Southern Builders v. Shaw Development: Green Building Claims
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Today, Green Building Law Update continues a discussion of the Shaw Development v. Southern Builders case, which demonstrates the emergence of green building litigation. On Monday, we reviewed basic facts related to the legal case and on Wednesday we looked at the contract between the two parties to determine green building responsibilities. Today we focus on the causes of action alleged by Shaw Development in the counter-complaint.
When owners and developers move forward with green building projects, they often do so with the goal of achieving a specific green building certification. What happens if a building fails to achieve the anticipated level of green building certification?
The owner may blame the designers, engineers, contractors and subcontractors for such a failure and sue one or all of the parties. Based on the counter-complaint and Project Manual, Shaw Development anticipated that the Project would achieve LEED Silver Certification and brought an action for breach of contract and negligence against Southern Builders when the certification was not obtained.
The liability of parties for failure to achieve a green building certification will be determined by the relevant contracts or related promises, which were reviewed on Wednesday. If a contractor guarantees a specific green building certification, the contractor will be responsible for the failure to achieve certification. The contractor should only commit to constructing the building per the approved design and using the approved materials. If the contractor performs in accordance with the contract, design and specifications, there should be no liability even if the building does not achieve the desired certification level. The contractor also needs to make sure that potential liabilities flow down to its subcontractors. The owner, on the other hand, may have valid reasons for requiring that the contractor guarantee green building certification. For example, the project may have to achieve certification to comply with green building codes or regulations.
On Monday, we will review the related damages alleged by Shaw Development and finish the discussion of this case. In the meantime, check your green building contract!
Related Links
- The Anatomy of America's First Green Building Litigation (gbNYC)
- The First LEED Lawsuit...Great.... (Real Life LEED)
- Open the Floodgates: The Era of Green Building Litigation (Greener Buildings)
After reading the counter-complaint, I find myself thinking about 2 things in particular:
1) According to the counter-complaint, the builder was responsible for a lot of unfinished work and several larege costs the developer incurred. One doesn't have to read too much between the lines to realize the developer and builder had contentious relationship brewing for quite some time during the construction process. So one wonders if there would have been any litigation at all had it not been for the loads of other unfinished work and negligent actions. It could be that the LEED part of this case is an additional issue rather than the primary agent that invoked the developer's ire and therefore the lawsuit. (The pricetag seems to argue otherwise, but it is just a thought.)
2)The clause pointed out in exhibit C is in itself a pretty weak argument that the builder was obligated to achieve LEED certification, as it is only intended to be a description of the building's design. So unless the specs go into more detail about the builder's specific obligations with regards to certification, I don't see how this clause could be used to demonstrate breach of contract.
Jason,
I agree with you on both points. Unfortunately, when green building projects result in contentious litigation, the certification, or lack thereof, could be seen as leverage by one of the parties to the lawsuit.
You are also right on the mark with your analysis of Exhibit C, the Project Manual. Are you sure your not a lawyer?
For further analysis of the contract documents and green building responsibilities, see my post on Wednesday.
Thanks for the great comments!