Tag Archives: terminology

Setting the Right Expectations for your Owner Client– Craft your Scope of Work well (law note)

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belt & suspendersRegular readers of this blog know that you absolutely should have a written contract, and not rely on “gentlemen’s agreements.”  But what is the most important part of your agreement to provide professional services?  The dispute resolution provision? Payment terms? Change Order requirements?  All of those are important.  I’d argue, however, that the Scope of Work provision is, if not the most important term, one of the key terms.  Face it– once you  have a good set of standard contract terms, they rarely need to be drastically rewritten for each individual project.  But each and every time you start a new project, whether for a long-time client or a new owner, you are defining the Scope of Work.

This is where paying attention up front can save you headaches down the road.  I often refer to the belt & suspenders approach— you want to both be very clear in describing the scope of work, and equally clear in describing exclusions to your services.  That way, everyone knows what is expected up front, and you can hopefully avoid litigation pitfalls down the road.

Bill Beardslee of Davis Martin Powell has coined a nice mnemonic for Scope that is very apt:

S C O P E

Sufficiently

Control

Other

Peoples

Expectations

 

Your turn. Do you carefully craft your Scope of Work for each new Project?  You should.  If you need help in crafting your Scopes of Work, drop me a line. 

 

 

Betterment on the Construction Project (law note)

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betterToday’s post is thanks to a discussion with an engineer following a talk I gave for the ASCE of North Carolina.  He asked about owners trying to recover for obvious mistakes, for which they’d have to pay anyhow.

That brought me to the topic of betterment.  What is betterment, and why is it important in the construction world?

Betterment is a legal concept that says, even if your plan is missing something, if the owner would have had to pay for that missing item anyhow, they cannot get money from you.

A real life example:  A designer’s set of plans showed sanitary sewer extending out 8 feet from the building footprint.  It did not show the sewer connecting to the city sewer line.  The owner later complained because it had to pay the contractor for a change order for the connection.  However, since the owner would have had to pay for the connection regardless, the owner could not recover from the designer for the missing sewer connection.  [Had the owner paid a premium due to the fact that the missing connection was discovered during construction, that premium over and above normal costs could have been recoverable.]

Betterment, then, is a defense to a claim of defective plans, because even if the plans are defective, the defect did not cost the owner any additional money.

It can be a tricky concept to explain–even some plaintiff’s lawyers that I’ve dealt with fail to understand the concept.  However, it is an important part of many defenses.

Questions?  Comments?  Ever experienced a “betterment” situation yourself?  Share in the comments section, below.

 

Is your design professional construction contract too friendly? (law note)

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not friendlyMy husband often travels the back roads between Chapel Hill and Fuquay Varina to visit friends.  En route (a circuitous route that goes past Sharon Harris Nuclear Power Plant, among other places), he passes by the “Friendly Grocery”.  For those who haven’t had the pleasure, here is a photo of the side of the building in all its glory.

In case you cannot read the list of forbidden activities, I’m re-printed them here (complete with spelling error):

not friendly sign

I’m not sure which is the “friendly” part of that sign.  In fact, the sign seems to be the antithesis of friendly.

What does this have to do with your construction contracts?  Sometimes, in an effort to please the client and/or secure the project, architects and engineers have the habit of being too friendly in their contract language.  That is, you make promises or proposals that may promise too much of a good thing for the client.  This can cause big problems.  Bigger than being towed away from a rural grocery store in the middle of nowhere.  You could be putting your insurance coverage at risk.

Have you ever promised to use “best efforts” in your design or plans?  Promised to design to a specific LEED standard?  Guaranteed 100% satisfaction?  You might be putting your errors & omission coverage at issue.  By warrantying or guaranteeing something, you are assuming a level of liability well beyond the standard of care required by law.  By law, you only need to conform to the standard of care, and your insurance will only provide coverage up to that standard of care.  In other words, if you make guarantees or promise “best efforts,” you are contracting to something that will *not* be insured.  If something goes wrong, you will be without the benefit of your professional liability coverage.

