BED BUG PRESENTATION
BY: Jeffrey M. Lipman
DOCUMENT YOUR ADVICE
Pest control operators are at risk of
being named in a lawsuit. It is
extremely important to document your
action plan and alternatives in writing.
FOLLOW THE ACTION PLAN
Hotel/Motel and apartment managers will be
named in most lawsuits. Extremely important to
follow the action plan and document
compliance:
 Written action plan approved by pest control
provider;
 Written engagement contract specifying bedbug
eradication & management;

Have pest control company
provide requirements for treatment
readiness;

Make sure tenants are prepared for
treatments;

Have written post treatment
follow up plan.
LANDLORD AND HOTEL'S
DUTY TO TENANTS & GUESTS
1.
2.
Provide a habitable premises
Protect from clear & present danger
CLEAR & PRESENT
DANGER
 Conduct
which presents an immediate
and serious danger to the safety of
other tenants or the landlord.
LANDLORD OR HOTEL MUST
ACT

1. Warn guests of danger (bedbugs)
 2. Evict tenants who interfere with bedbug
eradication.
 3. Assist tenants who are mobility impaired
with preparation for treatment.
ONGOING DUTY TO
INVESTIGATE
1.
2.
Bedbug monitors.
Periodic inspections as
recommended by pest control
operator.
PREMISES LIABILITY

Courts have adopted a seven (7) factor
multifactor formula for analyzing premises
liability actions
 (1) The foreseeability of possibility of harm;
 (2) The purpose for which the entrant entered
the premises;
 (3) The time, manner, and circumstances under
which the entrant entered the premises;
 (4) The use to which the premises are put and
expected to be put;
(5)
The reasonableness of the
inspection, repair, or warning;
(6)
The opportunity and ease or repair
or correction or giving of the warning;
(7)
The burden on the land occupier
and/or community in terms of
inconvenience or cost in providing
adequate protection.
IMPLIED WARRANTY OF
HABITABILITY

An implied warranty of habitability is a
warranty implied by law that by leasing a
residential property, the lessor is promising
that it is suitable to be lived in and will
remain so for the duration of the lease.
CASE LAW
Courts have recognized the obligation of a
landlord to provide his tenant with premises
suitable for habitation. Under this doctrine,
the landlord "impliedly warrants at the outset
of the lease that there are no latent defects in
facilities and utilities vital to the use of the
premises for residential purposes."
WHEN LIABILITY ARISES

A landlord "is only liable for injuries
resulting from a hidden or latent defect if
the landlord knew or should have known of
the defect." Implicit in this standard is the
rule that a landlord must, on some
occasions, make reasonable inspections to
search for latent defects.
LANDLORD'S OBLIGATION

The landlord's obligation is only to do what
is reasonable under the circumstances. The
landlord need not take extraordinary
measures or make unreasonable
expenditures of time and money in trying to
discover hazards unless circumstances so
warrant.
Where
there is a potential serious danger
which is foreseeable, a landlord should
anticipate the danger and conduct a
reasonable inspection before passing
possession to the tenant. However, if no
such inspection is warranted, the landlord
has no such obligation.
REASONABLE INSPECTION
"Under this standard, the landlord has a
duty to conduct a reasonable inspection
before passing possession to a tenant
when there is potential serious danger,
which is foreseeable." In this context, the
trigger of the duty to perform an
inspection is the foresee ability of a latent
defect that could lead to serious danger.
UNFAIR DECEPTIVE ACTS
& PRACTICES

Rental units may not contain illegal hazards
that endanger the occupant’s well-being or
that make the unit unfit for habitation. A
landlord who rents out an apartment
impliedly represents that it is in compliance
with the applicable health and safety codes.
If it is not, the landlord has committed a
UDAP violation.
Collection of the full amount of rent while
the unit is in violation of the housing code
or where the unit had material defects
rendering it unsafe or unfit is a UDAP
violation.
Spaulding v. Young, 32 Mass.
App. Ct. 624, 592 N.E.2d 1348
(1992)

Landlord is liable under UDAP statute if
conditions seriously or materially impair the
health or safety and well being of an
occupant, whether or not the conditions
violate the Sanitary or Housing Code.
Pierce v. Reichard, 593 S.E. 2d
787 (N.C. Ct. App. 2004)

Landlord is liable for UDAP violation and
treble damages for failing, despite tenant’s
complaints, to repair premises for leaky
roof.
Unfair to collect rent on an apartment
containing numerous defects making it
unfit and uninhabitable, where the
landlord had notice of those defects
and did not correct them.
EXAMPLE

Massachusetts’ highest court has affirmed a
$61,475 treble damages judgment against a
landlord who rented an uninhabitable
apartment to a tenant, refused to repair it,
and was abusive and threatening to the
tenant. Haddad v. Gonzalez, 410 Mass.
855, 576 N.E.2d 658 (1991).
EXAMPLE 2

Grundberg v. Gill, 56 Mass. App. Ct. 1116,
780 N.E.2d 158 (Mass. App. Ct. 2002)
(unpublished)

