As my four children were running through the house this weekend, I inevitably yelled at them, "No running in the house!"  My five-year-old responded, "Just passing through…"  Imagine the smile I had this morning when I read about a recent Tennessee appellate court decision about pass-through claims against the State.

 Pass-Through Claims Valid in Tennessee?

In Kay and Kay Contracting, LLC v. Tennessee Dep’t of Transportation (pdf), the contractor entered into a $10.2 million contract with TDOT for the construction of a new bridge on Interstate 75.  The contractor then entered into a $3.1million subcontract with the grading and excavation subcontractor. 

Problems occurred during performance and both the contractor and subcontractor filed claims against TDOT for additional compensation.  TDOT rejected the subcontractor’s claim because it did not have a contract with the subcontractor and, thus, it argued that sovereign immunity barred any claim by the subcontractor.  Although the Claims Commission agreed that the subcontractor was not a proper party to the lawsuit, it allowed the contractor to pursue the claim against TDOT as  "pass-through" claim on behalf of the subcontractor.

The Court of Appeals of Tennessee reversed, holding that the pass-through claim was prohibited by the doctrine of sovereign immunity.  Under that principle, the state is immune from lawsuit unless that immunity is expressly waived by statute or otherwise.  The Tennessee legislature has expressly determined that a written contract with the State is a waiver of the immunity for any lawsuit on the breach of that contract.  See Tennessee Code 9-8-307(a)(1)(L).

In Kay and Kay, the appellate court concluded that the contractor was not entitled to pursue the pass-through claim on behalf of the subcontractor, who did not have a contract with the state.  The court reasoned:

We acknowledge that we must give Tenn. Code Ann. § 9-8-307(a)(1)(L) a liberal construction. However, in so doing we cannot amend, alter, or extend the statute beyond its obvious meaning. Stewart, 33 S.W.3d at 791. The obvious and ordinary meaning of requiring a “written contract between claimant and the state…” is not susceptible of more than one meaning. A contract is either written or it is not. If we allow pass-through claims, then we are allowing a party to sue the State and prosecute the claim of a different entity that has no contractual relationship with the State. This is contrary to the clear and unambiguous language of the statute requiring a written contract between the claimant and the State before the State can be sued for breach of contract. We again note that if the General Assembly believes that allowing pass-through claims is in the State’s best interest and public policy favors allowing such claims, we invite the General Assembly to amend the relevant statutory provisions to expressly allow such claims.

The appellate court expressly held that its decision applied "only to pass-through claims wherein subject matter jurisdiction is predicated on the removal of the State’s immunity pursuant to Tenn. Code Ann. § 9-8-307(a)(1)(L)." 

The court expressed no opinion on whether pass-through claims otherwise are permitted in Tennessee in other contexts.  That decision was left for another day … another dispute. 

Image: Roger Smith

DeVries Family

Many of you know that I was out of the office last week as my wife and I welcomed our sixth child into the world.  Mia Hadley DeVries was born on June 29, 2010, weighing in at 6 pounds, 4 ounces, and 19.5 inches long.  Yes, I just said that we have six children!!!  You can breath now.

Mia Hadley DeVries

Since we are pros at this delivery thing, I thought about what I had to do to prepare for this wondrous event.  Here are a few tips to help you plan for your time away from the office, whether for a vacation, adult time-out, or new addition to the family:

  1. Plan ahead and schedule your days away.  The real point here is to actually "plan" you time away from the office.  When you are talking about a vacation, mark the time off on your calendar, even if you are staying in the area.  While this may be harder for a new birth in the family, you can at least plan that you will be out a certain number of days following the event.
  2. Tell your clients and customers in advance and by email.  Whether you are an attorney, a business executive, an architect or project manager, you should tell your closest relationships about your expected absence.  Even if you don’t have time, make sure you set up your email to send an automated message about your time away from the office, informing them of the date you are expected to get back and giving them an emergency contact number.
  3. Schedule your "away" work and deadlines before you leave.  If you find that you have a project deadline that occurs while you are away, either finish the project, assign it to your closest ally, or get an extended deadline … all before you leave.  If you plan to work while away (which I would not advised while on vacation), then prepare folders for each individual task.  That way, you can grab a folder if you have a spare couple of hours to work, whether on a plane or in a waiting room.
  4. Find access to wi-fi.  Most hotels, vacation hot spots, and even hospitals have access to wi-fi.  But you should make sure ahead of time.  If you cannot find wi-fi access, there are numerous applications that can turn your mobile phone into a modem for your laptop. 
  5. Pick an ally in the office to help you during your absence. It is important to have a strong network of co-workers in your office. Although your customers or clients will be aware that you are unavailable (or have limited availability) while you are away, there are situations where emergencies may occur. In such a case, prepare a trust-worthy co-worker to help you while you are away, whether it involves your regular work tasks or things that need to be done on an emergency basis.

