cea_william_20170118Becker & Poliakoff attorneys, led by shareholder William Cea, have secured a significant court ruling in favor of their client, Premier Parks, ending this case and providing for open competition to bid on a future water park planned for 65 acres in Fort Lauderdale (Premier Parks v. City of Fort Lauderdale).

Premier Parks, the parent company of Rapids Water Park in Riviera Beach, filed suit in October 2015 after the City tried to allow Schlitterbahn, a waterpark operator, to build on a 65-acre property owned by the City, including the existing Ft. Lauderdale and Lockhart Stadium facilities. After buying out the Federal Government’s interest in the land in 2015, the City agreed to enter into a 30-year lease with Schlitterbahn. Premier Parks argued that the City should have been required to obtain competitive bids for the project and the court agreed.

Gary Rosen, managing shareholder of Becker & Poliakoff, said: “This was a challenging case and we believed in our client’s right to compete for an opportunity to develop the property. We are extremely pleased for our client and are very gratified that the court has agreed with our view that the city should have submitted this to public bid.”

Media inquiries should be directed to Andi Phillips, Media Director, andi@roarmedia.com, (305) 403-2080, Ext. 128.

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The green building industry is arguably more popular than ever. The number of certified green buildings grows every day across all sectors of the building industry. Unfortunately, the contracts for sustainable projects are sometimes behind the times. Standard construction contracts are often not tailored to address the numerous issues and nuances that may come up on sustainable projects. This potentially puts all contracting parties at greater risk of uncertainty if disputes arise on the job site. Preparation on the front end of a green building is usually the best way to alleviate problems later on, and it starts with the contract. This is true whether the project is one for new construction or for renovations or retro-fitting.

First, the contract should be as clear and specific as possible about what the green goal is. Simply using terms like “green building,” “sustainable building” or “high-performing building” are not enough, because it is unclear what the precise goal is. For example, the goal may be to reduce electricity costs, and the owner may have a specific energy saving cost or usage goal in mind. That should be identified in the contract. In addition, an owner may require a third-party green rating certification. That could mean LEED certification, but LEED alone has multiple levels. Or, it could mean Green Globes, the WELL Building Standard, or a handful of other third-party rating agencies. If so, then specificity is needed. If the goal is not achieved, there will be no confusion as to what the goal was. Related to this issue is which party will bear the costs for certification fees, inspections and tests that may be necessary to the green certification. Again, this is best addressed in the contract.

Second, the contract should reflect who is responsible for achieving the project’s green goals. That might be a design professional like the architect or an engineer. Or it may be general contractor, sub-contractors, suppliers, a sustainability coordinator or a combination of construction professionals. Each segment of the construction project should be aware of what responsibilities it is undertaking in the green building process. The person or entity that is responsible also may want to get paid more for taking on the added risk.

Making Guarantees

All contracting parties should be aware of what guarantees they are making or receiving in terms of sustainable performance or certification. For instance, if a contract requires LEED Gold certification, but the final product does not achieve that, the contract should be clear about what the repercussions are. Similarly, the contract can address what happens when a component such as a solar energy system or a HVAC unit does not achieve the level of performance a contractor or otherwise represented.

An alternative to a guaranty is a performance bonus or bonuses based on the certification or performance levels achieved. In other words, a contract will describe a base fee for services on the project and then allow for additional compensation depending on the level of certification the building gets or based on the level of performance of the building after occupancy. This is helpful because it can be difficult to guaranty these levels on certain projects. Green building warranties may also be provided, but carry greater obligation or risk to the warranty provider.

The parties can also tie final completion benchmarks to the achievement of the sustainable goal, depending on the type of project. Money may be held back on a project pending the receipt of the green rating. However, when a rating will be bestowed by the rating agency is not always certain, and cannot be entirely controlled by the contracting parties.

A contract can also address the types of damages that may be obtained if the project fails to achieve the agreed-upon sustainability goals. For example, if the purpose of building green was to achieve certain tax credits, and those credits

are not achieved, they may become the measure of damages. Damages may be more difficult to ascertain in other performance metrics. Contracting parties may also want to consider capping those damages, or setting forth a method to measure them.

When it comes to green building contracts, there is no one size that fits all. Goals, methods, specifications and components can greatly vary. However, all parties involved in a sustainable building project have added incentive to consider and address the unique issues that may appear. Reliance on the standard building contract may not suffice. If the issues are not properly addressed upfront, the chances for dispute and litigation will significantly increase. As the old saying goes, an ounce of prevention is worth a pound of cure.

