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					Strategies for the Defense of
Condominium Claims
Beazley Expert Retreat
June 5, 2007
Sam Muir, Esq., Collins Collins Muir & Stewart, LLP
Gary Zwayer, AIA, Wiss, Janney, Elsner Associates, Inc.
Dan Murphy, P.E., Environmental Systems Design, Inc.
Michael Johnson, AIA, Carrier Johnson
Larry Borda, Esq., Beazley Group
Participants
Sam Muir Esq. is an attorney based in Los Angeles with
extensive experience in the representation of architects and
engineers. He is a co-sponsor of this event and he will act
as counsel for the Owner Developer;

Dan Murphy, P.E. is a principal of Environmental System
Design, Inc. They are consulting MEP/FP/TC engineers. He
will act as the employee of the mechanical contractor who
prepared the design;




                                                            3
Gary Zwayer is a registered architect who works for the firm
of Wiss, Janney, Elsner Associates, Inc. and who has
expertise in cladding systems and water infiltration, among
many other things. He will act as the expert for the
Condominium Association;
Michael Johnson, AIA is a registered architect and principal
of Carrier Johnson. He will play the role of the architect.
Larry Borda Esq. is a Claims manager for Beazley with 23
years of experience in providing a defense and counsel to
architects and engineers. He will act as moderator.



                                                           4
The Classic Scenario

 Commercial developer creates a limited liability partnership or
  LLC solely for purposes of constructing this project.

 The developer fancies himself a builder and does as much as
  possible on his own. This includes acting as a CM, retaining
  the subs directly and performing construction administration
  tasks such as pay requisition approval and site observation.

 Paperwork is sloppy. Agreements are often not fully executed,
  paper trails for important documents are non existent and
  files are not preserved.


                                                              5
 The developer markets the property aggressively, using
  catch phrases such as “world class”, “first class” or “state of
  the art” etc., which most people realize is mere “puffery” but
  which savvy lawyers can morph into misrepresentations.

 Construction issues and deviations from the plans are not
  discovered in the field.

 The developer controls the association until a certain
  percentage of units is sold and the condominium
  association takes control. -- look out !



                                                               6
Issues

“Mis” or “non” existent communication:
    Owner to Contractor
    Contractor to Contractor
    Architect to other Consultants and Contractors
    Owner to ultimate consumer




                                                      7
Design Build -- the good, the bad and the ugly

 Value engineering run amuck with little input, if any, from
  the Architect and no coordination as to marketing claims
  made by the Developer. This is especially true for MEP
  issues such as corridor exhaust, instant hot water and
  public space comfort levels
 Questionable design quality
 Lack of insurance




                                                                8
Responsibility but no control

 No role in the formulation of the contracts
 Design responsibility but no role in the identification of
  deviations from Contract Documents in the field
 No role in identifying or rectifying design issues in the field
 No central role in the flow of communication
 The Association makes direct claims against the Architect
  (who is no longer protected by the economic loss doctrine)
  that include a failure to deliver what was advertised,
  especially where the Developer is no longer a viable entity




                                                                    9
Our Case Background – with some amplification
 The building is a 20 story EIFS clad condominium with
  enclosed parking on the first 5 floors.
 The Owner/Developer retained an Architect for the
  preparation of the architectural and structural plans.
 The mechanical design was prepared in house by the
  Mechanical Contractor as part of a design build contract.
 The Owner/Developer retained each of the trade contractors
  directly.




                                                          10
Our Case Background – with some amplification
 The local Code enforcement ordinance includes an
  appearance control board that must approve the
  appearance of all buildings. This board required the garage
  to be enclosed to match the remainder of the building
 The Architect had no pay requisition approval or field
  observation duties. These functions were “performed” by
  the Owner/Developer
 The executed AIA agreement the Architect forwarded to the
  Owner/Developer was never returned




                                                           11
Background – with some amplification
 As is typically the case, during the turn over of the
  property from the Owner/Developer to the
  Condominium Association, the Association retained a
  consultant to inspect the building and identify any
  flaws in the design and construction.
 The consultant was given a list of perceived
  deficiencies from the Association that include:
    mold in exterior walls, especially in the indoor pool
     area and;
    Odors from cars in the garage entering the
     condominiums.




                                                             12
The Condominium Association Expert




Gary Zwayer will play the role of the consultant for
the plaintiff, condominium association.




