Project

CE/CM 4304 & CE/CM 5378 Design Project, FALL 2021

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(The names, project and issues presented in this assignment are not related to any real individuals, companies or projects.)

REVISED, #2: 9/13/21

Parties: Owner – Shinbone Commons, LLP (SCL)

Partner A - Tom Donifin, Inc. (DPI)

Partner B - Dutton Peabody, LP (DPL)

Retail Operator - Liberty Valance, LLC (LVL)

Architect - Picketwire Architects, Inc. (PAI)

Contractor - Buck Langhorn, Inc. (BLI)

Project: Seven Story Apartment Building, 192 Units

Concrete Frame, Brick & Glass Exterior, Retail on Ground Level, Two

Levels of Underground Parking

Shinbone, Texas

Design & Construction Issues

Partners A and B entered into a limited liability partnership (LLP) for developing a seven story

apartment building in Shinbone, Texas. Partner B has a construction division that contracted

with the LLP to design and construct the apartment building with one level of retail on the

ground floor. Buck Langhorn, Inc. (BLI) hired and directed Picketwire Architects, Inc. (PAI) in

providing architectural, structural and MEP design services: a Design-Build delivery method.

Shinbone Commons, LLP contracted with BLI using an AIA Document A141, “Standard Form

of Agreement Between Owner and Design-Builder”, with the AIA Document A201, “General

Conditions of the Contract for Construction”, as part of the contract documents.

In the LLP agreement, Partner A agreed to purchase the first floor Retail component of the

project from partner B’s construction division, BLI, for the predetermined amount of

$10,000,000.00. BLI guaranteed the completion date and cost of $45,000,000 for the project to

the LLP entity. As the project progressed, Partner A met with PAI and their consultants,

directing them to make various changes without DPL’s representatives being present. PAI

proceeded with Partner A’s revisions and issued the revised plans to BLI. Partner B and BLI

were very surprised by Partner A’s actions without their input, but in the spirit of cooperation

proceeded with the work. BLI received estimates from the subcontractors, totaling more than

$4,000,000, and submitted the price for the revisions to the partners. Partner A was not happy

with the pricing and pushed for BLI to absorb any extra costs using BLI’s contingency. The

partners and BLI worked out the issues and work continued. Several other issues surfaced, such

as adding a 4,000 square feet mezzanine level in the retail space. Partner A agreed to the cost and

a modest time extension.

Partner A owned the adjacent property and provided sitework for the entire development past the

property lines of Shinbone Commons. BLI and Partner A had several disputes about access to

the site and the delays caused by Partner A’s subcontractors.

When the mezzanine was added, PAI reviewed the additions with the city’s plan examiner and

the examiner said BLI did not need a revised permit since the mezzanine would be considered

part of the retail finish out. PAI relayed the city examiner’s decision, in writing, to the partners

and BLI, who proceeded with the work. The building inspector stated that he would observe the

CE/CM 4304 & CE/CM 5378 Design Project, FALL 2021

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installation of the mezzanine and only required the revised structural plans, adding the

mezzanine, be on site for review. The structural framing for the mezzanine was approved by the

building inspector.

Partner A negotiated a contract for leasing the retail space with Liberty Valance, LLC (LVL),

with the understanding the retail shell would be ready for finish out in July by LVL’s contractor

in time for them to open in November and not miss the holiday season sales. Early occupancy of

the condos began in December and completed the next April. BLI worked diligently to complete

the retail shell by July and accomplished most of the work except for the windows and exterior

doors. It was a very dry year and the retail shell was accessible for beginning the mechanical,

electrical and plumbing (MEP) rough-ins in July. LVL even hired BLI’s drywall subcontractor

to start building the walls in July along with a third party MEP sub, hired by BLI, who also

started working in July installing air conditioning equipment.

