Tag Archives: damages

A tale of 2 green roofs

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green roof

Chicago City Hall’s Green Roof

Two commercial “green” roofs have been in the news this week [Note: this article was originally published on February 17, 2011].   One involves a collapse; one involves energy savings.

Green Roof Collapse

The green roof at the Aquascape, Inc. warehouse in Illinois collapsed over the weekend, likely due to melting snow and ice.   A 50 foot wide section of th 256,000-square-foot roof (allegedly the largest sloping green roof in North America) collapsed on Sunday, although no injuries were reported.  A team of structural engineers from the building’s design firm is investigating the cause.  As noted in a company press release, St. Charles, IL, where Aquascape Inc’s head office is located, had been recently hit with a major snow storm where 20.6 inches of snow had fallen in less than 24 hours, followed by above freezing temperatures causing a quick thaw.  An ice damn at the base is suspected to have backed the water up over the parking structure causing its collapse.

Solar Roof goes “live”

While Aquascape’s engineers are investigating their roof collapse, there is some good green roof news closer to home.  Raleigh-based marble company David Allen Company has recently “flipped the switch” on a photovoltaic solar energy facility that  it claims is one of the largest rooftop photovoltaic systems in the Triangle, with  700 solar modules covering 23,000 square feet of the rooftop of the company’s warehouse.  The company hopes to offset at least 35% of its current electrical costs, and sell energy to Progress Energy as well, according to Triangle Business Journal.

Legal Implications related to Roof Design?

Both of these roofs bring up legal issues.  Was the Aquascape green roof designed appropriately to accommodate loads in a winter climate?

With so many roof collapses this winter (including, of course,  the Minneapolis metrodome) , is there, or should there be, a duty on the building’s owner/maintenance crew to proactively remove snow accumulations?

For new solar roofs, such as at David Allen Company, who assumes the risk if the expected cost savings are not realized?

Based on the sheer number of roof collapses this winter, and the number of green projects growing steadily, there is sure to be some litigation addressing at least some of these issues in the near future.  Stay tuned.

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Photo Courtsey Wikipedia/Creative Commons license 

Can a designer limit his liability to his fees for service?

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Architects and engineers (and the owners/contractors with whom they contract) often wonder whether limiting liability language is enforceable.  The answer, as in much of construction law, is very much dependent on what state’s court will be interpreting the contract.  Some states allow such limiting language, and others do not.

sign: proceed at own risk

 

In North Carolina, so long as the limitation of liability is not also an agreement to be liable for the other party’s negligence (which is barred as against public policy), such a limitation of liability is enforceable.  A case discussing this issue from the engineering perspective is Blaylock Grading Co., LLP v. Smith et al, 189 N.C. App. 508, 658 S.E.2d 680 (2008).  In that case, a surveying engineer limited his liability, via contract, to $50,000.  The Court, citing an earlier state Supreme Court decision, ruled that the limitation was valid and enforceable:

People should be entitled to contract on their own terms without the indulgence of paternalism by courts in the alleviation of one side or another from the effects of a bad bargain.  Also, they should be permitted to enter into contracts that actually may be unreasonable or which may lead to hardship on one side.  It is only where it turns out that one side or the other is to be penalized by the enforcement of the terms of a contract so unconscionable that no decent, fairminded person would view the ensuing result without being possessed of a profound sense of injustice, that equity will deny the use of its good offices in the enforcement of such unconscionability.  Id. at 511, 658 S.E.2d at 682.

Is this rule absolute?  Clearly not, as the above quote indicates.  Unconscionable limitations will not be enforced.  Moreover, a third party, not subject to the contractual terms, is free to sue in negligence.  But as between the contracting parties, such a limitation on damages can be a powerful tool to minimize exposure to risk.

Questions about limitations on liability?  Comment below or drop me a line.  And be sure to sign up for email delivery of blog posts directly to your inbox.

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Photo:  “Proceed at own risk” by Dave Nicoll via Flickr/Creative Commons license 

Root canals & Lawsuits: two things to avoid (Law Note)

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man flossing

No one (with the exception of sadistic dentists)  likes root canals, and no one (except lawyers) likes lawsuits.  In the same way you can prevent (or limit) the need for root canals through proper flossing habits, you can limit the number of lawsuits you need to be involved in if you include everyone you should the first time around.  For those involved in filing construction liens, this means that when you perfect a lien by filing the lawsuit, be sure you include everyone you need to include.  A recent North Carolina Court of Appeals case demonstrates this principle in full living color.

