Without tort reform, good firms will fail

BY JO RAE WAGNER SPECIAL TO CONTRACTOR BY NOW EVERYONE acquainted with me knows my determination to fight for tort reform for the construction industry. Deep pocket lawsuits have become a main topic of conversation for plumbing and HVAC firms. Over the past five years, I've seen good competitors fall under the weight of continuous litigation problems that always involve every firm with a contract

BY JO RAE WAGNER
SPECIAL TO CONTRACTOR

BY NOW EVERYONE acquainted with me knows my determination to fight for tort reform for the construction industry. Deep pocket lawsuits have become a main topic of conversation for plumbing and HVAC firms. Over the past five years, I've seen good competitors fall under the weight of continuous litigation problems that always involve every firm with a contract on any given project.

In our area of South Texas, schools are going back 10 years and suing everyone involved in the construction of their buildings. Reputable firms now avoid bidding districts resorting to this practice. One district is suing for more than $800 million, and that amount is growing.

We can no longer communicate with owners and have time to correct any deficiencies in their buildings. Now perfection is the rule. The problem is, as schools are finding out, the price of perfection is extremely high and almost always out of anyone's budget.

How did we allow this costly and destructive situation to creep into our life's work? First of all, we have become a society that always wants to blame the other guy for everything. If an owner sees a flaw in his perfect world, it must be the fault of the architect, engineer, contractor or subcontractors. He gets an attorney, because he doesn't want to figure out where the problem is, and the attorney naturally proclaims that we're all to blame, but he starts with suing the general contractor.

Now the GC has language in his subcontracts that says he can't be blamed because everyone held him harmless. The GC third-party sues everyone else to cover his losses. By the time this goes to mediation or arbitration, the idea of any one party being at fault or bearing liability somehow gets lost. The only thing that matters is the amount of insurance money available with so many firms involved. The real issue is not right or wrong, it's how much money can we drag out of insurance companies. Spare me from people who claim it's a matter of principle, not money.

In today's climate of frivolous lawsuits, we have to watch our contract documents very carefully. We dare not take on any liability except our own, or we will live to regret it. We should also send a message to entities that continue to sue that they may be out of luck if they want reputable companies to bid their future projects.

Recently, I visited my legislators in Washington and reiterated the need to stay the course on sensible tort reform. Otherwise, good companies will fall, and jobs will surely be lost.

We all need to write and telephone both our state and federal legislators that we're tired of this lawsuit mentality, and we want to go back to building America. Stop spending time we don't have inflating the bank accounts of trial lawyers.

After five years of trying to find all the answers to this costly and unproductive menace to our industry, I'm still looking and accepting suggestions.

Some of the suggestions that p-h-c contractors have come up with are:

  • Make illegal all contract clauses that include language containing subrogation of rights and additional insureds. Whatever happened to everyone being responsible for his own firm and employees, not the entire project?
  • Get rid of sovereign immunity. Why is it those that have this wonderful shield are the ones doing most of the suing? No one should be exempt from acting responsibly where the stakes are so very high for everybody else involved.
  • Require a cooling-off period. This is something some states have that should be required nationwide. There should be a time for the parties to meet and try to remedy all concerns, without a lawyer involved. This is a time for fixing problems and discussing solutions, not money. A time for rebuilding relationships that are only damaged, not yet broken.

If all of the above look like nothing but common-sense answers, I fully agree. It seems good old common sense has been missing in our legal system for quite sometime.

We talk about the outsourcing of jobs from this country, and lawsuits are a big part of the reason we are losing so much to foreign entities. Maybe if we just start asking for accountability from legislators, judges and lawyers, we can start to put a halt to what most people feel is a legal system out of control.

I'll certainly keep the pressure on with state and federal legislators, and I have a lot of wonderful people helping me. The Plumbing-Heating-Cooling Contractors - National Association Political Action Committee has dedicated time and money to advance this desperate and worthy cause, which has been shown to be a major issue in our membership surveys.

If we work together, we can make a difference in our future. If not, expect high insurance premiums to just get higher, and lawsuits will be part of the price of doing business in this country.

Jo Rae Wagner is president of CTO Inc., a contracting firm in Harlingen, Texas, and vice president of Plumbing-Heating-Cooling Contractors - National Association.