BOOK CLUB SERIES: LASERS, AND ROBOTS, AND DRONES, OH MY…

For The Dispute Resolver’s first installment of its brand new “Book Club Series,” we sat down with Leslie King O’Neal to discuss the recent release of the Forum’s new book—Technology in Construction Law: A Legal Guide. Leslie needs no introduction to the construction law community. In fact, just this year, the ABA Forum presented Leslie with the Cornerstone Award in recognition of her exceptional service to the construction industry, the public and the legal profession. Leslie now serves as an arbitrator, mediator, and neutral evaluator at JAMS, using her over 40 years’ experience handling construction and complex commercial litigation matters in private practice and as in-house counsel for Brasfield & Gorrie, L.L.C., an ENR top 25 commercial general contractor. Leslie is not afraid to tackle any topic including one that many attorneys do their best to avoid—technology.

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Q: What is your book about and who should read it?

The book is geared  to construction attorneys. It is a resource that provides practical advice for lawyers on issues related to the new technology being used to design and construction projects:  ethics, contracts, intellectual property issues, government regulations, insurance, cybersecurity, e-discovery issues, using the data to support expert opinions, developing presentations for mediation, arbitration, or court with the data, and how litigators can use technology as a tool.

Q:  What was your inspiration for writing a book about construction technology?

A couple of years ago, I learned about the numerous new technologies, such as robot dogs, drones, and virtual reality glasses, that my then-employer, Brasfield & Gorrie, L.L.C., was using or testing on its projects. I wondered how the data generated by these technologies could be accessed and organized and how it could be used as evidence in a dispute or an investigation. Then I was asked to introduce a speaker and edit a paper written by Rebecca Sherman and Megan George on new technology for the Forum’s 2021 Annual Meeting. This book developed from that paper. The idea was to create a resource for lawyers to help them understand these technologies and the voluminous amounts of data they create.

Q:  What are some of the technologies discussed in the book?

It addresses the most cutting-edge technologies being used by designers and constructors on projects today, including:

(1) BIM:  While Building Information Modeling (“BIM”) technology has been used for many years, it has evolved into a 3D model providing a virtual representation of all aspects of a structure. It allows various entities involved in design and construction of a project (designers, general contractors, subcontractors) to change and update the model in real time.  When a project is completed, the contractor can provide a “digital twin” BIM model to the owner for maintenance, operations, and future remodeling. The digital twin may include the owner’s “smart” technology such as control systems for security and climate control. This is the convergence of information technology (IT) and operational technology (OT). The digital twin replaces the “as-builts” that construction lawyers are familiar with.

(2) Drones:   Initially, drone photographs were used for inspecting sites or difficult to reach areas on projects. Now, drones use 3D photography which can be overlaid on the BIM model to verify that the design matches existing site conditions. Drone data can be integrated into other project management data through use of platforms such as Drone Deploy and Procore, making the data available to project teams in real time.

(3) Robotics: Use of robotics in construction is growing but has been challenging because construction sites are varied, complex and constantly changing and many construction activities are not repetitive. Currently, robots are used for site deliveries, autonomously operated equipment, project layout, hanging drywall, bricklaying, welding, tying rebar, cutting materials, packing, and cleaning. Robotics can also assist human laborers through “robotic arms” or exoskeletons.

(4) Laser Scanning: Laser scanning is a highly accurate method to capture the details of an existing building or construction site. Advanced scanners create 3D representations known as point clouds which contain data used to create a map of the precise shape and size of physical objects. This can be used for mapping existing site conditions and validating design execution.

(5) 3D Printing: Also known as additive manufacturing, 3D printing is the construction of physical elements, in 3D, by extruding materials such as plastics, concretes, powders, and resins from a machine guided by a CAD based model. These 3D printed objects have the strength of steel and can be operational when removed from the printer. 3D printing can create project models, project components such as formwork, and even entire structures.

(6) Wearable Technology: Technology included in watches, hard hats, safety vests, and work boots allows tracking and monitoring on-site personnel in an automated, streamlined process. It provides for greater worker safety, site security, and monitoring productivity.

(7) Virtual Reality (VR): VR goggles immerse the wearer in the modeled environment, allowing owners and other stakeholders to experience their project before work begins in the field. They can also be used in safety training and for collaboration between the design team and constructors.

(8) Project Information Management: Project information management platforms such as ProCore and Autodesk allow data from different types of technology to be integrated and organized so that project teams can use this information in real time. ProCore can integrate 300 different applications, including schedule, accounting, safety, daily reports, drone photographs, deliveries, RFIs, change orders, punch lists, and more. These are displayed on project dashboards, which are available to project team members with permission.

Q:  What challenges do these technologies create for construction lawyers?

Lawyers have an ethical duty of technological competence, which means they need to understand the technology their clients use and how to access, use and safeguard clients’ data. The volume of data created on projects through these technologies is exponentially greater than before. Data from many different sources may be housed in a data lake and may be organized and analyzed by project information management platforms such as ProCore or AutoDesk. These platforms are being used not only by large commercial general contractors, but also by residential contractors and subcontractors. Artificial intelligence and machine learning tools are necessary to review, organize, and analyze the terabytes of data  a project may create. Contract terms must be modified to deal with issues relating to these new technologies. Government contractors and private entities are subject to government regulations and cybersecurity requirements. Expert assistance may be needed to use data effectively in mediation, arbitration, or court proceedings. This book can assist lawyers in meeting these challenges.

Q:  Do you have any thoughts on what the future has in store for the construction industry?

