How many legal pleadings can a single project generate? Here's a building with dockets full of complaints, motions and settlement agreements that is still producing more.
The building is a three-year-old, classical-style concert hall in Carmel, near Indianapolis. The latest round involves a liability insurer that convinced a federal court that its policy does not cover defects in the concert hall steel erector's work on the roof framing. An appeal by the steel erector made last month is the newest pleading of the many filed over this building.
The issue of defect coverage in liability policies continues to vary from state to state as liability insurers try to eliminate the costly coverage when the opportunity presents itself.
Most of the tangled lawsuits over the Carmel, Ind.-Palladium, as the concert hall is called, were filed in state court and they finally settled November 14.
No one denies that defects delayed by three months work on the $119-million project, a lovely domed structure, back in 2009. Several million dollars in claims resulted.
The delays were caused by cracks or other defects discovered in the steel ring that supports the hall's domed roof. The city of Carmel's Redevelopment Commission sued Steel Supply & Engineering Co., Grand Rapids, Mich., plus other companies involved on the project, for faulty work.
The project and the conflict bring up some of the most important issues that weigh building construction down with risk management and legal costs, among them flawed workmanship and lack of coordination.
Forum-selection clauses assured that the main lawsuit by the redevelopment corporation against Steel Supply & Engineering, a company with a deep portfolio of completed large-span structures, would be heard in state court in Hamilton County, Indiana.
According to the Indianapolis Business Journal, Steel Supply & Engineering agreed to pay out $2.8 million to the financially strapped redevelopment corporation and forfeit another $750,000 in retained funds.
Key subcontractors and a structural engineer also reached settlements with Carmel or kicked into the settlement payout. For example, the Indianapolis Business Journal reports, an engineering firm that reviewed designs of the concert hall's roof design, Lynch, Harrison & Brumleve, Indianapolis, will pay out $800,000.
Steel Supply & Engineering had reportedly argued that Lynch, Harrison bore some responsibility for the "breaks" in the steel roof ring.
Related legal proceedings on another front continued recently.
Steel Supply & Engineering early last month asked a federal appeals court judge to overrule a state court judge who ruled that Illinois National Insurance Co., Steel Supply & Engineering's liability insurer, did not have a duty to defend Steel Supply under its policy.
In September, a federal court judge wrote that the problems on the project included defects in the structural steel and bolts and that there had been a "substitution of an inferior part." The redevelopment agency claimed the roof and the concrete dome panels were compromised by the problems, forcing the agency to make remediation plans and delaying completion
"These allegations relate solely to plaintiff's [Steel Supply & Engineering's] allegedly deficient workmanship," which although they may be the basis for lawsuits against Steel Supply do not add up to liability as it is defined in the policy, wrote Judge Robert Homes Bell.
Steel Supply & Engineering's attorney could not be reached for comment.