Elness Swenson Graham Architects, Inc.// RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC v. RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC// Elness Swenson Graham Architects, Inc. ( 2015 )
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ACCEPTED 03-14-00738-CV 4853036 THIRD COURT OF APPEALS AUSTIN, TEXAS 4/10/2015 5:50:17 PM JEFFREY D. KYLE CLERK Oral Argument Requested No. 3-14-00738-CV FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS In The Court of Appeals For The 4/10/2015 5:50:17 PM Third District of Texas JEFFREY D. KYLE Clerk Elness, Swenson, Graham § From the 200th District Court Architects, Inc. § Appellants and Cross-Appellees, § § v. § § RLJII-C Austin Air, LP, § RLJ II-C Austin Air Lessee, LP § and RJL Lodging Fund II § Acquisitions, LLC § Appellees and Cross-Appellants. § Of Travis County, Texas CROSS-APPELLANTS’ BRIEF MUNSCH, HARDT, KOPF & HARR, P.C. Michael W. Huddleston Benton T. Wheatley State Bar No. 10148415 State Bar No. 24015171 J. Stephen Gibson Tracy McCreight State Bar No. 07866000 State Bar No. 24037064 3800 Ross Tower 401 Congress Avenue 500 North Akard Street Suite 3050 Dallas, Texas 75201 Austin, TX 78701 214-855-7500 telephone 512-391-6100 telephone 214-855-7584 facsimile 512-391-6149 facsimile Email: mhuddleston@munsch.com Email: bwheatley@munsch.com Email: sgibson@munsch.com Email: tmccreight@munsch.com ATTORNEYS FOR APPELLEES, CROSS-APPELLANTS MHDocs 6062453_7 12690.2 IDENTITY OF PARTIES AND COUNSEL The undersigned counsel of record, pursuant to Texas Rule of Appellate Procedure 38.2, certifies that the following persons have an interest in the outcome of this case: Appellants, Cross-Appellees: Elness, Swenson, Graham Architects, Inc. Appellants, Cross-Appellees’ Weston M. Davis Counsel on Appeal: Gregory N. Ziegler Matthew Mumm Macdonald Devin, P.C. 1201 Elm Street 3800 Renaissance Tower Dallas, TX 75270 Appellants, Cross-Appellees’ Weston M. Davis Counsel at Trial: Gregory N. Ziegler Matthew Mumm Macdonald Devin, P.C. 1201 Elm Street 3800 Renaissance Tower Dallas, TX 75270 Appellees, Cross-Appellants: RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP RLJ Lodging Fund II Acquisitions, LLC Appellees, Cross-Appellants Michael W. Huddleston Counsel on Appeal: J. Stephen Gibson Munsch Hardt Kopf & Harr, P.C. 3800 Ross Tower 500 North Akard Street Dallas, Texas 75201 i MHDocs 6062453_7 12690.2 Appellees, Cross-Appellants Benton T. Wheatley Counsel at Trial: Tracy McCreight Munsch Hardt Kopf & Harr, P.C. 401 Congress Avenue Suite 3050 Austin, TX 78701 By: /s/ Michael W. Huddleston Attorney for Appellees, Cross- Appellants ii MHDocs 6062453_7 12690.2 STATEMENT CONCERNING ORAL ARGUMENT Appellees and Cross-Appellants respectfully request oral argument in this case. Appellees and Cross-Appellants respectfully submit that oral argument will help the Court in evaluating the issues necessary to the resolution of this appeal. iii MHDocs 6062453_7 12690.2 TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL .............................................................i STATEMENT CONCERNING ORAL ARGUMENT ........................................... iii TABLE OF CONTENTS ..........................................................................................iv INDEX OF AUTHORITIES...................................................................................ixx I. STATEMENT OF THE CASE ....................................................................... 1 II. ISSUES PRESENTED ....................................................................................4 III. STATEMENT OF FACTS .............................................................................. 6 A. Separate Contracts With Separate and Distinct Promised Performances on the Project. ................................................................. 7 B. Separate and Distinct Acts and Omissions Breaching Separate and Distinct Contractual Obligations. .......................................................... 9 C. Suit and Settlements By the Soils Engineer and the General Contractor. ...........................................................................................11 D. The Trial Court Rules That the One Satisfaction Rule Applies.......... 12 E. Attorney’s Fees Allowed Only for Breach of Contract Claim Against the Architect. .......................................................................................13 F. The Trial Court Renders Final Judgment. ...........................................13 IV. SUMMARY OF ARGUMENT .....................................................................14 A. The One Satisfaction Rule Does Not Apply. ......................................14 B. RLJ Entitled To Attorney’s Fees For the Presentation of the Breach of Contract Claims Against the Architect, General Contractor, and Soils Engineer Either If These Parties Shared a Joint and Several Contractual Duty Or If the Damages Were “Indivisible.” .................. 