Tort Reform?

September 22, 2004

Kevin Drum points out an L.A. Times article about Bush and his buddies and "tort reform" in Texas.

In short, changes in the laws of liability and civil damages in Texas, laws promoted as an end to "frivolous lawsuits" and to promote efficiency in markets, have replaced the right to sue a home builder for defects with the right to, erm, pay thousands of dollars in upfront costs before submitting the case to binding arbitration in a forum provided by the builder.

As the article points out, lawsuits and damages serve two roles. At the moment of the suit they serve to punish wrongdoers and provide a redress for damages done. Over an extended period of time, knowing that you can get sued for a screwup provides a major incentive for someone to get it right the first time. The case that is the focus of the newspaper article is a family who bought a $750,000 house, new construction, with a faulty roof that leaked and caused $300,000 in damage to the wallboard and interior. The builder refused to make more than token efforts - $10,000 towards roof work but nothing about the other damage. The homeowners only option was to sue, which the new laws prevented, or to go to binding arbitration, which they felt was stacked against them. They ended up putting a large sign in their front yard telling the world that the builder was a lying hack. He then tried to sue them.

As a reminder to anyone entering into a major contract, actually to anyone who is asked to sign a standardized form - the only thing that makes it a form is that someone printed it. If there is a clause you don't like - cross it out. If you live in Texas, cross out the arbitration clauses and refuse to deal unless the builder agrees.

Oh, and next time someone talks about Tort reform, ask if they are protecting the economy, protecting consumers, or protecting big business with political connections.

Posted by Red Ted at September 22, 2004 08:56 AM | TrackBack