I am certainly not the first … and certainly won’t be the last … person to write about Robert Watson’s webinar presentation yesterday afternoon entitled, Building a Sustainable Future: Progress & Trends Toward Improving the Environmental Footprint of Commercial Buildings.

Green Buildign Market and Impact Report

Watson, Executive Editor for GreenerBuildings.com, is most commonly referred to as the father of LEED because of his pioneer role as founder of the USGBC rating system. Watson spoke from his home in Shanghai at 1:30 a.m. Watson began his presentation with the following bold statement:

Green buildings [are the] only bright spot in the construction market.

Even then, Watson suggested that there will be some lag in the green building market due to the introduction of the more stringent LEED 2009 requirements, as well as the economic downturn in the market generally.

One of the primary purposes of the webinar was to highlight the release of the second edition of the Green Building Market and Impact Report 2009, which was authored by Watson. The Report sets out to document how and how much green building is making a difference in the world today. Some of the key finding include:

  • The estimate of reduced vehicle miles traveled has grown to 780 million to date versus 400 million in 2008, which means there are significant annual gasoline savings.
  • Total water savings from LEED through 2009 is estimated at 15 billion gallons, comprising 0.5 percent of annual non-residential water use.
  • Annual carbon dioxide savings from LEED buildings is approximately 2.9 million tons from energy efficiency and renewables.
  • Based on average materials costs, green building materials represented approximately $7 billion in cumulative spending through 2009.
  • Moreover, the embodied energy in buildings that are renovated instead of demolished is expected to save significant sums of energy.
  • Finally, an average of over 60 percent of construction and demolition waste was diverted from LEED projects, totaling 25 million tons to date.

According to the report, employees are currently enjoying improved indoor environments in LEED buildings at present and the productivity benefits from LEED buildings to date range from $230 to $450 million.

What do all these number mean to the traditional commercial developer, the hard hat contractor or the construction litigator? Here are some thoughts:

  1. The Report recognizes that new construction of green buildings is growing, while actual LEED certification is lagging. In my simple mind (…and I admit this may be an oversimplified conclusion…), the industry wants to be green but does not want to pay for the green plaque.
  2. The growth of the green building industry has created a "several billion dollar market" for LEED qualified and sustainable materials. From a practical point of view, subcontractors and suppliers of old will need to transform some of their product lines so as not to be edged out by the new material suppliers.
  3. The energy performance issues raised by green building critics will have a significant impact on the future of building standards. Shari Shapiro has addressed this issue on a number of occasions.

Watson concluded his presentation with the following statement: "In spite of the economic downturn, or perhaps because of it, LEED has reached target market saturation."

Question: Do you agree with this assessment?

I love seeing a case zig zag through the appellate process … and I especially enjoy reading one where intermediate appellate court reverses the trial court and the highest court then reverses that intermediate appellate court.  I know, I’m sick.

Zig Zag Through Appeals Process

In a decision released yesterday, Goff v. Elmo Greer & Sons Construction Company, the Supreme Court of Tennessee reversed the Court of Appeals and reinstated the trial court’s decision approving an award of punitive damages in a construction case.  The owners of the property filed suit against the general contractor on a highway widening project.  The owners contracted with the general contractor to use their adjacent land as a lay down area in exchange for compensation.  When the contractor failed to pay the full contracted amount, the owners sued.

Following a trial, the jury found in favor of the land owner and awarded: (a) about $5,300 for the unpaid contract balance; (b) about $9,500 for damages resulting from blasting activities; and (c) about $3,300 for burying debris on the property.  The jury also returned a verdict of $2 million in punitive damages, which the trial court reduced to $1 million.

The Court of Appeals affirmed the trial court’s judgment as to liability, but reversed the award of punitive damages based upon a finding that the trial court improperly considered Tennessee’s environmental laws in approving the award.  The Supreme Court of Tennessee reversed, holding that the trial court properly considered Tennessee’s environmental statutes in approving the award.

The Goff decision has a number of construction nuggets to analyze.  One of the more significant aspects of the opinion is the jury’s award of punitive damages based upon various environmental laws without any finding of a violation of those laws.   The intermediate appellate court determined that because the jury found that the contractor had not committed an environmental tort, the trial court should not have relied on the environmental statutes and policies in affirming the award of punitive damages.  The Supreme Court disagreed:

The evidence supporting the nuisance claim was the proof regarding buried whole waste tires.  In order to determine the reprehensibility of burying whole waste tires, the trial court considered the State’s policy regarding such action. To this end, the trial court correctly noted that the State has enacted legislation against burying whole waste tires, recited the public policy behind that legislation, acknowledged that [the contractor] was aware of the State’s policy against burying waste tires, and
observed that high civil penalties are permissible for burying waste tires. In our  view, the fact that the legislature has determined it necessary to prevent the improper burial of tires “to protect the public health, safety and welfare” is important in the discussion of the reprehensibility of [the contractor’s] actions.

