Tuesday, July 26, 2011

9 Questions About: Green Building Litigation

Chris Cheatham
from d5R 7/25/2011. click here for comments

Chris Cheatham is a construction attorney in Washington D.C. and a principal at the Law Office of Christopher W. Cheatham LLP.
Chris is a LEED Accredited Professional and has advised numerous companies regarding green building and renewable energy risks and contracts. He is also a frequent speaker for private companies, public agencies, associations and groups on the topic of green building risk management, as well as the publisher of Green Building Law Update and Blueprint Claims Blog.

d5R: When did you coin the term LEEDigation?

Chris Cheatham: I will always remember the moment. It was spring 2009, and I was tying my tie in preparation for my grandfather's funeral. My mind was wandering, probably because I didn't want to think about the task at hand. Suddenly, the word just popped in my head and I knew I had something. I bet that's not the answer you were expecting!

Here's my first blog post about the concept. It was amazing to see the word appear in ENR a few years later. 

d5R: At the time, did you anticipate an increase in litigation involving USGBC's LEED program specifically, or regarding green building certifications generally?

CC: I always anticipated an increase in litigation involving the LEED program because it had such a large market share.  But there is no reason the use of other certification systems could not result in the same type of liabilities and lawsuits. 

d5R: Has that happened? If so, mainly in commercial development, or in residential as well?

CC: There has been very little pure LEEDigation -- i.e. disputes involving certification. It's important to remember that construction litigation takes many years to develop (usually five to 10 years). LEED Certification did not hit critical mass until 2007-2008. We are just now starting to see some examples of LEEDigation emerge and I expect this trend to continue.   

d5R: I understand that green building disputes sometimes stem from a project's failure to get an anticipated level of certification. Please provide an example.
CC: I think your readers would be interested in the Bain v. Vertex Architects case. According to attorney Stephen Del Percio, a homeowner filed the lawsuit in part because the architect “failed to pursue and obtain for the Project certification from the USGBC LEED for Homes Program.” I would suggest reading Del Percio's entry regarding this lawsuit: 

d5R: You have cited construction defects as another source of green building litigation. How is this risk different with "green" projects and products than with any construction projects and/or products?

CC: Frankly, construction defects on green building projects are the same as construction defects on standard projects in that the causes are the same. Construction defects occur when inappropriate materials are used, or the design or construction is not properly completed.

Green buildings do create additional risk for construction defects because new or untested green products are often incorporated and anything new or untested has a  higher likelihood of failure. Other times, designers or builders may not have experience with green buildings and problems occur as a result. 

d5R: In the residential realm, a lot of builders and remodelers make green claims about their projects -- e.g., energy-efficiency, sustainable materials, waste-management, etc. -- but their projects do not necessarily have green certifications. Are they thus exempt from green building litigation?

CC: Absolutely not. If anything residential builders and remodelers face more liability arising from "green" claims. Most states have enacted a Consumer Protection Act that makes it easier for homeowners to bring lawsuits if they are confused by a contractor's claims. If residential contractors make promises about energy efficiency, materials or waste management, and fail to deliver, they could face liability under these Consumer Protection Acts. 

d5R: So, setting LEEDigation aside, what types of risk-management strategies should remodeling contractors and design professionals practice when it comes to green building?

CC: First, I would avoid making energy-efficiency guarantees. Contractors do not control how a home will be used. If the homeowner leaves windows open, and the home is an energy hog, what is the contractor going to do?

Second, using new or untested products can create problems down the road. For example, the Cheaspeake Bay Foundation built the first LEED Platinum building in 2000 and incorporated exposed wood products treated by a fairly new, environmentally-friendly preservative. The building is now reportedly at risk of collapsing because the wood rotted.

Finally, contractors should avoid making promises tied to rebates or incentives provided by federal, state or local governments. If the government entity fails to deliver the incentives, the contractor could be on the hook. In Washington, D.C., this scenario arose after the city reneged on solar rebates to residents.

d5R: What about contracts? I recently asked a green remodeler if his contracts have any language that speaks to the company's commitment to green principles -- e.g., only low/no-VOC paints, locally sourced where possible, etc. His response: "No green language in contracts. That is dangerous territory." He said you can explain why. Why?
CC: I am not sure I agree with the green remodeler. When a customer expects a green home, I think it's important to clearly define the customer's expectations and document these expectations through a contract.

For example, if the homeowner expects LEED for Homes certification, then the two parties should have a clear discussion about what it means to get certification and what will be required to do so. The contractor should then explain the costs tied to certification and incorporate appropriate contract language. 

d5R: A growing number of jurisdictions are now implementing green building codes. What should remodeling contractors and designers (and manufacturers, for that matter) be on the lookout for locally?

CC: Back in 2000, LEED certification was the new kid on the block. Now in 2011, LEED certification has widespread market penetration throughout the country. 

I equate LEED certification in 2000 with green building codes now. The International Green Construction Code (IgCC) is currently under development. Despite the fact that it is in draft form, many jurisdictions have already adopted it as a "voluntary" code. 

Green building codes mostly focus on commercial developments.  But I think you will see a push for green building codes to expand to the residential sector very soon.

We are starting to cover green building codes more in Green Building Law Update. These new codes will shift the standard of care for contractors and designers alike.  Hopefully, our readers will understand and address these new risks going forward.

Chris Cheatham, LEED AP, is a construction attorney in Washington D.C. and a principal at the Law Office of Christopher W. Cheatham LLP as well as the publisher of Green Building Law Update. Contact him at chris@cheatham-law.com

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