by Anthony da Fonseca
Design and construction defect claims seldom offer obvious allocations of liability. Thus, it is critical to understand all concepts to be investigated. Prior to evaluating the merits of the case, it is important to ensure that several critical steps are taken. Observing the following six tips will ensure that liability and defense costs associated with a construction defect claim are managed appropriately.
1. Information gathering: Start with some basics, as information takes time to collect and opposing counsel may be motivated to move the claim forward quickly.
- Collect all project correspondence, contracts, subcontracts, invoices, plans, change orders and photographs.
- Identify all employees who worked on the project.
- Establish a main contact person to the matter, preferably one that is intimately familiar with the project.
- Issue preservation letters to obtain communications on personal electronic devices and/or on-site construction surveillance video systems.
2. Identify the scope of services: Most disputes fail to settle due to unclear scope of services. Identifying the governing scope is paramount in developing liability defenses. It is equally important to determine whether such scope was expanded beyond the contract terms.
3. Identify the scope of work for other parties involved: Identifying the scope of work for other parties allows you to determine who was acting within their contracted scope and who was not. Such analysis helps assign liability, as well as identify who else should be at the table to share in defense costs for the claim.
4. Duty to defend and indemnity considerations: The contract and insurance policies for all relevant project participants should be reviewed to determine if the insured is required to indemnify or defend other parties on the project. Conducting this review early on will not only impact the defense of the claim but may also impact the resolution of the claim.
5. Issue Reservation of Rights correspondence: When accepting tender of a new claim, it is important to advise the insured that such acceptance is subject to a reservation of rights to withdraw acceptance of the defense if newly discovered facts result in a change of analysis.
6. Considerations for retaining expert witnesses: Construction defect litigation can be rather complex and is heavily driven by expert testimony. It is critical to have an expert witness who can serve as a credible independent party that can determine whether a claimed defect can actually be attributed to the insured. The expert must be able to clearly explain complex issues in a manner that can be easily understood by a judge and/or jury. Selecting an expert is critical to the success of the case and should be evaluated on a case-by-case basis to best reflect the merits of each claim.
We can all agree that the easiest way to avoid liability for construction defect claims is preventing them altogether. However, since prevention of a claim is not always possible, it is important to take early action upon receipt of a new construction defect claim to limit liability and ensure the most efficient expenditure of defense costs.
Anthony da Fonseca
Anthony da Fonseca is an attorney at Kenney & Sams.
