OUTLOOK

Every year state legislatures debate tort reform. Proposed bills provide for ceilings on pain and suffering, attorney's fees, and punitive damages. Most reforms for one reason or another never become law. Insurance has traditionally been the primary line of defense against legal attacks. However, this line of defense is no longer adequate.

First, the cost of insurance has gone up tremendously and the amount of coverage available has decreased.

Second, the average award in lawsuits continues to climb.

Thus more and more often, awards exceed the insurance policy limit. Finally, when a person makes a claim against their insurance policy, they often finds that their insurance premiums go up substantially, the company cancels the policy altogether or that their claim is not covered by the policy due to some well drafted "exception" provision in the policy.

You can see, that whether YOU are aware of it or not, YOU and most people are at one time or another exposed to the risk of lawsuits. Insurance is essential where possible, but other methods are crucial to protect against today's litigious society. As insurance becomes an increasingly inadequate method of a$$et protection, the prudent person must look to other means.

WAKE UP AMERICA THERE IS A LAWSUIT EPIDEMIC!

In 1995 Attorney Allen Fishman of Pennsylvania wrote an article in Central Penn Business Journal, titled Business Insights and answered a readers question who asked the question "How Can My Wife and I Make Ourselves Lawsuit Proof"? Fishman answered by quoting from a book written by Attorney Robert J. Mintz, title 'Lawsuit Proof: Protecting Your Assets'.

Attorney Fishman stated the following: "In the Nineteen (19) Million lawsuits filed last year (1994) in American courts, the MAJORITY of lawsuits' targets didn't do anything wrong". The reason people get sued these days is often just because they have money or savings and somebody else wants a piece of it". "This is called the 'legal' shakedown". He goes on to say: " You can protect yourself from 'judges and juries' eager to play Robin Hood with someone else's money". "Use asset protection strategies, those who have NOTHING are not likely to be sued, as most attorneys will not pursue after someone who has NOTHING".

Worthington Group are specialists in the construction of A$$ET Protection and have produced this information with the research efforts of Information Resource Associates for the benefit of the reader. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Never in the history of the United States have there been so many lawsuits. Some experts estimate that one out of four adults will be sued this year! Although lawsuits may seem groundless or even vindictive, they are a fact of life. Each year millions of dollars are unnecessarily lost due to our LAWSUIT UNPREPAREDNESS. How do we prepare ourselves to defend a possible lawsuit?

The first step is to realize that the danger exists and to recognize the many sources of lawsuits.

The second step is to have a PLAN of Protection. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

SOURCES OF LAWSUITS:

The laws recognize a duty on individual society members to act in such a way as not to inflict "wrongs" on other members. The violation of this duty is known as a tort. Tort Law purports to promote the accountability and social responsibility that comes with freedom. However well-intended, tort law today has often missed its mark and has mutated to where it does not emphasize social responsibility so much as it does social greed.

A lawsuit today is much like a lottery. A plaintiff can go to court on trivial grounds and come out a big judgment winner. More frequently, however, insurance companies, fearing a prolonged and ultimately costly lawsuit, are settling out of court to avoid the possibility of the plaintiff hitting the jackpot. Insurance companies then pass the costs of settling on to the consumer, making liability insurance even more expensive.

The average person simply cannot purchase millions of dollars of liability coverage, although multi-million dollar judgments are all too common. A person is then forced to get what coverage he can and hope it is sufficient. What happens if someone is hit with a judgment that exceeds his insurance coverage? The judgment creditor will then go after any a$$ets the judgment debtor has; house, car, boat, pension plan, savings, real estate, other investments, etc. The individual and his family may be left with only the minimum amount of a$$ets needed to live.

With a little vision, a person can foresee possible liability and protect his a$$ets accordingly. Still, more commonly, a person does not realize the circumstances under which a jury could find him liable for damages. The following discusses some common areas of potential liability. It is by no means comprehensive. Yet, the discussion should be helpful in identifying areas of potential lawsuits thus allowing the person to plan accordingly. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

INTENTIONAL TORTS:

Tort law focuses on the intent of the person committing the "wrong". If the person intended to commit the act, even if the consequences were unintentional, then the tort is termed an intentional tort. Some common intentional torts include: assault, battery, false imprisonment, intentional infliction of emotional distress, trespass, defamation (slander and liable), and misrepresentation.

