximate cause" the client must reimburse the inspector for all lost time and expenses regardless of any insurance payments made to anyone.
    Sorry, won't work.

    Vince


  26. #26
    Vincent Haller Smith's Avatar
    Vincent Haller Smith Guest

    Default Re: Legal "stuff" Inspectors should know

    Quote Originally Posted by Raymond Wand View Post
    Everyone knows that naming inspectors in suits occurs because the inspector has E&O and/or because they know the insurer may cough up some dough. Its called extortion.
    Your point is well taken.

    Vince


  27. #27
    Vincent Haller Smith's Avatar
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    Default Re: Legal "stuff" Inspectors should know

    Quote Originally Posted by Elliot Franson View Post
    Mr. Smith: And, in my experience, most are ruled in favor of the defendant. Such is also the case with engineers and Boards of Engineers. These sorts of "investigations" amount to little more than a stylized circling of the wagons.
    Your points are well taken but I think you mean the "Plaintiff".

    Vince


  28. #28
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    Default Re: Legal "stuff" Inspectors should know

    Quote Originally Posted by Vincent Haller Smith View Post
    Sorry, won't work.

    Vince

    Is there a law against it?

    What prohibits two parties from forming a written agreement within the law?

    Bruce King, B.A. King Home Inspections, LLC
    www.BAKingHomeInspections.com
    Certified Master Inspector, Independent Inspectorwww.IndependentInspectors.org

  29. #29
    Vincent Haller Smith's Avatar
    Vincent Haller Smith Guest

    Default Re: Legal "stuff" Inspectors should know

    A COUPLE OF "WAR" STORIES THAT I WILL NEVER FORGET

    1. As a young naive inspector (30+ years ago), I did a commercial inspection on a sporting goods building. I got into the shop (lots of ammo and stuff) O.K. did my job. I asked for access to the second floor and the seller/interviewee said they did not have the key. I never thought to ask why. So, I asked about the use. I was told it was used for some minor dry storage of personal items. I believed them and reported my findings to the insurer and the buyer.

    About a month later, the place burned down. Seems these folks were in financial troublle and rented the upstairs to vagrants who smoked and started a major fire with loss of life. I and my boss got sued. I now refuse to issue a report without getting into every nook and cranny of a building. Document & Document some more.

    2. When I first started in business, I hired (as a subcontractor) a very experienced inspector. I checked his credentials. His reports and photos were among the best. I passed them onto my clients. I paid him by the job. I found out after losing and couple of grand that he was giving me bogus reports and photos. He took some quick money and ran. I got stuck and lost good clients.

    This guy had the balls to call me and appologize. He told me point blankly that he needed some quick money and intended to screw me. He laughed. I checked his credentials and this fellow was good. What happened? I still wonder. Document & Document some more. I should have checked his work but trusted him to my detriment and was too busy building my new business to take those few crucial hours. Never will happen again!

    Vince


  30. #30
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    Default Re: Legal "stuff" Inspectors should know

    Two or more can agree to basically anything within their respective controls and have a signed legal contract but that would not prevent one from being named as a Respondent in a suit by the other. The agreed upon contract may afford some defense, thereby mitigating some loss, but it would not prevent the suit from being filed and the matter going forward within the judicial system. It would be up to the court to decide if the contract completely exonerated the Respondent. Usually there are other allegations and associated factors within the suit which are alleged to be outside the contract. Thus making the Respondent still responsible for damages based on the alleged incurred loss.

    A typical legal suit (initially anyway) can include any and all who may have contributed to the loss but that doesn't necessarily mean they will still be a party to the suit when it comes to a settlement. Basically the Plantiff's attorney wants to cover all the bases, even to the point of including 'fictitious' names like John or Jane Doe, if at the time of filing the identity of the person(s) is not specifically known - the suit can be amended at a later time with the appropriate name or even dropped all together.


  31. #31
    Elliot Franson's Avatar
    Elliot Franson Guest

    Default Re: Legal "stuff" Inspectors should know

    Quote Originally Posted by Vincent Haller Smith View Post
    Your points are well taken but I think you mean the "Plaintiff".

    Vince
    Mr. Smith: No, I mean defendant. When a charge is brought against an attorney or engineer by someone else, that someone else is then the plaintiff, while the attorney or engineer is the defendant, or . . .?


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