Settled Difficult Liability Case For Significantly Less Than Policy Limits

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Overview

Represented the engineer in a matter which involved the redevelopment of a mall where three large parking structures were added. Plaintiffs sued when two of these three garages needed major repairs much sooner than contemplated. As originally designed by the plaintiff’s internal architects, these parking structures were cast in place concrete. In order to save money on the project, plaintiff requested proposals from precast manufacturers to redesign the garages as precast structures. Our client is one of the leading national engineering firms working in precast materials for parking garages and arenas. The precaster, which went through a bankruptcy and several corporate changes between the time of the construction of the garages and the time of suit, hired our client to perform the engineering on the change from cast in place to precast. Our client assigned this project, which came in during a busy time, to a junior engineer. The engineer chose to directly translate the cast in place drawings into precast members rather than to independently redesign the garage as a cast in place structure. As a result, several aspects of the garage did not meet industry standards with respect to precast construction. A significant difficulty in this case was that those industry standards which our client was accused of failing to meet were the result of our client’s own executives consulting and contribution to various industry panels. In addition to having design weaknesses, it appeared that the parking garage was not properly constructed and that the maintenance on the garage was particularly poor. The combination of a less than perfect design, less than perfect construction, and extremely poor maintenance led to the near failure of the garage after 10 years, rather than after a 30 to 40 year expected lifetime. Repairs to the garage were estimated by plaintiff to be in the range of $16 million. Although more reasonable estimates put this number closer to $10 million, both damage estimates were well in excess of the $2 million limits of our client’s insurance policy. The insurer was placed in a very difficult position with respect to this project, as it faced a situation where a “victory” which limited our client’s liability to the design weaknesses still might exceed the limits of our client’s policy even if it were ultimately less than 20 percent of the overall liability. After developing a significant factual basis for poor construction and very poor maintenance, we were able to settle the case at mediation for significantly less than the policy limits.

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