Law & Governance
Determining Liability in Construction Claims: Rarely is Only One Party at Fault
Cases involving third party claims against a construction liability can be complicated, even with a straightforward, lump-sum arrangement between the owner and contractor. As with most things, it would be fair to say that it is rare, in construction liability cases, that a full assessment of the facts will lead to black and white conclusions.
The case described below involved a roofing sub-contractor who was con tracted to install a metal roof on a new commercial facility. Because this case has not yet been decided, neither specific details regarding the case nor our conclusions will be discussed.
BackgroundThe insured was a roofing sub-contractor who contracted with the general contractor to install a metal roofing system at a commercial facility under construction. The metal roofing system was to be supplied by the general contractor.
The general contractor was engaged by the owner on a design-build type of arrangement. The contract between the owner and the general contractor provided for incentive bonuses if the project was completed on or ahead of schedule. Conversely, liquidated damage provisions would apply if the general contractor was late. The roofing sub-contractor was hired on a lump sum basis by the general contractor. Both parties had worked together successfully on previous projects.
The metal roofing system, supplied by the general contractor, was manufactured in the United States.
The roofing sub-contractor commenced roofing operations in the winter, as dictated by the general contractor's schedule requirements. During the installation of the roof, numerous periods of severely inclement weather were encountered. On these occasions, the roofing sub-contractor suggested that the roofing operations should not con-tinue until the weather conditions became more favorable. The general contractor disagreed. Delays in completion of the roof would have delayed completion of the project.
During the installation of the roof, the roofing sub-contractor became aware that the roof was not "fitting together" as it should. The general contractor contacted the supplier who dispatched a technical representative to the site. This representative examined the installation and reportedly commented that the roofer was doing a good job, and that the problems he was encountering were to be expected.
Prior to the completion of the project and acceptance by the owner, roof leaks developed. The owner, the general contractor and the roofing sub-contractor were aware of these leaks. Ongoing attempts to rectify the problem were not immediately successful, and when the owner moved into the facility, large puddles of water from the continuing roof leaks were present on the concrete floor slab.
Months later, after the project was completed and the owner was fully moved in, moisture-related damage to the owner's goods was discovered. Engineers retained by the owner to investigate the cause of these damages concluded that they resulted from excess moisture in the building.
The owner is currently seeking damages related to inadequate performance of the facility and the cost of the damaged goods from the general contractor and the roofing sub-contractor, among others. The owner's estimate of damages is in excess of $1 million.
Determining LiabilityThe liability insurance coverage on the roofing sub-contractor applies only to dam-ages caused to the structure (excluding the roof), and the contents of the facility.
For the purposes of this article, we will assume that the damage to the stored goods resulted only from the moisture in the building. Thus, at first glance, it would appear that the leaking roof was the primary factor contributing to these damages (a black and white conclusion?). However, in a full assessment of the facts, the following additional moisture sources could also be considered:
- Moisture given off by the concrete slab on grade floor during the concrete curing process;
- Water vapor produced by propane construction heaters used to dry the interior of the facility;
- Moisture migrating up through the ground below the concrete floor slab;
- Accumulations of precipitation in the building prior to roof completion;
- Climate conditions;
- The ventilation system;
- The pre-existing moisture content in the goods themselves.
"Black and white" is becoming gray.In addition to the possibility that the leaking roof may not have been the only source of the moisture, there are many issues to consider when assessing the cause of the leaking roof, and the liability for the resulting damages. Some of these could include:
- Deficiencies with the roofing system, which was supplied by the general contractor;
- The weather conditions under which the roof was applied, and concerns raised by the roofing sub-contractor regarding these conditions and their effect on the roofing installation;
- The prior knowledge that the owner and general contractor had regarding the roof leakage problems.
In this particular case, we were retained reasonably soon (less than three years) after the damages were first noted. Despite this, there were still many issues to be assessed. As with most investigations, the passage of time can reduce the ability of an investigator to determine the cause of the event(s). However, when the investigation is concerned with determining the liability of a construction firm, the passage of time can seriously affect the final determination of liability. The effects on the evidence due to weathering, lack of maintenance, abuse in service, change of use, etc., can cloud an already murky picture to the point that determination of liability is not possible. Avenues of subrogation may disappear, and legitimate claims may be fruitless to pursue.
Even the contractual agreement between the general contractor and the roofing sub-contractor, which seemed to be a straightforward lump-sum arrangement, was not what it appeared. The fact that the general contractor was the supplier of the roofing product itself, and provided the roofing sub-contractor, through the technical representative of the roofing product manufacturer, with guidance and assurances as to the quality of the installation, may affect the degree of liability of the roofing subcontractor.
SummaryThe collaborative nature of construction projects often results in shared liability for claims resulting from the construction process. Rarely is only one party at fault. Even when it looks "obvious" that one party is fully to blame, a full and careful assessment of the facts of the case probably will show that there were contributing factors, or even that another party has primary liability for the occurrence.
The passage of time can seriously reduce the likelihood of a clear determination of liability. Accordingly, subrogation possibilities may evaporate, along with the legitimacy of the claim.
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