Mark J. Stempler is a Florida shareholder with the law firm Becker & Poliakoff. He is board certified in construction law, is certified as a LEED Green Associate and focuses his practice in the areas of construction litigation, government law, and civil litigation. He may be reached at mstempler@bplegal.com.

In this 2 part blog post I wanted to touch on some basics of the typical “multifamily” construction defect case. Whether the project is a condominium, apartment, assisted living facility or hotel they share many of the same issues.  There are six primary considerations in bringing these claims but each of those has many subparts which depend on specific facts of the project.  Considerations 1 to 3 are here.

The fourth consideration is the type of recovery available.  Generally the cost of repairing the defective condition is the damage that can be recovered.  In the event that such repair would be economically wasteful courts may consider diminution of value to be a valid damage.  In addition, depending on the type of property there may also be lost rents, lost profits claims for the time that the property was not able to be used for its intended purpose or for partial loss of use.  Attorney’s fees are often not recoverable in defect claims in most jurisdictions. The exception to the “American Rule” is where the fees are awarded to the prevailing party through contract or statute or what is called a “proposal for settlement” or “Offer of Judgment.”  The question of recovery is maybe the most important one for owners because no one wants to spend money on experts and lawyers where the damages do not warrant such claims.

The fifth consideration is the defenses available.  I have never handled a defect claim where there was no claimed defense by one of the parties identified above.  The typical defenses are that the owner failed to maintain the condition, that the damages were not mitigated, lack of notice of the condition, failure to comply with a statutory notice procedure, the repair is a betterment, the repaired items consist of first costs that the owner would have incurred anyways.  The determination as to the validity of a given defect claim or defense rests with the trier of fact, whether that be a judge, jury or arbitrator.  The applicability of a defense is based upon the specific facts of each case.

The sixth consideration is the cost in moving forward with such claims and the prospects of recovery. Given the complicated nature of these cases they often settle.  Driving settlement is the cost of moving forward in the litigation as well as likelihood of recovery from the named defendants or their sureties or insurance carriers. Not evaluating these items at each step of a case is a trap for the unwary client or counsel.

I have represented numerous owners, condominium associations, contractors and developers in these types of cases and I can guarantee that none of them wanted to be in this type of litigation.  However, sometimes construction projects go wrong and everyone bears some of that eventual cost.

In this 2 part blog post I wanted to touch on some basics of the typical “multifamily” construction defect case. Whether the project is a condominium, apartment, assisted living facility or hotel they share many of the same issues.  There are six primary considerations in bringing these claims but each of those has many subparts which depend on specific facts of the project.

The first consideration is who is the true owner and is that entity able to recover for the defective construction.  Is there a condominium association or building owner? Maybe it is the hotel or facility operator that is the aggrieved party or is the developer of the building?  Knowing who has the rights to make the defect claims is a critical first step.

The second consideration is to determine against whom any claims may be asserted.  Is there a claim against the developer of real property who designed, built and sold the units or buildings in questions? Or maybe there are claims against the general contractor and subcontractors who coordinated and performed the work?  What about the design professionals who designed the building improvements?  The reality is that all of these entities could be responsible for defects in the improvements.  How much each of them is responsible for is dependent upon the warranties, contracts and legal theories at play where the property is located as well as any contracts that may exist between the parties.

The third consideration is what types of claims available depend greatly on the jurisdiction you are in.  There may be contractual express warranties which would arise out of the contracts negotiated between parties. There are implied warranties pursuant to the common law that may be at play.  In some jurisdictions and depending on the type of property, Florida condominiums for example, statutory implied warranties may exist that protect the owner.  Most states still allow claims for negligence in the construction or design of the structures.  An important note is that not every claim can be made against every party. Careful consideration is needed as to what parties should be asserted against whom.

Part 2 next week.

You have a construction contract for work to be done on a project in Florida. Although hoping that all goes well, it’s your belief that if any legal issues arise, Florida law would apply. That may be correct, since Florida law would generally apply to issues concerning the performance of such a contract. However, that may not be correct.

What if your construction contract has a choice of law provision that specifies the law of a state other than Florida applies? That will likely require a further analysis regarding issues that could include but are not necessarily limited to what legal, equitable, contractual, and tort-type matters are at issue, are those matters encompassed within the particular choice of law provision, are there procedural and substantive issues to be considered, will the enforcement of the choice of law provision violate Florida public policy, what do Florida’s choice of law rules indicate will apply, what does the other state’s law provide, and how does that law compare to or contrast with Florida law.

