August 14th, 2017
Be Prepared and Plan Ahead
It’s no secret that we live in an increasingly litigious world. Unfortunately, some states currently are working on legislation that would only further decrease the available time for manufacturers and employers to evaluate meritorious claims and to defeat attempts at frivolous lawsuits. Worse yet, some states have already seen these bills pass through both their State House and Senate, which likely means the ever-increasing litigation boom of the 21st century is sure to not only continue, but grow.
I apologize for delivering the bad news up front, but it’s the reality we door and window professionals live in. However, from here on out, I will (hopefully) provide you and your company some good news in the form of simple solutions and best practices to protect your business in states committed to simplifying litigation avenues for plaintiffs.
Take, for example, a recent bill that passed the legislature in Connecticut but fortunately was vetoed by the governor.
Connecticut Bill SB 821: An Act Concerning Roofing, Window and Siding Consumer Warranties and Post-Sale Warranty Work Reimbursement for Power Equipment Dealers. Quite a mouthful, I know.
If the bill had become law, starting January 1, 2018, in the state of Connecticut:
“Whenever a manufacturer of residential roofing, window or siding materials offers a consumer warranty [for such products], such manufacturer shall pay any warranty claim made for materials and labor pursuant to such warranty not later than thirty days after receipt and approval of such claim. The manufacturer shall approve or disapprove a warranty claim not later than thirty days after receipt of such claim …
[and] if a warranty claim is not disapproved in writing by the thirtieth day after receipt of such claim … it shall be deemed to be approved and payment shall be made by the manufacturer not later than thirty days thereafter.”
So what would that have meant for you and your company? Basically, if a warranty claim was made against one of your products in the state of Connecticut, you would have had 30 days to evaluate the claim and render a decision. To put it another way, SB 821 would have limited the time for you to determine how to proceed with a warranty claim, a decision that could drastically affect the future of your company, to a mere 30 days.
What do you do if you are a smaller company located thousands of miles away with minimal resources and a limited amount of “boots on the ground”? This bill likely would have required you to put all other projects on hold and immediately send your team across the country to assess the alleged claims. Even a large company with lots of resources would have had to allocate time and energy to make sure certain claims are handled within 30 days. What if you need the opinion of an expert and/or meaningful field tests to truly decipher whether your company is at fault? With the clock already ticking, you’d have had to locate, negotiate and contract with your expert, who in turn would have had virtually no time to analyze, review and opine on the situation plaguing your company. And while SB 821 is dead, it’s critical to be prepared and plan ahead for laws such as this.
Although Connecticut and other states aren’t as manufacturer-friendly as they have been historically, I’m not advocating for a full-on boycott in these states. To the contrary, where others see struggle and defeat, I see opportunity. Some folks will elect to stay away from these states, while others will see precious market share and sales opportunity. But with opportunity comes risk. In order to offset the risks of doing business in these states, your company must plan ahead. If a potential contract for a job in one of these anti-manufacturing states seems too good to be true, it may very well be. I recommend adding several additional items to your checklist before taking a job in one of these states. For example:
- Has the end user/customer been involved in other litigation? Are they “sue happy?”
- Do your terms and conditions identify what state law applies?
- Do your terms and conditions indicate where any lawsuit must be filed, identifying the state, county and or arbitration process?
- Who are your “boots on the ground?” Who is the face of the company? Are they solid with their customer service and “bedside manner?”
- How do you track warranty claims? Do you have a key person and/or a team to respond in a timely manner?
- Do you have an expert ready to help on quick notice?
- Do you have replacement supplies in stock?
The answers to these relatively simple questions could provide you with the necessary information to safeguard your company’s future. If numerous other competing manufacturers have turned down the contract, that should also tell you something: suppliers beware. If the individual or company has been involved in one or more door and window lawsuits, press them further. Find out more details. Ask them follow up questions and conduct your own in-house research to determine if the opportunity outweighs the risk. And lastly, talk to your own counsel about the possibility of including a forum selection clause into your contract. This will allow you to control where a potential lawsuit or dispute resolution process will take place, and what state’s laws will be applied.
Finally, I recommend you do your homework up front and (1) notify your project evaluator, (2) find your expert, and (3) educate your experienced door and window trial counsel, as soon as you take on the project. Don’t wait around until the papers show up in your mailbox notifying you of a claim. Focus on the things you can control. State legislatures have spoken, and some have shown that they are only willing to give you 30 days to evaluate and decide whether a claim is covered under your warranty, but nothing is stopping you from utilizing your time effectively prior to a claim being tendered against you.
When taking on a project in an anti-window-manufacturer state, provide the file as soon as possible to your most trusted project evaluator, call your expert and provide them with the available details of the project, and notify your legal counsel of the project’s size and potential exposure. Be prepared and plan ahead. That way, when other companies shy away from potentially lucrative contracts in states with unfavorable laws, your company can confidently step up and evaluate the risks and rewards knowing you have the tools in place to make a smart and calculated decision.
Charles A. “Chip” Gentry is a founding member of Call & Gentry Law Group in Jefferson City, Mo. He can be reached at firstname.lastname@example.org.