Community associations are often given common elements in transition that incur damage from design and/or construction deficiencies. Associations typically have limited funds. Even those with ample financial resources are usually governed by Boards whose members are keenly aware of the fact that the Association’s funds are trust monies that need to be carefully managed and wisely expended.

Most board members do not have construction experience and are not lawyers or design professionals. They often do not know what to think when advised by counsel and engineering professionals that invasive testing is needed to permit investigation and documentation of the Association’s claims. Even when confronted with evidence of water infiltration, which they suspect or know may be causing damage, many association have an initial inclination not to want to spend a lot of money on engineering and forensic investigations. Once limited, preliminary testing shows a problem exists, and litigation becomes necessary, the question becomes, “How much testing is needed to support the association’s claims?” This blog is intended to help give some perspective to boards facing such a decision.

In Federal and most State courts, admissibility of scientific expert witness testimony is governed by the “Daubert” standard articulated in Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993). The key purpose of the Daubert standard is to ensure that the proposed expert testimony is both relevant to the issues in dispute and the evidence in support thereof is reliable.

Under Daubert, “the test of admissibility is not whether a particular scientific opinion has the best foundation, or even whether the opinion is supported by the best methodology or unassailable research. Rather, the test is whether the ‘particular opinion is based on valid and reliable methodology. The admissibility inquiry thus focuses on principles and methodology, not on conclusions generated by the principles and methodology. Once admissibility has been determined, then it is for the trier of fact to determine the credibility of the expert witness.” In re TMI Litig., 193 F.3d 613, 665 (3rd. Cir. 1999).

Generally, expert testimony is permitted when:

  1. The expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue
  2. The testimony is based on sufficient facts or data
  3. The testimony is the product of reliable principles and methods
  4. The expert has reliably applied the principles and methods to the facts of the case

Many state courts have adopted nearly verbatim Federal Rule of Evidence 702. For example, the New Jersey Rules of Evidence state:

“If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise.”

It is impossible for any association to afford to pay for its experts to invasively test every inch of a building. That is why courts allow parties to use limited invasive testing done by experts to support an opinion that the same conditions found in the limited testing exist everywhere on the buildings. This process is known as “extrapolation.”

The trial Judge is the gatekeeper of the evidence the jury gets to hear at trial. As a general matter, the use and admissibility of expert testimony based on extrapolation supporting claims of damages caused by design and construction deficiencies is based on an evaluation by the Judge of:

  1. The randomness of the sample
  2. The size of the sample

A detailed discussion of these concepts is beyond the scope of this blog. Generally, a sample must be randomly selected for its results to be fairly extrapolated. It has been said that a random sample is one in which each member of the population has an equal probability of being selected for inclusion in the sample. Absent random selection of samples, courts fear the occurrence of “selection bias.” This can be countered by proper planning. For example, if you have a case where there is suspected damage from water infiltration through exterior walls, your expert could do a reasonable number of moisture probes of each side of each building, augmented by invasive test cuts in selected locations.

The case law on allowing experts to extrapolate from their findings is extremely fact sensitive and voluminous. It is imperative that your attorney be familiar with it in order to plan the investigation with your expert. In some cases, you may even need the services of a statistical expert. What is clear is that the Association needs to have counsel and its experts devise a plan for how to provide sufficient testing to satisfy the Daubertrequirements for admissibility. That process will then allow the Association to understand how much money it needs to spend in order to prove its case and collect damages through mediation or trial.

On November 19-20, 2015, I will be speaking at Perrin Conferences’ First Annual National Construction Defect Conference at the Ritz-Carlton Hotel and Conference Center in Fort Lauderdale, Florida. I am honored to join an esteemed panel of industry colleagues to discuss Navigating the Minefield of Complex Cases (HOA, Condos, Hotels) on Thursday, November 19 at 9am.

