WASHINGTON - At a U.S. House subcommittee hearing, contractor Jo Wagner testified that the increasing number of "frivolous" lawsuits in the construction industry is jeopardizing small businesses.
Wagner is president of CTO Inc. in Harlingen, Texas, and a member of the Plumbing-Heating-Cooling Contractors National Association.
"Lawsuits threaten profitability and my company's ability to compete in the construction sector," she said. "Many of my fellow contractors are responding to the potential for legal action by reducing their work force. Simply, many contracting firms can't afford triple-digit increases in their general liability premiums - that is, if they're lucky enough to get coverage."
Wagner said that she supports a bill sponsored by Reps. Steve Chabot (R-Ohio) and Ken Lucas (D-Ky). The bill would limit noneconomic liability to those liable or negligent.
In her testimony, Wagner explained how her company became involved in mold and construction-defect claims related to a large school project in Texas. In this case, the school board sought $30 million from 26 contractors for a project that cost only $14 million to build. Even though depositions cleared her company from any negligence or liability, CTO was still found "guilty" and forced, through insurance, to assist in covering costs, she said.
According to Wagner, her company has spent more time preparing for litigation than running the business.
"In order for us to get back to doing what we do best, it is critical for us to get some real common-sense tort reform legislation passed in this country," she said. "We need to secure passage of legislation like H.R. 2813 and assign liabilities in direct proportion to the percentage of responsibility of those negligent."