THE CREDIBILITY OF YOUR EXPERT (INCLUDING YOUR DELAY EXPERT) MATTERS IN CONSTRUCTION DISPUTES

Posted on September 3, 2022September 3, 2022 by Edward Garber

Here is a quote from a judge in an order after the bench trial of a complex construction dispute between a prime contractor and subcontractor on a federal project:

The evidence received in this case demonstrates the dynamic nature of complicated construction projects. At every step, the details matter, and coordination and cooperation among the companies tasked with performing the job is essential. Thankfully, as even this case shows, most disagreements that arise as projects evolve are handled during construction, far away from a courthouse, by the professionals who know best how to achieve the ultimate goal of a completed project.

U.S. f/u/b/o McKenney’s, Inc. v. Leebcor Services, LLC, 2022 WL 3549980, *1 (E.D. Va. 2022).

This is a true statement. A statement that parties should remember as they navigate the nuances of a complicated construction project and dispute.

The facts of the case, however, would hardly be construed as a win for either party. Something else for parties to consider as they navigate the nuances of a complicated construction project and dispute.

While there were many components in dispute, one component is worthy of discussion. That is competing delay claims between the subcontractor and prime contractor. The prime contractor claimed the subcontractor delayed the critical path. The subcontractor claimed the prime contractor delayed the critical path. Both parties had experts supporting their conflicting delay theories. The question became which expert is more persuasive? Stated differently, which expert is the most credible? Perhaps neither as neither party recovered delay damages against the other.

The subcontractor’s delay expert did not appear to assign much blame to the subcontractor. The court did not find this to be credible because the evidence demonstrated the subcontractor’s “own shortcomings consistently delayed its work and, in turn, Project completion.” Leebcor Services, supra, at *25. The court understood that the subcontractor needed to prove that but for the prime contractor, the subcontractor would not have completed its work late. Yet, evidence demonstrated there was deficient and untimely work performed by the subcontractor. “Because [subcontractor] failed to disentangle its evidence of alleged [prime contractor]-caused delay from delay caused by its own shortcomings, it failed to demonstrate that [prime contractor] was required under the Subcontract to adjust its fixed-price to account for [prime contractor]-caused delay.” Leebcor Services, supra, at *26.

The court found the prime contractor’s delay expert, while maybe more credible in certain respects, was not more convincing. For instance, during a period of time, the court found that while the subcontractor may have been behind schedule, “[prime contractor] has failed to demonstrate by a preponderance of evidence that delays to the Project arising during this period are attributable to [subcontractor’s] failure to timely complete [the scheduled activity]. This is because the court concludes that other activities outside of [subcontractor’s] scope of work were delaying the completion of successor activities.” Leebcor Services, supra, at *28. In another instance, the court found that “concurrent issues within [prime contractor’s] control also delayed them, and no evidence was offered that would permit the court to disentangle [subcontractor’s] deficiencies from those attributable to [prime contractor].” Id. at *29.

Remember, many construction disputes require expert witnesses including delay experts. The expert needs to carry the day on an issue. To do this, the expert needs to be credible and persuasive. This case demonstrates why this should not be overstated and why, even with experts, a trier of fact may still find that neither carry the day.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

JUST BECAUSE I MAY BE AN “EXPERT” DOES NOT MEAN I AM GIVING EXPERT TESTIMONY

Posted on January 8, 2022January 8, 2022 by Edward Garber

On a construction project, it’s hard to argue that the involved parties — whether an architect, engineer, contractor, subcontractor, developer, etc. — are not experts in their field, i.e., they all some scientific, technical, or specialized knowledge or skill particular to their industry. However, this does NOT mean when they testify in trial, at an arbitration, or at a deposition regarding the construction project they are offering expert opinions / testimony as it pertains to that project. Testifying as to facts based on personal knowledge or involvement on a project makes you a fact witness and is different than evaluating and rending an after-the-fact opinion as to the work of others. This does not minimize your knowledge or expertise; it simply means that relative to the construction project you are involved with, your testimony is that of a fact witness and not of an expert. (It is possible to wear both the fact witness and expert witness hat, but that depends on your subsequent role in the litigation or arbitration.)