Affirming UDAP treble damages where
landlord knew or should have known that
failure to correct septic system would result
in a severe emotional distress and breach of
warranty.
UDAP MEASURE OF
DAMAGES

A North Carolina court holds that the
measure of damages for substandard
housing conditions is the difference
between the fair rental value of the property
in the warranted condition and its actual fair
rental value, but damages can not exceed
the total amount of rent paid by the tenant.
Cardwell v. Henry, 549 S.E.2d 587 (N.C.
App. 2001
A landlord’s continuous and systematic
breach of the implied warranty of habitability
has been found to be unfair. Although not
every breach of warranty would be a
violation, either an egregious or a continuous
one would be, as where the landlord
continuously failed to remedy defects despite
notices and judicial proceedings.
Substantial and material breach of implied
warranty of habitability is a UDAP violation,
even if negligent.
DUTY TO DISCLOSE

The landlord must disclose all violations of
law in the unit, and must correct or pay to
correct all such violations.
EXAMPLE

Underwood v. Risman, 414 Mass. 96, 605
N.E.2d 832 (1993)

Landlord is responsible only for disclosing
hazards of which he has actual knowledge.
Even if a landlord rents a unit not knowing
about serious housing violations, it is
unconscionable for the landlord to fail to
remedy the violations.
RATIONALE

The tenant is in an untenable position of
having to move out or live with substandard
conditions. Clearly, the UDAP statute was
designed to afford Plaintiffs the ability to
pursue claims against landlords who
withhold vital information about the health
and safety of their leased units.
UNJUST ENRICHMENT

The doctrine of unjust enrichment is based on the
principle that a party should not be unjustly enriched at
the expense of another or receive property of benefits
without paying just compensation. Although it is
referred to as a quasi-contract theory, the doctrine of
unjust enrichment is equitable, not contractual, in
nature. The doctrine of unjust enrichment serves as a
ground for the remedy of restitution.
ELEMENTS

One asserting a claim of unjust enrichment
must establish three propositions:
 (1) defendant was enriched by receipt of a
benefit,
 (2) the enrichment was at the expense of the
plaintiff, and
 (3) it is unjust to allow the defendant to retain
the benefit under the circumstances.
PUNITIVE DAMAGES CASE

The leading bedbug case discussing punitive
damages is Mathias v. Accor, 347 F.3d 672
(7th Cir. 2003) In Mathias, Judge Posner,
writing for the Seventh Circuit, reviewed a
diversity case brought in federal court against
Motel 6 in downtown Chicago where residents
of the hotel were bitten by bedbugs. A jury
awarded the 2 Plaintiffs each $5,000 in
compensatory damages and $186,000 in
punitive damages.
HOTEL’S ARGUMENT

The hotel argued that it was, at best,
negligent and that an award exceeding
$20,000 would be excessive.
JUDGE POSNER’S
THOUGHTS

Judge Posner ruled that "evidence of gross
negligence, indeed of recklessness in the
strong sense of an unjustifiable failure to
avoid a known risk was amply shown." Id at
674.
FACTORS RELIED UPON

(1) Discovery of the bedbugs;
 (2) Failed attempts at spraying the rooms to
exterminate the bedbugs;
 (3) Warnings by an exterminator that the
building needed to be closed while every
room was sprayed and refusal of the hotel to
comply; and
(4)
Knowledge of a management-level
employee of the defendant of the risk and
failure to take effective steps to wither
eliminate it or to warn guests ("which are
imputed to his employer for the purpose of
determining whether the employer should be
liable for punitive damages")

In Mathias, Judge Posner pointed out that the
infestation continued and began to reach
farcical proportions. After pointing out,
“odd that at that point [Management] didn't
flee the motel”.
 Judge
Posner discussed that the
hotel acknowledged to the
exterminator that there was a
"major problem with bed bugs"
and that all that was being done
about it was "chasing them from
room to room."

The court understood that “although
bedbugs bites are not as serious as bites
from other insects, they are painful and
unsightly. Motel 6 could not have rented
any rooms at the prices it charged had it
informed guests that the risk of being bitten
by bedbugs was appreciated. Its failure
either to warn guests or to take effective
measures to eliminate the bedbugs amounted
to fraud and probably battery as well. . . ”
RELIANCE NOT REQUIRED
(Most of the time)

Generally, courts are more receptive to
consumer fraud class actions than common
law fraud class actions in view of relaxed
reliance and causation requirements.
Reliance on the prohibited practice or
act is not required. In fact, recovery
is permissible even if the plaintiff
should have discovered the fraud or
otherwise should have known of it.
FRAUD NEED NOT BE
CONVEYED TO PLAINTIFF

Further, the misrepresentation need not be
made directly to the plaintiff. Raudebaugh v.
Action Pest Control, Inc., 650 P.2d 1006, 1009
(Or. 1982) (termite inspector falsely claimed to
the homeowner that the house was free of
insect infestation, later buyer relied on that
statement could sue the termite inspector under
statute.); Warren v. MeMay, 491 N.E.2d 464,
474 (Ill. App. Ct. 1986).
RELIANCE IN OTHER STATES