What if your construction contract does not have a choice of law provision but refers to or incorporates another document that does have such a provision? In this context additional issues may arise as to what terms and provisions are and are not actually incorporated through these other documents and how that may or may not bind the parties to the law of any particular forum.

Additionally, with Florida’s present judicial limitation of the economic loss rule to product liability matters, Florida litigants may also find themselves litigating non-contractual claims, despite the existence of a contract between the parties.  In such situations, a legal and factual analysis of the particular claims asserted should also include consideration of what jurisdiction’s law applies, even in the absence of a contractual choice of law provision.

So, when analyzing your construction contract, be mindful of the foregoing as some of the factors to consider in determining what law applies.

 

Concrete generally consists of three components: (a) water, (b) an aggregate material such as sand, gravel, or stone, and (c) cement. In condominiums, concrete is often used in the formation of the shell of the building, with further support and strength being provided by reinforcing steel located within a condominium’s concrete slabs, balconies, and columns.  Over time, exposure to atmospheric conditions, including but not limited to, items such as chloride ions or carbon dioxide (through a process known as carbonation), may cause or contribute to the corrosion of reinforcing steel located within concrete. Other factors may also contribute to this corrosion process. When this reinforcing steel corrodes rust can form, with a resultant volume that is greater than the volume of the original reinforcing steel. Rust can also adversely affect the bonding between the reinforcing steel and the surrounding concrete, with the potential for cracking, spalling, rupturing, and delamination of the concrete itself.

If potential concrete-related problems are observed, it would be helpful to engage the necessary technical and construction personnel to evaluate and remediate such conditions. A licensed competent structural engineer with experience in concrete repair work can ideally assist in several ways; including but not limited to, (1) identifying the cause(s) of the problem, (2) determining the projected scope and extent of remedial work, (3) preparing the necessary plans, specifications, and project manual(s), (4) assisting in soliciting and evaluating bids / proposals from contractors for such repair work, and (5) supervising and/or overseeing the contractor that is engaged to perform such remedial work.  The engineer’s responsibilities should be established beforehand, typically in and as part of the terms of a contract between the engineer and the condominium.

Hiring a licensed competent concrete restoration contractor and establishing the contract that is to be used with this contractor for such concrete repair work is also important. Among the types of contracts that have been used for concrete repair work are (a) lump sum or stipulated sum contracts, (b) guaranteed maximum price contracts, and (c) unit price contracts.  With respect to “unit price” contracts, the actual contract price is generally based upon the amount of linear, square, or cubic feet of work done. Notwithstanding an engineer’s (prior) estimate, once the damaged concrete is chipped away and one can see what specifically needs to be done, an entity, such as a condominium association that has entered into a unit price contract may, at times, find itself incurring costs that exceed the estimated cost of such work. With respect to “lump sum” or “stipulated sum” contracts the contract price is typically stated in the contract. Nevertheless consideration should be given as to what is and what is not included in this stipulated contract price, and if there are any other provisions (caveats / exceptions) that could nonetheless change this price. A “guaranteed maximum price” contract is, as the name suggests, one in which the price will typically not exceed a certain amount (again presuming no caveats or exceptions apply).  Irrespective of the type of contract that is used, the contracting parties should evaluate all of the terms and conditions of such contract, and be aware of how it affects their respective rights, obligations, and responsibilities.

Many contracts used in green building projects are not always ideal for green building projects.  Often, contractors, design professionals, or owners will use their old standard construction contracts.  But those forms might not take into account some of the nuances or issues that can arise on a sustainable project.

For example, green building contracts should strive to be more specific about what the green goal is.  Terms like “green building”, “sustainable building” or “high-performing building” lack the specificity of what the goal is.  Further, it is not enough for the owner to say it wants LEED platinum rating, or LEED certified, or Green Globe?  There is a difference.  Or, maybe the goal is to save money on electricity, or to reduce the amount of water consumed.  Those should be specifically identified, so if the goal is not achieved, there will not be confusion as to what the goal was.  Confusion often leads to a dispute, which often leads to litigation.

The contract should also reflect who is responsible for achieving the project’s green goals.  It can be the architect, an engineer, or contractors and sub-contractors or suppliers.  Each segment of the construction project should be aware of what responsibilities it is undertaking in the green building process.  And, they may want to get paid more for taking on the added risk.

