Who is Liable? So many parties involved!

Question

This is a long story - I will try to summarize.  If I miss something, please ask.  All thoughts very appreciated!

A tankless water heater was installed before I owned the house.  I had my plumber service it and during service, damage occurred.  The damage is result of the tankless being installed improperty (the dump line was ran, and hidden away under the furnace where it was not connected to anything and not visible).

Through the serial number, my plumber found who purchased it (Plumber C).  Plumber C also filed a permit with the city (of Dallas) for inspection.  It failed inspection and was red-tagged.

My plumber said Plumber C is liable, under law, essentially because of the red-tag.  Statue of limitations has not run out yet.  I asked another plumber for an unbiased opinion on the "plumbing law" and he agreed that Plumber C, who installed it, is responsible for damages.

Plumber C's insurance apparently does not have the provision to cover this damage, I'm not sure why as I don't understand all the insurance jargon, nor do I completely trust that the insurance company is just loopholing and trying to avoid a payout (the damages were about $10k).

I don't want to put a claim in on my insurance because my deductible is (in my opinion) expensive and I don't want a claim against me (this is my personal residence).

If I have to use MY insurance (if Plumber C insurance deny's the claim), will the subrogation process (my insurance going after someone else who's at fault) go after Plumber C's insurance?  Will they go after the previous home owner who did not disclose (on seller's disclosure) that the tank was installed incorrectly (they must have known because they were the owners during the installation)?  Or will they go after the title company (someone mentioned this to me), because the title company did not catch the outstanding red-flag permit on file with the city?  Or will they go after Plumber C personally?  I don't mean "go after" in any mean-spirited way, just lack of a better term.

Thanks, if you read that and have thoughts.  I appreciate it.

Bruce Clark · Answer

Please be aware that when asking questions like this, unless you get an answer from an attorney who is licensed in the given area, you must take all comments and opinions with a grain of salt.

With that said, this is my piece. First, it sounds like the first and best option of who to recover from is your plumber and/or his insurance company. He caused the damage.

You could also attempt to recover from Plumber C for his negligent installation. You could also attempt to recover from the seller if you can establish that they were aware of this issue and did not disclose it - which you should be able to. These are all viable options.

From my experience, it is likely that Plumber C's insurance policy will not cover this issue. The policies typically do not cover faulty workmanship, which is what it sounds like you are dealing with.

The problem with pursuing any of these routes is the amount of your damages. Hiring an attorney to recover $10k ends up being a wash in a lot of situations. I might call some local attorneys and see what they tell you. Otherwise, you could just pursue the claim pro se. Again, how much is your time worth?

Chris Bell · Answer

Everyone, thanks for the thoughts and opinions.  Certainly not taking anything as legal advice - don't worry.  I'm just trying to get various perspectives.

Dustin Lavender · Answer

No legal advice

As I see it, you no longer have recourse against seller or the previous plumber  and here is why.

Before closing you were given the opportunity to inspect and have inspected anything you felt necessary before you closed. At closing it all became your problem. Proving nondisclosure is not likely.

In my area and others, a permit to do work is legally supposed to be pulled before work begins on a project such as a water heater. If the plumber has pulled a permit first, the red flag would have shown up. Instead, most plumbers do the work and then call for a permit and inspection once the work is done.

I would check in your area and see if a permit is required BEFORE work begins. If so, and you are dead set on wasting time in court, I feel you would have recourse against your plumber for not pulling a permit prior to beginning work. You should still file the loss with your insurance IMO.

Joe Splitrock · Answer

@Chris Bell are you sure that your insurance company will cover this? Assuming they will, then I would just file a claim with them and be done. Filing one claim shouldn't raise your insurance in Texas. I think it is against the law in that state to raise on the first claim. It varies by state and insurance company. Even in states were they can raise rates, it is generally under 10% for your first claim and will drop off over time or if you change companies. You can sue whomever you want, but I personally think you are wasting your time.

http://wiseinsurancegroup.com/impact-a-claim-has-on-a-texas-home-insurance-policy/

Bart H. · Answer

I could be wrong, but I don't think you need to be licensed by an outside agency to pull permits in Texas. I know for a fact to become a licensed GC in Dallas all you more or less had to do was pay a fee.

Bill Hamilton · Answer

I doubt the red tag from the permit will get you anywhere. Lots of homeowners hire someone to do a job and then make the assumption that the professional did his job, including passing inspections on the permit. Point being you have prove the homeowner knew about it and chose not to disclose. Not easy to do. The title company would (in my opinion)not be on the hook at all. They cover title deficiencies, not inspection or permit things. Depending on who the lender was, sometimes they will catch on open permit but not always.

I would be tempted to call the licensing entity for plumbers for the state or city and run these questions past them. They might be able to pressure plumber c or help resolve who is legally liable.

Bart H. · Answer

If a red tag occurred during inspection under the prior owner, shouldn't that have been disclosed in the sellers disclosure?

Wouldn't you have the right to go back to them?

John Mocker · Answer

Chris,

I strongly recommend you consult with an Attorney who is familiar with the local laws / cases involving this type of claim.

Without knowing all the details this is some guesswork.  It appears that you have a faulty installation by Plumber C.  A failed inspection that both Plumber C and the prior homeowner should have been aware of (did the Red Tag generate notification from the City to the prior owner?)

In Contractors policies generally the policy does not pay for the costs of the Contractor repairing the faulty workmanship.  That cost they have to bear themselves.   The question will be on the ensuing damage that the faulty workmanship caused.

You may need to put claims in to several parties (ie.  Plumber C for the damage that ensued, the homeowner for not revealing the red tag that would have caused you to fix it....).   The terms of the purchase and the real estate laws will impact the claim possibilities against the prior owner.   The case law will give some indication of whether or not Plumber C's Insurance can deny all of the damage or just the costs of repairing the line the dump line.

All of the above make the consultation with an Attorney seem to be a logical first step.   After that there may be other things (Insurance dept, consumer Protection if the Plumber C was licensed, ...)

Mike Cumbie · Answer

Hi @Chris Bell,

I will echo @Bruce Clark in that an attorney from your area will have the right answer. That being said :)

I would just call my insurance company and let them at it. They will find who is at fault and go back and forth with all interested parties until they get you resolved. Your insurance company won't pay for something they are not supposed to cover, they will find out who is liable and have them pay up. Just my 2 cents and good luck!

Sid Leibowitz · Answer

I know you do not want to hear this however; ultimately you are liable at this point at least on the New York point of view. You can take an action against all of the parties however;  you will find that there will be diminishing returns after the smoke clears. Through the original factory warranty you will start your discovery. They may use terms as licensed or authorized dealer or licensed plumber.  Through the warranty you will find that the unit would probably have to be installed by a licensed plumber and or the installer would have to be a licensed dealer as well  and that the warranty may not be able to be passed to the next owner. The original plumber may have to had the installation inspected by the building department in many states. It may even be installed illegally altogether by the last home owner or handyman and not a licensed dealer or plumber. Your home inspector may even have a part of this faulty installation by passing this installation in an inspection report as well as the lawyer who accepted the report that he used for the closing. I would take the hit and find  licensed plumber and start entire process over and install "something" appropriate to local building code and obtain a fresh warranty.  This is from practical experience and not my personal opinion. I have been on this road before. It is more cost effective to start over than to unravel this and try to find a faulty party through the court as the court would tell you the same as well as an attorney if he is honest and experienced. An experienced ad ethical  attorney    would probably not be interested in trying to retrieve the costs of your debacle as it is hours in discovery that he would bill you for.

Who is Liable? So many parties involved!

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