A Survey of Green Building Litigation - What Can We Learn

Over the past few weeks, Wolfe Law Group has introduced the concept of Green Building to its readers. It's quite clear from these posts that Green Building is a growing phenomenon in the United States construction industry. McGraw Hill reports that green building will triple in the next five (5) years, and there's no sign of it slowing thereafter.

It's quite clear that the construction industry must prepare itself for the green revolution.

As builders, engineers, architects and other construction participants "dip their toe" in the green building waters, however, they must also consider some of the risks and potential legal exposure that may result from green building disputes.

Unfortunately, despite predictions of voluminous litigation, green building standards, regulations and contracts have been tested infrequently through litigation - and construction attorneys are mostly left guessing as to how future disputes will be resolved. This posts surveys some of the cases that have surfaced in the past five years, and discusses what they can tell us about the future of green building litigation.

Shaw Development v Southern Builders
There has been much discussion of this case out in the green building blogosphere. Green Building Law Update blog, for example, discusses the case in detail here, here and here. GreenBuildingsNYC also discussed the "anatomy" of the action in its blog post here.

The case itself brings up a lot of potential issues for green builders, but since the matter was settled without trial, the green building world is still left guessing as to the significance of those issues.

As explained by the two above-mentioned green building blogs, Shaw counter-sued Southern Builders seeking reimbursement for lost tax credits for Southern's alleged failure to "construct an environmentally sound ‘green building’ in conformance with the LEED rating system.”

The parties used an AIA A101 1997 form contract, and stipulated therein that:

"Project is designed to comply with a Silver Certification Level according to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Rating System, as specified in Division I Section 'LEED Requirements.'"

Unfortunately, it failed to indicate who assumed the risk of getting the LEED Certification, and many attorneys watching green building litigation were interested in seeing how the court would assign the risk of obtaining these credits. Alas, with the case settled, we'll never know.

However, parties to green building projects can learn something from the dispute: the AIA Form Contracts (& other form contracts) do not adequately accommodate green building projects. The parties should employ attorneys to contract more specifically regarding the green building expectations, and to assign risks related to the LEED Certification and building standards to the appropriate parties.

Washington Nationals Stadium Dispute
This "dispute" was recently settled without even evolving into actual litigation, and therefore, it's even more difficult to analyze the possible implications of the green building issues.

However, from a discussion found on the Green Building Law Update blog, a component of the dispute between the parties related to the LED lighting on the Nationals Scoreboard, and specifically, whether the failure to obtain LEED Certification related to the scoreboard prohibited the project from reaching "substantial completeness," and therefore stopping to toll of liquidated damages.

Since the matter is settled, we'll be forever left without a definitive understanding of the issue.

The raised questions should serve as a warning to green building contractors that green building provisions and requirements should be well-drafted to avoid problematic situations like the Nationals organization had in D.C.