Commercial Construction & Renovation

MAY-JUN 2016

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LEGAL EASE LEGAL EASE Even if you think you're working amicably with all potentially responsible parties toward a resolution, you always must consider the "what if" of ending up in litigation. Deborah Cazan is a partner in Alston & Bird's Constructions & Government Contracts Practice Group, where she focuses on representing clients in litigation, arbitration and mediation of construction, development and real estate related disputes. Breana Ware is an associate in the group. If you are running up against that deadline, parties can enter into agreements that postpone or "toll" that deadline. If that deadline has already passed, and you are the damaged party, you may be left holding the bag. No. 2 – Provide notice to potentially responsible parties To optimize recovery against responsible parties, it's important to provide timely written notice of the potential defects in accordance with the terms of any operative agreements. For example, many construction contracts impose a duty upon a property owner to report, in writing, any defect they discover. Many contracts also include a requirement that notice be made "immediate- ly" or "within a reasonable amount of time." A party's failure to notify an owner, architect or contractor about a discovered defect within the required time can be fatal to their claim, or at the very least, provide the other side with effective defenses to the claims against them. The content of a party's written notice of a defect also is important. Notices should be carefully worded, since the information conveyed in them can impact your claim down the road. For exam- ple, if you issue a notice of a defect to the contractor and architect for the same defective condition, both parties will attempt to use and rely upon the notice to the other party as evidence that they're not responsible for the defective condition. Also, if you provide a notice that sets forth the date a defect was frst discovered, the other side could use and rely upon that notice to argue that you failed to make your claim within the required time limits. Understanding the requirements and potential pitfalls of notice requirements are the frst step to successfully making or defending against a construction defect claim. No. 3 – Testing and investigation of the defect Another step in the process of addressing a defective building condition is to determine the cause of the defect and the best course for repairs. Very often, this is easier said than done. Contractors and designers almost will always point fngers at one another. So, owners often will engage consultants to help them deter- mine who the responsible party is. This determination often is made through forensic testing. Because this testing can be costly and time consuming, parties should plan this process with an eye toward litigation to protect their interests in case the responsible parties are unable or unwilling to repair the defect. For example, consider whether the testing frm you engage has litigation experience. The best frms will have a good understanding the substantive issues, the litigation process and the potentially confdential nature of their communications. It also is imperative at this stage that the damaged party offer and allow all potentially responsible parties the opportunity to view the damages and test the existing conditions before they are disturbed. If the damaged party fails to do this, it likely will face a "spoliation" claim by the defending party. Spoliation basically is a violation of a duty to preserve relevant evidence, and a failure to preserve relevant evidence can result in the court issuing sanctions against you. For example, a court could decide that, since you destroyed relevant evidence, you are not permitted to introduce your own expert's testimony. Spoliation claims are a costly distraction from the relevant issues in a case, and most spoliation claims can be easily avoided. No. 4 – Common claims The most common claims in construction defect cases are for breach of contract, breach of express and implied warranties, and negligence, which can mean either negligent construction or negligent design. Claimants make a number of strategic considerations when deciding when to make a claim, and against whom. These decisions are guided not only by actual responsibility for any damage or defect, but also by which parties are solvent, and whether insurance is available. Claimants also consider whether they have a greater likelihood for success if they align with one party over another. For example, owners may be hesitant to fle claims against architects if they need the architect to assist them in preparing their case against the contractor, who they may consider more responsible for the defects and resulting damages. While no two defect claims are identical, every defect claim requires careful planning. Even if you think you're working amicably with all potentially responsible parties toward a resolution, you al- ways must consider the "what if" of ending up in litigation. Employing some of the strategies discussed here can help maximize recovery and minimize liability. CCR 132 COMMERCIAL CONSTRUCTION & RENOVATION — MAY : JUNE 2016

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