Green building has become America’s new fad. You can define green building as an outcome of a design which focuses on increasing the efficiency of resource use including energy, water, and materials–while reducing building impacts on human health and the environment during the building’s lifecycle, through better siting, design, construction, operation, maintenance, and removal. With federal government funding now available for construction companies to “go green” with their building materials, do you foresee this being the next big boom? Here’s where it gets a little tricky the Leadership in Energy and Environmental Design LEED has become the de facto green-building certification standard in the marketplace. Under the LEED system, a building can achieve a ranking of certified, silver, gold, or platinum based on the number of points earned. To gain points, certain design features must be incorporated into the project.
LEED proponents routinely advocate that the savings from energy bills promptly pay back those extra costs. The problem with this position is that it is unproven and, in some instances, highly-contested.
It will be interesting to see if these new green practices will increase construction defect litigation in that field. With President Obama’s American Recovery and Reinvestment Act (ARRA) infusing hundreds of billions of dollars into new infrastructures including LEED projects and other high-efficiency energy projects construction companies “going green” have been on the rise. According to a new study by McGraw-Hill Construction, 35 percent of architects, engineers, and contractors report having green jobs, which represents one-third of the industry. That share is expected to increase so that by 2014 green jobs will comprise 45 percent of all design and construction jobs.
The most notable case to date for green construction defect litigation was that of Steven Gidumal. v. Site 16/17 Development LLC. The owners of a $4.2 million condominium unit in the Riverhouse apartment building in New York City sued the building’s developer and manager for $1.5 million for damages related to a variety of alleged green-construction defects, for example, insufficient heat from the “energy efficient” HVAC system. The owners’ cause of action included breach of contract and fraud based on alleged misrepresentations in the condo offering plan about the building and the units. While this case was resolved out of court, it is a reminder that developers can face allegations of fraud, misrepresentation, or both when promoting a building’s LEED certification or performance expectations to prospective owners, tenants, or both.
More litigation can also spring up from the newly implemented International Code Council International Green Construction Code (IgCC) standard. This new standard represents a fundamental shift in the standard of construction, which traditionally emphasized health or structural provisions as opposed to green provisions. With the elevation of several enforced green construction codes including at least 55 percent of building materials must be salvaged, recycled content, recyclable, bio-based, or indigenous may lead to more lawsuits for architects, contractors, and developers.
Research shows that lawyers representing construction clients involved in green-building projects can mitigate the liability risk by clearly setting forth the rights, remedies, and responsibilities of parties in construction contract documents.
How do you see this affecting the construction and construction defect litigation industry?