BIM Coordination Dispute
Architectural Record reports that XL Insurance recently settled a messy case arising out of the use of Building Information Modeling (BIM) to design and construct a life sciences building at a major university. XL representatives would not name the parties involved but commented on the dispute to make people aware of the risks of BIM.
The dispute centers on the lack of communication between the designers of the BIM model and the subcontractors actually responsible for performing the work – in this case the MEP contractor. The BIM model’s tolerances for spacing in the plenum were very tight but the nature of the restriction was not communicated properly to the MEP contractor. After the mechanicals were about 70% complete using normal sequencing, it dawned on everyone that they were out of space. Apparently, the design team did not communicate to the contractor that the very tight tolerances could only be achieved through a specific sequencing.
The contractor sued the owner, the owner sued the architect, XL provides insurance to the design industry and so it brought in the MEP contractor.
Too Complicated for a Jury?
The article reports that the resolution of the dispute was expensive and it had to be done by negotiation. Why?
XL did not litigate the claim because it would be difficult for any jury to comprehend.
Weak Links in the BIM Chain
There are two weak links holding back wider adoption of BIM, the technical sophistication of the subcontractors and contracts that fail to spell out duties and liabilities. This case highlights both risks.
It is somewhat surprising that the coordination involved MEP. MEP contractors have been using proprietary forms of 3D models to locate their work for years. It would seem that they would be among the most experienced and sophisticated end-users of BIM. Many in the industry acknowledge that the technical sophistication of subcontractors is a weak link.
The fact that the case required litigation before the parties could sit down and work out the resolution, points to a failure of the contract documents. It would seem reasonable to require any unusual sequencing to be noted in the BIM model. After all, subcontractors know enough to read the “Notes” portion of the drawings. Had the architect simply noted: “MEP sequencing critical to achievement of tolerances in plenum,” this dispute would have been avoided.
EPA Crowdsourcing lead paint enforcement in New England
Crowdsourcing The practice of outsourcing a job or task that is traditionally performed by employees or a contracted company to a non-organized, usually large group of people, generally in the form of an open call or competition.
Note to self: Don’t break law in plain sight of your competition
UPDATE (5/31/11): YouTube has taken down the video for unspecified violations of the Terms of Service.
Last Fall, I found this video while updating a PowerPoint presentation on the legal aspects of the EPA Lead-Based Paint Renovation, Repair & Painting (RRP) Rule. I showed it to a group of contractors at my next seminar and warned: “Be careful, these days everybody has a video camera.”
At that time, the EPA had not yet enforced any provisions of the new RRP Rule. Prior enforcement had dealt with the long-standing customer notification requirements. For instance, in July 2010 the EPA cited a Chicago area contractor called Hanson’s Windows and Construction and assessed a $784,380 fine. The press release stated:
The “warning” rule being enforced here is the 1998 federal Pre-renovation Lead Information Rule, which requires that renovators provide homeowners, tenants and owners or lessors of child-occupied facilities with the “Renovate Right” pamphlet and obtain written confirmation that they have received it. The purpose of the rule is to protect families during renovations in housing built before 1978.
This complaint has no connection to the recent Renovation, Repair and Painting Rule that went into effect April 22, 2010. The 2010 rule concerns new and additional requirements for renovation and repair worker training and certification.
EPA Announces Enforcement Action Against Rockland, Maine Contractor
According to an EPA press release dated May 16, 2011, the EPA has now charged a Rockland, Maine contractor with violations of the Renovation, Repair & Painting (RRP) Rule. The contractor, Colin Wentworth, had actually completed the EPA 8 hour course but had failed to take the extra administrative step to “certify” his firm. Wentworth was also charged with the following alleged violations:
- failure to post warning signs in the work area;
- failure to cover the ground in the work area with plastic sheeting to collect falling lead paint debris;
- failure to contain waste from the renovation activities to prevent releases of dust and debris before the waste is removed from the work area for storage or disposal;
- failure to prohibit use of machines that remove lead-based paint through high speed operation without HEPA exhaust controls; and
- failure to establish and maintain records necessary to demonstrate compliance with the Renovation Rule.
The enforcement grew out of an interagency investigation: “According to information gathered by inspectors from the Maine Department of Environmental Protection, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) and EPA, two workers employed by Colin Wentworth of Rockland failed to contain dust and debris generated by lead paint removal activities during a repainting project in October 2010.”
YouTube as an RRP Rule Reporting Tool?
Pictures are worth a thousand words and a video must be worth more. The EPA admits that it was tipped off by a YouTube video.
The (alleged) violations were brought to EPA’s attention via an anonymous tip linking to a video of the violations, posted on YouTube and taken in October 2010. The video documented workers using power equipment to remove lead paint from an exterior wall of a residential building without using any containment for lead-containing dust and debris.
