When our former employer decided to close his doors, we started a new company and purchased all of his records and equipment but did not purchase the business itself. The previous company went into business in 1991 with the owner as the only licensed surveyor. We got our license in 2013 and worked for him for 3 years signing plats. When we were getting our own professional liability insurance for the new company, our insurance company insisted we buy a tail policy for the duration of our former employer's career in order to cover the 3 years worth of work that we signed under the previous company name as they would not insure only those 3 years.
We recently marked lines on a survey performed by the previous company in 2001. The survey performed was to cut out a 2 acre lot from an existing parcel with a dwelling on it. His new division line went through that existing house, but was not shown on the plat he drew in 2001. The current owner is understandably upset by this revelation. He insists on speaking to the owner of the previous company, who has retired from surveying but still has an active license. Our question boils down to this: Whose insurance eats this? He does not pay for a tail policy to protect himself but we pay for one to protect us. How likely is a claim against the insurance will raise our insurance?
I'd think the statute of limitations has run out on that.
Chris Duncan, post: 422894, member: 7540 wrote:
Q1: Whose insurance eats this?
Q2: How likely is a claim against the insurance will raise our insurance?
A1 : The one that loses in court.
A2: 100%
I believe you have good grounds to be held harmless in this situation, but litigation is tricky. Do everything you can to avoid a suit. Whatever you do don't mention your residual insurance policy to anyone.
Tommy Young, post: 422907, member: 703 wrote: I'd think the statute of limitations has run out on that.
In Virginia, the clock on statute of limitations starts at the date of discovery of an error, not the date of the error itself. So basically a week and a half ago.
Probably, we will just end up fixing this mess at no cost to the owner. With a new plat and deed of exchange. But both the 2 acre lot and the parent parcel are tied up in deeds of trust. So, hopefully the banks will cooperate. But, this one raised all kinds of questions. While I understand what my professional liability covers, I am not very clear on what a tail policy does. I thought that it basically, at an affordable amount, kept the previous policy for the previous company actively covering his prior work. As long as he wasn't still performing new work with new liability. We did make a phone call to the insurance company, to ask a few "what ifs", they were less than helpful. So far there is no claim and no suit. But it isn't all said and done yet.
Chris Duncan, post: 423011, member: 7540 wrote: In Virginia, the clock on statute of limitations starts at the date of discovery of an error, not the date of the error itself. So basically a week and a half ago.
It's the same deal in Florida. For your client, the clock on the statute of limitations doesn't start until the error is discovered (or should have been discovered). I think 3rd party liability is limited to 2 years.
Can you tell me how a tail policy works? Do you have to pay a premium on that every year or is it a one payment deal? If its just a single payment, how long does it last? For as long as the liability lasts (which for us is forever apparently).
I do not know what a tail policy does for the surveyor, but I do know that it helps the insurance company transform a chunk of your money into their money with little else of value changing hands. Sorry, mama always said "if you can't say something nice, best to remain quiet" so I better shut up now.
Stacy Carroll, post: 423086, member: 150 wrote: I do not know what a tail policy does for the surveyor, but I do know that it helps the insurance company transform a chunk of your money into their money with little else of value changing hands. Sorry, mama always said "if you can't say something nice, best to remain quiet" so I better shut up now.
The issue is that even though you stop working, your liability continues to exist. In my state, we have the discovery rule (for the client, not 3rd parties) which means we really don't have a statute of limitations. So, our liability lasts forever (plus 2 years). I really wish our state society would do something about that.
Bow Tie Surveyor, post: 423089, member: 6939 wrote: The issue is that even though you stop working, your liability continues to exist. In my state, we have the discovery rule (for the client, not 3rd parties) which means we really don't have a statute of limitations. So, our liability lasts forever (plus 2 years). I really wish our state society would do something about that.
Our state society did an excellent job and managed to get ours passed. Six year SoL from date of work, not discovery
Bow Tie Surveyor, post: 423089, member: 6939 wrote: The issue is that even though you stop working, your liability continues to exist. In my state, we have the discovery rule (for the client, not 3rd parties) which means we really don't have a statute of limitations. So, our liability lasts forever (plus 2 years). I really wish our state society would do something about that.
Jeff Lucas said in a recent seminar that every single state in the code has a time limit on bringing an action on surveys, even if it's the catch-all section that takes care of actions not specifically identified. It's hard for me to believe that the state would allow someone to have a claim against a surveyor for something done wrong 40 years ago.
Tommy Young, post: 422907, member: 703 wrote: I'd think the statute of limitations has run out on that.
The Statute of Limitations generally runs from 2 years of the discovery of the error in most states.
Bow Tie Surveyor, post: 423089, member: 6939 wrote: ...our liability lasts forever (plus 2 years).
Lol. Leave it to us surveyors. We'll be liable for two years longer than we're in heaven or hell.
Chris Bouffard, post: 423112, member: 12313 wrote: The Statute of Limitations generally runs from 2 years of the discovery of the error in most states.
That's true, but some states have a cap on how long they have to discover the error. My state doesn't. I would say that you would have liability until the day you die, but I suppose they could still sue your estate after you are dead.
Texas as a 10 year "Statute of Repose" runs from time project is completed.
David C. Newell RPLS LS CFM, post: 423122, member: 6347 wrote: Texas as a 10 year "Statute of Repose" runs from time project is completed.
Tennessee has 4.