I think the construction industry will continue to find more uses for different types of technology. Although the design and construction industries were relatively slow in adopting technology, this has changed. The challenge is for project teams to understand the best ways to utilize the technology tools available. Also, construction lawyers need to understand the technologies their clients are using and how to gather, organize, and utilize the data effectively.

CLICK HERE TO ORDER A COPY OF TECHNOLOGY IN CONSTRUCTION LAW: A LEGAL GUIDE 

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Editor Marissa L. Downs is a construction attorney in Chicago, Illinois where she has been practicing law since 2009. Marissa is a partner at Laurie & Brennan, LLP and represents owners, general contractors, and subcontractors in all phases of project procurement, claim administration, litigation, and arbitration/trial. Marissa can be contacted at mdowns@lauriebrennan.com.

CGL Coverage for Liquidated Damages and the Contractual Liability Exclusion

Liquidated delay damages are common in construction contracts and are generally imposed when a contractor fails to achieve substantial completion within the time required by the contract. While contracts like the AIA A201-2017 have provisions for extending the time to achieve substantial completion when delays are caused by circumstances beyond the contractor’s control, delays can result from factors other than improper management or planning and the like, for which the owner is not required to give the contractor additional time. Courts are split on whether there is ever coverage under a CGL policy for contractually agreed upon liquidated delay damages.  

Liquidated delay damages are often excluded under the contractual liability exclusion of most CGL policies. The contractual liability exclusion excludes coverage for “liability for which the Insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement.” Courts often find the contractual liability exclusion in a CGL policy precludes coverage for liquidated delay damages, because such damages are contractual in nature and are triggered by the failure to bring the contract to substantial completion by a fixed deadline, regardless of the cause of the delay. However, some courts will look to the cause of the delay and find that there is coverage under a CGL policy for liquidated delay damages that are the result of property damage caused by an accident or occurrence.
 
In Clark Const. Grp., Inc. v. Eagle Amalgamated Serv., Inc., 01-2478-DV, 2005 WL 2092998, at *1 (W.D. Tenn. Aug. 24, 2005) a general contractor entered a contract for the renovation of the convention center in Memphis. Part of the project included the demolition of a structure attached to the convention center. The demolition work was improperly performed by a subcontractor and resulted in damage to the convention center.
 
The city sought to recover the costs of repairing the damage and liquidated delay damages under the contract. The contractor sought defense and indemnity from the subcontractor and its CGL insurers. The insurers contended that they had no duty to indemnify and defend the liquidated damages claim because that claim arose from a breach of the contract, which was specifically excluded by the policy. The court held that the delay damages were covered under the policy, and the exclusion did not apply, because the liquidated damages resulted from property damage that was covered under the policy.
 
In Mattiola Const. Corp. v. Commercial Union Ins. Co., 60 Pa. D. & C.4th 412 (Com. Pl. 2002) the court found coverage for liquidated damages under a CGL policy. In that case, a subcontractor was performing saw cutting on a bridge project when the subcontractor accidently cut a structural member of the bridge. The “accident” caused the stoppage of all work on the project and resulted in the assessment of liquidated damages against the general contractor. The general contractor withheld the liquidated damages from the subcontractor. The subcontractor sought to recover the liquidated damages from its CGL carrier. The CGL carrier refused to pay the subcontractor’s claim, citing, among other provisions, the contractual liability exclusion in the policy.
 
In determining whether the contractual liability exclusion precluded coverage for the liquidated damages, the court applied Pennsylvania’s “gist of the action” test, which looks to whether a tort wrong is the gist of the action, and the contract claims are merely collateral. The court rejected the CGL carrier’s arguments, finding that the gist of the action against the subcontractor was based on the accident and was in tort. The court went on to hold that simply because the amount of the damage owed as a result of that accident was defined by the contract, that fact did not make the damages contractual in nature and, as a result, coverage for the liquidated damages was not precluded by the contractual liability exclusion in the CGL policy.
 
However, other courts have explicitly rejected this approach for determining if there is coverage for liquidated damages resulting from property damage. In O & G Indus., Inc. v. Litchfield Ins. Grp., Inc., No. CV126006448S, 2015 WL 3651786 (Conn. Super. May 15, 2015), the court refused to apply the “gist of the action” test to determine whether liquidated damages were covered under a CGL policy. The court held that the “gist of the action” test would prevent an insurer from having any certainty as to whether a specific contract provision between the insured and third parties would be covered under the policy, because the insurer would have to wait for the event that triggered the delays to know if the delay damages were covered. The court found that the liquidated damages provision in the contract at issue was triggered by the failure to bring the project to substantial completion by a fixed deadline, regardless of the delay, and, as a result, the contractual liability exclusion precluded coverage for liquidated damages.
 
Similarly, in Kvaerner N. Am. Constr. Inc. v. Certain Underwriters at Lloyd's London Subscribing to Policy No. 509/DL486507, 1:15CV210, 2017 WL 2821691, at *1 (N.D.W. Va. June 28, 2017) (applying New York law), the court held that liquidated delay damages were not covered under the CGL policy, even if it was an occurrence of property damage that caused the delay.
 
While the cases are inconsistent, when the delays at issue are the result of property damage that is otherwise covered under the policy, some courts are willing to find coverage under a CGL policy for liquidated delay damages, despite a contractual liability exclusion. However, other courts take the position that a contractual liability exclusion in a CGL policy will preclude coverage for liquidated delay damages, regardless of the cause of those delays.  

