June 18, 2014

Do Good Fences Really Make Good Neighbors?


Robert Frost once observed, "Good fences make good neighbors."

Every now and then a claim comes across my desk that reminds me why there is a perception that Americans litigate too much. I believe in the court system, but it is currently overworked and stretched beyond its capacity to deal with the growing caseload. The defeat of recent tax measures will have a further severe impact on the court's capacity to hear cases. When I see a frivolous case, I see it in terms of dwindling judicial resources and the lost opportunities of parties who need to resolve a valid claim.

Imagine being my client, a developer who installed a decorative wall in the course of developing and building a subdivision. The wall was brick, bound with mortar, and a little under six feet in height. The wall stretched a little more than two city blocks.

Fast forward 10 years. Now imagine one fine day being sued for half a million dollars and punitive damages because the wall, which was never intended to be a structural fixture, was not permitted, wasn't and isn't covered by any building code, and is now supposedly falling down. Imagine your surprise when you discover that several of the lot owners have added hundreds of cubic yards of earth to their backyards and placed it up against this fence.

Sound far fetched? It isn't. This past year, I had the honor of representing a major developer in this dubious comedy of errors. After depositions of a dozen former and present lot owners, and several past and present employees of the developer, one thing became clear: the wall was just a fence.

As discovery went on, we found that the maintenance agreement, which was part of the title report, required the owners of the lots to repair and maintain the fence. During depositions, several owners admitted that they had noticed the fence leaning and did nothing to fix it. Using a decorative wall as a support for hundreds of thousands of pounds of earth is not only ill-advised, it can also be dangerous.

Oregon law provides for statutes of ultimate repose to prevent claims being brought 10 years from the date of construction. This does not, however, prevent a "creative" lawyer from filing claims for breach of warranty and negligence.

Ultimately, the question, is how do you protect yourself from a frivolous tenant lawsuit? It is a good idea when drafting the CC&Rs to include specific language about improvements such as fences, walls, or other large improvements that may be misused or neglected by subsequent tenants. Be sure to limit exposure to defects that could reasonably found at the time of delivery.

The type of lawsuit described above is a classic example of a "nuisance" lawsuit, filed to squeeze money out of a company that would rather settle than pay defense costs. There is little that can be done to stop a lawyer who has a filing fee and creative imagination. During the course of this litigation, my client offered, for public relations purposes and in good faith, to fix the fence. Instead, the plaintiffs, led by their lawyer, refused the offer and pursued the money. At the end of the day they got nothing more than the cost of the repair, after months of litigation and an entire day of mediation. It was a waste of time, money, and most importantly, precious judicial resources.

For more information on this topic, please contact marketing@jordanramis.com or call (888) 598-7070.

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