Bill could decrease contractor liability, legal costs

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Beyond being subject to less liability for injuries on construction projects, contractors could see a decrease in their legal expenses should lawmakers adopt a proposal that went before a legislative panel on Thursday.

Assembly Bill 773, sponsored by state Reps. Mark Born and John Nygren, calls for curtailing the state’s construction statute of repose, which contractors commonly invoke when defending themselves against personal-injury lawsuits alleging negligent design.

The statute bars lawsuits involving injuries that occurred more than 10 years after a given construction project came to an end. Lawmakers are now trying to reduce that window to six years.

One big backer of the proposed change is the Wisconsin Builders Association, which represents homebuilders throughout the state. The Madison-based group provided written testimony at Thursday’s hearing contending that reducing the window to six years would give builders, who are often defendants in lawsuits, certainty and control over their exposure to liability and reduce the cost of investigating allegations.

However important that proposal might be to contractors, it actually was not the main subject of debate at Thursday’s hearing. Much of the back-and-forth among opponents and proponents was instead about proposals to overhaul the state’s civil-litigation rules and increase the interest rate charged to insurers for failing to pay overdue-insurance claims, among other things.

One of the biggest changes would be to the state’s discovery rules, which regulate how lawyers collect evidence during legal proceedings. The proposal calls for placing time limits on depositions and restricting how many depositions can be requested in a particular dispute; and for requiring parties to show a “substantial need” for any electronically stored data they might be requesting, among other things.

Although seemingly unrelated to construction, this part of the proposal could still make a big difference for contractors.

Fred Strampe, a lawyer out of Milwaukee who spoke in favor of the bill on behalf of Wisconsin civil-defense lawyers, said the proposed limitations  could help lower how much construction companies spend to comply with discovery requests.

Even small construction disputes, he said, can involve thousands of documents. And having to produce those documents is not cheap.

“Pretrial discovery is one of the primary drivers of those costs,” Stampe said. “It’s not unusual for businesses to spend millions of dollars in pretrial discovery.”

Others said on Thursday that the state’s discovery rules are being abused to the detriment of businesses big and small, inflating their legal costs.

“It’s not just, ‘Produce this document,’” said Mark Behrens, a representative of the American Tort Reform Association. “It’s, ‘I want this document in a certain format so I can manipulate it just like the person who created it.’ You can very easily get into complicated issues.”

Still other warnings centered on other parts of the bill.

Ed Robinson, a lawyer from Brookfield who spoke on the behalf of the state’s plaintiff’s lawyers, said he was particularly concerned about a provision that would decrease the interest rate imposed on insurers who fail to pay overdue insurance claims. The proposal would eliminate the current rate of 12 percent a year and instead set up a system that would charge whatever the prime rate is at any given time plus one percentage point.

Robinson argued that the lower rates would make it more affordable for insurers to refuse to pay claims even at times when there is no dispute about whether a particular claim should be covered. He noted that insurance claims are not made just by injured people, but also homeowners and small businesses.

“It applies to all insurers,” he said. “It’s an all-inclusive statute that applies … in all types of claims.” Follow @erikastrebel