Miscellaneous Professional Services Claims Examples

The buyer, who is a builder, purchases a piece of land upon which they want to construct two homes. An agent represents the seller in the transaction. Subsequent to sale, the buyer discovers that the property cannot be built upon because of soil contamination. The buyer sues the seller and agent, alleging failure to disclose problems with the soil. 

Outcome: A suit is brought against the seller and agent alleging failure to disclose problems with the soil. 

Shortly after purchasing a house, they expected to quietly enjoy, plaintiffs quickly realize that their new neighbors have little regard for the peacefulness of their space. The neighbor's loud pets are a known nuisance; the previous owner called the police numerous times to try to rectify the situation. The previous owner failed to disclose this known neighborhood nuisance to the buyers when selling the property. The buyers seek to rescind the purchase based on the failure to disclose a known nuisance. They also name the real estate agent as a defendant for allegedly advising the seller not to disclose the nuisance. 

Outcome: Defense and settlement for the realtor was over $50,000 

Plaintiff alleges negligence, breach of contract, breach of a covenant of good faith and fair dealing arising from their real estate broker’s execution of closing documents of its residential property. 

Outcome: Defense costs exceed $50,000.

A company intending to lease office space is sued by the lessor when the lessee backs out of the contract because of a dispute regarding the split of costs associated with transforming the space to comply with the lessee's requirements for its business. Apparently, the construction costs were escalating well above what the lessee was expecting, but this was not an allowable basis to cancel the lease. The lessee cross-claims against its real estate leasing agent, alleging that it breached its duty of care by having it enter a lease that imposed potential liability, or risk of loss, contrary to the intent and understanding of the lessee. After going through a trial, the real estate agent receives a directed verdict in its favor.

Outcome: Defense costs totaled approximately $250,000 

A sublessee files a lawsuit alleging breach of contract, negligent misrepresentation and breach of fiduciary duty against their real estate agent and the sublessor after the sublessee was forced to vacate the property by the property owner/master lessor because the sublessee was not using the property for the intended purpose in the master lease. The sublessee alleges that the real estate agent did not review the master lease, did not tell them that the master lessor had to approve of the sublease and mistakenly told the sublessee that the sublessor was the actual property owner.  

Outcome: Settlement and defense for the real estate agent exceeded $500,000

A tenant leases property in a shopping center. The monthly rent includes charges for maintenance of common areas. The tenant asserts that the rent is being improperly calculated since the property manager is charging to cover areas that are not actually common areas.

Outcome: The tenant files suit against the property manager for breach of contract. 

A borrower secures financing for the purchase of a home from the banker. They all agree on a closing date. Prior to closing, the borrower discovers that the financing will not be available. As a result, the purchase cannot go through on the agreed upon closing date. The borrower has to find replacement financing at unfavorable terms compared to the original financing. The borrower sues for misrepresentation and seeks damages from the difference in terms of financing. 

Outcome: The borrower sues for misrepresentation and seeks damages arising from the difference in terms of financing. 

A class action lawsuit is filed against a company for its purported failure to provide proper written notice of the borrowers' rights after repossessing their automobiles and putting them up for auction as required under the Uniform Commercial Code.

Outcome: Settlement and defense exceeded $4 million 

While working for a customer, a leased employee of a maintenance service company falls into a holding tank and dies of asphyxiation. The employee’s estate sues the customer for damages. The customer files suit against the leasing company because the leasing company failed to purchase workers’ compensation. The customer alleges that the leasing company agreed to indemnify them for any damages resulting from workers’ compensation claims. The customer argues that the service company breached its agreement to procure the proper coverages and, as a result, should indemnify them for any damages attributable to the maintenance employee’s death.The total defense costs and settlement exceeded $150,000. 

Outcome: Total defense costs and settlement exceeded $150,000. 

A married couple allege that a collection agent harmed their credit status by placing incorrect entries on their credit history report. As a result, they were not able to close on a new home. The plaintiff alleges personal injury and violation of the Federal Consumer Credit Protection Act.

Outcome: Total defense costs and settlement exceeded $50,000. 

A company (insured) is retained to attend a foreclosure sale as the representative for the lender. The insured was instructed by the lender on the minimum amount that they needed to make on the opening bid. The insured mistakenly opens the bid at half of what the lender instructed. A third party outbids them by a few dollars and the lender loses the property. The lender alleges negligence against the insured, claiming that they owe the lender the amount that was still owed to them on the mortgage.

