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Law & Order

By Greg Crosslin
October 12, 2000

Lawsuit — it's a word PCOs hope to never hear. Today, homeowners are bringing suits against pest control companies with a variety of claims, but some of the more recent reasons are because of EIFS construction, chemical sensitivity issues and WDI damage. Attorney Greg Crosslin, of the Montgomery, Ala.-law firm Crosslin, Slaten & O'Connor, talks to PCT about litigation trends and how PCOs can avoid legal pitfalls with their current and potential clients.

Question: In your opinion, what are the major litigation trends facing PCOs today?

Answer: Clearly, property damage claims will remain the most prevalent type of litigation facing PCOs. However, future trends are somewhat hard to predict and are often regional and media-driven. For instance, immediately following the Dateline NBC report on Exterior Insulating and Finishing Systems (EIFS), some companies started receiving numerous "new" claims for termite damage. EIFS litigation has grown to the point that many companies are now writing exclusions in their contracts for this siding. Some companies have even resorted to canceling service to clients whose homes were built with EIFS. Some courts have created their own EIFS docket to handle the flood of litigation. We expect this to continue.

We are also seeing a tremendous rise in the number of cases involving WDI/WDO inspections. Most troubling is that in many of these cases, the filing of a lawsuit is the first notice a PCO has of a problem. There has also been a rapid rise in claims based on chemical-sensitivity issues. As a result of recent media attention, EPA's recent decision and perhaps its prevalence in the industry, we think chlorpyrifos claims will continue.

We are also seeing lawsuits involving baiting or monitoring systems. We believe these will also increase as they have been in use long enough for suits to be filed. Because of the enormous publicity and advertising surrounding the bait systems, we will not be surprised to see fraud and/or deceptive trade practice act allegations as well.

Question: How can PCOs prepare for these trends?

Answer: While trends are difficult to predict, virtually all issues can be handled successfully if the PCO takes necessary precautions and is aware of the environment surrounding the industry.

First, let's discuss chemical sensitivity claims. These claims have moved into the spotlight over the past 10 years as EPA has made public its attempts to reduce chemicals used in the control of pests. In its grass-roots campaign to reduce the use of these chemicals, EPA has painted a dire portrayal of pest control chemicals and termiticides as dangerous poisons that not only harm the environment, but pose the possibility of injury to inhabitants of treated homes. A majority of these claims are not brought to the PCO's attention until after a lawsuit is filed. Therefore, the PCO often has treated a residence with a particular chemical or group of chemicals for years and is unaware of any sensitivity problems until after his customer has filed a lawsuit. Thus, any alternative methods of treatment that could have been used become moot. This problem often can be defused by simply addressing the issue in the PCO's contract.

It is now becoming a common practice to place the burden on the customer to notify the PCO as to any sensitivity to pesticide/termiticide chemicals. It is always the right of the PCO to draft contracts to protect themselves from potentially damaging lawsuits. It is reasonable to require such notification, but also to require that it be made in writing. This gives PCOs the opportunity to correct the problems and, if the customer fails to provide notification, the customer assumes the risk involved.

Secondly, there is no doubt that there is an ongoing "push" for PCOs to switch to baits/baiting stations. Some PCOs are going to the extreme of "getting out" of the liquid treatment business altogether and relying solely on baits. This interview is not about the success or failure of baits, but I want to caution all PCOs that they should take the time to learn about the bait's manufacturer and the pros and cons of any product before using. There is more to baiting than advertising and commercials. The research data given by the manufacturer should be studied in detail. Review independent university studies. Also, PCOs should find out what the manufacturer will do to assist them if a customer files a lawsuit. You need to know if the manufacturer will help provide for the defense or, at least assist in providing research and data. It might surprise you the kind of responses some manufacturers have to these requests.

Question: How can pest professionals limit damage claims for inspections and treatments?

Answer: There is no way to absolutely limit all damage claims arising out of a PCO's performance of WDI/WDO inspection. Inspections are not an exact science and are not intended to be relied upon as exhaustive guarantees of the absence of termites, fungus or damage.

