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Following are four things you should know

about managing a defective building:

No. 1 – Timing is everythingOne of the frst steps a party should take if

it discovers or receives notice of a defect

is to determine whether, from a timing

perspective, the law still allows claims to

be made against responsible parties. Every

state has laws that limit the time parties

have to make claims to enforce their rights

or seek recovery after they have been dam-

aged (known as a “statute of limitations”).

Many buildings, at one point or another, experience

leaks or the effects of other design and construc-

tion errors. While no two defect claims are identi-

cal, parties can make strategic decisions to limit the likelihood

of a successful claim against them, and can use those same

considerations to successfully assert claims against those par-

ties responsible for building defects.

Managing a defective buildingFour things every construction

executive should know

By Deborah Cazan & Breana Ware

130 COMMERCIAL CONSTRUCTION & RENOVATION — MAY : JUNE 2016

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Even if you think you’re working amicably with all potentially responsible parties toward a resolution, you always must consider the “what if” of ending up in litigation.

Deborah Cazan is a partner in Alston & Bird’s Constructions & Government Contracts Practice Group,

where she focuses on representing clients in litigation, arbitration and mediation of construction,

development and real estate related disputes. Breana Ware is an associate in the group.

If you are running up against that deadline, parties can enter

into agreements that postpone or “toll” that deadline. If that deadline

has already passed, and you are the damaged party, you may be left

holding the bag.

No. 2 – Provide notice to potentially responsible partiesTo optimize recovery against responsible parties, it's important to

provide timely written notice of the potential defects in accordance

with the terms of any operative agreements.

For example, many construction contracts impose a duty upon

a property owner to report, in writing, any defect they discover. Many

contracts also include a requirement that notice be made “immediate-

ly” or “within a reasonable amount of time.” A party’s failure to notify

an owner, architect or contractor about a discovered defect within the

required time can be fatal to their claim, or at the very least, provide

the other side with effective defenses to the claims against them.

The content of a party’s written notice of a defect also is

important. Notices should be carefully worded, since the information

conveyed in them can impact your claim down the road. For exam-

ple, if you issue a notice of a defect to the contractor and architect

for the same defective condition, both parties will attempt to use and

rely upon the notice to the other party as evidence that they're not

responsible for the defective condition.

Also, if you provide a notice that sets forth the date a defect

was frst discovered, the other side could use and rely upon that

notice to argue that you failed to make your claim within the required

time limits. Understanding the requirements and potential pitfalls

of notice requirements are the frst step to successfully making or

defending against a construction defect claim.

No. 3 – Testing and investigation of the defectAnother step in the process of addressing a defective building

condition is to determine the cause of the defect and the best course

for repairs. Very often, this is easier said than done. Contractors and

designers almost will always point fngers at one another.

So, owners often will engage consultants to help them deter-

mine who the responsible party is. This determination often is made

through forensic testing. Because this testing can be costly and time

consuming, parties should plan this process with an eye toward

litigation to protect their interests in case the responsible parties are

unable or unwilling to repair the defect.

For example, consider whether the testing frm you engage has

litigation experience. The best frms will have a good understanding

the substantive issues, the litigation process and the potentially

confdential nature of their communications.

It also is imperative at this stage that the damaged party

offer and allow all potentially responsible parties the opportunity to

view the damages and test the existing conditions before they are

disturbed. If the damaged party fails to do this, it likely will face a

“spoliation” claim by the defending party. Spoliation basically is a

violation of a duty to preserve relevant evidence, and a failure to

preserve relevant evidence can result in the court issuing sanctions

against you.

For example, a court could decide

that, since you destroyed relevant evidence,

you are not permitted to introduce your own

expert’s testimony. Spoliation claims are a

costly distraction from the relevant issues

in a case, and most spoliation claims can

be easily avoided.

No. 4 – Common claimsThe most common claims in construction

defect cases are for breach of contract,

breach of express and implied warranties, and

negligence, which can mean either negligent construction or negligent

design. Claimants make a number of strategic considerations when

deciding when to make a claim, and against whom. These decisions are

guided not only by actual responsibility for any damage or defect, but

also by which parties are solvent, and whether insurance is available.

Claimants also consider whether they have a greater likelihood

for success if they align with one party over another. For example,

owners may be hesitant to fle claims against architects if they

need the architect to assist them in preparing their case against the

contractor, who they may consider more responsible for the defects

and resulting damages.

While no two defect claims are identical, every defect claim

requires careful planning. Even if you think you're working amicably

with all potentially responsible parties toward a resolution, you al-

ways must consider the “what if” of ending up in litigation. Employing

some of the strategies discussed here can help maximize recovery

and minimize liability. CCR

132 COMMERCIAL CONSTRUCTION & RENOVATION — MAY : JUNE 2016