Features Business intelligence Contracting
You Bet Your Glass: April 2011

During a break at a recent Canadian Standards Association A440 Windows
standard technical committee meeting, I had the chance to catch up with a
longtime acquaintance from the window industry.

During a break at a recent Canadian Standards Association A440 Windows standard technical committee meeting, I had the chance to catch up with a longtime acquaintance from the window industry. He is retired from the daily grind now, but keeps himself busy as an industry expert testifying on behalf of window manufacturers who have been embroiled in defective material lawsuits in the United States. Naturally, to fill this role, he is articulate, knowledgeable, and can talk until the cows come home.

As Canadian businesspeople in the construction industry, you have no doubt heard of some of the legal nightmares that take place in the land of litigation south of our border. The old axiom, innocent until proven guilty, provides no comfort when you are accused of supplying defective product or workmanship, as you must pay vast sums to prove your innocence regardless of the nature of the claims against you, or the outcome of the proceedings.

Across the United States, individual states have enacted various pieces of legislation over the years to equip building, home and condominium owners (and their attorneys) with the tools to seek compensation against suppliers of defective construction materials. What this legislation has done, however, is to create a litigation boom as legions of lawyers used these tools to file unsubstantiated lawsuits accusing builders of shoddy workmanship.

In Nevada, for instance, a statute passed in 1996 (referred to as Chapter 40) that was initially intended to allow homeowners to receive prompt repair of real defects drove the backlog of construction defect cases from about a dozen to hundreds. Of the billions of dollars that have been awarded in settlements since, 40 per cent went to cover guaranteed legal fees, another 30 to 40 per cent went to cover legal expenses and to hire supposed experts, and the homeowner who may or may not have suffered the damage ends up getting roughly 20 to 30 per cent. But this is only the tip of the iceberg. 

For every case that gets to court, there are a myriad of claims that are settled out of court by contractors, sub-contractors, material suppliers and their insurance companies. If you are a supplier of any building product to a condo, for example, that decided to start a defective material lawsuit, you will be on their defective-work shopping list. Unfortunately, you will likely find it less expensive to pay the ransom than to fight the bogus claim.

So, what do attorneys in the United States do following their working years?  Many of them retire to lovely beachfront condominiums in places like Florida to enjoy the fruits of their labour. Finding themselves with plenty of time on their hands, they get elected to their condominiums’ board of directors.

Now, with the downturn in the economy, aging buildings and the occasional hurricane inflicting damage, these beachfront condos find they can no longer keep up with expenses. Swimming pools are cracking, salt has deteriorated the parking garage, and the owners don’t have the money or the desire to pay for all the work that needs to be done to maintain their property value. Where is the money going to come from?

Fortunately for the condo boards, the other thing retired lawyers with lots of time on their hands like to do is to launch lawsuits. “Don’t worry neighbours,” they say. “I’ll get the money we need to fix the pool and the garage. We’ll start a defective construction materials lawsuit against the window manufacturer and installation contractor. Once they find out what it will cost to repair the alleged problems or pay their legal bills to defend themselves, they’ll be happy to write us a cheque to settle out of court. All our problems will be solved!”

Unfortunately, as a supplier or glazing contractor, that is how easily you could be dragged into a lawsuit in the American justice system. Make sure to do your homework before venturing into the shark-infested waters.•

Frank Fulton is president of Fultech Fenestration Consulting. He has
been in the industry for 30 years and can be reached via e-mail at
fultech.fc@gmail.com.