The inaugural chairs for this conference are:

  • Gary F. Baumann, Esq., Baumann, Gant & Keeley, P.A., Fort Lauderdale, FL
  • Wilson Townsend, Vice President of Claims, The RiverStone Group, Manchester, NH

Perrin Conferences is offering complimentary registration for in-house counsel and insurance company professionals. They are also offering discounts for multiple attendees from law firms.

Between the agenda and networking opportunities, this is likely a conference worth attending, especially those who regularly deal with construction defect issues on their projects. If you would like to register, please contact Lynnsey Perrin (lperrin@perrinconferences.com) 610-804-6165. Hope to see you there.

Unitowners in condominium associations and homeowners in homeowner associations are often confused about the legal responsibilities of design professionals, general contractors, subcontractors and municipal building officials and building inspectors regarding construction of their homes. This blog is intended to briefly clarify and explain the relationship among these various people and entities.

Architects are licensed professionals who design buildings to meet the needs of the owner. They are required to adhere to all applicable building codes and standards in the industry. To that end the architect creates construction drawings, details, and specifications to direct the subcontractors as to the materials or systems they are to use and how those materials and systems are to be integrated into the overall construction in such a manner as to satisfy the design intent of the architect. Architects have to have an overall understanding of the systems and materials being designed into a building and the requirements of the applicable building codes governing construction. The scope of work of the architect varies from job to job and is typically defined by the contract signed by the architect. For example, the scope of work could be as narrow as being hired by builders to simply produce a set of construction drawings that can be used by the builder to obtain a building permit. After that, the architect has no further involvement. At the other end of the spectrum, the architect is involved in reviewing and approving submittals of materials the builder or subcontractors want to use on the project, reviewing contractor applications for payment of invoices, and even reviewing work done by the general contractor/subcontractors in the field for compliance with the plans, manufacturer’s installation specifications, and details.

The Building Department of the municipality is responsible for protecting life and safety. They review the architectural and other construction drawings for compliance with building codes prior to issuing a building permit. They review things like the height of the building, square footage, intended occupancy, fire ratings, seismic requirements, and other considerations with an eye towards keeping the public safe. Once construction is under way, the building inspectors visit the site to check to see if the building is being built per the codes and approved plans. When construction defects are discovered and damage is found, many homeowners and condominium unit owners want to know why the building inspector and township are not responsible. While they may have some moral responsibility, the law of New Jersey gives them a qualified immunity from liability for negligence in doing building inspections. In the absence of fraud (ie, taking bribes), the building inspectors and the municipalities are immune from civil liability. This immunity was presumably granted by the legislature to prevent every municipality in New Jersey from being bankrupted by construction defect cases.

Continue Reading Understanding the Relationship Between the Architect, General Contractor, Subcontractors and Building Inspector for Construction Defects

Transition is often confusing for condominium associations run by Boards populated with unit owners who are not attorneys and who have no prior experience going through the process. Upon transition of control of the condominium association’s board of directors from the sponsor-developer to the unit owners, a key responsibility of the Board is to engage the services of an engineer or architect to conduct an inspection of the common elements to determine if there are any deficiencies. One of the most important considerations for the Board in transition is spending the Association’s money wisely when it comes to engineering investigations.

This blog is part of a series of articles designed to help condominium associations focus their efforts to investigate the condition of the common elements in a cost effective manner. This article focuses on investigations of buildings clad with fiber cement claddings.

Many condominium buildings are clad with fiber cement claddings that look like overlapping horizontal boards. Some fiber cement claddings are prefabricated panels. Fiber cement is a composite material made of sand, cement and cellulose fibers. It is important to understand how the designers of the buildings intended the fiber cement claddings to be installed. Fiber cement claddings are proprietary products produced by well established manufacturers whose installation instructions are readily available. Fiber cement clapboard siding is intended to be installed over weather resistant barrier (e.g, 15lb felt or Tyvek) and are designed to allow incidental moisture that gets behind the horizontal overlapping panels to drain out of the system. Fiber cement panelized claddings, by contrast, are sometimes installed as a face sealed barrier to water infiltration (whether they were designed this way or not). Like barrier EIFS, these face sealed systems depend entirely upon the face of the panels, flashings and caulk to resist water infiltration. Relying upon perfection of contractors in installing such barrier systems is, in our experience, an invitation to water infiltration problems a few years down the road.

