Are You Who Your Client Thinks You Are? How Simple Communication Errors Become Complex Problems
Advertising has come a long, long way in a short amount of time. Many of us can still recall when advertising your business was as simple as printing some business cards, putting lettering on a van and getting space in the local phone book. The advent of the internet, social media and software brought many new methods to communicate who we are to potential clients. Unfortunately, the ease with which we can communicate to the masses brings with it new issues and avenues of liability.
Most of the lawsuits where I am assigned to represent the inspector include a claim for some form of misrepresentation of either the inspector’s qualifications or the scope of services. Most of these misrepresentation claims have no basis. Those that do, however, quickly become more about the misrepresentation and less about the alleged error in the inspection itself. Why do these cases veer off into this territory? More often than not it is because the plaintiff’s attorney finds an avenue to recover the litigation expenses for their clients that has nothing to do with the quality of the services provided by the inspector.
Generally, a plaintiff in a civil lawsuit cannot recover attorney’s fees and litigation costs from a defendant as part of a damages award. However, many states have some form of a consumer protection law that allows a plaintiff in a civil case to recover the attorney’s fees and costs incurred in litigating a claim where there is a misrepresentation of the quality or scope of the services provided. Whether that provision is contained in a home inspection law or regulation, or whether it applies generally to all professions, these statutes and provisions turn simple cases into legal quagmires, add tremendous costs to defending a home inspection lawsuit, and could result in an award against an inspector that is not covered by insurance.
The most common form of alleged misrepresentation as to qualifications arises from misstating affiliation with an organization. Many inspectors join national or local home inspector organizations at one time or another. Most of those that join organizations advertise the fact of their membership. In states that do not have home inspection regulations or licensing, affiliation with a recognized national or local organization could be a primary factor in a client deciding to retain an inspector. Unfortunately many inspectors that discontinue their membership in these organizations fail to update their advertising and other documentary materials to reflect that change.
I recently defended an inspector in a litigation matter where the inspector used the logo of a state-based home inspector association on his inspection report and his inspection contract. Unfortunately my client had let his membership in that association lapse several years prior to the lawsuit. More unfortunately, and ironic, was that the attorney representing the plaintiff in that lawsuit was formerly the general counsel for that home inspector association. The plaintiff’s attorney checked on my client’s membership and found it had expired, and then used that to add claims for misrepresentation and fraud to the lawsuit. What started out as a relatively simple defense became a full-fledged war. Now there were claims for which my client had no insurance coverage. Worse, the entire case hung on credibility. The plaintiff’s case hinged on something the plaintiff alleged the inspector said during the inspection. The inspector denied making that statement. A jury would need to decide which party was more credible in order to decide the case. Now my client’s credibility was in question regarding something that had nothing to do with his skills or how he performed this inspection. This was a game changer that ultimately resulted in my client having to settle the case rather than fight it, despite having good defenses to the claims regarding the inspection. Why? Because the misrepresentation claims were not covered by insurance, and my client would be bankrupt if a jury found against him. That simple error in advertising made a defensible case indefensible and drove up the litigation expenses for the inspector. A simple error easily avoided by simply reviewing his inspection report cover and deleting any reference to the organization to which he no longer belonged.
Unfortunately it’s not just the folks that fail to update materials they created that land in the litigation vortex of misrepresentation claims. Another recent client had purchased his home inspection business from someone he worked with for several years. The former owner created a website describing his business and advertising his affiliation with a national association of home inspectors. The website contained many references to that association’s standards of practice and why it was important to seek out members of that association when choosing a home inspector. When my client bought the business he was not a member of that association. Now that the former owner was gone, nobody at that business was a member of the national association. Anyone viewing the website would have been left with a different impression. My client never updated the website. After he was sued for an inspection, the intrepid plaintiff’s attorney did some basic research, learned that my client was not a member of that national association, and quickly amended his lawsuit to add claims for misrepresentation and fraud. A formerly smooth path defending the case became a ride in a jalopy on a deteriorated roadway. Now it wasn’t just about the inspection. It was about the website, a threat that the plaintiff would report this incident to the state inspector regulatory board and a lack of insurance for the misrepresentation claim. Another winnable case made questionable by things having little if anything to do with the performance of the inspection.
In each of the above examples simple oversight and due diligence would have prevented misrepresentation claims. Here are some simple steps you can take to avoid the same issues:
Check the information in your contracts and reports for accuracy and, where applicable, compliance with state home inspector laws and regulations
Review your website and where necessary update it to provide accurate, up-to-date information on you and your affiliations
If you are working in multiple states, be sure to that your marketing materials are compliant with each state where you provide services
Take the time to make sure your clients know who you are and what you can do. Taking simple, proactive steps to do that now can save you time and money down the road.