[Market Watch] Termite Litigation: Is It Safe Yet?

We have been sued! This simple phrase can cause panic, anxiety and downright fear in any company. I recently had the pleasure of speaking to a group at the Kentucky Short Course in Lexington. The topic was “Termite Litigation: Is it Safe yet?” The short answer to that question is No! However, litigation in the pest control industry has reduced somewhat during the past couple of years. That can be attributed to better business practices, better inspections, better employee training, and better products. The reduction in termite litigation can also be attributed to litigation cycles. Many industries go through cycles where lawsuits are plentiful. We saw a trend in the late 1990s and early 2000s, where synthetic stucco (E.I.F.S) lawsuits were being filed in record numbers. The diet drug market also saw increases in lawsuits in the late 1990s. The point is every industry can point to a period of time when they saw an increase in litigation.  The pest management industry is no different. Although termite litigation has decreased, the reality is that it has not disappeared completely. As long as you are in business and have customers, you have a potential for being sued. 

WHAT’S AHEAD? In light of the downturn in the housing market it will not be a surprise to see a sharp increase in termite litigation during the next few years. There are overwhelming numbers of individuals who purchased homes that are now being foreclosed on or are facing significant increases in their monthly mortgage payments. Many of those individuals are going to look for ways to hold onto their homes. One of those ways will be to blame someone else for providing information to them that they relied on in buying that home. If any evidence of a termite infestation (or other covered organism) is located by the homeowner after moving in, the pest management company who issued the Inspection Report will become the prime candidate to be the main defendant in their lawsuit.

Although the pest control industry faces many types of lawsuits, the most prevalent one is those that revolve around an inspection for the purpose of financing a residential structure. These are often referred to as Wood Infestation Report cases. The majority of these lawsuits read the same. Typically, the plaintiff accuses the pest control company of breaching its contract to inspect the home properly, acting negligently and/or wantonly during the inspection by not locating or identifying the infestation (or all of the areas of infestation) that was present at the time of the inspection and making misrepresentations to them that they relied on to their detriment. Although there is not enough time to discuss all the elements of each of these allegations, the wantonness claim and the misrepresentation (fraud) claim can carry punitive damage awards. These are damages a jury or judge can impose to punish the defendant and deter their conduct in the future. Wood Infestation Inspection Report cases typically revolve around the report, the structure and the testimony of expert witnesses. 

Expert witness testimony is very important to the defense of not only the Wood Infestation Report your company has prepared but also the practice that your company follows in performing inspections to generate the Wood Infestation Report. Your expert will obviously need the credentials to back up his testimony (i.e. a number of years in the industry, an entomological degree, etc.) but will also need to be able to relate to a jury or the court. This important witness must be able to effectively communicate the parameters of an inspection and the limitations of the report but also provide a realistic image of exactly what goes into the inspection. More importantly, your documents will be vitally important. It is critical to the defense of a Wood Infestation Inspection Report case, or any other case for that matter, that your documents are clear, concise, legible, and prepared properly. Many lawsuits can be mitigated or postured in better position for your company if your documents are in order. There have been many articles written by lawyers for this industry that consistently preach that you must document, document, document! It cannot be said enough that the amount of time you spend preparing the reports and other documents that go with the services you are providing correctly will  save you hours of time in litigation. Lawsuits will happen but the better your documents and records are, the better chance you have in defending your practices and your business.

In addition to Wood Infestation Inspection Report cases, property damage lawsuits remain constant. These cases revolve around termite damage located at a home after it has been treated and/or placed under a contract. Regardless if your contract calls for retreatment only of active infestations, the lawsuit that is filed against you will be seeking recovery for that termite damage replacement. The concise and clear language of your retreatment contract with that customer will go far in defeating their claim that you are responsible for that damage. Many legal arguments can be made that the repair of damage is not your responsibility based on that contractual agreement. More importantly, to establish a defense to property damage claims, a clear graph showing the visual condition of the home when it was placed under contract, clear annual inspection reports (if your state requires them), and legible and properly calculated treatment records are very helpful to demonstrate to the court that all requirements to protect a home have been followed.

One other type of lawsuit that can be related to termite services is an alleged chemical exposure. During the past decade there have been a multitude of television investigative reports, magazine articles and rampant discussions on the Internet related to the dangers of pesticides. Clearly, pesticides can be dangerous if they are not used according to the label directions. However, some of the information, or misinformation, on the products used in this industry convinces people that their ailments are caused by the treatments from the pest management company. This type of litigation can be expensive to litigate but are very difficult to prove. If your company ever becomes involved with a “chemical exposure” case it will be important that you have the product labeling to provide to experts and other individuals to help eliminate, or at least cast serious doubt, that the treatment product you used was the culprit of the claimed illness. 

PAY ATTENTION. These are only a couple of litigation issues your company faces on a daily basis. There are many more that range from general pest treatments to violations of employment agreements. Litigation is a lot like running your business. Attention to detail will go a long way in determining the outcome.

M. Andrew Donaldson, Esq., is a partner with the law firm Ryals, Plummer, Donaldson, Agricola & Smith, P.C., based in Montgomery, Ala., and has represented pest control companies nationally for 10 years.