An experienced engineer or architect can look at a building and see deficiencies in the installation of fiber cement overlapping horizontal boards and panels. They normally look for missing or improper flashings, deteriorated or missing sealants and visible evidence of water infiltration inside buildings clad with these systems. Upon completion of visual inspections, experienced engineers typically use pin-type moisture meters (see www.lignomatusa.com for example) to probe the moisture content of the sheathing and framing under the fiber cement claddings. If the probes are inserted into wood and the reading is more than 20%, that typically is viewed as an indication that damage is beginning. If the reading exceeds 30%, that means the sheathing and framing are damaged and must be replaced. If the sheathing and framing are gypsum or oriented strand board (“OSB”), the acceptable level of moisture content in the wood is even lower than it is for plywood.

What the Board needs to understand is that it should focus its investigative efforts and resources on documenting the extent to which water is infiltrating inside the building and damaging sheathing and framing. As fiduciaries and as a matter of good common sense, the Board should be doing this. However, there is a practical reason why this needs to be the focus of the Board’s engineering investigations. The sponsor-developer is almost certainly an LLC or corporation with no assets once the last unit is sold. The subcontractors who constructed the common elements are also very likely to be small companies with no assets of any significant value. Therefore, the only way the Association is getting paid for the deficiencies you find in the construction of the common elements is through insurance policies insuring those responsible for the deficient construction. Analysis of those policies is beyond the scope of this article. For purposes of this discussion, what the Board needs to understand is that the insurance will often not cover your claim unless your engineers/architects can show proof of damage to sheathing and framing. You need to understand this and direct your engineers/architects to focus their investigations on finding this damage.

Elevated levels of moisture in the sheathing and framing under the fiber cement claddings can be caused by many conditions. Missing or improper flashings and open sealant joints are among the common and visibly obvious causes of water infiltration. Others that are not visible without invasive inspection are weather-resistant barrier that is lapped backwards (ie, instead of being installed from the bottom up, it is installed from the top down so the water runs behind the paper), failure to properly incorporate the weather resistant barrier into the flashings, and sealing up the bottom of a drainable system so water cannot escape. Instead, it works its way inside the walls. Determination of the causes of the damage should be done by an experienced engineer or architect who carefully documents the test methodology and results with photographs and video. Samples of particularly nasty-looking damaged wood products should be bagged and marked by date, location and the name of the person who took the sample. This is necessary to enable counsel to use this evidence at trial if that becomes necessary.

In hiring experts to do this investigation, we recommend to our clients that they use engineers and architects who have substantial experience testifying at deposition and at trial. Being a litigation expert is very difficult, high pressure work. Errors made by the expert in conducting or documenting the field investigation can be damaging, sometimes fatal, to your case. Why should you pay your hard earned money to train an inexperienced expert how to follow the rigorous procedures needed to document and prove your claims when there are plenty of experts out there who have done this for many years and are already very familiar with what is expected of them by counsel and the courts?

This is part two of a series of posts discussing Transition by Condominium Associations: Focus of Engineering Investigation. You can read the first post online here.

How do engineers find this moisture damage without tearing off all of the brick and cast stone? They use moisture probes, which are inserted through the mortar joints in the brick and cast stone and into the sheathing and framing. These probes measure the amount of moisture inside the sheathing and framing. If the probes are inserted into wood and the reading is more than 20%, that typically is viewed as an indication that damage is beginning. If the reading exceeds 30%, that means the sheathing and framing are damaged and must be replaced. If the sheathing and framing are gypsum or oriented strand board (OSB), the acceptable level of moisture content in the wood is even lower than it is for plywood.