The EPA is officially seeking to expand and enhance its enforcement through crowdsourcing. The press release invites anonymous tips and makes it easy for people to drop a dime (see links below):
This case highlights the importance of high-quality tips that include the name, address, and phone number of the person who allegedly violated the rule, and contain details about the violations observed. While every such tip doesn’t always result in a formal enforcement action, EPA follows through on tips to identify if violations have occurred and if public or environmental health has been jeopardized.
Avoiding and Mitigating Risk
The EPA RRP Rule presents a new layer of legal exposure for contractors. In addition to the direct risk of a jobsite inspection, there is a real ongoing risk if record keeping is sloppy. As the YouTube video demonstrates, anonymous complaints from neighbors, owners or the customer, can trigger an investigation.
Risk can arise from other sources such as contracts that do not address the special needs of a lead-based paint containing project. For instance, what if dust containment is damaged by a subcontractor, causing lead dust to spread throughout the building? Who is responsible for the cost of the environmental cleanup; who is responsible for the delay?
Updated prime contracts, subcontracts and record keeping practices can greatly mitigate risk. Contractors should also check with insurance brokers to see if their Commercial General Liability (CGL) insurance policy covers lead paint (probably not). Brokers catering to the construction industry now offer very affordable pollution insurance products. You can’t eliminate the risk of mistakes but there are many small steps that should be taken to reduce risk.
The recently published Harvard Joint Center for Housing Studies report titled Leading Indicator of Remodeling Activity (LIRA), projects annual growth slowing throughout the year to a 0.2% level.
Learn more about the Harvard Joint Center for Housing Studies LIRA projections.
So a contractor gets a call from a frantic homeowner in Massachusetts. She pleads with the contractor to come out right away and fix something. She says it is an emergency! The CNN “Severe Weather Forecast” predicted more heavy snow and warned that some roofs may need to be shoveled off.
The contractor arrives to check out the situation; there is no real emergency but the owner is plainly motivated to hire the contractor to do building maintenance tasks right away. On the spot, the contractor sees an opportunity to make an easy buck, writes out a contract for $999, the owner happily signs (after all, she thinks it is an emergency), and the contractor gets started right away.
Either not thinking about it or thinking that a) because the cost of the job was under $1,000; or b) because the services were technically not construction services; or c) because the owner said it was an emergency, the contractor did not provide the homeowner with the statutory 3-Day Notice of Cancellation Form. Big Mistake!
Later that day the homeowner pays the $999 in cash and is given a receipt for the work. She comments that it didn’t take as long as she thought it would but does not object. Four days later the homeowner hears from her regular lawn service contractor that he would have only charged $150 to clear the snow. She calls the contractor back and asks why it had cost so much. The contractor said that it was because of the emergency. He declines to adjust the price even though the job took only 2 man-hours.
What’s Wrong with this Picture?
- The contract is a door-to-door sale under Federal and State law.
- A door-to-door sale is any sale which is consummated at a place other than the seller’s primary business location.
- In Massachusetts, the seller in any door-to-door sale over $25 for personal, family or household use must give the buyer the statutory 3-Day Notice of Cancellation Form in duplicate.
- The situation was not a bona fide emergency.
- The contractor did not inform the homeowner that the job would only take about 2 man-hours.
What Should Have Happened?
- The contractor should always provide the statutory 3-Day Notice of Cancellation Form in duplicate with contracts consummated anywhere but the office.
- Work should not start until the expiration of the statutory 3-Day right of rescission for door-to-door sales.
- The contractor probably should have disclosed that the work did not really amount to a bona fide emergency.
- The contractor should have disclosed that the work might only involve a couple of man hours; this is what we call a “material fact.”
- If the contractor believed that there was a bona fide emergency and the work needed to be done before the 3 day Right of Rescission expired, the owner would have to handwrite a request to deal with the emergency and specifically waive her right to rely on the statutory 3-Day right to cancel.
What Can the Homeowner Do?
- Send the contractor a letter via Certified or Registered mail stating simply that she did not receive the statutory 3-Day Notice of Cancellation, that the purpose of the letter was to cancel the entire transaction, and that she would like her money returned. The law says that the contractor must return the money in 10 days.
- Even if the homeowner has waited more than 3 days to cancel, under the Massachusetts’ statute the cancellation can be sent at any time until 3 days after receiving the statutory Notice of Cancellation from the contractor.
What is this Crazy Law? I Never Heard of It Before.
Federal Law enacted in 1972 (Cooling-Off Period for Door-to-Door Sales 16 CFR 429.1 et seq.) declares that in connection with a door to door sale, it is an unfair or deceptive act or practice to fail to provide to the buyer a mandatory Notice of Cancellation or to fail to notify the buyer orally of her right to cancel. 16 CFR 429.1(e). Federal law also declares it a separate unfair act or practice to fail or refuse to honor any valid Notice of Cancellation within 10 days and refund all payments made. 16 CFR 429.1(f). Under federal law a “door to door” sale is defined as a sale of consumer services with a purchase price of $25 at a place other than the place of business of the seller.
