Court Doesn’t Leak Out Remedy for Homeowner’s Defective Roof

An unhappy homeowner sued a roofing contractor for roof defects seven years after her roof was installed. Roemer v. Preferred Roofing, Inc., 660 S.E.2d 920 (N.C. App. 2008) (NC Lawyers Weekly No. 08-07-0634). The homeowner alleged negligence, breach of contract and breach of warranty, seeking only monetary damages. A few months later, the more unhappy homeowner voluntarily dismissed her negligence and breach of contract claims. Why? Because the roof contractor’s motion to dismiss pointed out North Carolina’s statute of repose, which bars actions that seek damages based on defective or unsafe conditions of improvements to real property six years from the date the roofing contractor substantially completed her roof installation.

But what about the homeowner’s remaining breach of warranty claim? After all, the roof contractor provided an express lifetime warranty of dependability. Further, in
Haywood Street Redevelopment Corp. v. Peterson Co., 120 N.C.App. 832, 463 S.E.2d 564 (1995), the N.C. Court of Appeals held a breach of warranty claim was not barred by the statute of limitations (rationale would similarly apply to statute of repose) because each day the warranty was breached a new cause of action accrued. However, the even more unhappy homeowner knew she was in hot water when the court ruled that her case was different because she sought money damages only, when the only remedy she had that could survive the six year statute of repose was for specific performance (court compel roof contractor to fix the problem), not money damages.

Is there a practice pointer here to save for a rainy day? Yes, the best way to keep your head above water is to file your breach of warranty claim within the applicable statute of limitations and repose periods. And if your breach of warranty action is filed more than six years after substantial completion, in addition to money damages, the face of your complaint should also seek specific performance. (This entry posted by Ken Michael, a member of Womble Carlyle’s real estate development and construction law practice group.)

Source: NC Lawyers Weekly

USGBC to Outsource LEED Certification

GreenSource, a publication of McGraw Hill (publisher of ENR), reports that the US Green Building Council (USGBC) is preparing to outsource certification of buildings for its multitude of LEED rating systems. Outsourcing is intended to bring LEED into alignment with norms established by the International Organization for Standardization (ISO) for certification programs, which norms require the standard-setting organization to be separate from the certification organization.

Certification of buildings will be performed by independent, accredited certifiers overseen by the Green Building Certification Institute, a non-profit affiliate of the USGBC. In addition to providing a "high quality, auditable third-party certification", outsourcing should allow the USGBC to better manage the increasing demand for LEED certification of buildings and improve customer service.

Certification of buildings by independent, accredited certifiers will begin in January, 2009. For a more detailed description of how the process will work, visit GreenSource.

NC Supreme Court Alters Incorporation by Reference

A recent case handed down by the North Carolina Supreme Court is likely to have a significant impact on how construction contracts are drafted in North Carolina.

In Schenkel & Shultz, Inc. v. Hermon F. Fox & Associates, 685 S.E.2d 918 (2008), the North Carolina Supreme Court held that the standard practice of incorporating the entirety of a prime contract into a subprime contract (e.g., subcontract or subconsultant agreement) by reference may be flawed. In Schenkel, the court considered whether Schenkel (the Architect) and Fox (the Engineer) intended to incorporate by reference the terms of an indemnification provision contained in the prime contract between Schenkel and the Charlotte–Mecklenburg Board of Education (the “Board”) in their subprime contract, the “Standard Form of Agreement Between Architect and Consultant (AIA Document C141 6th ed. 1987) (the “AIA C141 Agreement”).

The prime contract between Schenkel and the Board contained an indemnification provision that expressly provided for indemnification against loss arising from negligence or breach of contract. By contrast, the AIA C141 Agreement entered into between Schenkel and Fox only required Fox to perform its services “according to this Agreement with the Architect [Schenkel] in the same manner and to the same extent that Schenkel is bound by the attached Prime Agreement to perform such services for the Owner [Board].”