 The aforementioned should also be aware of what guarantees they are making in terms of sustainable performance or certification.  If an architect undertakes the responsibility of achieving a certain level of certification, and that goal is not met, the contract should be clear about what the repercussions are.  Or, the contract can address what happens when a component such as an HVAC system does not achieve the level of performance a contractor represented.  If the contract is silent, the design professional, contractor, or whomever may find themselves facing a lawsuit for breach of contract.

 In some cases, an alternative to a guaranty is to allow for performance bonuses based on the certification or performance levels achieved.  In other words, a contract will describe a base fee for services on the project, and then allow for additional compensation depending on level of certification the building gets, or based on the level of performance of the building after occupancy.  This is helpful because it can be difficult to guaranty these levels on certain projects.

 There are some form contracts out there that are tailored for green construction projects.  But just about every project is unique and generally there is no one size that fits all.  So, before you sign that green building contract, whether you are an owner or part of the construction team, and whether its for new construction or even a renovation or retrofit, make sure you are contractually protected, and that everyone is on the same page as to the green goals.

The following are the 10 most frequently asked questions by Condominium Associations that are facing potential claims for construction defects:

1.    What is a construction defect?
Construction defects can be classified into three categories:  defective building material; faulty workmanship; and improper design.

2.    Who is responsible for the construction defect?
The developer, design professional, and contractor may all be responsible. Historically, the law has recognized that the various participants in the construction process are liable only for those defects that fall within their respective areas of expertise. For example, a contractor who builds a structure according to the design supplied by the owner generally is not responsible for the adequacy of the design.

3.    What warranties should the Association be aware of?
In addition to express written warranties received from the developer and contractors, the Association should be aware of warranties provided by the Condominium Act. The Condominium Act provides implied warranties in favor of individuals who purchase their units from the developer. The warranties as to the developer, run 3 years from completion of the building, (usually measured by the issuance of the Certificate of Occupancy) or 1 year from transition of control from the developer to non-developer unit owners but in no event more than 5 years from completion of the building. There is also a common law implied warranty under which the Association can make claims for a period up to 4 years from transition.

The warranties as to the developer are as follows:

–    As to the roof and structural components of a building or other improvements and as to mechanical, electrical, and plumbing elements serving improvements or a building, except mechanical elements serving only one unit, a warranty for a period beginning with the completion of construction of each building or improvement and continuing for 3 years thereafter or 1 year after owners other than the developer obtain control of the association, whichever occurs last, but in no event more than 5 years.

–    As to all other improvements for the use of unit owners, a 3 year warranty commencing with the date of completion of the improvements.
Contractors, subcontractors, and suppliers all grant warranties as to work or materials supplied as follows:

–    For a period of 3 years from the date of completion of construction of a building or improvement, a warranty as to the roof and structural components of the building or improvement and mechanical and plumbing elements serving a building or an improvement, except mechanical elements serving only one unit.

–    For a period of 1 year after completion of all construction, a warranty as to all other improvements and materials.

4.    How do we prove that a construction defect exists?
In most cases, the Association will need to hire the services of an independent expert. Experts are those who have the necessary training, education, and experience to give testimony in court as to the cause of a defect. For example, if your roof leaks, a roof expert who has designed roofs, evaluated other defective roof systems, and knows how roofs should be built would be in a good position to testify. A general or roofing contractor can repair a damaged roof, but he may not be the best person to act as the expert.
 

Continue Reading Top 10 Questions Regarding Condominium Construction Defects

by Mark J. Stempler, Esq.

 

Many construction contracts contain express warranties.  Express warranties are those that are written into the contract (as opposed to implied warranties, which are implied by law).  They usually pertain to situations where non-conforming work or materials are found, and may put an obligation on a contractor to fix the issue.  The most common warranties are those that cover the quality of materials, the conforming of work to the contract documents (and/or design specifications) and that the work performed is free of defects.  Most warranties run for a defined period of time.

 

Obviously, an owner of a green construction project will want as many warranties as possible, and warranty periods for as long as possible.  The contractor will want be careful as to what it is warranting, and limiting what it has to do if there are problems with the green aspects of the building.   For example, contractors may want to avoid promises about the performance and functionality of the building.  Statements about better indoor air quality, occupant health improvements, and energy costs may depend in part on factors outside the contractor’s control.  Similarly, promises that building "green" will make the building more valuable are tougher to keep if the real estate market is poor, or demand for green buildings is not there.  These statements may appear in the contract, but might also appear in brochures, prospectuses and other promotional materials.

 

To read more, go to http://thegreenbuildinglawblog.blogspot.com/.