Outcome: Settlement & defense exceeded $100,000

A debt collector is retained by a company in order to get an individual (the plaintiff) to return advanced commissions on deals that ultimately fell through. The debt collector comes to an agreement with the individual on a payment plan in exchange for not reporting the individual to credit agencies. The debt collector exceeded his authority in making this deal and the matter is reported to the credit agencies, anyway. The plaintiff files suit for breach of contract.

Outcome: Settlement and defense exceeded $200k

A state attorney general files a complaint in superior court alleging that a company and its employees made false or misleading representations to prospective clients regarding their services.

Outcome: Defense costs exceeded $2 million. 

The beneficiary of an estate alleges that the trustee mismanaged the trust by diverting funds into companies controlled by the trustee, charging excessive fees and transferring ownership of a house owned by the trust into his wife's name.

Outcome: Settlement and defense exceeded $300k 

A TPA is responsible for obtaining and processing medical claims for its client’s group health plan. The heath plan has an annual individual expense limit of $75,000. When an individual’s annual expenses exceed this amount, the stop loss carrier reimburses the health plan. The stop loss policy requires all bills to be paid prior to the expiration of their policy. The TPA fails to process and pay bills on a timely basis. The TPA submits a request to the stop loss carrier after the expiration of the stop loss policy to reimburse all expenses exceeding the individual expense limit of $75,000. As a result, the stop loss carrier denies all expenses above $75,000. The client sues the TPA for failure to render professional services. 

Outcome: The client files suit against the TPA for failure to render professional services. 

Plaintiff alleges breach of fiduciary duty, negligence and deceptive trade practices against a company it retained to amend its executive compensation plan to address changes in the tax code. Plaintiff alleges that the company failed to achieve its objective when its deferred executive compensation plan incurred adverse tax consequences.

Outcome: Settlement and defense exceeded $300k

A client alleges negligent administration, negligent misrepresentation and breach of contract against its 401k plan administrator. They claim that the plan administrator failed to properly conduct an annual compliance test in regard to the IRS' top-heaviness rules. Since the plan was later deemed to be top-heavy, the client was forced to take corrective action, including the reallocation of funds from key employees' accounts to the accounts of other employees.

Outcome: Settlement and defense exceeded $200,000. 

A company alleges that the Insured breached their fiduciary duty by failing to provide adequate advice regarding the riskiness of the purchase of assets, the amount and likelihood of a termination fee and the conflict that its ownership had with state law.

Outcome: Settlement and defense exceeded $500k.

A property owner alleges negligence against those involved in the construction of a multi-use development including its construction site consultant. It is alleged that it will take millions of dollars to correct issues with the roof and other serious construction defects.

Outcome: Settlement and defense for the consultant exceeded $250k

An individual who was severely hurt in a car accident sues the auto insurer responsible for not tendering its policy limits to him for his injuries in a timely manner. The auto insurer then brings its third-party claims administrator into the litigation. They allege negligence and breach of claims handling regulations by failing to advise the policy holder of exposure from the claim that was excess of the policy limits, failing to respond to a policy limit demand, and failing to advise the insurer that a policy limit demand was made upon it.

Outcome: Settlement and defense exceeded $750,000

An appraiser (insured) is retained to appraise a property that an individual (claimant) recently acquired and used to secure a note and deed of trust. The property was appraised at a value greater than 10 million dollars. After the borrower defaulted on the note acquired by the claimant, it was discovered that the property did not adequately secure the note. The claimant alleges negligence because they relied on the appraisal of the property conducted by the insured, who grossly overstated its value.

Outcome: This claim is still in litigation 

A bank alleges that the Insured conducted a negligent appraisal of a debtor’s collateral. When the bank declared that its credit facility was in default, there was not enough collateral to repay the debt.

Outcome: Settlement and defense exceeded $750,000.

An alleged faulty land survey of residential property cause a dispute between two neighbors regarding where one neighbor’s newly constructed house is being built on the lot. The land surveyor eventually prevails and is dismissed from the litigation, but not after incurring substantial defense costs.

Outcome: Defense exceeded $150k.