Elevated levels of moisture in the sheathing and framing under the brick and cast stone can be caused by many conditions. Missing or improper flashings, blocked weep holes and open sealant joints are among the common and visibly obvious causes of water infiltration. Others that are not visible without invasive inspection are weather-resistant barrier that is lapped backwards (i.e. instead of being installed from the bottom up, it is installed from the top down so the water runs behind the paper), failure to properly incorporate the weather resistant barrier into the flashings, and clogging of the air cavity behind the brick and cast stone so that the water cannot run down the weather resistant barrier and out. Instead, it works its way inside the walls. Determination of the causes of the damage should be done by an experienced engineer or architect who carefully documents the test methodology and results with photographs and video. Samples of a particularly nasty-looking damaged wood products should be bagged and marked by date, location and the name of the person who took the sample. This is necessary in order to enable counsel to use this evidence at trial if that becomes necessary.

In hiring experts to do this investigation, we recommend to our clients that they use engineers and architects who have substantial experience testifying at depositions and at trial. Being a litigation expert is very difficult, highpressure work. Errors made by the expert in conducting or documenting the field investigation can be damaging, sometimes fatal, to your case. Why should you pay your hard earned money to train an inexperienced expert how to follow the rigorous procedures needed to document and prove your claims when there are plenty of experts out there who have done this for many years and are already very familiar with that is expected of them by counsel and the courts?

Transition is often times a confusing issue for condominium associations run by Boards populated with unitowners who are not attorneys and who have no prior experience going through the process. Upon transition of control of the condo association board of directors from the sponsor-developer to the unitowners, a key responsibility of the Board is to engage the services of an engineer or architect to conduct an inspection of the common elements and building design to determine if there are any deficiencies. One of the most important considerations for the Board in transition, is spending the Association’s money wisely when it comes to engineering investigations. This is the first in a series of articles designed to help condominium associations focus their efforts to investigate the condition of the common elements in a cost effective manner. This first article focuses on investigations of builds clad with brick and cast stone.

Many condominium buildings are clad with brick and/or cast stone. It is important to understand how the designers of the buildings intended the brick and cast stone systems to be installed. The construction drawings typically have details showing at least the rudiments of the design intent for installation of the brick and cast stone. Brick and cast stone are porus, and therefore, most designers inted for there to be a weather resistant barrier wrapped over the framing sheathing of the building before the brick and cast stone are installed.

That weather resistant barrier is usually 15 pounds felt paper or Tyvek. Typically, there is a 1 or 2 inch air cavity between the weather resistant barrier and the brick or cast stone. This, coupled with the flashings installed at key locations, allows water to drain out of the system through weep holes in the brick and openings at the bottom of the system.

An experienced engineer or architect can look at a building and see deficiencies in the installation of a brick/cast stone system that may lead to water infiltration inside the wall cavity that could damage the sheathing and framing under the masonry cladding. They normally look for missing or blocked weep holes, missing or improper flashings, deteriorated or missing sealants and mortar in joints in the system. Efflorescence (a white deposit on walls caused by salts in the materials leaching out through exposure to water) is a possible indication that water cannot escape through the weeps and flashings and instead is forced to work its way out through the face of the brick or cast stone. If this is true, it is also possible that the water is working its way back inside the building.

What the Board needs to understand is that it should focus its investigative efforts and resources on documenting the extent to which water is infiltrating inside the building and damaging sheathing and framing. As fiduciaries, and as a matter of good common sense, the Board shuld be doing this. However, there is a practical reason why this needs to be the focus of the Board’s engineering investigations.

The sponsor-developer is almost certainly an LLC or corporation with no assets once the last unit is sold. The subcontractors who constructed the common elements are also very likely to be small companies with no assets of any significant value. Therefore, the only way the Association is getting paid for the deficiencies it finds in the construction of the common elements is through insurance policies insuring those responsible for the deficient construction.

