September 22, 2004


Texans Still at Odds Over Bush's Legal Reforms (David G. Savage, September 22, 2004, LA Times)

On his first day as governor of Texas, George W. Bush declared that limiting lawsuits was an "emergency issue" for his state.

"We must put a stop to the frivolous and junk lawsuits which clog our courts," he said in January 1995, a popular line he has repeated often since then.

Getting rid of "frivolous" suits — or even defining them — proved difficult, but the new governor won limits on how much money could be awarded in the biggest cases. For example, punitive damages were capped at twice the amount of a victim's loss.

But the legal-reform movement Bush launched in Texas has gone far beyond questions of monetary awards. Among other things, it has led to limits on the right to sue in the first place.

"Texas has gone from one of the most friendly states for consumer protection to one of the most anti-consumer states," said University of Houston law professor Richard M. Alderman, an expert on consumer rights. "It all began in 1995. Bush oversaw a significant retreat for consumer protection, and it was all done under the guise of attacking 'frivolous' lawsuits."

The impact has been felt by home buyers such as Mary and Keith Cohn, whose elegant new residence in this well-off Houston suburb came with a leaky roof that led to rotting and moldy wallboard throughout the structure. After their daughters became ill, the Cohns moved out. The repairs ultimately cost more than $300,000.

To their astonishment and dismay, they learned that when the builder refused to repair most of the damage, they could not sue him for redress. Instead, they could pursue private arbitration, a process they considered stacked against them.

"This is the largest purchase of your life," said Mary Cohn, "but you have zero consumer protection."

Strange, the story says right there that they are protected by a right to private arbitration. If the arbitration isn't working properly just tweak it.

Posted by Orrin Judd at September 22, 2004 8:22 AM

Exactly how long did these people let their roof leak before $300,000 of mold damage set in? One season, two, three?

Was the home inspected before it was finished? At the 11-month period before a one-year warranty expired? Did they ever climb up and look in the attic?

Perhaps the materials were sub-standard, but I think they needed to look around a little more. In the Southeast (similar climate to Houston), checking for humidity/moisture levels is pretty common, but it takes more than a few months for a small mildew problem to grow into a major mold issue.

Posted by: jim hamlen at September 22, 2004 11:51 AM

My guess is that they lived like pigs.

Posted by: Robert Schwartz at September 22, 2004 11:57 AM

Ah, yes, everyone knows that the people in elegant new residences in well-off suburbs live like pigs. It's the only explanation even though we have no evidence to assume so.

The only other explanation would be to blame businesses for substandard work, and they would never do that, would they? Especially not since they now have an arbitration system that effectively limits damages consumers could ask for.

Posted by: Chris Durnell at September 22, 2004 12:44 PM

It appears that the LA Times is being just a little bit disingenuous.

I did not read the LAT piece for a number of reasons but the Huston Press version seems a tad more even handed and while the Cohn's do not come across as 'living like pigs' they appear to flunk 'due diligence'.

Posted by: Uncle Bill at September 22, 2004 3:59 PM

Actually Chris, the arbitration system does not limit damages. An abitrator can award any damages he feels like awarding and the award cannot be overturned in court except for actual fraud.

For that reason I have always counseled clients to avoid arbitration unless they really needed it or it was the custom of their trade.

Arbitration is quite common in the commercial construction business and, given the rather (npi) sad reputation of the Texas court system, I am sure that many residential contractors are using it also.

The plus minus on arbitration vs court system is that arbitration (at least if it is properly supervised as by the AAA {never agree to unsupervised arbitration} ) is cheaper and faster than court trials. But courts have appelate review and more careful procedures and rules of evidence.

Arbitration does not have jury trials, which means that you do not have the right to have 12 of the most ignorant and credulous people you can dragoon off the street award you damages against the evil mingion of corporate interests. Of course, he wants a fair trial also.

The securities industry arbitration system has a bad reputation for stacking its panels with industry stooges. That the SEC has never seen fit to fix tis problem is further proof that they exist to protect the industry not the little guy.

That problem does not apply outside of the specialized world of the securities industry. I have not heard similar complaints about constrution industry arbitrations.

One area where the owners lawyers might complain about the inadequacy of arbitration is that there is no mechanism in arbitration for conducting a class action. Now this reduces the lawyers chance of a big payday, but it does not affect the validity or value of the clients case, unless the lawyer is a coplete and utter scumbag;-).

GTG. But Mold can be removed with Tilex or just plain bleach. I still am inclined to bet that these people are pigs.

Posted by: Robert Schwartz at September 22, 2004 4:37 PM

Private arbitration? Just tweak it?

What kind of fantasy world do you live in? Private arbitration is a joke. And why do Republicans hate consumers so much? And why do some consumers still vote for them?

Oh yes - because the Repubs are good at whipping up the anti-gay vote. Anyone heard that good ole' boy Swaggart lately? Now that's preaching!!!

Posted by: mkultra at September 22, 2004 7:57 PM

America turned against consumers the day the 401k was invented.

Posted by: oj at September 22, 2004 8:09 PM

"Private arbitration is a joke."

I take it that you have drafted a number of arbitration clauses and arbitrated a number disputes thereunder.

Posted by: Robert Schwartz at September 22, 2004 11:22 PM