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Author and Editor Stu Richeson is an attorney in the litigation section of Phelps' New Orleans office, primarily focusing on commercial litigation with an emphasis on construction matters, intellectual property issues and insurance.

Keep It Simple: Summarize (Voluminous Evidence, That Is...)

"The most complex analyses grow beautifully simple as they become public objects.” Philip Rieff, Fellow Teachers (1973), quoted in JOHN BARTLETT, BARTLETT’S FAMILIAR QUOTATIONS 800 (Geoffrey O’Brien gen. ed., 18th ed. 2012) 

In a recent ABA Forum on Construction Law Webinar, a panelist with substantial experience as an arbitrator explained that documents are the most important evidence in a construction dispute. Fact-finders, she said, focus on contemporaneous project records more than witness testimony to vet what happened.  

But, even a small to mid-sized construction project can generate millions of pages of documents. That is particularly true when disputes involve loss of productivity, delay, acceleration, and disruption. The volume of records related to entitlement and damages (e.g., timesheets, accounting, equipment logs, schedule files, meeting minutes, etc.) can overwhelm and confuse — not to mention bore — the fact finder. 

So, what is a construction lawyer to do? 

The Federal Rules of Evidence (and state analogs) provide a helpful way to make your point through summary analyses in Rule 1006, Summaries to Prove Content. 

Rule 1006 —  The Basics 

To handle a mass of records and present it as condensed whole, a party can use a summary, chart, or calculation if it meets the requirements of Federal Rule of Evidence 1006. Rule 1006 allows a party to use “a summary, chart, or calculation to prove the content of voluminous writings, recordings, or photographs that cannot be conveniently examined in court.” Fed. R. Evid. 1006. 

Applying Rule 1006 depends on both volume and convenience: again, it applies to voluminous writings, recordings, or photographs that cannot be conveniently examined in court. As one treatise explains, this Rule provides a flexible standard to address the practical reality that time is precious, and attention is limited: 

[T]he convenience standard does not require a showing that the source material is so voluminous that the material is impossible for the jury to examine and understand. Given enough time and resources, a jury can comprehend virtually any collection of evidence, no matter how large. But the practical reality addressed by Rule 1006 is that court time and resources are always limited. Instead, the convenience standard is satisfied where, even though it is possible for the jury to digest the source material, appreciable time and effort can be saved by admitting summary evidence. 

Victor J. Gold, Contents of Writings, Recordings, and Photographs, in 31 CHARLES A. WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE § 8044 (2d ed. Apr. 2023 update) (emphasis added). 

The Safeguards 

As with any good evidentiary Rule, there are also certain safeguards — including allowing the other party (and the court) to inspect the underlying records or data, and other requirements to keep out inaccurate, incomplete, or biased presentations. Rule 1006 expressly provides that: 

(1) The party to make the originals or duplicates available for other parties to copy or review, and 

(2) The court may require the party to produce the originals in court. 

Fed. R. Evid. 1006. 

Courts have implemented various safeguards to make sure that Rule 1006 summaries are not misleading. For instance, the underlying evidence be admissible, the party must lay the proper foundation for the underlying records, and the summary/chart-preparer must be available for cross-examination. BP Exploration & Prod. Inc. v. Cashman Equip. Corp., 2016 WL 1387907, at *5–6 (S.D. Tex. Apr. 8, 2016). Courts have excluded summaries because they are misleading or incomplete, United States v. Oloyede, 933 F.3d 302, 310 (4th Cir. 2019); fail to disclose the basis for (or lacks appropriate) underlying assumptions, United States v. Hart, 295 F.3d 451, 458–59 (5th Cir. 2002); or contain inappropriate argument or inadmissible evidence, Peat, Inc. v. Vanguard Research, Inc., 378 F.3d 1154, 1160 (11th Cir. 2004). 

When You Might Use the Rule

Rule 1006 Summaries can be extremely helpful in complex construction disputes. For example, you might use it to help demonstrate/prove claims involving: 

• Loss of Productivity and labor records. See Fireman’s Fund Ins. Co. v. United States, 92 Fed. Cl. 598, 699–701 (2010) (admitting PowerPoint presentation of expert summarizing loss of productivity damages); Nippo Corp. v. AMEC Earth & Envt’l, Inc., 2013 WL 1311094, at *5 (E.D. Pa. Apr. 1, 2013)
• Large amounts of invoices and/or evidence of payment and complex financial data. See BP Exploration & Prod., Inc., 2016 WL 1387907, at *15–16; United States v. Thompson, 518 F.3d 832, 858–59 (10th Cir. 2008); and 
• Schedule delay analyses/work progress. Twin K Constr., Inc. v. UMA, Geotechnical Constr., Inc., 597 F. Supp. 3d 1204, 1213–14 (E.D. Tenn. 2022). 

Conclusion 

Construction cases often involve many documents, the importance of which should not be overlooked. Just because it is possible to use a summary does not mean it is prudent or effective. For example, if there are some great documents in the project file, you will want to highlight, not bury, them. But, when the mass of data and analysis threatens to overwhelm, remember that the Rules of Evidence provide a remedy — one of which is Rule 1006. Just remember, KISS: Keep It Simple: Summarize.

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Author Steve Swart is a construction attorney with Williams Mullen in Tysons, Virginia. Steve counsels owners, developers, contractors, and subcontractors in all phases of a construction project, from contract negotiation through to completion, including disputes, litigation and arbitration. Steve can be contacted at sswart@williamsmullen.com.

