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Last Post 04/05/2010 10:41 AM by  Ray Hall
standard duty of care by insurance contractors
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Leland
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03/02/2010 11:26 AM

    What do you fellow adjusters think about contractors that advertise that they specialize in insurance but don't seem to know the basics of how it works and do economic harm to the insureds?

    My understanding of liability is that a professional has a "standard duty of care" so for example, a professional who's supposed to know something about the business he is in can't get away with saying "Not my fault, I didn't know any better" when things go wrong.

    Two examples:

    90 year old man has a fire. Emergency insurance remediation contractor tells him they will take care of everything, and the insurance will pay the bill. $8000 of drycleaning later, it is determined that the clothes are probably worth $2000 ACV.

    Did the contactor have a duty (as insurance repair industry professionals) to:

    a) check with the adjuster first on coverage/valuation question?

    b) advise the insured that the cost to clean might exceed coverage?

    c) look at the clothes and consider the potential problem?

    DOES THE INSURED OWE THE COST OF DRY CLEANING EVEN IF IT EXCEEDS THE VALUE OF THE STUFF CONSIDERING THAT HE TRUSTED THE WORD OF SOMEONE MARKETING THEMSELVES AS EXPERTS IN INSURANCE WORK INCLUDING EXPERTISE IN WHAT INSURANCE WILL PAY?

     

    Scenario #2

     

    Insured calls emergency insurance repair contractor. Emergency repair contractor tells the insured that do insurance work, they are experts, they tell the insured to make a claim, and then THE CONTRACTOR COMES TO THE HOME AND CLEANS ALL THE DAMAGE BEFORE THE ADJUSTER SHOWS UP THE NEXT DAY.  Bear in mind that this was not an emergency clean up. All the "damage" was repaired before the adjuster showed up. Now if the insurance company denies the claim, the contractor might sue the insured for not paying the bill.

     

    IS THE CONTRACTOR LIABLE FOR STEERING THE INSURED THE WRONG WAY ON SOMETHING THE CONTRACTOR SUPPOSEDLY IS AN

     "EXPERT" IN???

     

    My way of looking at it is like this: if you promote yourself in a certain line of business you better know what the heck you are doing in the line of work or accept the consequences. It's not right for the customers to suffer when the contractor doesn't follow basic principles of the industry he suppesedly specializes in.

     

    What do my fellow adjusters think?

    jlouden
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    03/02/2010 2:06 PM

    Did the contactor have a duty (as insurance repair industry professionals) to:

    a) check with the adjuster first on coverage/valuation question?  No.

    b) advise the insured that the cost to clean might exceed coverage?  No.

    c) look at the clothes and consider the potential problem?  Yes.

    DOES THE INSURED OWE THE COST OF DRY CLEANING EVEN IF IT EXCEEDS THE VALUE OF THE STUFF CONSIDERING THAT HE TRUSTED THE WORD OF SOMEONE MARKETING THEMSELVES AS EXPERTS IN INSURANCE WORK INCLUDING EXPERTISE IN WHAT INSURANCE WILL PAY?  Desk adjuster will negotiate settlement price with the contractor.

    I will play around with scenario 2 later.

     

    Leland
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    03/02/2010 2:19 PM
    OK- how about this scenario: a lawyer knows with a high amount of certainty (or should know!) that the absolute most that could possibly be won on a case is $10,000.00. He agrees to take the case and tells the client he will bill hourly, $150 per hour. The attorney knows that similar cases take about 90 hours of work.

    He neglects to tell the client that he has a very strong opinion that the case is only worth $10,000.00. He also conveniently doesn't mention that similar cases take 90 hours to resolve. If these facts had been disclosed to the client the client would not have agreed to hire the attorney. The attorney knows (or should know) that the client would have never hired him if he had given the client the full story.

    The case is won. The lawyer bills for 88 hours or a total of $13,200.00.

    Would anyone seriously think this is legit?