It's a mixed bag. While I'm glad we have it, it does a lot to protect the jacklegs.
Tommy Young, post: 423110, member: 703 wrote: Jeff Lucas said in a recent seminar that every single state in the code has a time limit on bringing an action on surveys, even if it's the catch-all section that takes care of actions not specifically identified. It's hard for me to believe that the state would allow someone to have a claim against a surveyor for something done wrong 40 years ago.
See the above comment. The same holds true with medical malpractice. The clock starts running upon the discovery of the error.
Chris Duncan, post: 422894, member: 7540 wrote: When our former employer decided to close his doors, we started a new company and purchased all of his records and equipment but did not purchase the business itself. The previous company went into business in 1991 with the owner as the only licensed surveyor. We got our license in 2013 and worked for him for 3 years signing plats. When we were getting our own professional liability insurance for the new company, our insurance company insisted we buy a tail policy for the duration of our former employer's career in order to cover the 3 years worth of work that we signed under the previous company name as they would not insure only those 3 years.
We recently marked lines on a survey performed by the previous company in 2001. The survey performed was to cut out a 2 acre lot from an existing parcel with a dwelling on it. His new division line went through that existing house, but was not shown on the plat he drew in 2001. The current owner is understandably upset by this revelation. He insists on speaking to the owner of the previous company, who has retired from surveying but still has an active license. Our question boils down to this: Whose insurance eats this? He does not pay for a tail policy to protect himself but we pay for one to protect us. How likely is a claim against the insurance will raise our insurance?
Your question has allot of hidden issues. My first thoughts are that if you didn't buy the company you didn't buy the liability. Had one of you signed the erroneous plat that could have been a separate issue. In matters like this I know it's wrong to make assumptions but if you did not hold an equitable financial interest and were employees only, having not been the individuals signing the erroneous plan than I can't see any liability issue if you staked the plat correctly.
The other issue is that you only purchased the records and equipment only. Purchasing the records does not make you responsible for their accuracy unless one of you signed them. Once you have signed them you have certified that they were prepared under your direct supervision and are therefor responsible for any errors or omissions.
The fact that the error occurred before any of you were signing the plans and assuming that you have no partnership status in the business would release you from any liability. If you did in fact have an interest in the company you might be found liable on a proportional basis related to the level of equity you had in the business.
There are two other issues to consider as well. I'm sure your former employer had E & O insurance and if he did, the error would be covered under the policy that was in force when the plat was issued. The client should, in fact, reach out to your former employer to obtain the information as to who the insurer was at the time of the original survey. The State Board should be able to supply the contact information, especially if, as you say, his license is still valid. Most states have that info on their web sites as a matter of public record.
The last issue I see is that for there to be anything actionable in civil litigation the client would have to prove he was damaged financially or physically as a result of the defective plat. You have not included the details leading up to your engagement to stake the lines but it would seem to me that if he is just now having the lines staked some 16 years after the plat was issued it is probably more of an annoyance than a damage. If he is looking to sell the 2 acres now the subdivision line could be corrected (in theory, depending on zoning requirements and local ordinances) to exclude the existing dwelling (or include it, depending on intent) and the problem goes away without need for litigation unless the 2 acres can not be achieved on a new plan. The liability would then be reduced to the financial loss generated by the reduction is the lot size.
I have one remaining question, was the subdivision plat recorded within the statutory time limits? If the client never recorded the plat then all bets are off for him to have any actionable cause.
It's an interesting situation but I can't see how you would assume any sort of liability for the work done in 2001. The part that irritates the hell out of me though is that insurance companies will often settle out of court rather than defend their paying client to cut their own legal expenses. Case in point, a fellow PLS & friend of mine staked out a house that was approved as a rancher on slab. The client/builder decided to add a basement without checking on seasonal high water tables or modifying the plot plans. The foundation was installed based on my friend's cut sheet graded to the finished first floor elevation. The newly constructed home was sold in the peak of summer and turned out to have a wet basement the following spring so the homeowner ended up suing everybody involved in the process and my friend's insurance company settled for $25K to walk away from the case rather than defend the work they were paid to insure.
Chris Duncan, post: 423016, member: 7540 wrote: Probably, we will just end up fixing this mess at no cost to the owner. With a new plat and deed of exchange. But both the 2 acre lot and the parent parcel are tied up in deeds of trust. So, hopefully the banks will cooperate. But, this one raised all kinds of questions. While I understand what my professional liability covers, I am not very clear on what a tail policy does. I thought that it basically, at an affordable amount, kept the previous policy for the previous company actively covering his prior work. As long as he wasn't still performing new work with new liability. We did make a phone call to the insurance company, to ask a few "what ifs", they were less than helpful. So far there is no claim and no suit. But it isn't all said and done yet.
I would not "just fix this at not cost to the owner". That might be seen as an admission of liability if this situation ever did end up in court. If the client wants you to fix it, you should get paid for your services.
Chris Bouffard, post: 423128, member: 12313 wrote: See the above comment. The same holds true with medical malpractice. The clock starts running upon the discovery of the error.
So if my doctor screws something up, I can start a lawsuit against him 50 years later?
If your doctor screws up bad enough for a lawsuit, you won't be around 50 years later.
It's critically important when purchasing to clearly state in the contract that you are purchasing the "assets" only. This constrains all liability to the previous owner. When selling, you should attempt to transfer assets and liabilities for the same reason.