15 V. ARGUMENT AND AUTHORITIES ...........................................................16 A. The One Satisfaction Rule Does Not Apply. ......................................17 iv MHDocs 6062453_7 12690.2 1. This Case Involves Contractual, Not Tort, Liability. ............... 18 2. The One Satisfaction Rule Was Developed to Address Settlements In Tort Cases With Less Than All Defendants After the Legislature Authorized Joint and Several Liability. ........... 19 a. Generally There Was No Joint & Several Tort Liability at Common Law. ......................................20 b. There Was No General Right of Contribution at Common Law. .......................................20 c. Statute Allowed Collection of All Damages From Any Defendant and Gave Defendant the Right to Contribution from the Other Tortfeasors, But Fails to Address Settlement With Less Than All Tortfeasors. ....................................21 d. The One Satisfaction Rule Was Designed to Address Joint and Several Liability In Tort Cases Only. ....................................................................22 3. The One Satisfaction Rule Only Applies In Cases Involving Joint Liability. ...........................................................................23 a. Unlike Tort Cases, Joint Liability in Contract Cases Requires More Than Common, Indivisible Damages. .....................................25 b. Without a Joint Contractual Obligation, Settlement Credit Under the One Satisfaction Rule Allowed the Architect to Do Indirectly What It Could Not Do Directly. ....................................................................31 c. This Court Has Rejected Application of the One Satisfaction Rule to Contractual Liability Without a Joint Contractual Obligation. ....................................................................32 v MHDocs 6062453_7 12690.2 d. Applying the One Satisfaction Rule Without Joint Contractual Liability Obliterates the Collateral Source Exception. ..........................................33 e. This Case Involved No Joint Contractual Liability of the Architect and the Settling Defendants. ....................................................................34 1) The Performance Could Not Be the Same by Operation of Law: General Contractors Legally Precluded From Preparing Plans & Specifications. ........................34 2) The Performance of the Architect and the Settling Defendants Was Not Alleged To Be the Same.......................................35 3) The Architect Argued That Its Duty Was Different From Those of the Settling Defendants. .............................................38 4. The One Satisfaction Rule Does Not Apply Because the Jury’s Verdict Did Not Award Damages for an “Indivisible” Injury.. 39 a. The Charge Submitted Apportioned Damages. ....................................................................40 1) The Plain Language of the Question Asked Determines What the Jury Found. .........................................................41 2) The Plain Language of the Question Limited Damages to Those Resulting from the Architect’s “[F]ailure to [C]omply [W]ith the Architectural Contract.” .........................................................42 b. The Jury Was Asked To Apportion and in Fact Apportioned Damages. ...........................................45 vi MHDocs 6062453_7 12690.2 5. No Right to Application of One Satisfaction Rule or Contribution Exists In Contract Cases In Light of Section 33.001. .......................................................................................48 6. Applying the One Satisfaction Rule in Contractual Liability Cases Impairs Contract Obligations In Violation of Texas Constitution Article I, §16. .......................................................53 a. Texas Public Policy Strongly Favors Freedom of Contract. ......................................................53 b. The One Satisfaction Rule Impermissibly Impairs Contractual Obligations.....................................54 c. Freedom of Contract Outweighs One Satisfaction’s Questionable Objectives. .........................55 7. The Architect Is Procedurally Barred From Asserting the One Satisfaction Rule. ......................................................................56 a. Waived by Failure to Specially Except. .........................56 b. Waived by Failure to Request Question or Instruction. ....................................................................56 c. Waived By Failure to Plead as an Affirmative Defense. ......................................................57 d. Barred By Laches. ..........................................................58 B. No Segregation of Attorney’s Fees Was Required. ............................59 1. There Is No Need to Segregate Fees For Claims Requiring Proof of the Same Facts. ...........................................................60 2. If the One