Assault. An assault is an intentional act that causes a reasonable apprehension or fear of immediate harmful or offensive contact. Note that either a fear of harmful or offensive contact or an apprehension of such contact is sufficient as long as it is reasonable. Offensive contact has been defined as an unwanted touching. Thus any act that causes someone to have a reasonable apprehension of an unwanted touching could constitute an assault. People with short tempers appear often as defendants in assault cases. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Battery. Battery is an intentional, unauthorized harmful or offensive touching. physical injury is not required. The touching can either be made by the defendant or put in motion by the defendant. For example, throwing a rock, poisoning food, and swinging a club are batteries as long as contact is made and contact normally occurs from such actions. The contact can be to any part of the body or anything attached to it such as a hat or clothing, a purse, a chair, or even an automobile in which a person is sitting. It is inconsequential that the person who committed the act was joking, playing around, or even had some virtuous motive. Motive is irrelevant. Damages available to the plaintiff include not only compensation for any physical harm, but also compensation for emotional harm and loss of reputation. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

False Imprisonment. This is the intentional confinement or restraint of another person without justification. Physical barriers, physical restraint, and even threats of physical force are methods of confinement sufficient to constitute a false imprisonment. Merchants often face suit for false imprisonment after they have detained a shoplifting suspect for questioning. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

If such detention is unreasonable, it is false imprisonment. Most states have passed legislation designed to protect merchants from suit. The usual statute provides that if there is a reasonable suspicion that the person was shoplifting, then the merchant will not be liable. Merchants should institute a procedure that falls within their particular state's statute. Anytime anyone is detained against their will, there is a potential lawsuit. If the suit is successful, the plaintiff will not even have to prove damages or harm to reputation and mental distress from the imprisonment. The law presumes such damages exist in every false imprisonment case. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Intentional Infliction of Emotional Distress. This is a recent development in tort law. This tort is defined as an intentional act that amounts to extreme and outrageous conduct resulting in severe emotional distress to another. A common case of this type involves, for example, the incorrect informing of a spouse that her husband or children have been killed. Also, repeated annoying behavior coupled with threats that results in extreme emotional distress may constitute this tort. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Trespass to Land. This is one of the most familiar torts. Trespass occurs whenever a person enters or causes anything to enter land that is owned by another, or remains on the land or permits anything to remain on it after permission is withdrawn. Examples of common trespasses include walking or driving across land, shooting a gun across land, throwing rocks against a building or spraying water on it, building a dam across a river that causes water to back up on someone else's land, and placing all or part of a structure on the land of another.

Since property rights extend both above and below the surface, digging beneath someone's land or flying closely above it constitute a trespass. The defendant in a trespass case is liable for damages even if he does not harm the land. In addition, he is liable for any physical harm done to the land. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Defamation. This tort involves the wrongful hurting of a person's reputation. The law divides defamation into slander and liable. The difference between the two is that slander comes from spoken words while liable results from written words. Both require a publication of a statement that holds an individual up to ridicule, contempt or hatred. Publication in this sense means that the statements are made to others besides the defamed party. You can call someone incompetent and dishonest to their face, but it may be slander if anyone else hears the remark.

Even if a third person simply overhears the remark, it is sufficient to constitute publication. Courts have even held that dictating a letter to a secretary constitutes publication. Also, anyone who republishes or repeats defamatory statements is potentially liable even if that person states that they are quoting someone else. This is why most radio stations when broadcasting live talk shows delay the broadcast by seven seconds. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Misrepresentation. The elements of misrepresentation are:

1. Misrepresentation of facts or conditions with knowledge of falsity or reckless regard for the truth.

2. Intent to induce another to rely on the misrepresentation.

3. The plaintiff justifiably relies on the misrepresentation.

4. The plaintiff is damaged because of the reliance.

5. There is a causal connection between the reliance and the damages suffered.

The plaintiff in a misrepresentation case can not only recover restitution damages but also may receive expectation damages, i.e., the benefit he would have obtained had the statement been true. Also, many courts allow punitive damages in misrepresentation cases. This tort is particularly worrisome to the businessmen who may be vicariously liable for the misrepresentation of others.

"Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

UNINTENTIONAL TORTS

As the name suggests, unintentional torts do not require the defendant to have any intent to commit the act. Unintentional torts are caused by the negligence of a defendant. To establish a negligence case, a plaintiff must prove:

1. The defendant owed plaintiff a duty of care.

2. The defendant violated that duty of care.

3. The violation of the duty was the case in fact of harm to the plaintiff.

4. The violation of the duty was the proximate cause of the plaintiff's harm.

5. The plaintiff suffered damages for which the law will require compensation.

The duty of care required is that of a reasonable person. The question presented is "what would a reasonable person do under the same circumstances?"

For instance, a reasonable person would not drive negligently. If a person did drive negligently, i.e.: didn't watch what he was doing, and the negligence was the "cause in fact" of the injury to another person then the negligent driver could be liable for damages.

The issue of "cause in fact" stated simply is "but for defendant's act, would the injury have occurred?" In the case of the negligent driver, the defendant would need to show that had the driver not been negligent, the injury would not have occurred. Finally, the act also must be the "proximate cause" (sometimes called the legal cause) of the harm. There are many volumes written on the concept of "proximate cause." "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Simply stated, proximate cause is a question of when the law decides to cut off the defendant's liability for his acts. In the negligent driving scenario, what would happen if the plaintiff had sued the parents of the defendant? The plaintiff would argue that "but for the birth of your son, I would not have been injured." While there may be a causal relationship between the birth of the son and the accident, the law chooses at a certain time to cut off the liability of having a child. In other words, while the parents may be vicariously liable for the acts of a child, at some age the law cuts off the liability.

Similarly, if a person drives down a road in a yellow car and unknowingly passes a person with a fear of large yellow objects, causing him to go stark raving mad, the law will cut off the driver's liability and not recognize this as a wrong though there was certainly causation.

The types of suits possible under negligence theory are virtually limitless. Any harm that is caused by the violation of a duty of reasonable care is a potential lawsuit. Operating a car, boat, tractor, etc. in a way that causes damage are some of the more common sources of lawsuits. Also, maintaining your home, office, work site etc. in a way that causes damage gives rise to lawsuits. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Even the most prudent home owner could be hit with a lawsuit from someone who slipped and fell while on his property. The home owner even owes a duty of care, although it may be a lower one, to people trespassing on his property. Negligence while hunting, skiing, fishing, and participating in other sports has also generate lawsuits. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Sometimes courts will deem the violation of a statute as negligence per se. That is, once the plaintiff proves the defendant violated the statute, all he would then need to prove to win the case is that the violation caused damage to the plaintiff. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

For example, if your community has a leash law and your dog, while in violation of the leash law, crossed a road and was hit by a car, you as the dog's owner could easily be liable for any damage sustained by the car and its occupants. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Malpractice suits are specialized forms of negligence suits in which the professional's conduct falls below the care required by a reasonable member of the profession. Doctors, lawyers, accountants, dentists, architects, engineers, psychologists, beauticians, plumbers, and educators have all been sued for malpractice. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

The general trend is for the plaintiff to sue for any damage sustained in any way and to name, as a defendant, anyone even remotely connected to the damage. Often the professional does not fall below the reasonable standard of care but the jury feels sorry for the injured plaintiff and thus returns a judgment for him. The jury often feels justified because the "rich" professional has "deep pockets" and thus "can afford it." "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

STRICT LIABILITY:

Liability under the theory of strict liability is imposed regardless of fault. That is, even if the defendant is not negligent, but is reasonable and prudent, he may still be liable for damages. Following are areas where Strict Liability is often imposed.

Warranties-Express and Implied. A suit for breach of warranty is under contract law theory, not tort theory. However, the two are similar if you view a tort as a breach of an implied social contract. Also, tort claims are often pursued alternatively with contract theory. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

If a manufacturer warrants a product against defects and then defects occur - absent a defense he obviously will be liable for any damage. However, many manufacturers and sellers who think they are not warranting a product, learn too late that they actually did.