Instead, make sure that your contracts, and proposals, are not too friendly to the client.  Sure, agree to work in accordance with the standard of care of professional architects/engineers.   But don’t make guarantees, or promise “best” efforts.  In fact, you might want to educate your client on why you cannot make such guarantees, and why anyone who does (i.e., your competition) is putting their insurance coverage at risk.  Owners want and need you to stay within the bounds of your coverage.  You need to, also.  Maybe the owner of the Friendly Grocery was on to something there.

Your turn.  Have you ever used language that jeopardized your insurance protection?  Uncertain if you have?  Drop me a line and we can talk.

Photo (c) Melissa Brumback  Creative Commons License

Ask not for whom the bell tolls: it tolls for thee! The construction trial (Law & Order: Hard Hat files Part 9)

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This is the final section of a 9 part series discussing the entire trajectory of a construction lawsuit involving claims of design errors or omissions.  If you missed any of the earlier posts, click on the Law & Order tag to read them all.
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The time has come.  You’ve been sued.  Suffered through discovery.  Talked about the project under oath til your throat turned raw.  And responded to the umpteen million request from your lawyer.  You’ve engaged experts, second-guessed your work, and looked at copies of legal documents that made your head spin.  Now, at long last, you will have your day in court.  Or will you?

church bellsWhen will your case be heard?

Your trial date is a moving target, at least in North Carolina.  Depending upon the county or jurisdiction the lawsuit is filed in, you are probably looking at your case taking from 1 year (for a small homeowner lawsuit) to 2 or 3 years for very complex cases.  This is one reason why court ordered mediation is required in all Superior Court cases in North Carolina.  It is also why most construction lawsuits do settle– at some point– prior to trial.  Some cases settle, literally, on the courthouse steps (or in the courthouse conference room).  Others settle during trial itself.  But if you find yourself settling at the last minute, you will have spent the time and money for trial preparation for naught.  A somewhat bitter pill to swallow.

What is involved in trial preparation?

Expect to review many documents relating to the project all over again with your lawyer(s), even if you’ve previously discussed them.  Expect to spend time with your expert(s) discussing your plans and design intent.  Expect to have some mock testimony sessions with your lawyers and others on their team.  Mostly, expect a lot of aggravation.  Trial preparation takes time.  A lot of time.  While much will be done by your construction lawyer, you will need to be actively involved.

How does the trial work?

The trial itself is probably the closest to a Law & Order scene that you will experience.  But don’t expect Jack McCoy (or Perry Mason) moments.  Very little happens in a trial that is completely unexpected.

If the trial is a jury trial (and most are), your lawyers will question the potential jury pool to try to weed out folks that have predisposed themselves to one side of the case.  The other side will do the same.  The result, ideally, is a group of disinterested, neutral folks that will decide your case.

After jury selection, opening statements are given.  These are speeches given by the lawyers to forecast the evidence that will be given to the jury.

The, the plaintiff (that is, the party suing you) will be told to call its first witness.  The plaintiff will proceed to call witnesses to the stand to testify.  The order that they are called in is up to their lawyers, and different lawyers have different strategies for deciding which witnesses they call first, middle, and last.

With each witness, the plaintiff’s counsel will ask open ended, non-leading direct examination questions.  After that, your counsel will ask leading questions on cross examination aimed at poking holes in the other side’s case, and establishing your own case theory.

After the plaintiff has presented its case and rests (and following some procedural motions at that point), the roles are reversed, and your lawyer will conduct direct examination, while the plaintiff will cross examine witnesses.

There are often legal sidebars during a trial, where the lawyers approach the judge and whisper about legal matters.  If extended debate on something is needed, the jury will be excused.  While you will not be invited to the bar to talk during sidebars, your lawyer can tell you what was discussed and how it effects your case.

At the conclusion of all evidence, the jury is given a set of legal jury instructions, and the lawyers present their closing arguments as to why their position should prevail.  Then, you wait.  And wait.  And wait, until the jury reaches a verdict.  The jury foreperson will read the verdict into the record.

What happens after trial?gavel

Depending on the trial results, one side may ask the judge to set aside the verdict (called a j.n.o.v.), which is rarely granted.  Whoever has lost may decide to notice an appeal of the verdict.  Appeals must be based on legal errors that the judge made during trial.  An appeal can take years, and the end result can be the same (that is, the verdict is upheld), overturned (set aside), or remanded for a new trial.  Yes, that’s right: you can be forced to re-try your case.