Meet the Forum's In-House Counsel: MATT MEAKER

Company: Sundt Construction, Inc.

Email: mbmeaker@sundt.com 

Website: www.sundt.com

Under Grad: The University of Arizona (Bachelor of Arts in Communication & Psychology, graduate of Honors College, 2000)

Law School: James E. Rogers College of Law, The University of Arizona (JD 2003)

States Where Company Operates/Does Business: Throughout most of the United States

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Q: Describe your background and the path you took to becoming in-house counsel.

A: In high school I was a Speech and Debate geek and found that not only did I enjoy competing with my team, but also that I had some skill at it. I went to the University of Arizona intending to be an Aerospace Engineering major. One day into orientation, it was clear that was not the path for me and I pivoted.  I focused my undergraduate studies with an eye to going to law school and with the desire to better “understand people.” To this day, the things I learned in college about non-verbal communication and motivation serve me well. I graduated law school in 2003 and purely by luck landed at a residential construction defect law firm. My early experience was defending home builders in class actions. After this, I worked for several firms solely focused on construction litigation, which was my primary experience for the first part of my outside counsel career. During the Great Recession (2007 – 2009), it became clear that a broader role as an “Outside General Counsel” who got involved in advising and avoiding litigation as well as litigating when disputes were inevitable was well suited to my skillset. At this time, I began to build a client base of both transactional and litigation clients.  This was how I approached the remainder of my outside counsel career.  After 14 years of law firm practice, I moved in-house 6 years ago.  The construction law generalist role, combined with the opportunity to be a part of the business in non “legal” ways, fits me very well.

Q: Describe your experience in the construction industry. 

A: I was fortunate enough to join the construction industry right from the beginning of my career. I have defended residential construction defect claims and learned the size and scale of class action lawsuits. I have been involved in multi-party mechanic's lien foreclosures where there was a genuine issue around the priority and/or validity of liens. I have been involved in licensure disputes and with the formation of joint ventures. And since coming in-house, I have negotiated project contracts of all shapes and sizes and resolved the largest claim I ever had in my career before a three-member Dispute Resolution Board. At present, I serve as group counsel for two of Sundt’s operating groups – Industrial and Transportation. In this role, I provide legal support for the negotiation of prime contracts and revisions to “downstream” agreements, in addition to any other questions that might arise. In addition, I am also our company’s primary internal employment law resource and manage some of Sundt’s litigation, including payment disputes, insured claims and car accident cases. I truly get to act as a construction law generalist. 

Q: What kind of work does your company do? Do you focus on specific sectors, states or regions? 

A: Sundt is a 133 year old, one hundred percent employee-owned general contractor. We currently are licensed in over 35 states and have offices throughout the country.  Our operating groups are broken down into building (dormitories, hospitals, K-12 schools, and similar projects), transportation (runways, light rail, bridges, freeways, etc.), industrial (water/wastewater, semiconductors, mining, etc.) and renewables (utility grade solar).  One of our current national focuses is in the water and wastewater space.

Q: What advice would you give to outside counsel about how to meet or even exceed their client's expectations? 

A: The first piece of advice for outside counsel is straightforward and may seem basic, but it is very important: the client is hiring YOU, not your law firm. The in-house lawyer is not wowed by firm letterhead or by the accomplishments of high profile partners. Rather, we sought you out and hired you because we believed you would be a good fit for our team. Sundt’s legal team is relatively small, and we seek straightforward advice for our company. I am looking for authenticity and candid assessments, and I expect outside counsel to set attainable expectations for both of us and then actually meet them. This includes when it's best to settle and what range should the matter settle for. We also expect counsel to listen and understand what our company needs to accomplish and understand that we also have an internal client in the business. I want to know, if it was your company on the line, what would you be willing to do and not do? Good outside counsel will be a strong advocate when appropriate, while at the same time helping us to not become blinded by it. For example, an advocacy piece can easily persuade a member of our internal business team that the case is stronger than it realistically is. Finally, one of the most important communications you can provide a client is the monthly bill. I should be able to look at it and see the value of the time and not be surprised by either the amount billed or the efforts undertaken. 

Q: What is your experience litigating or arbitrating construction disputes? Was your experience generally positive or negative and why? 

A: I litigated and arbitrated cases for 14 years as outside counsel, and I currently manage a wide variety of cases in litigation and in arbitration in-house, with the support of outside counsel. It has been generally a positive experience, in spite of occasional frustrations. I have learned to accept what those of us who are engaged in litigation know – that the adversarial system is one of the worst ways to solve disputes. Disputes at my company are in litigation typically because we could not solve the matter at the project level, which I believe is the ideal place to do so, because the parties at that level have relationships. One of the best things about being in-house counsel and providing advice before a dispute escalates to litigation or arbitration is getting to help resolve disputes before they escalate.

Q: What are some of your interests or hobbies?

A: My wife and I just celebrated our 15^th wedding anniversary.  We have two daughters (14 and 11). When not at work, my primary focus is the three of them. This includes attending volleyball and softball games, as well as being a top flight Girl Scout Cookie salesperson (around the office I am know as the “Cookie Dad”). My wife and I also share a passion for public policy and community service. I served on the Arizona Board of Regents (the governing body for Arizona’s university system) in law school, and my wife worked at the White House for a couple of years right out of college.  This mutual passion was a driving force around my efforts to develop a Government Relations program at Sundt. We are in our second year of a five year plan I spearheaded and at present it is focused in Arizona. I am happy to be a part of a company that supports its employee-owners and which is committed to making a difference in the community.