Interestingly, the Supreme Court did not decide whether a private right of action existed for a claimed violation of the state’s environmental statutes because the jury did not find the existence of any "environmental tort" and neither of the parties raised the issue on appeal.

For the contractors out there, Goff is a good reminder of the total exposure (including significant punitive damages) for violation of state waste disposal and environmental laws.  For the legal practitioner, Goff instructs that a statute may be used to define the public policy for proving punitive damages even when there is no violation of the actual statute.

TN Attorney General OpinionOver the past two months, I have received a few inquiries from small business owners about an amendment to Tennessee’s workers’ compensation laws.  The primary question is whether the new law, which takes effect on December 31, 2009, will require a sole proprietor to carry workers’ comp insurance on himself?  (Traditionally, there was an exclusion for sole proprietorship under Tennessee law.)

According to the recent Tennessee Attorney General Opinion No. 09-173, the answer to the above question is a resounding, "YES."  Based upon the AG’s opinion, here is how the law now stands:

  1. If you are a general contractor or subcontractor, you must provide workers’ compensation insurance coverage for your employees. ("Any person engaged in the construction industry, including principal contractors, intermediate contractors and subcontractors, shall be required to carry workers’ compensation insurance.")
  2. If you are a sole proprietorship … and you have no employees and you are performing the work yourself … you are required to carry workers’ compensation insurance on yourself, unless: (a) you contract directly with the homeowner; or (b) you are working on your own residence.

It will be interesting to watch how the construction industry responds to this issue.  The legislative history of the amendment reveals that the change in the law was prompted by a need to ensure that all subcontractors and employees working on a construction site were properly covered by workers’ compensation insurance.  According to the legislative discussion, some employers were purportedly avoiding paying for coverage by claiming that their employees or subcontractors were actually sole proprietorships.

Question: What’s happening in your state on this issue?

Not many things in life are free.  So you can imagine my excitement over the weekend when I received an email to attend a free sneak preview webinar featuring Robert Watson, the "Father of LEED."  Better yet … you are invited, too!

Join this fast paced live 60 minute free webinar to hear a first-hand presentation and analysis of the second edition of the Green Building Market & Impact Report by the report’s author Robert Watson, GreenerBuildings.com Editor, industry leader and LEED “founding father.” 

In the Green Building Market & Impact Report 2009, the authors attempt to answer whether commercial green buildings live up to their name—that is, that they are engendering demonstrable environmental improvement. The findings are described by the authors as "both encouraging and cautionary."

 Overall, we believe that LEED buildings are making a major impact in reducing the overall environmental footprint of individual structures. However, significant additional progress is possible and indeed necessary on both the individual building level and in terms of market penetration if LEED is to contribute in a meaningful way to reducing the environmental footprint of buildings in the U.S. and worldwide.

Findings from this landmark survey include:

  • LEED 2009 & Global Green Building Market Trends
  • Worldwide impacts of LEED on LEED Market Trends
  • Land Use Impacts
  • Water Efficiency Impacts
  • Energy Impacts
  • Materials Impacts
  • Indoor Environmental Quality
  • And more…

All registrants get access to a downloadable version of the Green Building Report.

 

I received an email this morning with the following warning: "The following message is intended for construction audiences only. Do NOT watch this clip alone or in the dark. Please wait 30-minutes after eating before watching this clip. DO forward this video on to a friend or colleague."
 

https://youtube.com/watch?v=MFZI7N_AEBE%26hl%3Den%26fs%3D1%26color1%3D0x2b405b%26color2%3D0x6b8ab6

A couple of my observations about AGC’s campaign for its annual convention:

  1. This is very smart.  When I usually receive mass email alerts and messages, I put them in a "review later" folder and come back to them later in the week.  Not this one.  It caught my attention and I immediately clicked through the links.
  2. This is very timely.  Sending this particular message during the week of halloween was ingenious.  Although the AGC Annual Convention is not for another five months, the message was tailored for the season and I am sure we can expect similar treats over the next coming months.
  3. This is very exciting.  What AGC did here was step out of the cookie cutter approach to marketing.  It’s a sign of the construction industry embracing Social Media and using technology in new ways.  Kudos, AGC!