A good discussion on this premise can be found in a non-construction case, Buzby v. Turtle Rock Community Association, Inc., 47 Fla. L. Weekly D99a (Fla. 2d DCA 2022), dealing with whether a lawyer was testifying as an expert regarding his own fees. The attorney thought he should be paid for his testimony because he was a professional testifying as to his own attorney’s fees. Yet, his testimony was not actually in the form of expert testimony, but factual testimony as to his own fees. The appellate court held the lawyer was NOT entitled to an expert fee (being paid for this time as an expert), and this rationale can equally be extended to parties testifying on construction projects:

This distinction between testimony (i) describing historical facts from personal knowledge and (ii) evaluating the work of others is not limited to doctors; it applies to attorneys as well.

Thus, the question of whether a witness testifies as an expert – and is thereby entitled to an expert fee – depends not only on the witness’s credentials, but also on whether the witness actually gives expert testimony.

***

Like a treating physician, [the attorney] testified to facts within his personal knowledge about acts that he either took or supervised. Even though the acts [the attorney] described involved technical matters, [the attorney’s] recollections of them “are facts nonetheless.”

***

[The attorney’s] decision to volunteer an opinion about his own work did not transform the nature of the deposition or his purpose of testifying.

Buzby, supra (internal citations omitted).

APPLICATION OF FRYE TEST TO DETERMINE ADMISSIBILITY OF EXPERT

Posted on February 2, 2019February 2, 2019 by Edward Garber

Florida went back to the Frye test/standard, instead of the Daubert test utilized in federal court, to determine the admissibility of expert testimony. The Frye test is more favorable to plaintiffs because it applies when an expert renders an opinion based on new or novel scientific principles. See D.R. Horton, Inc. v. Heron’s Landing Condominium Ass’n of Jacksonville, Inc., 44 Fla.L.Weekly D109b (Fla. 1^stDCA 2018) (“The supreme court has described the Frye test as one in which the results of mechanical or scientific testing are not admissible unless the testing has developed or improved to the point where the experts in the field widely share the view that the results are scientifically reliable as accurate. Stated differently, under Frye, the proponent of the evidence has the burden of establishing by a preponderance of the evidence with the general acceptance of the underlying scientific principles and methodology. However, as stated, the Frye standard only applies when an expert attempts to render an opinion that is based upon new or novel scientific principles.”).

In D.R. Horton, Inc., a condominium association sued the developer and general contractor (same entity) for construction defects that included claims in negligence, violation of building code, and breach of statutory warranties. The developer/general contractor moved in limine / to strike the association’s experts under, at the time, a Daubert analysis, but which became a Frye analysis during the pendency of the appeal. The expert opined as to construction defects and damage and the appropriate repairs – really, no different than any construction defect dispute, from what it appeared. The trial court denied the motion and during trial the experts testified and a sizable damages judgment was entered against the developer/contractor prompting the appeal. One issue on appeal was the admissibility of the expert’s opinion. The appellate court noted that a Frye analysis is not necessary because the experts used a scientifically reliable and peer-reviewed methodology.

A smart tactic, and I mean SMART tactic, that the association’s counsel seemed to utilize was to engage a third-party engineer to testify during a hearing that the methodology used by the association’s experts was industry standard methodology and generally accepted. Thus, the opinions were not based on new or novel scientific principles and the appellate court affirmed the trial court’s denial of the contractor/developer’s motion in limine.