 

My family.

 Me and Arizona Governor Hobbs at an event. 

 My family at this year's White House Easter Egg Roll. 

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Assistant Editor-in-Chief Jessica Knox is an Associate in the Minneapolis office at Stinson LLP. She represents owners, general contractors, and subcontractors in litigation disputes. Jessica can be contacted at jessica.knox@stinson.com. 

Courthouse Reporter Series - How to Avoid Having Your COVID-19 Expert Stricken

Expert witnesses play a key role in litigation, especially when dealing with construction issues. The testimony of an expert at trial can be a deciding factor in helping persuade a jury or judge in your client’s favor. Thus, it is imperative that your expert’s opinion meet the proper legal standard.

In Polaris Engineering, Inc. v. Texas International Terminals, LTD, the United States District Court for the Southern District of Texas reiterated the importance of an expert’s opinion complying with the applicable legal standards governing expert testimony. 2023 U.S. Dist. LEXIS 109413 (S.D. Tex. June 26, 2023).

The legal standard at issue in Polaris was Rule 702 of the Federal Rules of Evidence. Polaris involved a suit arising from a contract related to the design, engineering, and construction of a terminal and crude-oil processing facility for Texas International Terminals in Galveston, Texas. There were four separate contracts that governed the Project. One of the contracts governed the creation of the 50,000 barrel per day crude processing unit. Because the parties wanted to move quickly, they agreed to certain assumptions about the Project and specifically designed a change order process whereby the price and schedule could be adjusted if the agreed upon assumptions were incorrect. 

Polaris submitted a multitude of change orders, which it alleged Texas International never accepted or rejected. Polaris also insisted that Texas International failed to adequately engage in the change-order dispute resolution process as detailed in one of the contracts. Texas International attempted to bring the Project online and introduce crude oil. However, the Project failed to achieve stable operations and the parties’ relationship fell apart. Polaris alleges that this was because TXIT used nonconforming crude oil and refused to engage qualified operators.  Polaris alleged that Texas International failed to pay what it owed under the four contracts and filed suit seeking various forms of relief. The matter was removed to federal court.

One of the claims asserted by Polaris involved a claim for over $18 million in COVID-19 related change order requests that it submitted to Texas International after filing suit. In an effort to support its claims, Polaris utilized two experts to specifically testify about the various impacts that COVID-19 had on Polaris’s schedule and the various damages that Polaris incurred from the COVID-19 delays.

Texas International moved to strike the testimony from both experts claiming that the expert testimony was based on unreliable data and did not include any methodology. In ruling on the motions, the Court made it clear that they are “gate-keepers” and have to ensure that expert testimony is both relevant and reliable. The Court stated that the proponent of the expert testimony (in this case, Polaris) bears the burden of proving the:
(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact trier of fact understand the evidence or a fact in question,
(b) the testimony is based on sufficient facts or data,
(c) the testimony is the product of reliable principles and methods, and
(d) the expert has reliably applied the principles and methods to the facts of the case.

The Court struck Polaris's first COVID-19 expert because the expert did not model the alleged COVID-19 schedule impacts in its delay analysis but simply stated that construction was disrupted by labor absenteeism and other COVID-related restrictions and procedures. The Court further pointed out the expert’s failure to use any specific method to explain how or to what extent Polaris’s safety protocols caused delay. The Court ultimately found that the expert's opinion was not the product of a reliable method. The Court noted what the expert had done in analyzing other delays on the Project, such as the Critical Path Method and noted that no such analysis had been done with respect to the COVID-19 delays. This lack of analysis was noted by the Court as warranting exclusion of the opinion.

The Court noted that Polaris’s second COVID-19 expert did use a method and appropriate facts to conclude that Polaris’s damage calculation was reasonable and, if COVID-19 caused the delays, then this portion of the expert's testimony would be admissible. However, the Court noted that the expert failed to use a methodology or provide facts to support that COVID-19 actually caused the alleged delay. The expert admitted that he had not identified documentation to support the delay was caused by COVID-19 and referred to the first expert's report for the delay assessment rather than performing his own analysis. Ultimately, the Court ruled that the second expert's conclusions were inadmissible because they were not supported with facts and a methodology. 

Expert opinions are important and often needed. However, as illustrated in Polaris, courts will strike opinions that do not comply with applicable standards such as here: supporting facts and reliable methods.

Be proactive by discussing the admissibility standards with your expert and evaluating their opinions to avoid any potential for having the opinions stricken. Do not be afraid to communicate the importance of the standards to your expert. After all, it may prevent you from having your expert opinion thrown out.

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Author Andrew G. Vicknair is an attorney with D'Arcy Vicknair, LLC in New Orleans, Louisiana. Andrew focuses his practice on intellectual property, commercial, and construction disputes and regularly handles claims related to construction defects, payment disputes, design issues, and general disputes among subcontractors, owners, and general contractors.

OPINION: Stop Requiring Exhibit Lists!

You are conducting the final hearing of a high-dollar construction arbitration. Opposing counsel hands you the next document that counsel plans to use in questioning the witness on the stand. You notice that the document is bates stamped but has no exhibit number. So, you quickly consult opposing counsel’s exhibit list and – gasp – you find that the document is not on the list. What do you do? Do you object?

