Case # 1: Construction Defect:

 

Bank v. General Contractor* (* note: case specifics not given to preserve confidentiality)

 
We were hired to assist as experts in the defense of a general contractor who had just completed a twelve million dollar project. 

 

This particular case arose, surprisingly enough,  right after completion of a new, forty thousand square foot commercial building in Fremont.  Most of the three floors were occupied by a large and successful bay area bank.  In addition to numerous employee offices, as their California headquarters, the building included high end design features, a spectacular entrance lobby, conference rooms and so on, all of which had been designed by a well known architect.  

 

The bank was particularly proud of its new computer center.  Here they had installed a mainframe IBM computer, masses of data storage and a highly sophisticated air conditioning system essential to maintain safe operating temperatures in that room.  However, within weeks of occupancy, problems began to surface.  Employees complained of fumes coming through the air conditioning, giving them headaches.  This was something of a mystery, seeing as the entire HVAC system was designed by a professional mechanical engineer, duly licensed and registered in California, with a long track record of many successful installations.  To make matters much worse, the sophisticated air handling and cooling system for the computer room and its three million dollars worth of hardware, aside from occasional fluctuations no one could explain, suddenly shut down one Friday evening. Temperatures climbed steadily during a hot Fremont night, and continued to creep upwards through the next day.  This was not discovered until an employee, stepping in to check on some data files, entered the computer room and found the temperature up to around a hundred degrees, and still climbing.  

 

The bank’s data storage drives were rated to 40 degrees centigrade, and Saturday afternoon, the temperature was right at that point.  The bank president was called in, as were various air conditioning specialists, along with the general contractor and his HVAC sub contractor.  The bank was understandably rattled: they were close to losing their entire main frame data storage integrity, and somehow (they reasoned) whatever was wrong with the computer room was tied to employee’s complaints about fumes and headaches. 

 

Some months of heated back and forth ensued.  The general contractor came in, brought back his sub-contractor and they made various adjustments to registers, checked the equipment on the roof for consistent operation, and consulted with the mechanical engineer of record.  He went back through all his calculations and equipment specifications, then verified that everything was supplied and installed as per specs.  Meanwhile, the bank was getting increasingly alarmed.  After months of delays and unresolved problems, intermittent appearance of fumes, continued fluctuations in the computer room, with temperatures spiking now and then, the bank decided the general contractor had screwed up in some way, and filed suit against them for a million dollars in damages.  To back up the legitimacy of their claim, they had hired their own mechanical engineer.  He concluded the entire HVAC was suspect, and would need to be removed and replaced at close to the lawsuit’s dollar value.

 

We were subsequently called in to help sort through this mess.  Upon inspection, the building itself was obviously the work of a contractor who took great pride in their product.  As a former contractor (twenty five years ago) I have learned to recognize the almost invisible “fingerprints” left by those who are involved in any type of construction.  You cannot fake, or hide these fingerprints.  Just as native American Indians could read footprints the way we might read a newspaper, those marks and indicators left by contractors do not lie.  Realizing this, I began to look further afield.  We performed a careful and thorough evaluation of the plans— both structural and mechanical.  We went back through the superintendent’s daily records, then those of the sub-contractors.  Finally, not finding a whole lot of answers, I spent a day on the roof of this building, examining every piece of air conditioning equipment.  At around 4pm, as is often the case around San Francisco Bay, the prevailing wind direction changed.  That’s when I noticed that, with the wind blowing in from the north, the fumes from the air conditioning units (they were gas fired) blew from the exhaust of one unit, across to the intake of the next.  No one had thought about prevailing wind direction and how that might effect each unit’s positioning on the roof top.  That explained the fume problem, but what about the sheer lack of air volume many offices were suffering from, along with the computer room?

 

As we pored through the daily logs and records, then interviewed sub-contractors, an interesting picture appeared.  The structural plans did not allow for adequate space to accommodate the air conditioning ducts.  When the sub contractor and the general brought this problem up to the architect, many months before, he refused to make adjustments, stating that he was not going to “lower the ceilings” and “ruin his beautiful design.”  Understandably, the general contractor hardly felt he could take issue with the architect over this.  After all, the architect had the power to approve (or deny) all progress payments.  So the general did what many contractors would do: told the sub to work with what the architect had given them.  And that’s what happened.  To squeeze 20″ diameter ducts into a 12″ diameter space, the HVAC contractor compressed them until they looked like bagels, viewed from the side.   He sent notes to the architect explaining he didn’t think the air conditioning system would perform adequately.  These were ignored. 

 

It took a great deal of research to unearth this verbal, undocumented conflict between the architect’s design and the actual mechanical requirements, but to cut a long story short, this case settled along the following distributions:  The bank had the entire duct work system ripped out and replaced.  The architect was forced to pay fifty percent of that cost, the general and the  HVAC shared twenty five percent between them and the mechanical engineer picked up the remaining twenty five percent.  

 

By careful research, we reduced the general contractor’s final liability from $1,000,000 to $125,000.