States that do have reliance elements
emphasize that reliance may be wholly
unreasonable and refer to the effect on the
"unsophisticated consumer" when determining
whether or not an act or practice is deceptive.
Murphy v. McNamara, 416 A.2d 170 (Comm.
Super. 1979) (statute must be applied to protect
the unsuspecting and the credulous as well as
the sophisticated.)
MAJORITY APPROACH DAMAGES

The majority approach under most state
consumer law statutes is "benefit of the
bargain", value of product/services as
represented less value as delivered, which is
more favorable to the consumer than "out of
pocket" approach.
COMPENSATORY DAMAGES
INCLUDE

All compensatory damages presumably
include consequential and incidental damages,
including repair costs and lost profits, where
foreseeable and otherwise recoverable under
damages rules. see e.g., Hyder-Ingram
Chevrolet, Inc.v. Kutach, 612 S.W.2d 687
(Tex. App. 1981)
LIABILITY STEMS FROM
UNCERTAINTY

HAVE A CONTRACT

HAVE A FEE STRUCTURE

INSURANCE
CONTRACT

HAVE TERMS IN WRITING
 SPECIFY WORK TO BE PERFORMED
 NO GUARANTEED – OR WILL BE
LIMITED
 SPECIFY CLIENT’S DUTIES TO
PREPARE FOR TREATMENT
 SPECIFY COSTS OF TREATMENT AND
AFTERCARE
WHAT IF CLIENT DOES NOT
WANT TO SPEND THE $$$$

PCO WILL REFUSE THE JOB
 PCO WILL HAVE CLIENT SIGN
DOCUMENT WITH THEIR
RECOMMENDATIONS AND
DECLINIATION
 PCO WILL SEND POST CONTRACT
CONFIRMATION LETTER
FEE STRUCTURE

IN WRITING
 REQUIRE PCO TO PROVIDE WRITTEN
ESTIMATE
 PCO SHOULD SPECIFY WORK TO BE
PERFORMED
 PCO SHOULD SPECIFY INITIAL COSTS
 PCO SHOULD MAKE SURE FUTURE
COSTS ARE NOTED
 AGAIN, NO GUARANTEES PCO
INSURANCE

GENERAL LIABILITY POLICY
(probably will not cover much)
 GLP GENERALLY DOES NOT COVER
BEDBUGS (need a rider)
 MAKE SURE AGENT INFORMED IN
WRITING OF YOUR NEEDS AND
POSSIBLE EXPOSURE
INSURANCE FOR BUILDING

LIKELY WILL COVER BODILY INJURY
(Premises Liability)
 LIKELY WILL COVER PROPERTY
DAMAGES (Premises Liability)
 UNLIKELY WILL RECOVER REBATE IN
RENT
 UNLIKELY RECOVER ATTORNEY FEES
UDAP
UNFAIR DECEPITIVE ACTS & PRACTICES
CONSUMER FRAUD: Actual + Triple
damages + Attorney fees
 GENERALLY NOT COVERED BY
INSURANCE
 SOMEONE HAS TO PAY
 GENERALLY DEEP POCKET
 THAT MEANS YOU
GETTING SUED

CALL YOUR INSURANCE CARRIER
 CALL A LAWYER
 DO NOT CALL THE PLAINTIFF OR HIS
LAWYER
 DO NOT TALK TO THE PRESS (nothing
good comes from this)
 THE QUESTION IS NOT “WHETHER” –
RATHER “WHEN” (It is a numbers game)
IOWA CLASS ACTION
MODEL

PROPERTY DAMAGES
 REBATE IN RENT
 PERSONAL INJURY
 ATTORNEY FEES
 UDAP
PROPERTY DAMAGES

BEDDING
 FURNITURE
 CLOTHING
EXAMPLE LOW SIDE:
$250
REBATE IN RENT
VALUE OF INFESTED UNIT = $0.00
MONTHLY RENT:
NUMBER OF MONTHS
$ 500
X 3
______
$1,500
PERSONAL INJURY
DISFIGUREMENT FROM BITES:
PAIN & SUFFERING (DISTRESS):
MEDICAL BILLS:
$2,000
$2,000
$ 500
______
$4,500
UDAP
TREBLE DAMAGES (TRIPLE) OR ACTUAL + TREBLE
(4X)
PROPERTY DAMAGES
$ 250 X 3 = $ 750
REBATE IN RENT (3 MONTHS) $1,500 X 3 = $4,500
PERSONAL INJURY (NON UDAP) $2,500 X 1 = $2,500
_____
$7,750
ATTORNEY FEES
LOADSTAR: PREVAILING RATE X HOURS = $$$$$
1 DAY WORK UP + 1 DAY TRIAL = 16 HRS
RATE: $300 HR
16 X $300 = $4,800
TOTAL COST SINGLE
RESIDENT
$12,550
CLASS ACTION
PER PLAINTIFF
PLAINTIFFS
$ 7,750
x 100
_______
$775,000
ATTORNEY FEES
$350,000
TOTAL LOW SIDE: $1,125,000
THIS ASSUMES PRE-TRIAL SETTLEMENT
LIABILIY STEMS FROM
NO WARNINGS
NO ACTION
ARROGANCE