Assuming this is not your first construction arbitration hearing, you do not object. Why? Because your objection would be futile. Construction arbitrators simply do not exclude evidence on the basis that it does not appear on an exhibit list. (Evidence not produced in discovery or otherwise previously provided might be a different case.) In an informal poll of a dozen construction lawyers conducted by this author, not one reported evidence being excluded solely because it did not appear on an exhibit list. This remained true even when the applicable case management order purported to prohibit the introduction of evidence not on an exhibit list. Thus, to be used in an arbitration hearing, documents must appear on an exhibit list, unless they don’t, in which case you can use them anyway. So far, so pointless.

The scope of the average exhibit list only compounds this inanity. Exhibit lists are typically due several weeks in advance of the hearing. In an ideal world, both parties would have complete witness outlines, including exhibits, ready by this deadline. In this fantasy, both parties would then provide each other reasonably short exhibit lists that would allow for review of each exhibit on the list prior to the hearing. Both parties would then proceed to the hearing secure in the knowledge that they will not be subject to attack by the use of any document excluded from these tidy lists. This, to put it mildly, is not how things play out.

Perhaps the most organized and diligent among us know the exhibits they will use by the time the lists are due and can populate them with just those two- to three-hundred exhibits. Everyone else simply plays it safe and includes every document that could conceivably be relevant. The shortest list this author has received included at least 600 exhibits; the longest approached five figures. Of what conceivable use is an exhibit list that includes essentially every relevant document, and isn’t even binding in the unlikely event one has been omitted?

We have now established that arbitration exhibit lists are typically pointless, excessively voluminous, and largely unenforceable. They are also expensive. An enormous amount of time and money is spent creating exhibit lists. Based on the largely unfounded fear that a document left off will not be allowed into evidence, lawyers pore over the production database, adding and re-adding countless documents.

And yet, even given that (1) there is practically no consequence for failure to include a document on an exhibit list; (2) exhibit lists are almost always too lengthy to serve their intended purpose of previewing a party’s evidentiary showing; and (3) exhibit lists require a tremendous expenditure of time, effort, and money, almost everyone still insists on exhibit lists as a pre-hearing requirement, and almost no one insists that the lists be limited in any way. (There’s no real incentive to push for a strictly limited exhibit list that could come back to bite you in the event you forget to include a crucial document.) Thinking too much on this foolishness compels me to propose this obvious and remarkably simple solution: stop requiring exhibit lists!

I recognize this is a break from tradition. Arbitration, however, is remarkably easy without exhibit lists. I hope you’re sitting down for this: you can just handle the exhibits at the final hearing like you would handle the exhibits at a deposition. Let that sink in. You already know how to proceed without an exhibit list, you just didn’t know it. When an exhibit is introduced, it is assigned the next available number. It is as simple as that.

The logistics largely resolve themselves. Regardless of whether you are using hard copy or electronic documents, there are ways to make their introduction seamless. When using hard copies, you can employ the classic exhibit stickers. When using electronic documents, you can employ one of the multiple tools that exist for on-the-fly branding and sharing of exhibits. Even if your arbitrators request exhibit books, there are any number of practical options. (Consider giving them binders with tabs that are added to as you go, for example.)

Exhibit lists do nothing but incentivize waste. Wasted time, wasted effort, wasted money, and wasted paper—banker’s boxes full of wasted paper. So break the cycle, and embrace this most obvious reform: don’t include a requirement for an exhibit list in your next case management order.

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Author Todd Heffner is an associate in Troutman Pepper's construction practice group. Todd has devoted his career to serving clients in the construction industry, particularly high-stakes federal court litigation and arbitration.

Editor Jane Fox Lehman is a Senior Attorney at The Babcock & Wilcox Company.

Stock photo ccourtesy of Vecteezy

How Will Artificial Intelligence Impact Construction Litigation?

In the first half of 2023, artificial intelligence (“AI”) caught the public’s imagination. Attorneys have not been immune from the fever-pitch of commentary regarding the possible applications. While early adopters have had varying degrees of success, commentators have proposed various potential impacts on construction projects and disputes. This article discusses potential areas where AI can assist in preventing and resolving disputes from the pre-bid stage through project completion and close-out.

What is AI?

Artificial intelligence entered the popular zeitgeist accompanied by both optimistic and pessimistic predictions about the future. Internet searches on AI exploded in December 2022, reflecting a rapid and widespread public interest in the topic. The term “AI” itself is often loosely used to refer to a machine or computer software with the ability to conduct machine learning.[1] Whereas “automation” is the simple process of computing inputs, artificial intelligence refers to the ability to learn without additional programming from a human being. Now, increased computing power is finally helping some of the potential applications of this technology come into focus. Nonetheless, artificial intelligence is still maturing and is subject to “hallucinations” where the technology essentially generates erroneous nonsense.

In the Contract:

Changes in the scope of work are one of the most common sources of construction disputes. AI has the potential to impact construction contracts by mining details such as the proper scope of work. A construction contract can be a lengthy, complicated document with cross-references to bid documents, other agreements and specifications. For example, parties could use AI in the future to flag when a revised drawing requires a formal change order. These details are often central to subsequent disputes. Of course, in any scenario all contractual language should always be reviewed by an experienced construction attorney.

In the Field:

AI has multiple use cases on the ground. For example, AI with “computer vision” may be used to predict the best locations to drill into concrete while avoiding expensive mistakes and obstacles.

AI may have use cases in scheduling and management. Delays are a common source of frustration on construction projects. It now seems plausible AI could be used in the future to analyze available data to, (i) predict the probability of a delay, and (ii) after a delay occurs, to identify the cause.

