The Orlando Sentinel

ORLANDO, Fla. – In a ruling that is sending ripples through the pest-control industry, a federal appeals court has reinstated a huge punitive-damage award to a Florida homeowner in his lengthy battle against Orkin Inc.

The 11th Circuit Court of Appeals in Atlanta last week endorsed a 2003 arbitration-panel award of $2.25 million in punitive damages for the homeowner, Collier Black of Ponte Vedra. His house sustained severe termite damage while under a lifetime contract with Orkin, one of the country’s largest pest-control companies.

The arbitration panel’s total award for Black and against Orkin was $4.2 million, which includes $750,000 in compensatory damages and $1.2 million in attorney fees.

Orkin had appealed the panel’s decision, and in 2004 a federal judge had removed the punitive damages while upholding the panel’s findings and its other awards. Black had appealed to the federal court in Atlanta to have the punitive damages reinstated.

In its Feb. 17 ruling, a three-judge panel of the 11th Circuit said, “there is ample factual support for the (punitive damage) award,” citing the arbitration panel’s “explicit findings that would support gross negligence and fraud on the part of Orkin.”

Legal experts said Orkin, a subsidiary of Atlanta-based Rollins Inc., has few options other than to appeal the decision to the U.S. Supreme Court – which is considered unlikely.

Nevertheless, Orkin spokeswoman Martha Craft said Thursday that “we strongly disagree with the (appeal’s court) ruling, and we are vigorously exploring all options to have the case reviewed.” The company has until March 10 to decide what to do next.

Black, a 53-year-old retired publisher, isn’t sure what he’ll do next, either, though he and his wife, Peggy, have sold their $1.5 million home in Ponte Vedra – after fully disclosing its termite history, Black said. They are building another home in nearby Jacksonville, Fla.

Black, whose case spurred a racketeering investigation against Orkin by the Florida attorney general’s office, wondered out loud this week about that investigation, which began in April 2004.

“I feel like I’ve been in a 15-round fight. There’s no thrill,” Black said of the appeals court victory. While happy about the court ruling and the large award, “if this is just about Collier and Peggy, it doesn’t count for much. It’s all the people who didn’t have the chance we did. I don’t know why the state isn’t pursuing this investigation as aggressively as it can.”

JoAnn Carrin, a spokeswoman for the attorney general’s office, said the investigation continues, hinting that Orkin has been foot-dragging.

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“We have discussed the matter with company representatives (from Orkin), and so far they have not satisfied our concerns, so the investigation is ongoing,” Carrin said. “We want to make sure that Floridians who do business with Orkin get what they pay for.”

Roughly half of all Florida homes have termite contracts, though many do not include the repair guarantees that the Blacks had in their agreement.

Orkin’s Craft would not comment on the state investigation, other than to say the company was cooperating “and hopeful for a favorable resolution very soon.”

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But no matter what happens with the state investigation of Orkin, the latest court ruling will affect more than just the Atlanta-based pest-control company, industry observers say.

“I think it will make the (pest control) industry change how they do business,” said Wayne Cowart, a former Orkin executive who now runs a Valdosta, Ga., consulting business that advises both consumers and pest-control companies during disputes.

“The industry cannot afford to ignore this type of verdict,” said Cowart, describing it as the largest punitive award “in the history of the pest-control industry paid through arbitration.”

Unlike Orkin, the vast majority of pest-control operators carry maximum liability insurance of just $1 million, Cowart said. “If a company like that was hit with a case like Collier’s, two bad things happen: They’re out of business, and all their customers have no (termite) contracts anymore.”

Tampa, Fla., lawyer Pete Cardillo, whose practice is limited to representing residential and commercial clients in termite cases, said the ruling sends a strong message to all pest-control companies that punitive damages are a real possibility if they defraud consumers.

“This is the highest federal court in the entire Southeast saying this conduct merits an award of punitive damages,” said Cardillo, who added that such punitive awards have been rare in the past.

“Punitive damages, more than anything, cause Orkin concern,” Cardillo said. “It’s going to have serious repercussions; they cannot predict and control punitive damages.”

Cowart, a paid consultant for Black during his arbitration battle, said he has no ax to grind with Orkin. He said the company has already become more service-oriented under its new president, Glen Rollins, a direction he said the industry needs to follow.

“The message to the industry is this: We have to do a better job of service after the sale,” Cowart said.

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(c) 2006, The Orlando Sentinel (Fla.).

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Distributed by Knight Ridder/Tribune Information Services.

AP-NY-02-23-06 1917EST

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