On July 23, 2015, the parties in the lawsuit The Chesapeake Bay Foundation, Inc., et al v. Weyerhaeuser Company, et al, pending in the U.S. District Court for Maryland, filed a Stipulation of Dismissal with Prejudice following a confidential Settlement Agreement and Mutual Release.
Because the settlement is confidential we do not know precisely how this case ended.
But we do know the facts as recited by the trial judge in a May 4, 2015 opinion ruling on motions, ..
More than 15 years ago, CBF contracted with SmithGroup, Inc. to design the Philip Merrill Environmental Center, CBF’s headquarters, on the Chesapeake Bay in Annapolis, Maryland. CBF also contracted with Clark Construction Group, LLC as general contractor to oversee the construction, which spanned from 1999 into 2000. SmithGroup’s ‘green’ design called for exposed structural wood members outside the envelope of the Merrill Center, including some that penetrated the building’s façade.
Weyerhaeuser, a manufacturer of columns and beams, agreed in a purchase order to provide Parallams to Clark for use as the exposed wood members. Parallams, which have a rough-hewn appearance, are manufactured by bonding together strips of wood (i.e., a then new, LEED rapidly renewable material). The wood strips’ lack of uniformity creates channels, or avenues, that run longitudinally through the Parallams. Thus, water is expected to infiltrate Parallams used outdoors. To protect against rotting, Parallams are pressure treated with a wood preservative.
The Clark Weyerhaeuser purchase order required Weyerhaeuser to treat the Merrill Center’s Parallams with the preservative PolyClear 2000 (i.e., a then new, LEED low emitting material). Weyerhaeuser engaged third party defendant Permapost Products Co. to apply the PolyClear 2000 treatment, and Permapost provided certificates to Weyerhaeuser verifying that the treatment had occurred. Nonetheless, 5 years later, CBF discovered that the Parallams indeed had rotted and deteriorated and subsequently learned that the Parallams had not been treated with PolyClear 2000 as certified, that PolyClear 2000 was not in any event well suited to the job of preserving the Parallams, and that Weyerhaeuser had knowingly given false assurances to the contrary.
Less than 50 days after the trial judge recited those facts in an opinion granting in part and denying in part cross motions for summary judgment, the parties entered into the Settlement Agreement. Weyerhaeuser’s third party action against Permapost is unaffected by the dismissal and remains scheduled for trial beginning November 9, 2015.
Despite the confidential settlement we know a lot about this case. CBF initially settled with SmithGroup and Clark who undertook remediation measures which involved replacing the Parallams and then they all commenced this action against Weyerhaeuser to recover more than $6 Million related to the deteriorating columns. Those interested in the procedural history of this case may look to my earlier blog post Litigation Over First Ever LEED Platinum Building.
Substantively the case suggests there is no more liability arising from green building versus other construction, but that the liability is different.
The crux of this case is one of those differences, claims arising from materials. It should give architects pause, now more than ever, that specifying new or untried materials and products (that are often the keystone of sustainable building) comes with unique risks; and in this case PolyClear 2000 was specified even before the emerging era of expanded liability arising from environmental product declarations and health product declarations.
Finally, the most significant take away from this case, that involved sophisticated parties engaged in a multi-Million Dollar green building project that was the first LEED Platinum building, is that properly drafted contract documents are both the best sword and shield for mitigating risk.