In one case, an unsupervised child drowned in his family's swimming pool. Of course, had a parent been watching, the drowning would not have occurred. Still, the parents sued the seller of the pool cover. The court found that an express warranty was breached by the drowning of the child. The seller of the pool cover, was married with five children, lost everything - his home, car, savings, etc. He was forced into bankruptcy and years later he has yet to recover fully. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

The problem is that almost any action can constitute a warranty. A description of a product in writing or in advertising, a sample of a product, or even a picture of a person using the product may all be express warranties. In addition, the law will imply a "warranty of merchantability" on merchants. Also an implied warranty of "fitness for a particular purpose" is imputed in some circumstances, even at times on people who sell goods at garage sales.

Although it is possible in some states to disclaim these warranties, many people do not know enough about them to disclaim them. Also, there are federal statutes that, in certain circumstances, do not allow the disclaiming of liability for consequential damages. The best advise is that if you are in the business of selling anything, contact an attorney knowledgeable in that area to determine what types of express and implied warranties you are making. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Products Liability. A manufacturer who exercises all possible care in manufacturing a product can still be liable for injury resulting from the use of that product. This theory of products liability has made it much easier for a consumer to sue a seller or manufacturer. In short, anyone who sells a product in a defective condition unreasonably dangerous to the person who uses it may be liable for any resulting physical harm. As you might guess, most of these cases turn on the issue of what constitutes an unreasonably dangerous product. While "unreasonably dangerous" seems to be a fairly restrictive standard, juries have expanded its meaning to include a vast number of situations. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

In one case a person placed a stepladder in some mud and then climbed on it. Predictably, the ladder slipped and the person fell off injuring himself. The jury, using a products liability theory, found the ladder manufacturer liable for damage. The jury decided that because the manufacturer didn't warn the user of the hazards of placing it in mud, the ladder was unreasonably dangerous. The argument in essence was that "If it weren't unreasonably dangerous it would not have caused the injury."

However circuitous this argument might be, it is unfortunately quite common. Again this is often a case of a jury feeling sorry for an injured person and wanting to make the "rich" business or company pay for the injury. This hardly promotes personal responsibility. Also, often times the "rich" company owner is hit with a judgment larger than he can afford and thus loses most of his a$$ets. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Owner for Damages Caused by Pets. Owners of animals may be held strictly liable for damage or injury that their pet causes. This is true when the owner knows of the pet's vicious propensity.

For example, if a person owns a dog and he knows that the dog has a propensity to bite, then he will be liable for any injury the dog may cause. Most states have a "one bite" rule. That is, the dog is allowed one bite without the owner being liable. But, if it is a pet that is naturally wild, such as a tiger, lion, or even a pit bull, the owner will be liable on the first bite. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Farmer for Acts of Livestock. In many states the owner of livestock is strictly liable for any damage the animals cause. Thus if cattle break loose from their enclosure, the farmer will be liable for any damage the roaming cattle cause. . "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

VICARIOUS LIABILITY:

It is possible for a person to be held liable for any of the torts discussed above even though he personally did not commit them. Under certain circumstances the law will hold persons vicariously liable for the acts or omissions of others. The following discusses some common forms of vicarious liability.

Employer for Acts of Employee. It is a well-established rule of law that an employer is vicariously liable for any tortious acts committed by his employees while they act in the scope of their employment. Thus, if a carpenter negligently drops a brick from a scaffolding striking a pedestrian, the contractor who employed the carpenter may be liable for any damages. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Similarly, if a security guard shoots someone in the course of his duty, absent any defenses, the employer will be liable for damages. Vicarious liability extends to employers even if the employees' acts are prohibited by company policy, or even illegal. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Employer for the Negligent Hiring and Training of Employees. Even if the tort that the employee committed was not done in the course of his employment, an employer may still be liable if the tort was a result of negligent hiring or training. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

In one classic case, the employer of a security guard was held liable when the guard used his position to help rob the business he was supposed to be guarding. In another case, an owner was held liable for the assault committed by a manager on a customer. In both instances the employer didn't investigate the background and character of the employees and thus was liable for damages. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Employer for Dangerous or Harmful Activities of Sub-Contractor. In an attempt to avoid liability for acts committed by employees, some employers do not hire "employees" but rather, they hire sub-contracts to do the work. The essential difference between an employee and sub-contractor is the degree of control the employer has over the person performing the work.

