Liability Issues Arising from LEED/Sustainable Services. Kerry Gosse NLAA, CAHP,MRAIC

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Theodora Bradford
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1 Liability Issues Arising from LEED/Sustainable Services Kerry Gosse NLAA, CAHP,MRAIC

2 LEED Requirements Design Phase Application Meeting Prerequisites Applying Standards Missing Points Designer Contractor Owner

3 Risk Areas Marketing Proposals Contracting Implied services RAIC Language LEED Services Performance Commissioning

4 Marketing & Proposals General Marketing Materials Request for Proposals Proposal Responses Interviews s and Follow-up

5 Case Study Go for the Gold! Project involved the design and construction of an office condominium development. The Developer marketed the building as green and made representations about energy savings and tax credits. By contract, the architect agreed as follows:

6 Go for the Gold! Architect warrants that it is highly experienced in projects of this size, type and complexity, and will perform its services at a level consistent with a first-class architect. Architect further acknowledges that USGBC LEED accreditation is of utmost importance to Owner and agrees that it shall design a facility that achieves Gold level LEED accreditation.

7 Go for the Gold! Upon completion, the Project failed to achieve Gold accreditation for numerous reasons. In the meantime, the commercial real estate market experienced a glut of available space. A number of buyers backed out because of the failure to attain LEED certification.

8 Go for the Gold! The Developer sued the Architect on breach of warranty, breach of contract and negligence counts for its failure to fulfill its guarantee of Gold. Claimed damages included combinations of: Diminution in value of the property Lost profits on undone sales Increased carrying costs Increased energy costs over the life of the building Lesson Learned: Do Not Guarantee a Particular Outcome

9 Contract Language (Client Form) The Architect will submit documentation and proof to the Department that the design will comply with or exceed compliance with the Silver Building rating of the LEED rating system for new commercial construction and major renovation projects. The Architect will take all necessary measures to obtain a Silver Building rating for the project.

10 Contract Language (Client Form) The Architect will submit documentation and proof to the Department that the design will comply with or exceed compliance with the Silver Building rating of the LEED rating system for new commercial construction and major renovation projects. The Architect will take all necessary measures to obtain a Silver Building rating for the project.

11 Contract Language (Client Form) The Architect shall take all necessary measures and shall meet professional standards of care to provide design and other services for the project, including those elements necessary to achieve Leadership in Energy and Environmental Design (LEED) Silver Certification, to file application documents to obtain LEED Silver Certification, and to take other measures necessary to obtain LEED Silver Certification, but shall not be responsible for rejection based on deficiencies not within its control. Nothing contained above shall be construed to limit the Architect's responsibility to provide drawings, specifications or other documents or services necessary to obtain LEED Silver certification, or to perform any other of its contract responsibilities during any phase described in this contract.

12 Contract Language (Client Form) The Architect shall take all necessary measures and shall meet professional standards of care to provide design and other services for the project, including those elements necessary to achieve Leadership in Energy and Environmental Design (LEED) Silver Certification, to file application documents to obtain LEED Silver Certification, and to take other measures necessary to obtain LEED Silver Certification, but shall not be responsible for rejection based on deficiencies not within its control. Nothing contained above shall be construed to limit the Architect's responsibility to provide drawings, specifications or other documents or services necessary to obtain LEED Silver certification, or to perform any other of its contract responsibilities during any phase described in this contract.

13 Recommended Contract Language The LEED Green-Building Rating System and similar environmental guidelines are subject to interpretation, and achieving levels of compliance involves all parties and includes the Owners use, operation and maintenance of the completed project and the Contractors' performance during construction. The Architect does not warrant that the Project will achieve LEED certification or guarantee a certain level of energy savings but is required to use reasonable care consistent with the professional standard of care exercised by like Architects on like projects in interpreting LEED standards and in designing in accordance with LEED.

Custom Exclusion of Consequential Damages Neither the Client nor the Design Professional shall be liable to the other or shall make any claim for any incidental, indirect or consequential damages

14 Custom Exclusion of Consequential Damages Neither the Client nor the Design Professional shall be liable to the other or shall make any claim for any incidental, indirect or consequential damages arising out of or connected to this Agreement or the performance of services on this Project. This mutual waiver includes, but is not limited to, damages related to loss of use, loss of profits, loss of income, unrealized energy savings, diminution of property value or loss of reimbursement or credits from governmental or other agencies.

15 Custom Clause IMPORTANT suggest adding: The total amount of all claims the City may have against the Design Professional under this Agreement or arising from the performance or non-performance of the services under any theory of law, including but not limited to claims for negligence, negligent misrepresentation and breach of contract, shall be strictly limited to the lesser of the fees or $500,000. As the City s sole and exclusive remedy under this Agreement any claim, demand or suit shall be directed and/or asserted only against the Design Professional and not against any of the Design Professional s employees, officers or directors. Neither the Client nor the Design Professional shall be liable to the other or shall make any claim for any incidental, indirect or consequential damages arising out of or connected to this Agreement or the performance of services on this Project. This mutual waiver includes, but is not limited to, damages related to loss of use, loss of profits, loss of income, unrealized energy savings, diminution of property value or loss of reimbursement or credits from governmental or other agencies.

16 Summary & Review Checklist Clauses to include: Disclaimer recognizing that process is collaborative and designer does not have control over all facets needed to achieve green/leed benefits and/or requirements Green exclusion of consequential damages clause Clauses to avoid: PROMISES OF SUCCESS The project will achieve Gold rating The building will achieve a 20% energy savings or be net zero Normal review comments still applicable (limit of liability, proper negligence standard, etc.)

17 Potential for Mistake - Examples Failure to Peer Review: Start With The MODEL Client thinks MODEL is a performance guarantee EA Credit 1 Optimize Energy Performance LEED Application New Standards and New LEED Standard Areas (LEED for Schools) Calculations, generally, FTE for Credit 4.2, for example Specifying requirements for Contractor performance Failing to create documentation at the time necessary for credit Failing to mitigate risks of 3 rd Party Commissioning Agent Tunnel Vision focus on LEED credit but not consequences New technology, prior uses (bamboo floor and adhesive example)

18 Summary AVOID PROMISES OF SUCCESS Present honestly Maximize Credit Interpretation Process (CIR) and Design Phase Credits review for Anticipated credit determination Consider Impact of what you say/write/do Communicate scope and roles early and often Encourage high level and quality Commissioning Commit to professional performance of services Do not overstate What have you done to meet the Standards? First, KNOW THEM

SUSTAINABLE DESIGN Legal Implications and Liability Risks for Engineers

SUSTAINABLE DESIGN Legal Implications and Liability Risks for Engineers Paul M. Mannix, Esquire Wayman, Irvin & McAuley SUSTAINABLE DESIGN Leadership in Energy and Environmental Design (LEED) Green Globes