LVL was responsible for providing their own design and construction documents, therefore they

hired an architect and design firm, but they hired PAI under a different agreement from the

BLI/PAI contract. LVL’s manager, Angus Starbuckle, was not a proficient manager and not

diligent in making decisions which delayed the construction documents and the CDs were not

submitted for permitting until October 25th. LVL’s contractor did not receive the finish-out

building permit until November 7th. LVL and Partner A claim that BLI’s delay in enclosing the

retail space with windows and doors until September caused the delay in completing and opening

the retail store until the next March. Also, LVL and Partner A claim that adding the mezzanine

without updating the base building permit caused a delay in the issuance of LVL’s finish-out

permit.

Legal Posturing & Claims for Damages

Partner A and LVL claim damages from BLI for delaying the start of work for the retail finish

out due to the late installation of the windows and doors, plus the delay in acquiring LVL’s

finish-out building permit. Partner A and LVL filed separate suits against BLI because of the

claimed delay in the amount of $6,000,000 each, totaling $12,000,000, citing lost rent from the

retails space and lost business during the holiday season and anticipated profits.

BLI claims that the space was ready in time for finish out and LVL started work in the shell as

scheduled. Also, BLI claims the delay in LVL obtaining a finish-out building permit was not

their fault since they were told to proceed with the mezzanine work by PAI and the city plan

reviewer, and did not contract with PAI for the design of Liberty Valance, LLC.

Since LVL did not open in time for the holiday season, Partner A refused to buy the retail

component from Partner B and BLI for the $10,000,000 as previously agreed. Partner B files

suit against Partner A for the $10,000,000 and for BLI’s extended general conditions due the

design change delays, totaling $12,000,000.

Instructions

Review the documents mentioned in the case outline. You will individually create your report

and Powerpoint presentation, then submit them on Canvas. Divide into groups of four or five

students for studying the information and documents. Develop your reports keeping in mind the

questions and issues noted below, plus the Contract Documents and the interrelationships

between the parties. Choose which path you would like to take in representing one of the parties

by selecting “Group A” or “Group B”.

CE/CM 4304 & CE/CM 5378 Design Project, FALL 2021

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Group A

Assume your group has been hired by Partner A and LVL to be an Expert Witness for their

complaint and defense. You must back up all of your answers by referencing the appropriate

documents and paragraphs. Opinions may be expressed in your report and will be based on your

professional experience.

Group B

Assume your group has been hired by Partner B and BLI to be an Expert Witness for their law

suit against Partner A and LVL and in their defense. You must back up all of your answers by

referencing the appropriate documents and paragraphs. Opinions may be expressed in your

report will be based on your professional experience.

Present your findings in report format addressing at least each of the Issues and Questions below:

(These are “thought provoking” questions to help in developing your report and not to be

answered like taking a quiz.)

1. Are Partner A and LVL justified in suing Partner B and BLI? Why or why not? 2. Do Partner B and BLI have any contractual obligations to Partner A and LVL? 3. Are Partner B and BLI justified in suing Partner A? 4. How would BLI prove they will incur additional general conditions due to changes in the

work?

5. Should BLI have proceeded with the mezzanine without a revised building permit? 6. Should BLI have proceeded with Partner A’s design changes without written approval? 7. Did the start of LVL’s contractors work in the shell retail space constitute acceptance of

the shell for finish out?

8. Does LVL have reason to blame BLI for delaying the completion of the retail store until March?

9. What other dispute resolution options are available to the parties besides litigation and why may these alternatives be more appealing?

10. Did PAI have a conflict of interest by working for both BLI and LVL?

Report Outline

Your reports should include the following topics at a minimum:

• Introduction

• Resumes of Experts – you may be creative in drafting your individual resumes

• Executive Summary

• Background & Methodology – facts of the case and how you approached the problem

• Opinions & Conclusions (detailed explanation and reference to related documents)

• Powerpoint presentation for the class (all team members will be presenting)

A copy of your written reports will be due Nov. 23, 2021

Student Presentations will be held on Nov. 30 & Dec. 2. No in-class presentations will be

required. We will discuss the case on December 2nd.

GOOD LUCK!!!

Instructor: Michael Fairchild, AIA, NCARB, LEED® AP