Unfortunately, many homeowners and their lawyers want inspections to be absolute warranties. The National Pest Management Association has guidelines on how to prepare the NPCA-1 reports. However, we have found in defending PCOs that inspections offer a wide variety of issues. Inspections today cost from $50 to $300. Consequently, some PCOs feel the need to perform 10 to 15 inspections per day in order to make a profit. In reality, what they are saying is that they are willing to risk a lawsuit, from a future home buyer, for $50. Therefore, we strongly caution all PCOs to take their time and perform a thorough inspection. We suggest they take pictures around the home. It is amazing to see how many lawsuits are resolved, if not dismissed, because the PCO has a picture of an inaccessible area or termite damage that was present at the time of inspection, and the inaccessibility or damage was noted on the report. PCOs should consider purchasing a "flashlight camera" for inspections, if feasible. It is true that a picture is worth 1,000 words.

Limiting potential damage responsibility for treatments can be relatively easy if a PCO's contract specifically spells out what they are and are not responsible for. For example, some PCOs include a deductible or limit the amount of damage for which they will be responsible by placing those terms in their contracts. It is amazing what we have found to be left out of contracts as well.

PCOs should not forget to list conducive conditions that will void any repair and/or replacement of damage that might be provided under the contract. For instance, if a PCO has a customer that has wood-to-earth contact, they should advise the customer of the condition and the possibility that the contract repair clause will be void if the customer decides not to make the needed repairs. This should be followed with a cancellation notice. Unfortunately, many PCOs overlook the condition excluded in the contract. By taking such action, they defeat the purpose of the exclusion. In other words, they will not be released from liability under the contract to make the repairs, despite the existence of a conducive condition.

Finally, all contracts should be specific. If PCOs only want to cover one type of species of termites in their damage repair contract, they should state which species. We represented a PCO in Alabama who provided repair work in the event of new termite infestation of "subterranean termites." Under Alabama regulations, "subterranean termites" include Formosans by definition. The customer, and now plaintiff, had damages caused by Formosans and the PCO is required to make the necessary repairs.

Question: What is going on with the EIFS siding problem?

Answer: This has become a serious subject to PCOs on the East Coast and in the South. If there is a potential new contract, PCOs should seriously debate whether they want to take this homeowner, and possibly future plaintiff, as a client. If so, they should make sure the contract contains the appropriate disclaimers and conditions to protect them. First, they must make sure the EIFS is cut back above the grade and back wrapped accordingly. Second, they should make sure the customer doesn't have a sprinkler system that is spraying water directly on the siding or around the base of the house, diluting the termiticide applied. Finally, after the fifth year of the contract, PCOs should retreat the property to solidify the partial barrier.

If PCOs are conducting a WDI/WDO report for a home that has EIFS, they should take moisture readings around the home and report the results. Also, if the EIFS is below grade, they should note the graph accordingly and explain the inaccessible areas. They may want to draw attention on the report as to what is inaccessible so that the future home buyer can get another opinion and NOT rely on the report in the purchase of the home. Simply, they should ask themselves "Is this house risk worth the annual renewal I will receive from the customer?"

Question: Termite baits are the newest treatment option for PCOs. Have there been any suits or claims arising out of the use of baiting systems?

Answer: Even though termite baits are relatively new to the market, there has been some litigation about the alleged failure of bait systems. So if PCOs are thinking about using a baiting system, it is important to ask the system's manufacturer about any recent litigation regarding their respective products. Also, it is important to ask the corporate representative what their role will be if PCOs are sued for the product's failure. PCOs should also check with their insurance carrier to see if they will provide coverage and, ultimately, a defense, if the baiting system's failure is the sole reason behind the lawsuit.

Question: What is Crosslin, Slaten & O'Connor?

Answer: Crosslin, Slaten & O'Connor (CS&O) is a law firm representing pest control companies. CS&O has been involved in pest control cases in more than 30 states covering issues involving termite damage claims, pesticide claims, baiting systems, WDO/WDI reports and inspections, as well as chemical exposure.