Monday, November 23, 2009

'You've been served!'

You've been sued. It could have been prevented, or you could have at least had a solid defense to get you out. It's too late for that now.

That should grab your attention. That's the situation one glass shop recently found itself in, and shared what they learned the hard way so that the rest of us might avoid the same perils in the future. So, without going into the whole case, here are some takeaway points that we should all take to heart.

State your warranty clearly. Spell out what you do and do not cover, and for how long. Don't leave any room for "creative interpretations" that can be used against you. For example, this company's statement that printed on every work order and invoice read as follows: "Materials and Labor are guaranteed for one year. Insulated glass carries 5-year warranty from manufacturer, we warrant labor for 1 year." That statement is clear to people in our industry, but not so clear to outsiders. Worse, it leaves plenty of room for interpretation. In this case, the glass shop sold IGUs to a millwork company, who installed the glass in windows they were making. The glass company simply brokered the IGUs, buying them from a local manufacturer and delivering them to the millwork company. When the IGUs began to fail in the first year, the customer claimed that the glass shop was on the hook to cover their labor costs, even though the glass shop sold them no labor, because the warranty stated that labor was covered for the first year! Obviously, that was not the intent of the warranty, but the glass shop ended up with a fight on their hands, and it's a fight they could easily lose.

Avoid even the appearance of deception. The millwork company went on to claim that they were maliciously deceived by the glass company into thinking that the glass company was manufacturing the IGUs in-house. Again, the warranty statement at least implies that someone else is making them, but state it in writing on your quote for all to see.

Keep your Web site updated, and be careful what it says. This glass shop's Web site stated, "We keep all glass fabrication in-house!" But the shop doesn't make IGUs. Again, the intent of the owners was honest: they do fabricate their own glass (cut, polish, bevel. drill, etc.), and they don't manufacture IGUs and never meant to imply that they do. In hindsight, that distinction between fabricating and manufacturing could and should be more clear, lest it be used against them in court. Which it was. Read your Web site as an outsider, or better yet as a plaintiff's attorney, and see what could be misunderstood or twisted to use against you.

Choose your vendors carefully. Don't just buy on price. Does your IGU supplier have a professional operation, a clean plant and good equipment? Does your temperer routinely test their glass and log the results? Saving a few cents now can cost you in the long run, at the least in callbacks, and at worst in a jury award! If things go bad, you are going to have to explain how and why you chose that specific vendor.

Require insurance certificates from your vendors. This is the big one, the most important lesson here. The glass company in this case obtained a ruling against the IGU supplier requiring it to indemnify the glass shop. But the supplier did not have insurance in place, and no money with which to indemnify, so the glass company was left holding the bag. Don't just assume your suppliers are taking care of their business, require them to give you a certificate of insurance.

If you get sued or have a claim made against you, be involved. Don't just hand it off to your insurance company and hope that it goes away. Your insurance company is looking out for #1, despite what they might say. If there is a way for them to deny coverage, they will. They will choose an attorney for you, and that attorney probably gets a lot of business from the insurance company. Most attorneys take their obligation to you, the insured, seriously, but some might want to look good to the insurance company by identifying a way to get them out of the claim altogether, leaving you on your own. So, stay in the loop, ask questions, be involved, and be cooperative. You might also consider hiring your own attorney to look over the shoulder of the insurance company's attorney; this is an additional expense to you, but will keep everyone honest.

Our friend in this case ended up settling with the customer, but could have avoided a great deal of expense, time, and heartache if they had just known then what they know now! So now you know, and of course "you should not consider this as legal advice" and should talk to your own attorney about any and all of the above! In the end, the above is worth exactly what you paid for it.

--By Chris Mammen, president, M3 Glass Technologies, Irving, Texas


Anonymous said...

The warranty issue is discussed in the December Glass Magazine:

Mickey SSF said...

Escellent advice. Well written.