Fox contended that this language merely required it to perform its services in the same manner and to the same extent as Schenkel was to perform its services to the Board. Fox alleged that the term “services” should be construed narrowly so as to include only engineering services, and should not be broadly construed so as to include the indemnification obligations contained in the prime contract.

Schenkel responded that the language of the subcontract was a typical “flow–down” provision in which all the same rights and obligations of the subcontractor flow from the subcontract up through the general contractor to the owner, and conversely down the same contractual claim. Schenkel argued that the flow–down provision of the subprime contract incorporated by reference the entire prime contract, including the indemnification provision such that its subconsultant, Fox, should likewise be bound to the indemnification provision contained in its prime contract with the Board.

The Supreme Court agreed with the Court of Appeals and found that because the language of the AIA C141 Agreement was susceptible to differing yet reasonable interpretations, the contract was ambiguous and, therefore, summary judgment was inappropriate for either party. The Supreme Court sent the case back to the trial court for it to determine the “intent of the parties” with respect to whether the parties intended for the indemnification provision contained in the prime agreement to apply to Fox in the performance of its services under the AIA C141 Agreement.

The lesson to be learned from the Schenkel decision for construction law practitioners and professionals alike is to avoid the temptation to simply incorporate by reference the prime contract en toto. The better drafting technique, and the one that our Supreme Court appears to now require, is to expressly incorporate the provisions that the parties intend to govern in the event of a dispute, including, but certainly not limited to, the indemnification provision. (This entry published by Carson Culley, a member of Womble Carlyle's construction law practice group.)

19 Awards for Campus Architecture, Buildings, Plans and Landscapes

The Society for College and University Planning (SCUP) and the Committee on Architecture for Education of the American Institute of Architects (AIA-CAE) have announced 19 awards in the areas of architecture, campus planning and landscape architecture. Winners included not just American universities but also projects on foreign campuses, such as the master plan for the faculty of arts and sciences at the Aga Khan University, in Karachi, Pakistan, by Payette.

Recognition went to a variety of new (Alice Paul Residence Hall at Swarthmore College) and renovated/restored (Dalton Hall at Bryn Mawr College) structures, from housing (Riverside Housing Initiative at Harvard University) to theaters (Performance and Studio Arts Campus at Columbus State University) to technical centers (PDSI (Physics, DMSE, Spectroscopy and Infrastructure) Project at M.I.T.) to a storm water-management master plan (Meadow Creek Regional Stormwater Management Master Plan at University of Virginia.).

A complete list and links to the awards and images may be found at http://www.scup.org/membership/awards/2008/. (This entry published by Liz Riley, a member of Womble Carlyle's real estate development and construction law practice group.)

Dim on BIM?

Sure the future of Building Information modeling (BIM) is bright, but the path to that future has a temporary dim - based on complaints from folks in the construction industry.

A recent survey of structural engineers reveals a sunny forecast - 74% of respondents think they will have to use BIM to meet their client needs in less than 12 months. Published articles espousing the bright and growing future of BIM are legion.

But not fast enough according to a recent ENR article that reports findings from an April eConstruction Industry Roundtable. The biggest gripe is lack of interoperability. Currently, software is imperfect and platforms are not compatible. A steel fabricator on the panel opines: "I keep hoping and looking for leadership in the general construction industry to promote a true interoperable solution where none of us is tied to a single software house."

The rate at which BIM is being adopted in the construction industry is accelerating, however, "significant impediments still remain in the path of broader implementation." This, according to an Associated Construction Publications article citing a recent Eighth Annual CMAA/FMI Survey of Owners. The biggest cloud in the sky? Lack of expertise and industry standards.

Some rays of light have emerged, with recent standards promulgated by the National Institute of Building Standards, the Associated General Contractors of America (AGC), and an upcoming ConsensusDOCS BIM Addendum. Time will tell "weather" the mix of these different standards will result in an atmosphere that is stormy or calm. (This entry posted by Ken Michael, a member of Womble Carlyle’s real estate development and construction law practice group.)