Satisfaction Rule Applies, It Requires Proof of Breach of the Same Promised Performance and an Indivisible Injury. ........................................................................................61 3. Alternatively, If Proof of Indivisible Injury Alone is Enough for the Application of the One Satisfaction Rule, Segregation of Fees Was Still Not Required. ....................................................61 vii MHDocs 6062453_7 12690.2 VI. CONCLUSION AND PRAYER ...................................................................62 CERTIFICATE OF COMPLIANCE .......................................................................64 CERTIFICATE OF SERVICE ................................................................................65 APPENDIX IN SUPPORT OF CROSS-APPELLANTS’ BRIEF ..........................66 viii MHDocs 6062453_7 12690.2 INDEX OF AUTHORITIES Page(s) CASES Allan v. Nersesova,
307 S.W.3d 564(Tex. App.—Dallas 2010, no pet.) ..........................................44 Amco Trust, Inc. v. Naylor,
159 Tex. 146,
317 S.W.2d 47(1958) .................................................................32 AMX Enters., Inc. v. Bank One, N.A.,
196 S.W.3d 202(Tex. App.—Houston [1st Dist.] 2006, pet. denied) ............... 49 Austin Road Co. v. Pope,
147 Tex. 430,
216 S.W.2d 563(1949) ...............................................................21 Bejjani v. TRC Servs., Inc., No. 14-08-00750-CV,
2009 WL 3856924(Tex. App.—Houston [14th Dist.] Nov. 19, 2009, no pet.) .............................................................................57 Bonniwell v. Beech Aircraft Corp.,
663 S.W.2d 816(Tex.1984)................................................................................48 Bradshaw v. Baylor University,
126 Tex. 99,
84 S.W.2d 703(1935) ...................................................................22 Brewer & Pritchard, P.C. v. AMKO Res. Int’l, LLC, No. 14-13-00113-CV,
2014 WL 3512836(Tex. App.—Houston [14th Dist.] July 15, 2014, no pet.) (mem. op.) ............................................................57 Brewer v. Nationsbank of Texas, N.A.,
28 S.W.3d 801(Tex. App.—Corpus Christi 2000, no writ) ..............................58 Brown v. Am. Transfer and Storage Co.,
601 S.W.2d 931(Tex. 1980) ..............................................................................33 Buccaneer Homes of Alabama, Inc. v. Pelis,
43 S.W.3d 586(Tex. App.—Houston [1st Dist.] 2001, no pet.) ........................37 Buckner Orphans Home v. Berry,
332 S.W.2d 771(Tex. Civ. App.—Dallas 1960, writ ref’d n.r.e.) .....................26 ix MHDocs 6062453_7 12690.2 Bullock v. Regular Veteran’s Ass’n of U.S.,
806 S.W.2d 311(Tex. App.—Austin 1991, no writ) .........................................56 Byer Custom Builders v. Franks,
389 S.W.3d 880(Tex. App.—Houston [14 Dist.] 2012, no pet. hist.) .........39, 43 C.H. v. Dep’t of Family & Protective Servs., No. 01-11-00385-CV,
2012 WL 586972(Tex. App.—Houston [1st. Dist.] Feb. 23, 2012, pet. denied) (mem. op.) .....................................................41 City of Fort Worth v. Johnson,
388 S.W.2d 400(Tex. 1964) ..............................................................................58 Coleman v. United Savings Ass’n of Texas,
846 S.W.2d 128(Tex. App.—Fort Worth 1993, no writ) ..................................51 Columbia Rio Grande Healthcare, L.P. v. Hawley,
284 S.W.3d 851(Tex. 2009) ..............................................................................42 Crown Life Ins. Co. v. Casteel,
22 S.W.3d 378(Tex. 2000).....................................................................24, 39, 49 CTTI Priesmeyer, Inc. v. K&O Limited Partnership,
164 S.W.3d 675(Tex. App.—Austin 2005, no pet.) ...................................passim Dalworth Restoration, Inc. v. Rife-Marshall,
433 S.W.3d 773(Tex. App.—Fort Worth 2014. pet. dism’d w.o.j.) ................. 58 Deal v. Madison, 576 S.W.2d.................................................................................................... 21-22 Dick’s Last Resort of West End, Inc. v. Market/Ross, Ltd.,
273 S.W.3d 905(Tex. App.—Dallas 2008, pet. denied)....................................56 Duncan v. Cessna Aircraft Co.,
665 S.W.2d 414(Tex. 1984) .......................................................................passim El Paso Natural Gas Co. v. Berryman,
858 S.W.2d 362(Tex. 1993) ..............................................................................50 Energy Reserves Group v. Kansas Power & Light,
459 U.S. 400(1983) ............................................................................................54 x MHDocs 6062453_7 12690.2 Export Worldwide, Ltd. v. Knight, No. SA 05 CA 647 XR,
2007 WL 628746(W.D. Tex. Feb. 27, 2007) ............. 27 Fairfield Insurance Co. v. Stephens Martin Paving, LP,
246 S.W.3d 653(Tex. 2004) ..............................................................................53 First Title Co. of Waco v. Garrett,