WAIVER OF CONSEQUENTIAL DAMAGES AND LOSS OF USE DAMAGES (IN CONSTRUCTION / DESIGN DEFECT DISPUTE)

Posted on January 24, 2015January 24, 2015 by Edward Garber

In construction / design defect cases, a plaintiff (party proving defect) may assert a category of damages referred to as loss of use damages. Importantly, if your contract includes a waiver of consequential damages, these types of damages will not be recoverable. This is a significant issue to consider when entering into a construction contract, especially when you are the owner of the project, because if you do not want to waive a party you hire of consequential damages (such as loss of use damages), then you do not want to include a waiver of consequential damages in your contract or, at a minimum, you want to carve out exceptions to the waiver of consequential damages. Stated differently, this is an issue and risk you want to consider on the front end because even though construction / design defects are not anticipated, they do occur.

In a construction / design defect scenario, an owner’s consequential damages would generally be those damages unrelated to repairing the defect. For instance, loss of use of the property or lost rental income to an owner during the implementation of the repairs would be a consequential damage that would be waived by a waiver of consequential damages provision in an owner’s contract.

An example of a waiver of consequential damages provision found in the AIA A201 (general conditions of the construction contract between an owner and contractor) is as follows:

The Contractor and Owner waive Claims against each other for consequential damages arising out of or relating to this Contract. This mutual waiver includes

.1 damages incurred by the Owner for rental expenses, for losses of use, income, profit, financing, business and reputation, and for loss of management or employee productivity or of the services of such persons; and

.2 damages incurred by the Contractor for principal office expenses including the compensation of personnel stationed there, for losses of financing, business and reputation, and for loss of profit except anticipated profit arising directly from the Work.

This mutual waiver is applicable, without limitation, to all consequential damages due to either party’s termination in accordance with Article 14. Nothing contained in this Section 15.1.6 shall be deemed to preclude an award of liquidated damages, when applicable, in accordance with the requirements of the Contract Documents.

(See AIA A201-2007, s. 15.1.6)

Now, if loss of use damages are not contractually waived, the recent decision in Gonzalez v. Barrenechea, 40 Fla. L. Weekly D258a (Fla. 3d DCA 2015), illustrates how an owner can recover these types of damages when there is a construction / design defect. In this case, an owner sued its architect for design errors with the HVAC system in a newly constructed home. The owner was forced to engage a new design professional to address the deficiencies. It took the owner 20 months to repair the deficiencies during which the owner claimed he could not live (or use) his new house. Although the owner did not live in the house, there was evidence that the owner had some use of the house. For instance, the owner’s son slept in the house on an intermittent basis, the owner docked his boat at the dock behind the house, furniture was stored in the house, and the owner had cars parked in the garage.

Notwithstanding some use of the house, the owner put on testimony of an expert real estate appraiser that testified that the owner incurred lost rental value of approximately $15,500 per month during the 20-month repair period. The architect argued that this rate was flawed because the expert failed to factor in the use the owner had of the house during the 20-month period. The trial court agreed and denied the owner the loss of use damages.

The Third District Court reversed the trial court finding that the owner was entitled to loss of use damages:

Under Florida law, a homeowner that loses the use of a structure because of delay in its completion is entitled to damages for that lost use. Florida courts have held that “[d]amages for delay in construction are measured by the rental value of the building under construction during the period of delay.”

Gonzalez, supra, quoting Fisher Island Holdings, LLC v. Cohen, 983 So.2d 1203, 1204 (Fla. 3d DCA 2008).

Furthermore, because the architect failed to put on any evidence as to what the rental value of the house should have been during the 20-month period factoring in the owner’s use of the house during this period, there was nothing to refute the owner’s rental rate.

This case touches upon important take-aways:

Consider the risk of a waiver of consequential damages provision on the front end, especially if you are an owner. Likewise, if you are a contractor or design professional, you want to consider the risk of not having such a waiver of consequential damages.
Loss of use damages are recoverable in a construction / design defect case absent a contractual waiver of consequential damages.
An owner can introduce evidence of loss of use damages through an expert real estate appraiser that can testify as to the rental rate of the property during the repair period.
A contractor or design professional defending a loss of use damages claim should engage its own expert to counter an owner’s expert. In this case, if the design professional had an expert real estate appraiser, it would have put on evidence of a rental rate much lower than the $15,500 per month factoring in the owner’s limited use of the house during this time period.