Following the construction industry and related legal topics in the United States.

Tuesday, May 8, 2007

Errant Mail Carrier Delivers News of Missing Rebar

A mail carrier test driving a car in a parking lot crashed into a Matthews, North Carolina elementary school. As a result, school officials discovered over 80 percent of the block walls did not have necessary steel reinforcing bars. The school was completed in 1993, the car vs. wall mishap occurred in 2001, and the school filed suit in October 2004, eleven years after the school was built. Since North Carolina has a six year statute of repose barring stale claims, the school can’t sue the contractor, right? Depends. In Charlotte-Mecklenburg Board of Education v. R.L. Casey, Inc. et al., Mecklenburg County Superior Court No. 04 CVS 18745, the tribunal had to determine whether the contractor committed fraud or willful or wanton negligence – exceptions to the statute of repose.

An AIA contract governed the underlying dispute, so the case was compelled to arbitration. Ultimately, the arbitrator reduced the school’s award 25 percent from $2.1 million to $1.6 million because the school’s architect and engineer agents had at least constructive notice of the deficiencies and had opportunities to do more inspections. The contractor’s superintendent assured the engineer that the steel rebar was in place, so the arbitrator charged the contractor with willful and wanton negligence, for wrongfully concealing evidence and affirmatively representing that the rebar was in place. Hence, no statute of repose limitation.

In February 2007, Mecklenburg County Superior Court entered the arbitration award and both sides appealed. Two weeks ago, the parties settled working out terms for the contractor to pay the school over $1.6 million.

Lessons learned? If you are a contractor who knowingly fails to install rebar in walls and lies about it, don’t expect the courts to let you off the hook after six years. And the lesson for the mail carrier, wear seat belts and find a larger parking lot.

For further information, see the April 30, 2007 edition of NC Lawyer's Weekly. (This entry posted by Ken Michael of Womble Carlyle’s construction and real estate practice group).


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