One of my favorite leadership gurus, Michael Hyatt (CEO of Thomas Nelson Publishing) posted a few good recommendations a couple months ago about using templates for greater efficiency.  Michael wrote:

For years, I have used the concept of “templating” to improve my productivity. The idea is that you create a template for any task that you find yourself doing repeatedly. So instead of “reinventing the wheel” every time, you do it once, save it as a template, and then reuse it.

Using Templates for Construction Cases?

In my construction litigation practice, I have used various templates to make my life easier during various stages of a construction disputes.  This week, I want to share with you a couple of those templates.

The first one is a mechanic’s lien information sheet (pdf) that outlines the background information that is needed for me to file a Notice of Non-Payment or Notice of Lien on behalf of a client.  The type of information that I need to file a lien includes the following:

  • Is the project residential or commercial?
  • Is the Contract with the owner of the property or the prime contractor?
  • Name and address of property owner and prime contractor.
  • Name of project/subdivision; property location map; and property address and/or lot number.
  • Type of service/material/labor supplied to the project.
  • Commencement date (ground breaking) of the project.
  • Beginning date of your work on the project.
  • Total amount invoiced to date with a copy of the invoices.
  • Amount owed or unpaid on the project.
  • Last date of your work on the project.
  • Date entire project was completed.
  • Any “Notice of Completion” recorded?
  • Any payment bonds issued?

While this information appears to be a no-brainer request for those contractors who file liens on a regular basis, I have found over the years that my clients appreciate the template that I send them.  This way, there is no confusion about what information I need from them and I am able to more effeciently help my client pursue their rights.

I have my Google reader set to search various blogs, news sites, and Twitter feeds to help me keep current with the latest trends in the construction industry.  There remains one major problem: the words we use have different meanings for everyone.  

Google and BIM

Take, for example, my search of Twitter feeds (above) for Building Information Modeling (BIM).  If you were to do the same search during a weekday morning, the majority of results would return various individuals involved in some aspect of the construction industry either praising or criticizing BIM. Now, if you were to do the same search on any given Friday or Saturday night, you might be surprised to get a varied assortment of results (and photographs) of individuals out for a night of partying.  You see, BIM is also slang for "bimbo" or … how do I say this … a "lady with questionable morals"? 

What’s the lesson here?  Did you click on this article because you thought it related to LEED or Green Buildings?  It kinda does.  It kinda doesn’t.  The lesson is that we live and work in a world where information spreads quickly.  In addition, we have become informal in our communications through the use of email, texting and Twitter.  (And in our personal lives, there may not be anything wrong with informality in our communications.)

However, the construction project is built on expectations and performance.  Where those expectations are accurately and correctly reduced to a writing, the parties have a written contract.  Where the parties use words that have different meanings (and both interpretations are reasonable), we now have an ambiguity.  A judge or arbitrator will then be asked to interpret that ambiguity based upon any number of legal tools (i.e., parties’ words and conduct, other writings outside the four cornings of the contract, industry norms, etc.).  As the construction industry begins to employ new technologies, such as BIM, or new performance based goals, such as energy performance from a LEED certified building, then it becomes even more important that we use words that do not lead to miscommunication.

At the end of yesterday’s webinar on Construction Documentation and Record Management, I was overwhelmed with so many good questions. Due to time constraints, I did not get a chance to answer them all.  However, I promised to follow up on your inquiries … below are some of your questions.

Construction Law Questions

How long should project related documents be retained? Why would the timeframe for retaining documents be less than the jurisdiction’s statute of repose?

During the webinar, I said that this would depend on two factors: (1) any written retention policy in place; and (2) any advice given by your tax professional. As one of the participants asked in the chat questions, you may want to keep documents for as long as the statute of repose period in your particular jurisdiction. The statute of repose (like a statute of limitations) cuts off the right to bring action if not pursued within the applicable period. For example, the statute of repose for construction defects in Tennessee is four years after substantial completion, whereas Virginia has a five year statute of repose. Short answer: Keep ‘em 10 years, unless the statute of repose period is longer.

Is there a legal requirement for keeping project documentation and emails?

There are a few issues that are competing here: business issues and legal issues. Purely as a matter of business management, you want proper document controls in place … for the reasons discussed in the presentation. As a legal matter, the only “legal requirement” to maintain records is to make sure you comply with any document management/retention obligations that are required by the parties’ contract (public or private).

Do these project management tips apply to either/both public or private projects?

The lessons can be applied to both public and private projects. Of course, there may be different project controls in place or record management systems required for public contracts. For example, both Wisconsin and Texas now require use of Building Information Modeling (“BIM”) on certain public projects. Also, the general legal issues may differ if you are pursing a claim against a public owner because you may have the dispute resolved by an agency or administrative judge. However, most of the tips in the presentation are applicable to both public and private contracts.

