Green Litigation Could Have Been Worse
One of Green Building Law Update's favorite topics in 2008 was the Shaw Development v. Southern Builders case. You may recall that the Shaw Development v. Southern Builders complaint was one of the first examples of green building litigation, which resulted from a project's failure to obtain green building tax incentives.
After recently research the condominium project, I was stunned, but not all that shocked to read the following headlines:
Crisfield Condo Sales Slump; Captain's Galley Restaurant Closes
Condominium auction sale canceled
The first article describes the struggling Shaw Development project:
Twenty-three condominiums sit along the water in Crisfield. So far only six have been sold. At the bottom of the condominium is the empty Captain's Galley restaurant. It closed on Monday. Shaw said the operators have not paid rent in a couple of years.
The second article describes the results of the condominium project's struggles:
A foreclosure sale planned for the waterfront Captain's Galley Condominiums was called off Friday after the owner filed for Chapter 11 bankruptcy. The renewed interest in the condo units is due in part to recent price reductions. Two bedroom units now start at $247,000 and a three-bedroom listed at $369,000 will probably be reduced to $359,000, she said.
"They're huge reductions -- less than half the original price," she said.
If the Shaw Development v. Southern Builders case had gone to trial, it would have resulted in very messy green building litigation. A good attorney would have argued that the condominium sales slump and the restaurant closing was the result of the project's failure to achieve LEED Silver certification. A good attorney would have argued that the failure to achieve certification not only resulted in the lost tax incentives, but also resulted in the slumping sales and restaurant closing.
Do you think Shaw Development could have successfully recovered these damages?
Related Links:
- Crisfield Condo Sales Slump; Captain's Galley Restaurant Closes (WBOC)
- Condominium auction sale canceled (DelmarvaNow.com)
- Shaw Development, LLC Files for Chapter 11 Bankruptcy Protection (GRELJ)
- Shaw Development v. Southern Builders (GBLU)
Photo Credit: WBOC
Chris,
As you mentioned a good attorney would certainly have made those arguments. I feel there would be serious uncertainty as to whether or not they would be able to recover for them as it would be difficult to show that the diminution in value was caused by the failure to achieve certification and not as the result of the general decrease in the market.
In looking at environmental law cases where there has been a release of pollution and a decrease in the value of homes nearby but where the pollution has not actually "touched" the property whose value has decreased courts have been extraordinarily reluctant to award damages for a decrease in value. Since we do not have any green litigation cases to base our analysis on I believe the judges would look to environmental law cases and determine that, absent a conclusive showing that the failure to obtain certification was the cause of the decrease in value, that damages cannot be awarded.