Reference no: EM132261661
Risk Management and Insurance
Bob and his investor group own an apartment community in Greensboro, North Carolina. During a routine visit Bob notices that someone has installed satellite dishes everywhere. They are attached to the exterior walls, roofs and balcony railings. As a part of the lease residents must sign a “Satellite Addendum” advising them that they cannot install a dish without permission and advising them that the dishes must be confined to a balcony or a porch and cannot be attached to the structure. Bob is furious with his staff for not policing the situation and asks them for a plan to correct it. The manager indicates that she will give notice to all residents that improperly installed dishes must be removed and if they are not removed within a reasonable period the maintenance staff will remove the dishes. The manager assures Bob that the matter will be handled.
About a month later Bob lets the manager know that he will be in Greensboro in about a week. The manger has done nothing about the dishes and in a panic mobilizes quickly. She gives the residents 48 hours notice to remove the dishes and after the period has expired she sends the maintenance staff to remove the dishes. The maintenance staff is under pressure to remove the many dishes and does so as efficiently as possible, sometimes throwing them off the roof and balconies causing substantial damage to many of the dishes. They also pull and cut wires allegedly causing damage to equipment inside the residents’ apartments.
The residents are enraged and contact the Greensboro housing authority. After an initial investigation the housing authority determines that this may be a case of discrimination based on national origin. Satellite programming is preferred over cable by people who speak Spanish because there is a lot more Spanish language programming available on satellite services. They claimed that removal of the satellite dishes had a disparate impact on Spanish speaking residents and thus discriminated against a protected class. A member of the housing authority staff set up a card table in the parking lot to encourage residents to sign the complaint. They were reasonably successful and signed up about 40 of the 204 apartments. A complaint was filed against Bob, the ownership group, Bob’s management company, and each of the employees at the property. After about a year of investigation and negotiation the matter was settled. Many of the original complainants could not be found and the few that remained settled for very modest sums. Bob also had to agree to attend sensitivity training and to require that the staff take an annual seminar related to discrimination.
During the process Bob developed a rapport with the investigator who confided that she believed that the manager, an African-American woman, was the source of the problem. This did not surprise Bob because he had observed the manager saying things that made him uncomfortable. Bob had a talk with the manager and she assured him that she had no problem with “those people”.
The situation proved to be a huge distraction to the staff and property performance was suffering. Bob also advised the manager that performance needed to improve. It did not and about 90 days later Bob gave the manager notice of termination. The manager then filed a claim with the Equal Employment Opportunity Commission (EEOC) claiming her termination was racially motivated and discriminatory.
Identify the risk management issues presented above and suggest solutions, including potential insurance coverage.