In Massachusetts, door to door sales are governed by MGL c. 93, § 48 and by 940 CMR 3.09. Such sales are simply defined as: ”An agreement providing for the sale or lease of goods, or the rendering of services, or both, primarily for personal, family or household purposes in excess of twenty-five dollars in value and which is consummated by a party thereto at a place other than the address of the seller or lessor. . .” [i]
It is a violation of law to fail to provide two copies of the statutory form Notice of Cancellation to the buyer with the contract at the time of the sale. It is a violation of law to fail to inform the buyer orally of her right to cancel the sale within 3 business days. These violations, without more, not only constitute per se violations of MGL c. 93A[ii] but have also been declared criminal acts by the MA legislature.[iii]
Once the contractor is mailed a Notice of Cancellation letter voiding the contract, failure to return funds is yet another violation of the law and again constitutes an unfair act or practice. MGL c. 93, § 48(d) states that: “In the event of cancellation pursuant to this section the seller or lessor shall within ten business days of the receipt of any valid notice of cancellation (i) refund all payments made, including any down payment made under the agreement. . .” (emphasis added)
Under both Federal and Massachusetts’ law, it is no defense that a consumer solicited or even pleaded with the contractor to do the work. The only applicable exception for bona fide emergencies still requires that the contractor orally and in writing provide the 3 day Notice of Cancellation. The emergency exception expressly requires that, “the buyer furnishes the seller with a separate dated and signed personal statement in the buyer’s handwriting describing the situation requiring immediate remedy and expressly acknowledging and waiving the right to cancel the sale within three business days.” MGL c. 93, § 48(k).
Clearly, the contractor in this story did not request this statement nor ever mention a 3 day right to cancel. What about the fact that the work was done and there was no complaint about the work? The statute provides a forfeiture provision: “A seller of services shall not commence such service during the three business day cancellation period, and the buyer shall not be responsible for the value of work performed during such period, in the event of cancellation.” MGL c. 93, § 48(j).
The regulations promulgated by the Massachusetts Attorney General specify certain acts and practices to be unfair and deceptive under c. 93A. 940 CMR 3.00 et seq. For example practices which further violate c. 93A are listed in the regulations, 940 CMR 3.09 including: “(t)he failure to make any representation, in the sale, offering for sale, advertising, or distributing for sale, or in any other manner, including the failure to adequately disclose additional relevant information, which has the capacity, tendency or effect of misleading or deceiving purchasers or prospective purchasers with respect to any material aspect of the product or transaction or any service to be performed in conjunction with the purchase of the product or service which the seller is advertising, selling, offering for sale or distributing for sale” (emphasis added)
In Massachusetts, licensed contractors are already familiar with the 3 day Notice of Cancellation requirement. The Home Improvement Contractor Act requires inclusion of the same MGL c. 93, § 48 Notice of Cancellation with respect to home improvement contracts over $1,000. It is reasonable to conclude that omission of the Notice by this contractor was a knowing omission, and as such relevant to the violations of c. 93A. Refusing to refund the money in full after receiving the Notice of Cancellation from the homeowner in light of the law is likely to be considered another willful violation of c. 93A.
Among other things, the Massachusetts’ Consumer Protection Act (c. 93A) exposes the contractor to liability for punitive damages (triple damages) and attorney’s fees if the homeowner decides to pursue the case. This type of practice also invites complaints to the Attorney General, the contractor licensing board, and the Better Business Bureau. This could amount to a lot of cost and trouble for the contractor over a quick buck.
[i] An agreement providing for the sale or lease of goods, or the rendering of services, or both, primarily for personal, family or household purposes in excess of twenty-five dollars in value and which is consummated by a party thereto at a place other than the address of the seller or lessor, which may be his main office or branch thereof, may be canceled by the buyer for other than the seller’s or lessor’s breach, whether or not such agreement contains a provision for periodic payments or an extension of credit, provided the buyer, not later than midnight of the third business day following execution of the agreement, notifies the seller or lessor that he is canceling, and such cancellation shall be effective thereupon. MGL c. 93, § 48(a)
[ii] MGL c. 93, § 48(f).
[iii] MGL c. 93, § 48(e).
“Legal Impact of the EPA Lead-Based Paint Repair Renovation & Painting (RRP) Rule”
Effective April 2010, anyone who is paid to perform work that disturbs painted surfaces in housing and child-occupied facilities built before 1978, must follow the RRP Rule. This includes general contractors, trade contractors, (including painters, plumbers & electricians) window replacement contractors and residential rental property owners/managers. The EPA RRP Rule is not business as usual – $37,500 fines are possible. The new law has strict certification, work practices and record keeping requirements.
The coverage of the Rule and key requirements, liability, insurance, contract issues and practical concerns will be covered.
Speaker: Construction Attorney Steven J. O’Neill - www.attorneyoneill.com
Sponsor: National Association of the Remodeling Industry (NARI / RCA Chapter)
Massachusetts is one of a handful of states to take over enforcement of the new lead laws. Read more below.