Analysis of those policies is beyond the scope of this article. For purposes of this discussion, what the Board needs to understand is that the insurance will often not cover your claim unless you can show proof of damage to sheathing and framing. You need to understand this and direct your engineers/architects to focus their investigation on finding this damage.

Last week, a Miami judge ruled that a lawsuit filed on behalf of homeowners in the wake of the Chinese drywall disaster can proceed as a class action. The case, currently involving 152 homes in Miami-Dade County, Florida, marks the first state class action approved in the country. Under the judge’s ruling, homeowners in Miami-Dade County can choose whether or not they want to be a part of the lawsuit.

In the suit, homeowners in three subdivisions, which were built in 2005 and 2006, are suing the builder, developer, installer and supplier of the defective Chinese drywall. The trial is expected to begin later this year, unless a settlement is reached before then.

To date, there have been roughly 6,000 similar cases filed in a number of states throughout the country, some of which are individual settlements which have already been approved.

If you suspect your home may be built with defective Chinese drywall, contact us here for a free no obligation case review.

U.S. District Court Judge Eldon Fallon in the first “bellwether” trial in the Multidistrict Litigation proceedings for homes containing Chinese drywall ruled that the defective drywall attacks and severely damages copper and silver components of homes where the drywall is installed. The ruling also states that in order to correct the problem, the drywall, wiring, plumbing, air conditioning equipment (including ductwork), and interior finish components such as trim, flooring, cabinetry, and carpeting must be removed and replaced. In homes where Chinese drywall is mixed with non-corrosive U.S.-made drywall, the judge ruled, all drywall from whatever source must be stripped, and all wiring, plumbing, and air conditioning systems throughout the house must be replaced.

The ruling came from the case, Germano, et al. v. Taishan Gypsum Co. Ltd., et al., which pits seven Virginia homeowners against the Chinese government-owned manufacturer Taishan Gypsum. In the published ruling, the judge walks through a point-by-point description of the damage the drywall has caused and explains why the only appropriate remedy is to completely remove and replace the affected building materials. The court rejected all suggestions by drywall manufacturer Knauf Tianjin, appearing on behalf of the absent Taishan Gypsum, that the problem might be solved by removing only certain pieces of drywall or by cleaning copper components rather than replacing them.

You can read the judge’s filing online here.

If you suspect your home may be built with defective Chinese drywall, contact us here for a free no obligation case review.

Lloyd Medley, chief judge of Orleans Parish Civil District Court, stated that the policy exclusions that insurers have commonly been using to deny claims for drywall damage don’t apply. Medley told Audubon Insurance Co. that the three items in its policy that the company had used to deny the homeowners insurance claim that New Orleans residents Simon and Rebecca Finger had made did not apply. The ruling is good news for any Louisiana homeowner whose house was constructed with defective Chinese drywall.

You can read more on this story online here.

If you suspect your home may be built with defective Chinese drywall, contact us here for a free no obligation case review.

U.S. District Court Judge Eldon E. Fallon is expected to issue a detailed ruling shortly, laying out the scope of remediation he thinks is necessary. However, during the trial, two key points were brought to everyone’s attention which presents a problem for the region’s largest affected builder, Lennar:

– the damage to insulated electrical wiring, and
– the apparent ineffectiveness of vacuuming alone to remove residual drywall particles
Lennar started remediating homes last year, stating that it knew what needed to be fixed and how they will go about fixing the problem. Initially, Lennar stated that insulated wiring within the walls of the homes were not affected, and therefore, it could snip off the exposed ends of copper wires and could use the rest. However, recent findings conclude that its not that simple.

During the trial, scientists presented several cases in which insulated wiring had been damaged in homes. Lennar appears to have reached the same conclusion sometime last year, as its protocol has changed, and they now remove all affected wiring in homes.

Though the change to the remediation process has been made for the future, but what about the early homes where the remaining wiring was left behind? That is something we will have to keep an eye out for in the future.

If you suspect your home may be built with defective Chinese drywall, contact us here for a free no obligation case review.