    Any professional that pulls this kind of stunt, in my opinion, hasn't earned their money.

    Leland
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    03/02/2010 2:36 PM
    The liability occurs when a professional's behavior is below the standard other similar professionals use. Knowing this I went ahead and asked some knowledgeable people (emergency service contractors, very experienced adjusters) whether a restoration contractor should behave the way I described above. Everyone told me that that behavior was not the norm for the industry.

    see this:

    A duty of care may rest with anyone in a certain situation. Every person has a duty to use care in actions so as not to harm others. This is the prudent man rule. If you violate it and somebody gets hurt, you have been negligent and can be held accountable in a civil court for damages. EX: a skateboarder runs off a wall and falls into a lady with a baby and hurts the baby. this is a violation of the duty of care. there is a test of reasonableness imposed. Skateboarding is almost always unreasonable. ( that's part of the appeal) If a fireman fell from a ladder while trying to save a person, and struck that same lady, that would not be unreasonable and not a violation of the duty of care ( unless he was drunk)

    A STANDARD of care is very different. It is the amount of care required by certain people under certain situations and does not usually apply to everybody. It is a measure of care, not just a duty. It is usually MORE than the simple reasonable care required of ordinary people. A doctor must perform to a certain standard of care when he performs medical services. The same for an attorney. All the similarly situated professionals must adhere to the same commonly accepted standard of care used by their fellows. If they use methods that are not the standard used by their brother or sister professionals, they may have violated the standard of care for their profession and be subjected to penalties. Thus, the phrase "standard of care" is used in malpractice cases mostly.
    Ray Hall
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    03/02/2010 4:24 PM

    I think water suckers think we eat a large bowel of stupid for breakfast. , but they are all brothers of plumbers. I will pay some of this fraud if OUR agent sent them out. But if they chased the fire trucks, beware Blue & white, lime green or any other franchise.

    Leland
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    03/02/2010 4:56 PM
    It's hilarious how we can say "lime green"; "big blue"; or "big red" and everybody knows who we are talking about.

    Ray- I know how much you hate the water suckers.

    One outfit I have trouble with is a particular dry cleaning company that doesn't even do drycleaning. The have salespoeple after a fire, and what you or i would pay $2000 for if we took it to the drycleaner ourselves gets billed at $6000.00. Then the company takes it to a regular drycleaner and drops it off. I think they also negotiate a lower bulk price, so they pay even less than my $2000 example.

    None of this is so outrageous until they bamboozle an old guy who uses up his coverage limit that he needs for something else.

    Another issue in California when you overcharge a 90 year old man (like my example) is that we have an elder abuse statute that can result in treble damages.

    The law looks at elder abuse similar to hurting a child.
    moco
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    03/02/2010 9:35 PM

     

    Posted By Leland on 02 Mar 2010 11:26 AM

    What do you fellow adjusters think about contractors that advertise that they specialize in insurance but don't seem to know the basics of how it works and do economic harm to the insureds?

    My understanding of liability is that a professional has a "standard duty of care" so for example, a professional who's supposed to know something about the business he is in can't get away with saying "Not my fault, I didn't know any better" when things go wrong.

    Two examples:

    90 year old man has a fire. Emergency insurance remediation contractor tells him they will take care of everything, and the insurance will pay the bill. $8000 of drycleaning later, it is determined that the clothes are probably worth $2000 ACV. The initial remediation service should do nothing more than cleanup and/or setup any essential eqpt to reduce effects of the loss. THEY SHOULD PHOTO ANY DAMAGED ITEMS REMOVED AND DISPOSED OF PRIOR ADJUSTER INSPECTION, BUT REALLY SHOULD LEAVE ALL DEBRIS ON SITE FOR ADJUSTER TO DOCUMENT, TAKE SAMPLES FOR ITEL ETC. Any dry cleaning of contents, clothes whatever should be left for the Aduster to determine covg. on, and left be until said adjuster arrives.