Question: Do you have any "away from the office" tips?

Images: Kim Vetter Photography

Fellow blogger Matt Handal did a post today about his Livescribe Pulse Smart Pen.  I love technology and I absolutely love this gadget!  However, Matt’s post raised a red flag to me about the discoverability of taped or recorded conversations in litigation.

For years, lawyers have been requesting "electronic discovery" from the opposing side.  Traditionally, the debate has been about emails and native electronic files.  How are we to collect the information?  How are we to process the information?  How are we to produce the information? But the debate mainly focused on computer servers, desktops and laptops.

Then came mobile devices, such as Blackberries and iPhones.  Is the information on these devises subject to discovery?  Instant messages and other data stored on mobile devices are generally discoverable under the applicable rules in your jurisdiction covering e-discovery.   In one reported case, the court found it suspicious that all data had been wiped from two Blackberries and ordered sanctions for spoliation of evidence.

So what about the data from a Livescribe Smart Pen? I would treat this data as any other form of data … whether in hard-copy or electronic format.  If a construction schedule is discoverable, then the native Primavera files are most likely subject to production.  If a particular written statement is discoverable, then the recorded version is most likely subject to production.  If hand-written notes are discoverable, then the electronic notes transcribed by the smart pen are most likely subject to production. 

In the end, I am extremely leery of recording any attorney-client conferences, as well as any meetings with consultants and testifying experts.  The Livescribe Smart Pen would be great for hearings and other public meetings.  But understand that the digital recording may be otherwise discoverable depending on your jurisdiction.

Matt Handal agrees: "For privacy reasons I restrict my use of the smart pen to proposal and strategy related meetings."

You’ve heard about Nashville’s historic flood almost six weeks ago and all the damage that it has caused to thousands of homes throughout Middle Tennessee. Just this morning, Nashville Metro government sent 305 buyout letters to homeowners whose homes were damaged within the floodway, the area where water flows most swiftly during a flood. Today’s post is about a decision released yesterday by the Court of Appeals of Tennessee regarding what may occur when a restoration contractor fails to remediate toxic mold following significant water damage. 

Nashville Flood | Mold Damage

In Victoria Dutton v. Farmers Group, the Plaintiffs’ home was flooded and incurred severe water and mold damage when the hot water tank burst. The Plaintiffs began to experience various illnesses after moving back into the home. Despite assurances from ServePro (the remediation contractor) and the Plaintiffs’ insurance carrier that the home was safe, the Plaintiffs discovered that their home was contaminated with toxic mold almost three years after moving back into the home. The Plaintiffs filed suit against various defendants alleging distinct causes of action.

The trial court held that the Plaintiffs’ claims were barred by the applicable statute of limitations. The Court of Appeals reversed, holding that the discovery rule tolled the applicable statute of limitations.  In Tennessee, the discovery rule provides that a cause of action accrues and the statute of limitation begins to run when the plaintiff knows or should have known that an injury has been sustained as a result of some wrongful or tortuous conduct by the defendant. 

In this case, the Plaintiffs did not connect their illnesses to the toxic mold exposure in the home until close to three years after they moved back in the home. The Court found that the defendants attempted to remediate the mold issues in 2002 and the Plaintiffs had a good faith belief that the problem was resolved. The Plaintiffs did not discover until 2005 that the flooring throughout the home was not removed as originally advised in the 2002 cleanup of the home. After testing, it was found that the linoleum flooring was severely contaminated with toxic mold spores. The Court reasoned:

Without the obvious signs of mold contamination in the home, Plaintiffs had no indicators that mold contamination caused their health problems. . . . Eventually, [the insurer] retested the home, which confirmed that Plaintiffs’ home was contaminated with toxic mold. Until a doctor mentioned a possible allergic reaction as to the cause of [Plaintiffs] injuries, Plaintiffs did not have sufficient facts to investigate their potential claims. Under these circumstances the discovery rule tolled the statute of limitations.

The Victoria Dutton case is a good example of how the courts will apply the discovery rule to personal and property damages cases involving residential construction.  Factually, the case also highlights the severity and seriousness of toxic mold exposure following a significant flooding event. Finally, the case demonstrates that there may be certain substantive defenses in your state that preclude you from recovering on a claim including, but not limited to, a statute of limitations, the discovery rule, and the tolling of the statute of limitations.

