Mediating Construction Defect Cases and Other Construction Cases: Factors to Keep in Mind
By Barry Howard
Planning to mediate a construction law case? Whether your case involves construction defects, environmental issues, breach of contract, construction delays, or other construction-related claims, there may be multiple claims and defenses in play. Add the likelihood of multiple parties, and you’re looking at expensive case, whether you’re representing the plaintiff or a defendant.
That’s only one reason so many construction cases go to mediation. Mediation gives the parties an opportunity to save time and money and to create a settlement that that lets them get on with their lives — and back to business. Let’s take a closer look at some of several issues that often arise in a construction law mediation and how to prepare for them.
Construction Defect Claims and the Challenges They Present
As a Nashville-based construction law mediator, I’ve seen a lot of construction defect cases lately. There are quite a few residential construction defect cases in middle Tennessee. There are many property developers in this area, and sometimes these developers or general contractors have taken on too much work, or jumped into areas where they didn’t have any experience. The result is quite a few construction defect claims.
Often the parties in these cases lack paperwork, and the question may become whether the work was done negligently or in accordance with generally accepted construction principles. If there is paperwork such as plans, they may be rudimentary at best.
We’re seeing a lot of construction defect cases on the commercial construction side as well. Part of this issue is that in the last few years, general contractors have struggled to get subcontractors as there is a shortage of subcontractors in a variety of trades. General contractors have taken on subcontractors who may not be vetted, creating a lot of construction defect cases on the commercial side as well.
The Importance of Experts
Construction cases often require experts to prove causation, damages, or both. One of your first considerations when preparing to mediate a construction case is determining whether your case requires an expert. If you are planning to have an expert at trial, you may need an expert at mediation as well. Of course, not every construction case requires an expert — for example, if your case is over a contract dispute, you may not need an expert, but most construction cases involve expert reports and testimony. Even if the expert isn’t required to prove that there was a construction defect, you might need him or her to calculate damages.
If you’re going to have an expert at mediation, you should provide the person’s name and any reports to opposing counsel well before the mediation so that opposing counsel can evaluate him or her. As a mediator of construction cases, however, I have run into lawyers who don’t want to disclose their experts at mediation, considering it a trial tactic. That doesn’t work in mediation. I encourage attorneys to disclose their experts ahead of the mediation so that the other side can evaluate them and keep their opinions in mind when determining their potential risk. If your goal is to get your case settled for your client — and that is the goal at mediation —let the opposing counsel have your expert’s info ahead of time.
Construction case experts are often engineers who may testify as to the cause of damage in a defect case. For example, in a case involving a defective roof, there may be a pivotal question of why you have water intrusion. Is it because of the materials selected? Is it because of the way the materials were put in? Is it a combination of both factors or for another reason? It’s fairly common to have experts evaluate the alleged reason behind the problem. Or, in a case involving settlement issues with a concrete or brick building, you may have a structural engineer who opines whether the problem is with the construction itself or with the plan’s site preparation.
At trial, a case can come down to a battle of the experts, where expert credibility is evaluated as well as what they have to say. Note that you may not have to bring your expert to the mediation; if the expert has written a straightforward report that you’re comfortable with, you can provide that instead. However, I think it’s smart to have an expert to answer questions from the other side’s expert.
Have All Parties at the Mediation
Another issue to consider is making sure that you have all the relevant parties at the mediation; otherwise, you may be unable to settle the case. On complex construction cases, you may get subcontractors pointing fingers at each other. For example, I had a case that involved construction defects. There was a roofing issue as well as an issue with the doors and windows The subcontractors that did the roofing blamed the framing contractor, while the framing contractor blamed the roofing subcontractor. With an issue like this, you can’t just separate them out and say we’re going to deal with roofing issue and next we’re going to deal with the framing issue. Sometimes there is the risk they are all interconnected, so you need all the subcontractors there because otherwise it’s easy to point the finger at the one who isn’t there.
When you have multiple subs, you also have multiple insurance carriers, and the policies covering them may affect the ability to settle the case. For example, the insurance policy may have an exclusion for your own work, but if you have a roofing subcontractor doing work, for example, that may trigger some insurance coverage. You must make sure all the insurance carriers have been notified and that they are participating in the mediation. You need not only all the relevant subcontractors but all the relevant insurance carriers as well.
Finally, if you’re worried about disclosing trial strategy by disclosing expert names, keep in mind that roughly 75 percent of construction cases settle at mediation, and about 90 percent before trial. Go into your mediation with a positive attitude towards settlement, prepare ahead of time, and you’ll more likely to walk out with a settlement you and your client are happy with.
About Barry Howard
Barry Howard has been mediating cases since 2007 and has been a full-time mediator and arbitrator for the last four years. Barry has mediated personal injury, professional liability, medical malpractice, civil rights, employment disputes, construction defects and injury, wrongful death, and commercial disputes.