                                                       13
The Investigation
 The Consultant performed an extensive investigation
  that included the following:
    Analysis of the Contract Documents
    Complete visual inspection of the building
    Air sampling to determine mold or other airborne
     contaminants
    Water testing of the exterior walls
    Sample cuts in the interior and exterior portions of
     the walls to determine as-built conditions and
     amount of damage


                                                            14
Report by the expert for Plaintiff
 The Architect’s design failed to provide for proper flashing at
  all penetrations of the drainage EIFS system and the
  Architect’s approval of shop drawings failed to identify the
  missing flashing
 The contractors failed to install flashing at all penetrations of
  the drainage EIFS system, and leakage into the walls
  occurred due to the lack of flashing
 Although Code compliant, the mechanical system designed
  and installed for the pool is inadequate because it fails to
  utilize outside air to lower the moisture content of the interior
  air and prevent moisture accumulation in the walls


                                                                15
Report by the expert for Plaintiff

 The exhaust system designed and installed for the enclosed
  parking floors is so deficient that it is virtually non-existent
  and the garage will have to be abandoned or all enclosing
  walls removed
 The Architect failed to require a complete air vapor barrier
  in the walls of the pool
 The Architect should have anticipated requirement by the
  local appearance control board that garage be enclosed.
  Had this been done the original architectural drawings
  would have shown this which, in turn, would have put MEP
  on notice as part of its preparation of the original drawings.


                                                                 16
Report by the expert for Plaintiff re: Damages

 To repair the improper flashing at all penetrations of the
  drainage EIFS system, at least 6 in. of the EIFS will have to
  be removed, and new EIFS installed to match the existing.
  The opinion of probable cost is $2,472,500 excluding
  unknown amount of repair of damaged wall materials.
 The mechanical system installed for the pool will have to be
  replaced with a new system that includes negative
  pressure, exhaust of interior air and use of exterior makeup
  air. The opinion of probable cost is $129,400 excluding
  unknown amount of repair of damaged wall materials with
  modified air/vapor barrier at a probable cost of $100,000.




                                                               17
Report by the expert for Plaintiff re: Damages

 The exhaust system designed and installed for the enclosed
  parking floors is so deficient that it is virtually non-existent
  and the garage will have to be abandoned or all enclosing
  walls removed and replaced with a decorative open grille
  work. If approved by the appearance control board, the
  opinion of probably cost for the open grille work is
  $3,375,000.




                                                                     18
The cross exam of plaintiff’s expert




                                       19
Report by the expert for the MEP

 That the pool exhaust is code compliant and would have
  worked had there been a complete air/vapor barrier
  installed in the wall
 That the garage ventilation can be addressed using high
  velocity (but noisy) exhaust fans
 Enhancements required for the pool and garage exhaust
  constitute a “betterment” that should be paid for in large
  part by the Association
 That the MEP was not made aware of a design change
  enclosing the garage



                                                               20
Cross exam of the MEP




                        21
The expert report for the Architect
 The Architect expected exhaust provisions by MEP designer
  to exhaust moist air which should have been replaced by
  dry exterior air
    that the Architect had no responsibility for coordinating
     or providing info re: design changes in the garage
     affecting the MEP;
    that the Architect had no field observation duties and
     that construction deficiencies in the EIFS are not its
     responsibility
    that “approval” of the EIFS shop drawings did not
     address flashing inadequacies since it is a proprietary
     system and flashing is addressed by the manufacturer.


                                                             22
The cross exam of the Architect




                                  23
Owner/Developer Position
 The damages sought by Association re: abandonment of the
  garage constitute economic waste
 Added exhaust for pool and garage constitute “betterment”
  and the majority of those costs should be borne by the
  Association
 The Architect should have been aware of local control board
  requirements re: appearance and should have anticipated
  need to enclose garage in the original design. This would
  have put MEP on notice re: exhaust requirements.




                                                           24
Owner/Developer Position
 Architect’s unsigned agreement governs its duties and
  responsibilities and therefore it was required to coordinate
  with MEP re: pool and garage exhaust requirements and it
  should have been doing field observation
 Owner Developer agrees with Architect’s report re: MEP
  issues
 Building is 5 years old. The building would require major
  renovation after 20 years and therefore any damage claim
  should be reduced by 25 % to reflect a credit for usage
 Owner is innocent and had Architect and MEP done their
  jobs there would be no claim; seeks defense and indemnity.


                                                            25
Defensive Strategies

 Seek to join forces with Developer and Builders to portray
  claims as a function of lack of maintenance or overreaching
 Joint defense agreement
 Be mindful of arguments re: economic waste and betterment




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Defensive Strategies

 Seek credit for usage of the building prior to claims being
  brought
 Plant a mole in the association
 Get good mediator
 Notify us IMMEDIATELY when you are asked to provide
  information or to meet to address problems with the
  project, especially when that request is from an attorney.




                                                                27
Conclusion

Condominium litigation is costly at best, but success can be
achieved with the right team and with creative strategies.




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