AI may also have certain use cases in preventing or limiting workplace injuries. For example, AI could conceivably be used to scan a construction site for individuals without certain personal protective equipment. Machine learning will also be involved in any autonomous machinery or equipment used on job sites of the future.[2]

In the Office:

Construction disputes typically involve a multitude of documents, including contracts, specifications, drawings, change orders and correspondence. Analysis of a well-documented construction project can quickly become one of the most time-consuming aspects of a dispute. To the extent AI may gain the ability to apply machine learning to increase the efficiency of large document reviews, this could represent a significant change in the landscape of construction litigation.

In Court:

Some intrepid lawyers have begun using artificial intelligence as part of their practice. These early adopters have been met with mixed results, and sometimes worse. Some courts are responding by requiring that any attorney using artificial intelligence disclose when AI is used in the preparation of filings. They also must certify that each and every citation to the law of the record has been verified as accurate.[3]

Of course, the use of artificial intelligence may trigger several important professional and ethical duties for attorneys. The ABA recently addressed some of these concerns when the House of Delegates adopted a resolution regarding the use of artificial intelligence at the 2023 Midyear Meeting.

Conclusion:

It can be difficult to separate the wheat from the chaff when it comes to the true potential of AI and machine learning. In terms of the technology adoption lifecycle, AI has likely turned an important corner as it transitions from “innovators” to “early adopters.” For some of us, the hype and prognostications can be an obstacle to performing an objective assessment of likely benefits and risks. Construction law remains in the very early stages of the so-called “AI Revolution” and the final destination remains unclear.

Construction, like the law itself, is an old profession not known for embracing disruption. But while the promise of artificial intelligence can be alluring, construction attorneys should be careful not to allow these new tools to replace their own research and judgment. Nonetheless, the potential of machine learning to impact all phases of construction from planning and drafting through project completion and dispute resolution warrants close attention and thoughtful analysis. The power of the underlying technology will continue to grow.

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Patrick McKnight is a member of Fox Rothschild’s national Construction Practice Group. For more information, please contact Patrick at pmcknight@foxrothschild.com. 

[1] To be clear, machine learning is more accurately described as a subset of artificial intelligence.

[2] The flip side of the coin is how liability will be apportioned when AI is accused of causing an injury. This is a developing area of tort law beyond the scope of this article. 

[3] See e.g., Judge Michael Baylson’s June 6, 2023 Standing Order Re: Artificial Intelligence (“AI”) in the Eastern District of Pennsylvania.

Meet D1's Neutrals Series: BILL FRANCZEK

Company: Woods Rogers Vandeventer Black PLC

Office Location: Norfolk, VA

Email: Bill.Franczek@wrvblaw.com

Website: https://wrvblaw.com/attorney_/william-e-franczek/

Law School: Syracuse University Law – JD, 1982, Magna Cum Laude, Order of the Coif

Types of ADR services offered: Arbitration, Dispute Resolution Boards and Panels, Mediation and Neutral Evaluations

Affiliated ADR organizations: American Arbitration Association  (AAA); International Institute for Conflict Prevention and Resolution (CPR);  London Court of International Arbitration (LCIA);  International Court of Arbitration (ICC)

Geographic area served: Nationwide

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Q: Describe the path you took to becoming an ADR neutral.

A: I have an undergraduate degree in Civil Engineering and a Professional Engineering License in NY and VA.  So, when I became a lawyer, I applied for membership in the AAA, and was accepted as a construction neutral in 1987.  I now practice construction law and serve as an ADR Neutral in matters across the country and internationally.

Q: Describe your background and experience mediating and arbitrating construction cases.

A: I have been a construction mediator for about 20 years, mostly in matters on the east coast.  My background in construction engineering helps with facilitating resolutions, as I believe construction professionals can identify with me and my experiences. As far as arbitrating construction cases, I have handled 250-300 cases in my career.  I’ve been fortunate to be involved in some very large matters ($100M+), which are generally handled with 3 arbitrator panels, and before some very good construction lawyers.  I currently have 9-10 such matters pending at any given time.  More recently, I’ve been involved in several large wind and solar panel energy cases.

Q: What percentage of your current legal practice is spent on ADR work? What do you do when not serving as an ADR neutral?

A: I’d estimate about 95% of my work is now ADR related.  I also serve some clients with day-to-day questions, contract reviews and dispute resolution matters.

Q: Do you do neutral work beyond “garden-variety” mediation or arbitration? If so, what additional ADR services do you offer?

A: I do a considerable about of Dispute Resolution Board work, including infrastructure work in Texas, California, Virginia, Maryland and Colorado.

Q: Mediators are oftentimes described as “facilitative,” “evaluative,” or “transformative.” Do you have a style?

A: I try to start cases as a facilitative mediator, but invariably end up providing an evaluation of each party’s cases, to the extent enough information is provided to me to do so.

Q: Are virtual mediations as effective as in-person mediations? What are their advantages/limitations?

A: I think in-person mediation is much better than virtual.  Getting face-to-face contact helps develop trust and credibility.

Q: What techniques and strategies do you use to help parties overcome impasse?

A: At the end of the process, I will often offer to provide each party with a separate “mediator’s recommendation” that has sometimes proven to enable resolution of difficult cases.

Q: What should attorneys and their clients take into consideration when vetting and/or selecting an arbitrator?

A: His/her experience in construction, their temperament, and most importantly, recommendations from other lawyers on their experiences with potential candidates.

Q: What advice do you have for parties when considering whether to choose a single arbitrator or a panel?