Image: Eric Hamiter

Top Tweet Construction, BIM, LEEDAside from some personal quiet time to reflect on the day ahead, my second favorite part of the early morning is to review my RSS fees to see what may have happened in the prior 24 hours.  It’s a sickness.  I know.

I always find at least one golden nugget of information that may be useful in my professional or personal life.  Sometimes it is breaking news about a green construction issue.  Sometimes it is strange.  And sometimes it is simply entertaining.

In any event, I want to begin sharing with you some of these TOP TWEETS, which are determined during my morning review of the prior day’s Tweets and based on my sole discretion. There’s no formula or selection criteria.  You may agree or disagree with my choices.  That’s okay.  You may choose to send me links.  That’s okay, too.

And so, here are some Top Tweets for June 21, 2010:

I am involved in the ABA Forum on the Construction Industry’s initiatives to bring various social media to the forefront of our group’s marketing and development activities. This past week, leadership asked us to develop and draft a “best practices protocol” for our work on this issue. After reviewing our charge, I am more and more convinced that owners, developers, contractors, and suppliers need to implement a similar protocol for their development in construction practices.

 

What is a best practices protocol?

Just as it sounds … it is a written protocol that outlines the best practices for success on a project, event or task.  In the construction context, it might be a "Best Practices Protocol for Document Management" or "… for Handling Work Injuries."  It contains the steps taken in order to achieve the successes from any given set of circumstances.  It also contains the lessons learned from the failures.

Why would you create a best practices protocol?

In its simplest terms, you would want to create such a written document in order to pass on to subsequent project managers and team leaders the operating procedures and protocols that led to the success or failure of your particular project. 

Is the best practices protocol discoverable in subsequent litigation?  Any lawyer worth his weight in gold would give you the only correct answer … it depends!  The real issue here is whether a party’s "self-critical analysis" can be used by the opposing party as evidence of liability, breach of contract or violation of some standard of care.  The courts have treated the issue differently, but here is a good discussion of the discoverability of self-critical analysis documents.  In short, the basic requirements for the privilege are: (1) the information must result from a critical self-analysis undertaken by the party seeking protection; (2) the public must have a strong interest in preserving the free flow of the type of information sought; and (3) the information must be of the type whose flow would be curtailed if discovery were allowed.

Question:  Are you creating "lessons learned" or "protocols" for ensuring success on you projects?

Image: Brian Hillegas

Just a few days ago I wrote about how, like the World Cup soccer games, BIM presented a lot of excitement for many proponents. Turning to another competitive analogy, there continues to be many in the construction industry who simply refuse to go "all-in" with their poker chips.  According to a recent McGraw-Hill Construction report, I may be wrong.  The report concludes that half the industry is behind BIM technology.

Are You All-In | Building Information Modeling

The SmartMarket report is titled The Business Value of BIM: Getting Building Information Modeling to the Bottom Line, and was produced with Autodesk and 26 other industry players like HOK, Turner, PB, US Army Corp of Engineers, AIA, DBIA, AGC, SMACNA and others.

The purpose of the survey and report was to find "who’s using BIM" and "where are they getting the real business value?" After surveying thousands of AEC participants, here are some key findings:

  • Almost 50% of the industry is now using BIM.
  • All BIM users plan significant increases in their use.
  • The majority of users are experiences real business benefits directly attributable to BIM.

The 52-page report is packed with very detailed findings on numerous issues, such as using BIM to gain a competitive advantage, increasing productivity and investing in your team.  Another interesting finding was that two-thirds of the non-users say that concerns about legal liability have little to no impact on their consideration of BIM.  

What are some key recommendations? For beginners, the value of BIM is on the horizon.  In other words, new users see limited value at the start, but additional opportunities materialize with experience.  For non-users, do not delay your decision to embrace technology.  According to the report, "BIM users are seeing positive returns today and expect those benefits to grow over time." For owners, the lesson is to take charge and demand that your design team use BIM.

What did the report conclude?  While the preliminary findings focused on who is using BIM, the real focus addressed the overall value proposition of BIM.  In this environment, the pressing question for AEC players is whether the return on investment is real.  Among others, here are some key finding about ROI: (1) most users see a positive ROI in their use of BIM; (2) those returns tended to improve with experience; and (3) owners and contractors see the highest returns on BIM.

If you have time, the report is definitely worth a read.  It also contains a number of case studies that provide great illustrative examples of the business value of BIM.