An employer merely contracts for the final product with a sub-contractor, while an employer trains, supervises and provides tools for the employee. At times, though, the line between the two is quite gray. Sometimes a defendant learns all too late that a "sub-contractor" was really an "employee" in the eyes of the law, especially relating to Internal Revenue Service.

The law will not allow employers to absolve themselves of liability stemming from certain activities merely by delegating the duty to a sub-contractor. Activities such as demolishing buildings, dusting crops, and repairing cars are among those activities that have been deemed inherently dangerous and therefore non-delegable.

Other non-delegable duties include those performed to maintain the safety of land held open to the public. Thus a hotel would be liable for the negligence of a plumber or a lifeguard even if they were independent sub-contractors. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Partner for the Acts of a Joint Partner. A partner is generally held jointly and severally liable for torts committed by other partners. This means that a claimant can sue one partner and then collect the entire judgement from another partner. A formal partnership agreement is not necessary to constitute a partnership. In addition, a limited partnership that was not properly established may be treated as a general partnership with resultant liability even to those who thought they were "limited partners." "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Joint Enterprise. Similar to liability in a partnership, courts have also imposed liability on all members of a joint enterprise when persons outside the enterprise are injured.

A joint enterprise exists when there is:

(1) an express or implied agreement,

(2) there is a common purpose,

(3) there is a community of interest, and

(4) thee is equal right of control.

Some cases have stated that even social venture will qualify. Thus four people who go on a ski trip sharing expenses, having a common purpose and equal right of control, might all be liable if one of them drives negligently. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Corporate Director for Acts of the Corporation. The corporate form has long been a tool for lawsuit protection. Still, it is far from impenetrable. Many corporate officers have learned all too late that a court can pierce the corporate veil in many circumstances. When this occurs an officer or director may be liable as if the corporation were a partnership. Even without piercing the corporate veil, an officer or director who fails to remedy a condition that he knows is dangerous may be liable for all resulting damages. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

Parent for Acts of Children. Most states, in varying degrees, hold parents liable for the tortious acts of their children. These statutes require fault on the part of the child ranging from negligence in some states to "willful" or "malicious" conduct in others. Also in many states there is a dollar limitation on the parents' liability. Yet, where a parent knew of the malicious, reckless, or mischievous propensities of his minor child and failed to control the child, there is every reason to hold the parents liable for the child's acts. "Irrevocable A$$et Protection Trusts" afford the Protection YOU require.

"I've Been Meaning To Do My Estate Planning, But!!!

Sound familiar? We have never said something similar, or have procrastinated on this issue have we? One thing for certain, we MUST make sure the people we love are the benefactors of our estate, not the IRS.

We felt compelled to provide a few statistics about the issue of Probate, and how it can devastate ones intent for their heirs if they have not properly set themselves up to protect their a$$ets..70% of Americans die without an estate plan, and most of the 70% figure is because of procrastination, very sad indeed.

In a recent review of a study from the American Probate System the following was reported.

1) Americans SPEND in excess of $2 billion Dollars on Probate related costs each year.

2) The study condemns the Probate System as 'costly, slow, and outmoded.. a sad state of affairs'.

3) More than $1.5 Billion Dollars goes to Probate Attorney billings.

4) Probate Attorneys use 'Simple Wills' as "Loss Leaders". What this means, ( attorneys write 'Wills' for a very small price to attract clients for the BIGGER fee they will collect from Probate billings).

5) Without an estate plan, YOU can lose YOUR entire estate to attorney billings and the IRS.

*** TOMORROW ***

He was going to be all that he could be tomorrow. None would be kinder and braver than he tomorrow. A friend who was troubled and weary he knew, who'd be glad of a lift, on him he would call, and see what he could do tomorrow. More time I have to give to others tomorrow. Each day he made his list of things to do tomorrow. The greatest of workers this man would have been tomorrow. The world would have hailed him had he ever seen tomorrow. All that was left when living was through, was a mountain of things he intended to do tomorrow.

INFORMATION RESOURCE ASSOCIATES, 95 WRITE PROTECTED