In Lawyers Title Insurance Corp. v. Zogreo, LLC, __ N.C. App. __ (November 16, 2010), two contractors filed and perfected valid liens on a piece of property.  They did not include, in the lawsuits to perfect the liens, the banks which had given funds to the property owner after they first began work on the property.  The Court held that it was entirely proper not to include the banks (who held deeds of trust on the property to secure their loans); however, by the contractors’ failure to include them, they were forced to later litigate priority issues with the banks.  This is because “if a subsequent encumbrancer is not joined [in the underlying lien perfection lawsuit], he is not bound by the judgment in the action between the contractor and the owner.”

In other words, even though they filed proper liens, filed the lawsuits timely, and even won final judgment in those lawsuits, because they did not include the banks, the banks were free to start a new action, which they did in this case.  The banks also obtained an injunction to stop any judicial sale of the property until priorities could be established.

Moral of the story? It is better to include all subsequent encumbrancers (i.e., the banks) when perfecting a lien.  It’s not required, but it is better practice.  (And flossing your teeth isn’t required, either).   After all, who wants a root canal, or, in this case, to re-litigate your right to be paid money in yet another expensive lawsuit?  When it comes to root canals and lawsuits, fewer is better.

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Photo: Day One Hundred Fifty-One by Eric Mesa via Flickr/Creative Commons License

Tues Tip: Check out the new AIA Bond forms

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Have you seen the 2010 AIA 312 Payment Bond Form?  If you regularly deal with AIA bonds, be Payment Officer looking at demolitionsure to check out this blog post, entitled “What changes you need to know about in the new AIA A 312 Payment Bond” from the New York Construction Law Update Blog.

  Of particular note:

There is a new section (7.3) that expressly states the surety’s failure to respond within sixty (60) days does not constitute a waiver of any potential defenses.  However, the new AIA A312 also states that if the surety fails to respond and if the claimant has to bring an action to recover under the bond, and is successful, then the surety will be responsible for attorneys’ fees incurred by the claimant. 

The new Section 16.1 provides certain minimum requirements that must be in the notice of claim to constitute a valid claim under the bond.  Previous versions of the AIA A312 did not contain such minimum requirements and a claimant in a rush could potentially submit a simple letter identifying the project and setting forth the amount of its claim to try and squeeze in before the deadline to submit a claim. 

While it is tempting and easy to skip reading standard form contract documents, that is not a good practice.  The new requirements involved in making a bond claim, for example, are something that would be easy to overlook if you have previous experience making bond claims– and it could be a very expensive lesson.  Moral of the story, as always, is to read your contracts, preferably with your attorney and insurance carrier at hand.

Do you use the AIA 312 Payment Bond form?  Thoughts about the new Form versus the old Form? Bonding questions in general?  Drop me a line or comment below.

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Photo copyright of U.S. Air Force and made available via Creative Commons license. 

Unlicensed Contractor & his partnership take a hit (Law Note)

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man banging head against wallImagine being told that you will not be paid for a house you constructed pursuant to a contract with homeowners.  And imagine that the reason for not getting paid had to do with whether or not you signed a contract “on behalf of” your partnership or whether you simply signed your individual name.  This is the exact case that Ron Medlin, partner in Ron Medlin Construction, is facing thanks to a recent North Carolina Supreme Court case, Ron Medlin Construction v. Raymond A. Harris, __ N.C. __, (December 20, 2010).

Ron Medlin entered into a contract with the Harris’ for the construction of a home not to exceed $604,800.  Of note, Medlin did not have a licensed general contractor’s license, as is required.  However, Ron Medlin Construction, a partnership, was appropriately licensed as a general contractor, and the partnership performed the work relating to the construction of the residence.

When litigation arose over cost overruns, the Harris’ claimed they did not need to honor the contract because it was with an unlicensed contractor.  Under North Carolina law, any person who performs work in excess of $30,000 needs to be appropriately licensed or he cannot recover for his work in the Courts.  (See Brady v. Fulghum, 309 N.C. 580, 586, 308 S.E.2d 327, 331 (1983)).  The partnership argued that it did not have a contract with the Harris’, yet it performed work in constructing the residence and, therefore, was entitled to recover a just amount under a theory called quantum meruit.  The Court held that the partnership ratified Ron Medlin’s individual acts, and as such the partnership was bound by the (unenforceable) contract and could not recover.

The Court held, as a matter of law, that:

a contract for the construction of a home or building executed by a partner in a licensed partnership engaged in the construction business is the contract of the partnership unless the remaining partners can show that the partner was not authorized to act on behalf of the partnership and, if not so authorized, the partnership did not ratify the contract.

Moral of the story?  It is important that you follow the rules in signing and performing under construction contracts, as well as in maintaining your proper corporate formalities.  It might even be worth having your attorney review your construction contract before you sign it.    Unless, that is, you don’t mind that chance that you may end up performing some of your work for free.

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Photo:  “361/365 days -it feels good to stop” by badjonni via Flickr/Creative Commons license.