    Did the contactor have a duty (as insurance repair industry professionals) to:

    a) check with the adjuster first on coverage/valuation question? No, leave contents be for the adjuster to document and determine covg.

    b) advise the insured that the cost to clean might exceed coverage? No.

    c) look at the clothes and consider the potential problem? No

    DOES THE INSURED OWE THE COST OF DRY CLEANING EVEN IF IT EXCEEDS THE VALUE OF THE STUFF CONSIDERING THAT HE TRUSTED THE WORD OF SOMEONE MARKETING THEMSELVES AS EXPERTS IN INSURANCE WORK INCLUDING EXPERTISE IN WHAT INSURANCE WILL PAY? The insured and/or Contractor, should get approval from the adjuster on what can  and cannot be done prior to inspection by adjuster. The insured should check with the adjuster or examiner regarding policy limits. If the insured enters into agreement with the Contractor before hand, then yes, any price difference should be between the insured and contractor if the actual cost exceeds the amount the carrier will pay. However, all final payment decisons will be at the discretion of the carrier.

     

    Scenario #2

     

    Insured calls emergency insurance repair contractor. Emergency repair contractor tells the insured that do insurance work, they are experts, they tell the insured to make a claim, and then THE CONTRACTOR COMES TO THE HOME AND CLEANS ALL THE DAMAGE BEFORE THE ADJUSTER SHOWS UP THE NEXT DAY.  Bear in mind that this was not an emergency clean up. All the "damage" was repaired before the adjuster showed up. Now if the insurance company denies the claim, the contractor might sue the insured for not paying the bill. All damages should be documented prior to any repairs by the contractor and/or insured (proof of loss). It would be preferred for debris to be left onsite for the adjuster to observe, note quality if possible and collect samples for ITEL if needed. The desk adjuster or examiner should advise the insured what initially can or cannot be done, and provide a contact number asap for the adjuster. The adjuster should be contacted for any questions the insured has. If the insured blindly enters into an agreement with the contractor, well then any difference not paid by the carrier is between the two of them.

    IS THE CONTRACTOR LIABLE FOR STEERING THE INSURED THE WRONG WAY ON SOMETHING THE CONTRACTOR SUPPOSEDLY IS AN

     "EXPERT" IN??? Probably not, it should be that the insured has enough sense to MAKE CERTAIN all of his/her damages or covered, and that the carrier will pay the amount the contractor is asking. If the insured signs a contract without making certain  then it would be a civil issue between him/her and contractor IMO.

     

    My way of looking at it is like this: if you promote yourself in a certain line of business you better know what the heck you are doing in the line of work or accept the consequences. It's not right for the customers to suffer when the contractor doesn't follow basic principles of the industry he suppesedly specializes in. The BBB and State Contractor licensing authority where said contractor resides and/or works should be advised of contractors lack of knowledge of his proclaimed expertise.

     

    What do my fellow adjusters think?



     

    jmckay
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    03/20/2010 6:10 PM
    As an insurance repair contractor I can state emphatically that it is much easier to work 'with' the insurance company than 'against'. Do we always agree? No, but we try to come up with the most fair solution to put the insured back into a pre-loss condition. I personally think the likes of the lime green and others have a racket. The HO on the last fire I worked could not believe the billing from lime green to demo, sponge, and clean. I completely rebuilt a kitchen from studs out, floors in the entire house, fixtures, paint, handler and duct, exterior paint, and more in a 1400 SF house and lime greens bill for 'cleaning' was 1/2 of my entire construction bill. The HO couldn't believe they got paid that amount in 3 days on site and whatever time they spent cleaning at the w/h. We were there for 60 days. Funny thing is, they got paid to clean the unit against mine and the HVAC contractor's recommnedations only to come back after cleaning it and being paid for such to let the adj know it 'can't be cleaned'. This happened with about 1/2 the furniture as well. I know that they do 'save' carriers money, but they have no liability. The get paid to 'try' and don't actually have to back up their work if it doesn't come clean. They just add it to the replacement items.
    Olegred
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    03/20/2010 6:40 PM

    in both cases sole responsibility is on the insured, period. Don't be stupid is my motto.

