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SENIOR ADVOCATE

By Liza Horvath

 

Get Sued

 

It is pretty easy these days to get sued – just think of the case of Stella Liebeck v. McDonald’s Restaurants. Liebeck gets coffee from the drive-up, spills the hot fluid in her lap causing severe burns and is awarded $2.86 million in damages. The case made many wonder if personal responsibility and culpability are somehow less important than the services of an aggressive lawyer and a sympathetic jury. There is no question that Liebeck was injured – she was hospitalized for eight days and underwent skin grafting. However, placing a hot cup of coffee between your thighs as you drive is - well, risky – at a minimum.

 

In 2010, Eric Moran served lawsuits on at least 27 restaurants in the Los Angeles area for violating the Americans with Disabilities Act. The suits cited offenses ranging from lack of grab bars in the bathrooms to a chair in a restaurant aisle. Moran gave the restaurants the option of making a cash settlement with him or face costly and protracted court litigation. It is true that not providing access for the disabled is a civil rights issue and the restaurants should have been in compliance – but filing 27 separate cases is simply abuse of the system and, as some of the defendants claimed, extortion. Since then legislation has been adopted to reduce inappropriate claims under the disabilities act but that did not stop Moran from collecting on many of the complaints he filed.

 

When a claim is filed, the effected insurance company will attempt to determine whether the claimant will settle and, if so, will paying a settlement be less expensive than a full blown court defense. Couple the inclination by insurance providers to settle with attorneys who take cases on a contingency fee basis – “If we win you something we get 33.3333 percent, if we do not win, you pay nothing,” along with the reputational damage that a business can sustain from a public lawsuit and the system screams for reform. The odds are stacked in favor of the claimant.

 

Tort reform is complex and most likely will not be done any time soon. The good news is that there are actions being taken to at least curb unsubstantiated lawsuits. But, but as regular citizens, what can we do to protect ourselves and our hard earned assets against judgment?  

 

The simple answer is insurance - car insurance, liability insurance for your home and a hefty umbrella policy that covers anything else should protect most of us from losing assets by judgment. However, what if you are in a high-risk profession? What if you are a physician, contractor or a trustee?  The fear of lawsuit can dissuade a talented service provider from doing what they love and providing a service that is of benefit to many.

 

In addition to insurance, there are legal ways to help shelter assets from judgment. Next week’s Senior Advocate will provide information on the use of trusts in asset protection and other methods to help keep assets safe from judgment. Until then, pay your insurance premiums, be safe and use the coffee cup holder that came with your car.

 

 

Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831)646-5262 or email liza@montereytrust.com

 


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