LITIGATION PREVENTION: A Practical Approach to Minimizing

Corporate Lawsuits By : Peter J. Lamont, Esq.

We Live in a Litigious Society It is a well known fact that we live in an extremely litigious society. Perhaps it is partially because never before has a generation known more about the laws and legal system that govern our nation. We have instant access to laws and statutes via the Internet. Additionally, blogs, message boards and posts help to educate citizens about their legal rights.

Weakened Economy

Recent Changes to Consumer Protection

Laws

A Legal System that

Allows People to

Sue for Just about Any

Reason

The Ease of Finding a Plaintiff's Attorney

Aside from increased knowledge of legal rights, the following factors impact our society’s urge to file lawsuits:

The Nightmare of Dealing with Wellborn Cabinet Co.

This is the story of a retired senior citizen who was victimized by Wellborn Cabinet, Inc of Ashland,  Alabama.  It is the storyof a close friend of mine who I tried to help thru a very difficult situation.  Unfortunately, he is the classic “little guy” up against a huge corporation with lots of legal resources to intimidate anyone who complains about their shoddy products.  I worked with this “little guy” who I will call Joe, for two years trying to settle this problem and saw personally what a terrible impact a fight with a big company can have on a person.  This website is to tell this terrible story, serve as a forum for others who have been victimized and try to put a stop to this type of intimidation. 

http://wellbornsucks.com/

I am looking for a lawyer to help me handle problems with a Kitchen design company that designed and supplied the cabinets for the kitchen in our brand new home in New Hampshire. It is a long story, but quite simply the screwed us .

What Creates Liability?

Misrepresentations

Mistakes

Confusion

Lack of Formal Procedures

Lack of Communication

Taking Shortcuts

Failure to Follow Through

Poor Record Keeping

Failure to Report Problems

Preventative Measures

Timely Reporting to Home Office

Protecting Against Damaging Admissions

Proper Screening/Hiring of Subcontractors

Proper Compliance with local laws

Proper Communication with your clients and subcontractors

Eliminate Short Cuts Avoid “Design Ego” Thorough Site

Inspections & Contract Resolution

Proper Record Keeping

1. Proper Communication

Effective Listening

Note Taking

Memorialize Phone Calls

Reduce Everything to Writing

Be Specific

Obtain Approval SignaturesExplain Contract and Limitations

Do Not Exaggerate

2. Eliminate Shortcuts

Don’t take foolish shortcuts

Shortcuts lead to litigation

Don’t confuse efficiency with shortcuts

Do your due diligence Make sure all

paperwork is complete

3. Avoid “Designer Ego”

.

Know the limitations of the product

Creativity is inspiring but keep it under control

While you as the designer can “design anything” that the customer desires the product might not support those desires

Just because you can do it doesn’t mean it’s a good idea

4. Initial Site Inspections & Contract Resolution

Take Photos

Request Client Initials

Take Notes

Draft Comprehensive Memos

Measure Alone

Measure with Client

Advise Client of Problems in Writing

Explain Plans & Obtain Signed Approval

Take Notes

Draft Comprehensive Memos

Check with Home Office

5. Keep Proper Records

Your file should be in reverse chronological order

It should contain every document related to your interaction with the customer

All conversations should be reduced to writing

Client File

Plans E-mails Notes Memos Other Docs

-Alert Home Office via

E-mail-Copy

Counsel

-Document Client File

-Send Copy of File to Home Office

-Be Accurate- Prepare Timeline

-Contemplate Witnesses &

Preserve Other

Favorable Evidence

REPORT POTENTIAL PROBLEMS

IMMEDIATLEY

6. PROPER REPORTING

7.Never Make Damaging Admissions

Chose your words carefully.

Anything you say “can & will be used against you.”

Never criticize the company or management.

Even the friendliest customer could use your words against you.

8. Properly Screen & Hire Installers and Subcontractors

Make sure that the subcontractor has the proper level of experience and is a valid legal entity

Make sure subcontractors complete Poggenpohl’s Subcontractor Certification

Have subcontractors update the Certification as necessary

All subcontractors must sign Certification on annual basis

Use Subcontractor Checklist as a tool

9. Comply with Local Laws and Regulations

Utilize attorney resources

Communicate with Home Office and Counsel concerning notices of changes to local laws and regulations

Err on the side of caution Calendar deadlines and

coordinate with legal Counsel

Examples of Actual Litigation Issues•Lawsuit over improper height of kitchen island

•Claim over deceptive advertising involving lighting

•Litigation based upon promise to provide replacement kitchen

•Litigation over failure to install kitchen before filming of television program

•Litigation over improper installation

EXPANSION OF CONSUMER FRAUD & PROTECTION LAWS

The New Jersey Supreme Court recently ruled that the Consumer Fraud Act and its treble-damages remedy can apply to contractors performing interior work on new homes. The ruling in Czar Inc. v. Heath , A-114-07 expands the already broad power of the statute.

In Czar v. Heath, the Heaths hired Czar Inc. to install kitchen cabinets, interior doors, moldings and chair rails in their home which was under construction. The homeowners were unhappy with the quality of the work and withheld $80,000 from the bill . Czar then sued the Heaths for the unpaid balance. The Heaths counter-claimed alleging violation of the Consumer Fraud Act.