    Leland
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    03/20/2010 10:13 PM
    My point is that the contractors DO have liability.

    Imagine if your loved one went to a cardiologist and later died. The Doctor then stated "I'm sorry your loved one died. I just didn't know how to read that complicated EKG thingy. I'm sorry, but this doctor stuff is very complicated. Oh well".

    How is that any different than a dryout contractor with advertising that says "We are Insurance Specialists" and when they bill $1000 for cleaning a $100.00 item, they say "I'm sorry it cost so much. I just didn't know about that complicated insurance policy wording. Oh well."

    It's my opinion that the insured has a very good justification for not paying the contractors bill.
    Olegred
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    03/20/2010 11:44 PM
    This conversation is worthless unless it can be taken action upon. To take action and sue you have to prove negligence. Classic definition is duty owed>duty breached>damages caused by that breach>financial detriment. This whole idea stops at the first step. There's no duty for the contractor statutory or otherwise. On the other hand insured has the contract with the insurance company where it says that the insured has the duty to let the ins company examine damages before starting the repairs. this is it.
    sbeau4014
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    03/21/2010 9:47 AM
    Olegred, I disagree that there is no duty owed in that I can almost guarantee that there is a contract between the insured and that contractor, and it depends on the language of that contract that the insured signed. The fact that the contractor wrote up the contract to begin with can give the insured an advantage if quetions arise. In the absence of said contract, insured wouldn't have to pay the contractor a penny for the work done. You can get into express and implied duties owed in this, and I think an insured can make a decent case that the contractor as a "professional" owed a duty to fairly charge an insured for work done and know if the cleaning of an item exceeds the value of the item (especially like the example that cleaning cost of $1,000 vs value of $100). I find that your comment "There's no duty for the contractor statutory or otherwise" a little disturbing, and would recommend the next time you do CE education (if you do it online) to take some courses on liability (GL/products, etc) issues. There is a huge world of claims out there besides the sticks and bricks of cat adjusting and it makes for a well rounded adjuster to learn the other elements of the claims field.
    Olegred
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    03/21/2010 1:06 PM
    any duty owed to the insured by the contractor will only be about quality of the work, timeline and etc. In every contact that I have seen it was explicitly stated that the homeowner is responsible for paying for work. In real life scenario, it is close to impossible to hold contractor liable... well, may be you can prove otherwise by pointing to some court cases where homeowner won... and please, let's discuss subject, not me....
    Ray Hall
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    03/21/2010 4:21 PM

    Olergred is often wrong, but seldem in doubt. When an agent sends out a contractor to extract water it,s very hard to say when it turn bad that the insured selected the contractor. Many of the water suckers will tell the housewife the claim is now in thier hands. This means leave all  concerns to "us" we were sent by your insurance company and we are experts in water and smoke restoration.

    I have seen this snake oil pitch for the last 40 years. The whole pitch is rush rush 24 hours if very critical to save the damaged floors, walls. Kinda like sewing a finger back on with microsurgery or putting a front tooth back in. I HAVE never seen ONE loss when this was a fact. I have seen probably a thousand losses were sums up into the thousands were spent to try, but never worked. I would like some one to post if  if the decision was not made on the spot the same day of the event the cost of the final loss was increased by thousands. It,s like a tree on the house claim.  I don,t think I have even seen one gather new energy and crush the house.

    Ray Hall
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    03/21/2010 4:34 PM
    Posted By Ray Hall on 21 Mar 2010 04:21 PM

    Olergred is often wrong, but seldem in doubt. When an agent sends out a contractor to extract water it,s very hard to say when it turn bad that the insured selected the contractor. Many of the water suckers will tell the housewife the claim is now in thier hands. This means leave all  concerns to "us" we were sent by your insurance company and we are experts in water and smoke restoration.