Image: Jam Adams

The Property Report in the Wall Street Journal this morning featured the $200 million Museum Tower, a Dallas condo project that is touted as the "Exception to the Slump" (sub. req’d).  It is called an "exception" for a few reasons: (1) new condo construction in this economic environment is not the norm; (2) weakening appraisals for existing condo units show signs of continued distress; and (3) financing for a project of this magnitude is simply difficult.

Dallas Condo Project | Museum Tower

As highlighted by reporters Nick Timiraos and Kris Hudson, it is this last point that makes the Museum Tower deal intriguing: "The $200 million project, located in a prime parcel in an up-and-coming arts district, is being financed entirely by the Dallas Police & Fire Pension System." (my emphasis added). Say that again … it is being financed entirely by a local pension system!

The original developers struggled for months to find conventional financing.  But as most other developers have learned over the past couple of years, traditional financing methods are simply not available.  According to Richard Tettamant, the pension fund administrator in this case, the timing was "perfect … to pull the trigger." Tettamant credited the low interest rates and low construction costs as chief factors in the decision to invest in the project.

This project financing deal highlights that alternatives do exist to traditional financing.  Others may include: public financing, such as funding through the Federal stimulus package; private investment and syndication packages; public incentive programs, such as local tax increment packages; and public private partnerships (known as PPPs).  Like most other real estate and construction projects, timing becomes the driving factor.

Image: Museum Tower Dallas

I grew up with a soccer ball at my feet. So it was no surprise to see me relaxing in front of the big screen this weekend, son by my side, to watch United States and England play in the opening round of the FIFA World Cup tourney.  And the game was a lot like … Building Information Modeling (BIM).

Nelson Mandela Stadium Designed Using BIM 

Odd analogy?  Not really.  There was a lot of excitement leading up to the game.  To some, there was no chance of success.  To others, this was the time to shine.  To many, however, survival was the only question.  As an observer, I was bubbling with anticipation … only to come away with … a tie game!

Do you see my point?  BIM is similar to the United States game against England for three reasons: 

  • There "was" and "remains" a lot of excitement about the future of BIM.  If you go into the project with the expectation of a win, then you are more likely to actually win.  In other words, the potential successes from use of BIM on a project become more of a reality once the whole project team buys into the excitement.
  • A tie is not that bad.  While you always want a win for the construction industry, a tie is still better than a loss.  Let me translate: Until BIM becomes an industry standard, it is still good for BIM proponents to take what points are available … and keep playing.
  • There will always be the naysayers.  A number of soccer fans simply do not think the Americans have what it takes to compete in the World Cup.  Likewise, to many in the construction industry, the jury remains "out" on the value of BIM.  "Though it makes sense in theory, they remain unswayed that the cutting edge design tool has many practical applications or that it represents the wave of the future," says blogger Kevin Doyle.

Finally, there is one more bit of information to share about BIM and World Cup soccer.  Two of the five new venues built for the every-four-year event were modeled using BIM software and techniques.  For example, to design the unique roof structure of Nelson Mandela Bay Stadium in Port Elizabeth, steel detailers used BIM software to model the project.

So, just as the sky is the limit for the future of BIM, the Unites States’ performance against England proves that the power of positive thinking is an important element in both soccer and construction project management.

It really is impossible to put your arms around the number of green building and energy performance policies and codes that are sprouting up all across the nation.  When a project involves private commercial development or public investment, one of the most discussed issues is whether the cost of obtaining LEED certification from the U.S. Green Building Council is worth the investment.  And so the cost versus certification debate continues … and one county in Montana has found the middle ground.

Finding the Middle Ground in Green Building

Yesterday, commissioners of Missoula County, Montana approved a policy that encourages and promotes green building practices, as long as they save money in the long run.  According to chair of the Commission, “This is the closest thing we’ll come to having an energy policy. If the feds won’t do it and take the lead, I’m just honored to be a part of this.”

The policy directs county offices and departments to “incorporate” or “support the use of” LEED methods and techniques when designing, remodeling and operating public facilities. Unlike other counties in the United States that have recently required a specific level of LEED certification, the Missoula County policy will require “the highest level achievable under LEED that’s cost-effective based on the long-terms cost and the limits of available funding.”

As state and local leaders are racing to develop and implement new building practices—whether they incorporate USGBC’s LEED, Energy Star, Green Globes, or some other rating system—I think the compromise by Missoula County is a step in the right direction.  Such a policy would allow the public or private developer to incorporate cost-effective criteria in its development plans, while at the same time would require that owners and developers adhere to sustainable building practices.

There remains one problem: consider the owner who seeks the highest level of LEED certification that is cost effective based upon its long-term costs and limits of available funding and it is determined that LEED certification would not be possible. What then? Have they complied with the local building policy or code?

Image: satosphere