Defective Construction

Gallet Dreyer & Berkey
David L. Berkey, Partner

Our client was a new board in a recently constructed building that suffered from serious Local Law 11 problems arising from defective construction. We counseled the board to retain an engineer to determine the cause of the cracking in the building’s exterior façade bricks. The cause was determined to be improper construction, contrary to filed building plans, which put extra stresses on bricks. Once the problem was identified, we made sure that the sponsor was put on notice of the defective condition and arranged for meetings with the board, its engineers, the sponsor, and its engineers and contractors. A plan for remediation of the exterior brick façade by installation of extra-relieving angles was agreed to by the sponsor’s principal. The building agreed to supplement the remediation by paying for installation of additional relieving angles. The parties entered into a tolling arrangement, so that the statute of limitations would not bar the board’s claims should the sponsor not fulfill its agreement to perform and pay for its agreed portion of the repairs.

The parties have so far avoided litigation. Provided the sponsor complies with its agreement to perform the repair work, the board has agreed to release the sponsor from claims for defective installation of the exterior building wall. This agreement and avoidance of litigation has motivated the sponsor to perform the corrective work at little expense to the board, other than its cost for legal and engineering advice and the extra work that it chose to have performed.

Legal Lesson

The board learned that negotiation can be very cost- effective, especially when a board obtains the evidence to show that its claims have merit. Sponsors, engineers, and contractors all want to avoid litigation, with the adverse publicity and unnecessary expense that it can entail. By assembling a team of capable attorneys and engineers, a board can show that it has the firepower to sue if needed, and put itself in a strong position to obtain a favorable outcome in negotiation.