Closing out a job: What recommendations do you suggest for Data Controllers in gathering electronic records from Project Managers, superintendents? Also–must such electronic files be printed and placed in a hard file?

During the webinar, I partially answered this question. Let me try again with the following recommendations for Data Controllers:

  • Have the same person do the collection.
  • Make sure the collection is complete and exhaustive—i.e., don’t collect emails from everyone’s computer except the “document clerk.”
  • Have a written policy about what information is to be gathered and what will be done with the information.
  • Create an index to describe or categorize the information.
  • Back-up or save all the information in one location, preferably a portable hard drive that can be copied and sent to your attorney. It is hard to deal with 50 CDs or DVDs than one hard drive.
  • It is not necessary (nor advisable for cost reasons) to print electronic files for long term storage.

Does using an Owner supplied management tool (Site Manager) for daily diaries (i.e. with a State DOT) relieve you from expanding the level of detail in documentation?

No. Use as much detail as necessary to accurately describe what is required in the report (i.e., conditions, scope of work, installed quantities, labor, man hours, etc.).

As you highlighted the advantages of using a one environment/system between all parties involved, what is the main disadvantage of such application?

Cost … depending on the size of your company and project. If you do not have this infrastructure in place, the initial investment can be costly in terms of licensing fees, usage and management fees, and additional costs for trained personnel.

In regards to emails, what about if you have a disclaimer on the bottom that states that the info is only intended for the person addressed? Can those still be used by the other party?

Yes. No. Depends. If you are talking about emails between individual employees of the parties, then they can certainly be used as party admissions. If you are talking about emails to/from a non-party to the litigation (what may be called a third party), then you can probably use the information in the email and even the email itself if you can get around one of a few evidentiary objections.

What is the scope of coverage under a commercial general liability (CGL) insurance policy on a construction project?  As most attorneys will tell you, "It depends."  It truly depends on the express terms or language of the policy, the cause of the damage, and notably the jurisdiction of the dispute.

The Mississippi Supreme Court heard oral arguments on October 5, 2009 in the case of Architex Association Inc. v. Scottsdale Insurance Co. to determine what exactly is covered under the terms of a CGL policy.  The general contractor (Architex) filed suit against its insurance carrier after the owner the project sought damages from the general contractor for alleged defective work.  The insurer claimed that the defective work was performed by a subcontractor, which was not covered by the CGL policy.  The general contractor contended that any negligent work of the subcontractor should be covered under the "your work" provisions of the policy.  

The trial court held that damages were not caused by an occurrence or accident since the work being performed by the subcontractor was an "intentional act."  The oral arguments on appeal can be found at the Mississippi Appellate Court Video Archive. (The appellate court has some great questions between 1:50pm-1:55pm and 2:01pm). 

In a prepared statement published in the Mobile Bay Business Journal, Architex’s counsel, Dorsey Carson, indicated that a finding for the insurance carrier would render a contractor’s CGL policy practically useless:

"It would exclude coverage for any damages if the act that caused the damage is in any way related to the act of construction. It is a matter of whether the insurer is going to cover its insured for acts that it received premiums for, and for a policy that it marketed to contractors expressly for this type of damage.”

A decision from the Mississippi Supreme Court is expected by the end of the year.  Many in the construction industry are watching this case as it will have a significant impact on insurance coverage disputes:

If your project goes bad and you end up in court … effective project management procedures can help you minimize your exposure.

Worried about your project?

I will be presenting this webinar to show you what you MUST document and what you SHOULD NOT document to help you win in court!  It is sponsored by WPL Publishing Co., Inc., the publishers of Construction Claims Advisor, Construction Project Controls & BIM Report and Green Building Insider.

This interactive program will provide you with guidance to help you develop effective procedures for documenting your projects.  You’ll get answers to your pressing questions, PLUS you will get sample forms and correspondence you can put to use right away to make sure you are documenting everything you should be –  in the right way.  This course will explore:

  • “Putting it in writing” rule – what should you record?
  • For whom are you documenting?
  • What is the hearsay rule?
  • Why are proper records so essential for claims and disputes?
  • Critical project documentation – what you absolutely need to document; and non-critical documentation – what you don’t need to document?
  • How to use project management software and Web-based capabilities to move towards a paperless project, establish good audit trail and consolidate project documentation
    Is written instruction via e-mail the same as a change order?
  • What should you do when a project goes bad?
  • AND MUCH, MUCH MORE!

The presentation is set for Wednesday, October 21, 2009 at 1:00 to 2:30pm (EDT).  You can register online.   More importantly, if you have any great construction “war stories” that you would like to share, please let me know.