    I have seen this snake oil pitch for the last 40 years. The whole pitch is rush rush 24 hours is very critical to save the damaged floors, walls. Kinda like sewing a finger back on with microsurgery. Thousands were spent to try, but never worked. I would like some one to post if  if the decision was not made on the spourgery or putting a front tooth back in. I HAVE never seen ONE loss when this was a fact. I have seen probably a thousand losses were st the same day of the event the cost of the final loss was increased by thousands. It,s like a tree on the house claim.  I don,t think I have even seen one gather new energy and crush the house.

    Sending out a water sucker is causing real problems in this area of layoffs. I have had some 2% deductible losses when the water suckers ran carpet removel and dry out up the flag pole and it did not exceed the 2% but was real close and we had a house without any carpet and base and a male insured screaming "all they did was take out the carpet and leave 4 fans in the house overnight". Now work this little claim out. I have found people who have had their 2nd claim want to deal with the adjuster only.

     

    Leland
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    03/22/2010 10:05 AM
    How's this for a different but similar example:

    The insured has a beautiful tile shower. The tile matches the bathroom flooring. There is a leak in the manifold, inside the shower wall. The plumber says he needs to bust open the tile to get access. The insured says "Well, if that's absolutely necessary, go ahead. You are the expert". The plumber says, "Yes, I have to get inside the wall".

    After the tile is damaged the insured's brother in law shows up. He immediately asks, "Why didn't you guys just bust the drywall in the closet, on the back side of the wall? Why did you destroy the tile when you could have easily gone from the other side?"

    The plumber says "Oh, that is a good question. I didn't think of that. Even though my business card says "repair specialist" and "insurance claims" I am actually new at "old construction" plumbing. Most of my experience is in new construction, installing the plumbing before the walls go up. I just didn't think about the easy way to fix it. Sorry. Here's my bill for $500.00. Sorry about your tile."

    Leland
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    03/22/2010 10:21 AM
    Since we're on the subject some of this liability applies to adjusters also.

    Let's say that you are an adjuster. You have a state license, and you put the words "large loss adjuster" on your materials. You get a claim for a burned building. The dec sheet lists 4 buildings. Inside the fence at the insured's location there are 5 buildings. One of them is burned. You recommend payment of $50,000 for the burned building. You bill $800.00 for your quick service. Later you (and the carrier) find out that the burned building actually belonged to the guy next door. You could have discovered this with one phone call to the insurance company or one question to the tenant of the burned building.

    Are you liable?

    Does the insurance company owe you a fee of $800.00 for your adjusting services? Would it be wrong for the insurance company to refuse to pay your fee? If the shoe was on the other foot and you were the file examiner, would you approve the fee?
    Olegred
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    03/22/2010 10:29 AM
    does not change anything in my book. Any time somebody offers you a service it is your responsibility to find out how much and if it is going to be covered by the insurance company.... don't be stupid is my motto...
    ChuckDeaton
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    03/22/2010 10:45 AM
    Actually, in Arkansas, the contractor has the option of a mechanic's lien. Even for unsatisfactory work most contractor's invoices are eventually paid. There are contractors that are experts at doing little work and then filing a lien.
    "Prattling on and on about being an ass with experience doesn't make someone experienced. It just makes you an ass." Rod Buvens, Pilot grunt
    Ray Hall
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    03/22/2010 4:03 PM
    Posted By Ray Hall on 21 Mar 2010 04:34 PM
    Posted By Ray Hall on 21 Mar 2010 04:21 PM

    Olergred is often wrong, but seldem in doubt. When an agent sends out a contractor to extract water it,s very hard to say when it turn bad that the insured selected the contractor. Many of the water suckers will tell the housewife the claim is now in their hands. This means leave all  concerns to "us" we were sent by your insurance company and we are experts in water and smoke restoration.