Is all lost, then, if you lose the jury verdict?  No; definitely not.  No one likes to spend time and money on appellate briefs.  So, even though the case is over, the parties may *still* negotiate a settlement.  Be aware, however, that you will have a judgment “on the books” against you if the jury found that way, and that can affect your credit ratings.  However, the judgment will also be rendered “satisfied” if you settle (or pay it off), which generally helps re-establish your good credit rating.

That’s it!  You now know just enough about the construction trial process to be dangerous!   I’ve obviously had to condense many details in this series, so if you have any questions or want me to expand on any area, drop me a note or comment in the comment section of the blog.

Pull on your jeans: time for some Legal Wranglings (Law & Order: Hard Hat files Part 8)

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Previously on Law & Order: Hard Hat files [chunk-chunk], we discussed how to know when a lawsuit is coming, how you will be sued, why you should not be your own attorney, and why documentation is key.  We’ve also discussed being deposed, hiring experts, and mediation.  We’re coming to the top of the 9th now, discussing how to have your case decided by a judge.  [Next up: the jury trial]. 

Your lawyer has told you that your case might be heard on legal issues alone, before a judge. Or he’s mentioned that he is filing a motion for “Summary Judgment”. What, exactly, does that mean? To understand summary judgment, it is first necessary to understand how a typical case is heard.

yada yada legal documentIn a case that goes to a jury trial, it is in fact the jury, not the judge, who decides the case. The judge handles order in the courtroom, the admissibility of evidence or witnesses, and other legal issues. But at the end of the day, the factual issues (that is, was your plan defective? If so, what if any damages did that defect cause?) are decided entirely by the jury. Most of the time.

So what’s this thing called “summary judgment”?

Sometimes, there are no real factual issues in dispute. In that case, the judge can decide the matter on the legal issues alone. For example, if you are sued after the expiration of the statute of repose, and there is no debate about when you last performed professional services on the project, then your lawyer can bring a motion to have the judge decide the case in your favor purely on that legal issue.

Most construction cases, however, are not so clear cut factually. However, you can still have a judge decide a case on summary judgment if the disputed facts, taken in the light most favorable to the other side, still show that you should win.

What happens when you file for a summary judgment hearing?

Either side can file a paper called “Motion for Summary Judgment”.  This is usually done during or after discovery, as factual issues are determined and the list of truly disputed items is narrowed.  Both sides have  an obligation to present evidence as to why/why not the judge should grant the motion.  Evidence can include affidavits (including your own and that of your expert), discovery responses, deposition testimony, and documents produced in discovery.

How does the judge decide?

The judge is required to take the factual evidence in dispute, and assume that the non-moving party’s version is correct.  For example, let’s say you are moving for summary judgment based on the statute of repose.  You claim that you last performed work more than 6 years before the lawsuit was filed.  If the other side has some evidence that work was done later than you claim, then that is a dispute of a material fact.  The judge will have to assume that the other side’s date is correct, and deny the motion for summary judgment on those grounds.

If, however, the disputed facts are not material (that is, not crucial to the deciding law), then the judge does not need to even consider them.  And no one can rely on bare assertions of fact (of the “nuh-uh” variety): they have to produce some evidence of their position.

How will we know if we won or lost?

This varies from judge to judge.  In general, unless the case is clear cut, the judge will want to take the case “under advisement”.  What that means is that the judge is going to review the presented materials, make a decision, and then call the lawyers to tell them how he/she has ruled on the motion.

What does it mean if we lose summary judgment?

If you are asking for summary judgment and lose (and in close calls, expect to lose as judges prefer that cases go to a jury), then the denial of your motion for summary judgment means that the show goes on.  Discovery can continue, and the case will be prepared for trial.

Of course, just because mediation has impassed and summary judgment has failed does not mean there *will* be a trial.  Many cases continue to be negotiated and settled “on the courthouse steps”.  Literally sometimes.

If your case does not, next week’s entry on jury trials should be required reading.

Have a question about summary judgment or other court motions?  Drop me a line or comment, below.