| Perils
of Remedying Disputed
Defective Design or Construction
By
John S. Mrowiec
Determining the cause of water infiltration
into a building can be challenging. Which elements of the structure are leaking?
Is it a design, fabrication, installation or maintenance issue?
Initial
impressions, even consensus opinion developed by experts years later, might later
prove to be mistaken.
Litigation may be likely or, perhaps, already has
commenced. How and how quickly can the infiltration be corrected? Does investigating
or correcting the problem destroy the evidence necessary to determine causation
and fault? What if an initial impression, or even consensus opinion, about the
cause ultimately proves to be mistaken?
An owner recently learned an expensive
lesson on the perils of attempting to correct water infiltration while litigation
was ongoing in Harborview Office Center, LLC v. Camosy, Inc., 2006 Wis. App. LEXIS
149 (2d Dist. Feb. 15, 2006).
A developer, Harborview Office Center LLC,
entered into a construction contract with Camosy Inc. as general contractor to
construct a three-story office building in Kenosha.
The building envelope
included aluminum windows and an exterior insulation and finishing system (EFIS).
A component of the EFIS System is a plastic foam board insulation approximately
1 to 1.5 in. thick referred to as an expanded polystyrene layer (EPS).
For
architectural interest there were 0.75-in.-deep horizontal and vertical V-shaped
grooves cut into the EPS. A waterproof basecoat and embedded fiberglass mesh were
then applied to the entire face of the EPS board over the V-grooves before application
of a stucco-like finish coat over the basecoat.
Water Problems Start The project was completed in late 1997. In late 1997 or
early 1998, prior to tenant occupancy, signs of water infiltration appeared. The
owner discovered additional water leaks with each rainstorm.
The contractor,
architect, window installer and EFIS installer participated in varying degrees
in early efforts to identify the cause of the leaking and to remedy the problem.
The efforts were only partially successful in reducing water infiltration.
Approximately
four years after project completion, the owner sued the contractor, the architect,
the window installation subcontractor and the EFIS installation subcontractor.
The owner's complaint, and subsequent pleadings, each alleged "significant
and recurring water infiltration" and continued that "[w]ith nearly
every rain, windows leak." The owner contended that it would be necessary
to remove and replace all of the windows to resolve water infiltration problems.
At
some point, one of the owner's insurers, paid under an insurance policy, but the
court opinion does not disclose the amount. The insurer intervened in the case.
The
parties retained experts to identify the design and construction deficiencies
causing the water infiltration and to evaluate a process to correct deficiencies.
The owner's expert opined on several deficiencies that contributed to the water
infiltration.
He did not consider that cracks in the V-grooves of the
EPS portion of the EFIS System were a cause.
Remediation Starts By May 2003, the owner wanted to
proceed with remediation. On May 28, 2003, the owner conducted a demonstration
on how EFIS would be removed around windows, removal of the windows and inspection
of head jambs and sill flashing. The parties, some of the experts and counsel
were in attendance. The owner's expert would supervise the remediation.
The
owner hired a contractor to perform the remediation. When the remediation contractor
visited the site to measure the windows, he noticed cracks in the V-grooves.
Concerned
that window replacement would not completely resolve the leaks, the remediation
contractor suggested that water testing be performed.
The owner told the
remediation contractor that there had been enough testing and wanted to proceed
with remediation. According to the owner, the cracks were "superficial"
and an EFIS installer and expert had analyzed them.
After the new windows
were installed, the owner's expert conducted water tests. When an area failed,
it was determined that there was a "slight leak through a crack" in
the EFIS.
Now, the owner's expert suspected that cracks in the V-grooves
were a potential source of water infiltration. The next test area failed too.
Given
the results of the water tests on the first two areas, the owner's expert advised
owner that defects in the V-grooves were a possible source of water infiltration.
The owner's expert ordered the remediation contractor to grind and refinish the
V-grooves.
After grinding and refinishing the V-grooves, the water test
passed. Thereafter, all V-grooves were ground and refinished. By Sept. 18, 2003,
the reworking of the V-grooves was substantially complete. The owner's expert
did not tell the other parties about his new opinion or of the V-groove work. Spoiled
Evidence? On Sept. 17 and 18, 2003, the principals of the owner testified at
deposition that their expert had recommended the repair of EFIS cracks, that the
cracks were a source of water infiltration and that they had authorized repair
work beyond the original window replacement.
After additional discovery,
the various defendants filed a motion to dismiss the case on the ground that the
owner had spoiled the evidence. The trial court found that the first time defendants
had noticed that the owner contended the V-grooves were a source of water infiltration
was at the owner's principals' depositions after the V-grooves already had been
ground.
The trial court dismissed the case. The owners performing the V-groove
work, defendants' "ability to gather evidence concerning the source of water
infiltration and to allocate responsibility amongst themselves was compromised"
Harborview Office Center, 2006 Wis. App. 149, * 14.
The owner appealed.
The Wisconsin Appellate Court affirmed the trial court.
The governing rule
is that "There is a duty on a party to preserve evidence essential to the
claim being litigated." The parties had focused on the windows as the cause.
The owner never notified the parties that the owner's expert had changed his opinion
and was ordering remediation of the V-grooves. Here, the owner's conduct was "egregious
because it was a flagrant, knowing disregard of the judicial process" Harborview
Office Center, 2006 Wis. App. 149, * 17-18.
The Appellate Court was "sensitive
to the fact that [the owner] has spent over $1,700,000 in remediation and now
may not be able to recover its expenses."
However, under the facts
of the case, dismissal was appropriate (Harborview Office Center, 2006 Wisc. App.
149, * 31).
John S. Mrowiec is a partner
with Chicago-based Conway & Mrowiec, a construction and public contracts law
and litigation practice. He may be reached at (312) 658-1100. For information,
go to the firm's Web site at www.cmcontractors.com.
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