    I have seen this snake oil pitch for the last 40 years. The whole pitch is rush rush 24 hours is very critical to save the damaged floors, walls. Kinda like sewing a finger back on with microsurgery. Thousands were spent to try, but never worked. I would like some one to post if  if the decision was not made on the spourgery or putting a front tooth back in. I HAVE never seen ONE loss when this was a fact. I have seen probably a thousand losses were st the same day of the event the cost of the final loss was increased by thousands. It,s like a tree on the house claim.  I don,t think I have even seen one gather new energy and crush the house.

    Sending out a water sucker is causing real problems in this area of layoffs. I have had some 2% deductible losses when the water suckers ran carpet removel and dry out up the flag pole and it did not exceed the 2% but was real close and we had a house without any carpet and base and a male insured screaming "all they did was take out the carpet and leave 4 fans in the house overnight". Now work this little claim out. I have found people who have had their 2nd claim want to deal with the adjuster only.

     

     

    RJortberg
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    03/22/2010 8:08 PM

    Leland-

    About the plumber / shower... regardless of the actual facts, I think many would have responded that the water damage had already caused the tile to separate from the durock, and there was no need to damage the drywall on the other side of the wall since the tile was already loose and bubbling, the wall already had to be replaced, etc. Point is most will say that what they did was required by x,y or z facts.

    But assuming that the plumber did admit that he had not given this other approach much thought per your scenario, I think duty to pay is based on a question or standard of reasonableness. Most plumbers would know better than this plumber, and therefore the plumber in this case was negligent / less than professional in his services when compared to the actions of his peers. Therefore the property owner is the damaged party. and the plumber is responsible for curing the damages due to his neglect. This is probably a case for small claims court even if the plumber files a mechanic's lien. I'd guess the net damages would be based on the cost to cure the negligence less the cost of the basic service performed (as if fixing the shower through the drywall).

    About adjusting the wrong structure... I'd like to hear how the carriers would view this. The interesting fact here is that the insureds fence encircles the neighbor's building, and that poses a question of adverse possession. Assuming the fence is a non-factor and that both the neighbor and insured agreed that the improvements are in fact owned by the neighbor, then a few questions are raised - why did the insured file a claim on a property he knowingly does not own. Next, assuming the carrier pays, then is the adjuster liable for the $50K? He/she certainly does not get to keep the $800 fee since the property adjusted was not on the dec sheet, but is he/she liable for the $50K? I would say the carrier would probably pursue the insured first for false reporting / insurance fraud, and the adjuster would get off w/ a slap on the wrist. But he could be liable for a shortfall since he/she did not verify the property address / legal description.   I'm curious to see how this would actually play out from a carrier's standpoint.   

    And Olegred - you may want to watch for your ongoing use of absolutes.  When I hear the words "only", "any", "every", etc., I cringe because it unnecessarily opens up potential for conflict... maybe you want that, but I would shudder if I heard that on a regular basis, because some of us have sufficient life experience to know that rarely is anything 100% one thing or another, and tempering judgment and facts helps reduce potential conflict.  Anyway, that's my absolutely valuable $.02. 


     

    Ray Hall
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    03/23/2010 1:08 AM

    I think the insurors have found over the years a recommended contractor for any repair on a auto or building by the carrier has more bad ponts than good. Just pay a fair amount and move to the next loss. The higher  deductible amounts have changed many Homeowners into doing more clean up task themselves.

    If you look at the NFIP program you will see it,s designed for "do it yourselfers".T he exactimate  data base has enough cleaning codes for a person to take his family on vacation for a week on a good smoke claim.

    Olegred
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    03/23/2010 2:52 AM
    advise taken :) I will never use never...
    claims_ray
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    03/23/2010 3:12 AM
    Your showing how well your Masters Degree is working with your spelling on that one Olegred.
    Advise or Advice?
    Olegred
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    03/23/2010 1:07 PM
    hey, man when you speak 5 languages and E is not your mother tongue, you make mistakes ... advice is the noun... thanks for correction ... you can eat another fat burger with fries to celebrate...
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