The Court held that the Consumer Fraud Act, the Contractor’s Registration Act, the New Home Warranty Act, and the regulations promulgated pursuant to those statutes were designed to provide an integrated scheme of protections for homeowners. The contractor, which neither acted as the general contractor nor qualified as a builder of new homes, was engaged in the business of home improvements and subject to the remedies of the Consumer Fraud Act.

This decision is important for Poggenpohl because a plaintiff who successfully proves that a violation of the Act occurred will be entitled to treble damages and attorney’s fees.

NEW JERSEY

Gov. Ed Rendell of Pennsylvania signed into law a bill known as the Pennsylvania Home Improvement Contract Act which will serve to regulate home improvement contractors and which requires that all home improvement contractors be registered with the state. All registrations must be completed by July 1, 2009 which is the date that the law goes into effect. The bill defines "home improvement contractor" as any person who owns and operates a home-improvement business or who undertakes, offers to undertake or agrees to perform any home-improvement. In relevant part, "Home improvement" is defined as any repair, replacement, remodeling, demolition, removal, renovation, installation, alteration, conversion, modernization, or improvement in connection with land or a portion of land that is adjacent to a private residence for which the total cash price for all work agreed upon his more than $500. The bill excludes new construction, the sale of appliances, home improvement retailer having a net worth of more than $50 million and the sale of goods by a seller who neither arranges to nor performs directly or indirectly any work or labor in connection

with the installation or application of the goods or materials. Clearly, the bill is liberally constructed for the purpose of protecting Pennsylvania residents from unscrupulous business practices by contractors, etc. The general definition of both "home improvement contractor" and "home improvement" certainly applies to most kitchen and bath companies doing business within the state. Kitchen and bath companies will have to comply with the registration law prior to the July 1, 2009 deadline. If you do not register with the state, it will not recognize as valid or enforceable any improvement contract entered into between your company and Pennsylvania residents. In addition to the registration requirement the bill also contains requirements about deposits on the job. For any contract exceeding $1000 in value you may never receive a deposit in excess of (A.) one third of the home-improvement contract price; or (B.) one third of the home-improvement contract price plus the cost of special order materials that have been ordered. Finally, the law imposes new criminal penalties for home-improvement fraud.

PENNSLYVANIA

FEDERAL LAWEPA LEAD PAINT LAWS

Common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips by disturbing lead-based paint, which can be harmful to adults and children.

To protect against this risk, the, EPA issued a rule requiring the use of lead-safe practices and other actions aimed at preventing lead poisoning. Under the rule, beginning April 22, 2010, contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978 must be certified and must follow specific work practices to prevent lead contamination.

Understanding the Litigation Process1. Complaint filed & served

2. Answer filed & served

3. Discovery1. Written2. Oral Depositions3. Inspections4. Expert Witnesses

4. Motions

5. Trial

Law Offices of Peter J. Lamont146 Florence AvenueHawthorne, NJ 07506

Phone: (973) 949-3770  Fax: (866) 603-0471 Toll Free: (855) NJLAW01 (855) 655-2901www.peterlamontesq.comwww.kitchenandbathattorney.com

Additional Offices in Massapequa, NY and affiliates throughout the country

Attorney Profile:

Peter J. Lamont, Esq. is a commercial litigation and trial attorney admitted to the New Jersey State Courts, the New Jersey Federal District Court, the District of Columbia and the United States Court of Appeals for the Third Circuit. Additionally, Mr. Lamont has been admitted Pro Hac Vice to numerous state and Federal courts including the District Courts of Florida, the Federal District Court of Illinois, the Federal District Court of Nevada, and the State and Federal Courts of New York. Since 2008, Mr. Lamont has served on various committees for the New Jersey State Bar Association including the Consumer Protection Committee; Business and Commercial Litigation Committee and Government and Public Sector Committee.

Mr. Lamont's practice focuses on all aspects of commercial law as it relates to the kitchen, bath and construction industries including the setup and organization of business; formation of bylaws, mission statements, handbooks and corporate documents; business consulting; litigation prevention tactics and techniques; contract formation and review; negotiations of multimillion dollar construction projects; drafting and reviewing leases, endorsement agreements and related documents; trademark and copyright disputes; employment issues; and business law, general litigation and trial work.

Mr. Lamont is a writer for Kitchen & Bath Business Magazine and authors a monthly online column addressing legal issues impacting the kitchen and bath industry. He is also a member of the NKBA and a frequent presenter and guest lecturer at corporate events. His column can be viewed at www.KBBonline.com. Additionally, Mr. Lamont operates a blog that focuses on legal issues affecting the kitchen, bath and construction industries. The blog can be viewed at www.kitchenandbathattorney.com.

Mr. Lamont has written numerous articles for the New Jersey Lawyer and other publications and regularly gives legal presentations to insurance claims specialists, third-party administrators and corporate clients. Mr. Lamont is a member of the Passaic County Bar Association, the New Jersey Defense Association and the New Jersey State Bar Association.

If you have any questions about the law or better business practices, please do not hesitate to contact Mr. Lamont.

Appendix FORM “A” – Telephone Memorandum Form FORM “B” – Certification of Subcontractor Form  FORM “C” – Subcontractor Qualification Checklist FORM “D” – In Store Incident Report  FORM “E” – Simple Sales Agreement  FORM “F” – Legal Articles from Kitchen & Bath Business

Electronic copies of the above-referenced forms are available upon request from Peter J. Lamont, Esq.