A: I believe a single arbitrator for cases < $2M is probably wise, just for the cost element.  It has been my experience that using the AAA Streamlined Three Arbitrator Option where one of the three handles all pre-hearing matters can be cost-effective. I think you are likely to get a more “negotiated” resolution with 3 arbitrators than just one.

Q: Do you think limits should be placed on discovery in the arbitration context?

A: Yes, definitely.  I give the parties a draft Scheduling Order that I have to try to convince them to limit discovery, while at the same time giving them the latitude to provide for the amount of discovery necessary for the particular case.

Q: What are some of your interests or hobbies?

A: Reading, international travel, wildlife and bird watching.

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Assistant Editor-in-Chief Jessica Knox is an Associate in the Minneapolis office at Stinson LLP. She represents owners, general contractors, and subcontractors in litigation disputes. Jessica can be contacted at jessica.knox@stinson.com. 

Toolbox Talk Series Recap – Arbitration Motion Practice

In the June 22, 2023 edition of the Toolbox Talk Series, Adrian Bastianelli, Peckar & Abramson, P.C., and Brian Cashmere, Williams Mullen, moderated by Jennifer Millender of the American Arbitration Association (“AAA”), discussed motion practice in arbitration. Specifically, they offered advice on how to choose the right issue for a motion, how to get approval for a motion, how to write the motion, and how to get the arbitrator to grant it. They also discussed the pros and cons of motion writing in arbitration settings.

1.      How to choose the “right issue” for a motion in arbitration

The panel discussed what type of issues can, or should, be brought up in a motion in arbitration.  Cashmere stated that a clear and concise issue is best for this type of review.  For example, statute of limitations, notice, or contract interpretation issues may make great summary judgment or partial summary judgment motions.  Essentially, an issue that the arbitrator may resolve via primarily a question of law is more likely to succeed.  Bastianelli warned against submitting just any “available” motion, as the practice may turn the arbitrator against you. Both panelists mentioned the need to consider strategy before filing a motion—ask, “how will filing this motion help or hurt reachingArbi final resolution.”  Cashmere noted that sometimes the threat of bringing the issue to a hearing can put pressure on the adverse party in a way that is favorable to your client’s goals; possibly even more so than actually submitting the issue.

2.      How to get approval for a motion in arbitration

Bastianelli noted that, under AAA Rule 34, a party must first receive approval to submit a substantive motion before actual submission. Cashmere warned that some states, like California, do not typically allow motions, at all. Usually, where permitted, you must submit a letter to the arbitrator on why they should allow the motion, though Cashmere stated that sometimes the need for a motion may be raised during a case management conference. Both panelists stated that the key to getting approval for the motion is trying to convince arbitrator that your situation is the exception: the sometimes-unusual situation where the law is truly all they need to decide the issue.  They emphasized the need to make a case that the issue can be settled if the arbitrator allows a motion.  Bastianelli recommended making the arbitrator feel guilty; argue that arbitrator resolution of the issue on motion will save time and money.

3.      How to write a good motion in arbitration

The panelists also discussed how to write a convincing motion. Cashmere suggested sticking mainly to law and only mentioning truly uncontested facts, but only if they would help decide the issue.  If the motion can be solved purely through questions of law, as it should, then the panelists suggested leaving all the “messy” facts out. Bastianelli underscored that, like with any motion to a court, the motion should be well written and have adequate legal basis, so as not to waste time or upset the arbitrator.

As to timing of the motion, Bastianelli emphasized that if you can get the motion in before discovery is done, it could save everyone the time and money of doing discovery on what may become a moot issue.  The earlier the submission, the better.

4.      How to get the arbitrator to grant a motion in arbitration

The panelists confirmed that, once a motion is submitted, the chances the arbitrator will grant it are nonetheless low.  Out of five motions Cashmere submitted in arbitration, all five were denied.  Despite forty years of arbitrator service, Bastianelli can count on two hands the times he granted a motion.  The panelists discussed some of the reasons for this, including that almost every legal issue has a fact-dependent element.  Additionally, arbitrators may be concerned that, by excluding evidence, they may give the other party basis to vacate the award.

Both panelists agreed that, regardless of these obstacles, if your motion focuses on a pure legal issue and emphasizes that it saves everyone time and money, success on a motion is possible.

5.      Pros and Cons of motions in arbitration

In sum, the panelists provided some possible pros and cons that attorneys should consider when deciding whether to submit a motion during arbitration:

Pros:

• A potential to win on that issue?
• Saves client time and money?

Cons:

• Costly to write the motion - is it in budget?
• Will an unfavorable decision on the motion hurt the remainder of the arbitration?
• Motions are rarely granted - will the time and effort be wasted if it does not actually move the case forward?

The goal is to use motions in arbitration to better serve your client.  While they should be used sparingly and are rarely granted, there can be times and places to make a motion in arbitration.

Click here to view the discussion in its entirety.  

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Author Michael Zehner is a construction attorney with BBG Construction Law in Denver, Colorado.  Michael counsels clients on legal issues through all phases of their construction projects, from contract negotiation to completion of the work and beyond, with a focus on litigation.  Michael can be reached at mzehner@bbglaw.com.

Editor Douglas J. Mackin is a construction attorney with Cozen O’Connor in Boston, Massachusetts. Douglas counsels owners, developers, contractors, and subcontractors in all phases of a construction project, from contract negotiation through to completion, including disputes, litigation and arbitration. Douglas can be contacted at dmackin@cozen.com.