LEGALISSUES
Legal Issues Arising Out of Green Design and Construction
by Shawn E. Goodman, Sabo & Zahn, Attorneys at Law
G
overnmental bodies have tried to incentivize so-called “green” design and construction. Governmental projects in particular often carry required green standards. Private projects, on the other hand, are tending to at least be nudged “green” through tax or contract-related benefits. Those who tout green building tend to promote what they assert are cost savings arising out of green features or, at a minimum, the marketing and promotion available for a property which reaches a level of green certification. Predictably, green design and construction has lead to some litigation. While the actual volume of cases has not yet been as high as some might have predicted, there already is a small, burgeoning body of law being developed, and the future will bring more, not less, such cases. This article will provide a summary of some of those matters as they relate to certain parties in the construction process. Many of the issues which have arisen have to do with certification of buildings as meeting the standards set by an independent organization, the United States Green Building Council (“USGBC”). That organization promulgated what it calls its “Leadership in Energy and Environmental Design” (“LEED”) rating system which includes four certification levels: Certified, Silver, Gold and Platinum. In order to reach each certification level, certain, specific requirements must be met and a certain number of possible points must be accumulated. Factors which go to determine whether a building or project is able to achieve one LEED certification level or another include the skill of the project contractors, the nature and extent of the documentation in support, and the materials and design, respectively. There are several LEED rating systems related to the type of construction or structure. There are also other green rating systems, e.g., the Environmental Protection Agency’s Energy Star program and the Green Building Initiative’s Green Globes, respectively. Although the rating systems were originally set by independent organizations, many of their standards have been incorporated into building codes or otherwise been adopted by agencies of government, including at the local, state and federal levels. Illinois, for example, has a Green Buildings Act. California
16
LICENSED ARCHITECT • VOL 16 NO. 4 • WINTER 2012
has what it calls “California’s Green Building Standards Code” (“CALGreen”) which was enacted last year. Indeed, a new International Green Construction Code just came out in March 2012. Green buildings, of course, are favored for non-monetary, i.e., environmental, reasons. Nevertheless, when a project does not include certain green features, or if it does not meet a certain level of certification, adverse financial implications can result, e.g., lost development, or tax, incentives. While not overwhelming in number, some of those LEED-related cases which have been filed give a sense of the kinds of liability which can be posed to the various involved parties. Southern Builders v. Shaw Dev., No. 19-C-07-11405 (Md. Cir. Ct. 2007), was the first piece of green construction litigation between private parties. The project encountered significant delays in general. When it did not timely receive LEED certification, the owner did not obtain tax credits. Maryland offered such credits to LEED-certified projects. To qualify for the tax credit, the builder was required to file an application which could result in certification of the final construction. When the builder recorded a mechanics lien claim and tried to obtain allegedly due and owing amounts, the developer counterclaimed for some $635,000.00, asserting that the building was to have, but did not achieve, a certain LEED certification. The matter eventually reached settlement on terms that have not been disclosed, so technically there was no prevailing party. However, just based on what was filed, it was clear that the parties did not clearly communicate by their contract an express understanding of the significance of LEED certification for financial purposes, or which party would bear the risk in the event such certification was not met. They did not do so even though a requirement to construct to a LEED Silver level was included in both the project specifications and the scope of work which accompanied the contract. Representations that a certain level of green certification will be accomplished can serve as the basis for a fraud action. For example, in Keefe v. Base Village Owner, LLC, No. 2009 CV 273 (Colo. Dist. Ct. 2009), sixty-one condominium unit buyers sued the developer, based in part on the marketing of the building which included statements that it would be LEED-certified and