Aggressive Cooperation Yields Great Results for Owner-Client
Our client, the owner of a downtown office tower with a glass curtain wall system had significant leakage problems throughout the building. The curtain wall contractor was applying band-aid solutions that were not working. The tenants (in a building that was 95% leased) were complaining and their complaints were growing louder by the month. The owner had a strong direct contract with the curtain wall installer that contained a favorable indemnification clause. We brought suit against the contractor and its insurer under breach of contract, indemnification and negligence theories, fully expecting the curtain wall contractor to implead the national curtain wall designer, who had deeper pockets. They did so.
However, we recognized that an indemnification clause is only as good as the indemnitor’s ability to pay. While a less experienced construction counsel may have marched forward with expensive depositions, written discovery and motions, we recognized that large legal bills did not equal success and did not address the biggest risk to the client --- the ongoing leaking.
Though the negligence allegation triggered insurance coverage and provided a defense for the glass contractor, the insurer reserved its rights to contest coverage, and the contractor claimed that without coverage, it may be forced out of business. While that was clear posturing, we knew we were not dealing with a deep-pocket contractor. We held early settlement discussions, which while they did not result in a settlement, they did accomplish a framework for damage mitigation and open communications.
The glass contractor hired a competent independent expert. That expert, along with our expert, began a process over a few years of investigating the leaks, limited water testing, and learning from the findings and ultimately resolving the vast majority of the leak issues. During this period, all parteis reserved all rights at the discovery was informal and streamlined. Periodically, we held settlement/planning conferences with the defendants and their counsel and experts and were able to obtain multiple extensions on the scheduling order to accommodate this process. While the process took time, we didn't needlessly burn client money.
Once our damages, which included attorneys’ fees reimbursement, were finalized, we mediated the case and took an aggressive position at mediation. We were able to obtain a result that included repayment of all attorneys’ fees, all out-of-pocket costs paid by our client for its experts, covering all repair work, and a fund to address any future leaks. The building is largely leak-free and has remained 95% leased throughout the five-year process. We are confident that had traditional legal discovery taken place, the fees that would have been incurred would have been multiple times those incurred and would have precluded settlement on the advantageous terms achieved.