860 S.W.2d 74(Tex. 1993).................................................................................24 Fortenberry v. Cavanaugh, No. 03-07-00310-CV,
2008 WL 4997568(Tex. App.—Austin Nov. 26, 2008, pet. denied) (mem. op.) .............................................................................61 Galle, Inc. v. Pool,
262 S.W.3d 564(Tex. App.—Austin 2008, pet. denied) ............................. 28-29 Gattegno v. The Parisian,
53 S.W.2d 1005(Tex. Comm’n App. 1932, holding approved) ..................20, 22 GE Capital Commercial Inc. v. Worthington Nat’l Bank,
754 F.3d 297(5th Cir. 2014) .......................................................................passim Green v. Flournoy, No. 03-10-00299-CV,
2011 WL 3435735(Tex. App.—Austin Aug. 5, 2011, no pet.) (mem. op.)....................................................................................41 Gym-N-1 Playgrounds, Inc. v. Snider,
220 S.W.3d 905(Tex. 2007) ..............................................................................53 Haygood v. DeEscabedo,
356 S.W.3d 390(Tex. 2012) ..............................................................................33 Hoffmann v. Dandurand,
180 S.W.3d 340(Tex. App.—Dallas 2005, no pet.) ..........................................50 Hudspeth v. Enter. Life Ins. Co.,
358 S.W.3d 373...................................................................................................49 Hunt v. Ellisor & Tanner,
739 S.W.2d 933(Tex. App.—Dallas 1987, writ denied) ....................... 36-37, 43 Hunter v. Fort Worth Capital Corp.,
620 S.W.2d 547(Tex. 1981) ..............................................................................51 xi MHDocs 6062453_7 12690.2 In re Sewell,
413 B.R. 562(Bankr. E.D. Tex. 2009) ...............................................................26 InvestIn.com v. Europa Int’l , Ltd.,
293 S.W.3d 819(Tex. App.—Dallas 2009, pet. denied)....................................27 Jim Walters Homes v. Reed,
711 S.W.2d 617(Tex. 1986) ..............................................................................18 K-Bar Servs., Inc. v. English, No. 03-05-00076-CV,
2006 WL 903735(Tex. App.—Austin Apr. 7, 2006, no pet.) ......................................................................................................27 Landers v. East Texas Salt Water Disposal Co.,
151 Tex. 251,
248 S.W.2d 731(1952) ........................................................passim Langever v. Miller,
124 Tex. 80,
76 S.W.2d 1025(1934) .................................................................54 LJ Charter, LLC v. Air America Jet Charter, Inc., No. 14-08-00534-CV,
2009 WL 4794242(Tex. App.—Houston [14th Dist.] Dec. 15, 2009, pet. denied) ..................................................... 24, 26, 30-31 Mancorp, Inc. v. Culpepper,
802 S.W.2d 226(Tex. 1990) ..............................................................................50 McCarty v. Wani Venture, A.S.,
251 S.W.3d 573(Tex. App.—Houston [1st Dist.] 2007, pet. denied) ............... 57 McClellan v. Scardello Ford, Inc.,
619 S.W.2d 593(Tex. Civ. App.—Amarillo 1981, no writ)..............................26 Med. Specialist Group, P.A. v. Radiology Assocs., L.L.P.,
171 S.W.3d 727(Tex. App.—Corpus Christi 2005, pet. denied) ......................46 Medina v. Hart,
240 S.W.3d 16(Tex. App.—Corpus Christi 2007, pet. denied) ........................38 Merit Drilling Co. v. Honish,
715 S.W.2d 87(Tex. App.—Corpus Christi 1986, writ ref’d n.r.e.) ................. 48 Minn. Min. & Mfg. Co. v. Nishika,
953 S.W.2d 733(Tex. 1997) ..............................................................................41 xii MHDocs 6062453_7 12690.2 OAIC Commercial Assets, L.L.C. v. Stonegate Village, L.P.,
234 S.W.3d 726(Tex. App.—Dallas 2007, pet. denied)....................................31 Osborne v. Jauregui,
252 S.W.3d 70(Tex. App.—Austin 2008, pet. denied) ............................... 29-30 Osterberg v. Peca,
12 S.W.3d 31(Tex. 2000)...................................................................................41 Oyster Creek Fin. Corp. v. Richwood Investments II, Inc.,
176 S.W.3d 307(Tex. App.—Houston [1st Dist.] 2004, pet. denied) ......... 49-50 Pagosa Oil & Gas, L.L.C. v. Marrs & Smith P’ship,
323 S.W.3d 203(Tex. App.—El Paso 2010, pet. denied) ..................................57 Paschall v. Peevey,
813 S.W.2d 710(Tex. App.—Austin 1991, writ denied)...................................49 Pilgrim’s Pride Corp. v. Smoak,
134 S.W.3d 880(Tex. App.—Texarkana 2004, pet. denied) .............................46 Price Pfister, Inc. v. Moore & Kimmey, Inc.,
48 S.W.3d 341(Tex. App.—Houston [14th Dist.] 2001, pet. denied) ............... 38 Reliant Energy Servs., Inc. v. Cotton Valley Compression, L.L.C.,
336 S.W.3d 764(Tex. App.—Houston [1st Dist.] 2011, no pet.) ......................41 RenewData Corp. v. eMag Solutions, LLC, No. 03–05–00509–CV,
2009 WL 1255583(Tex. App.—Austin May 6, 2009, pet. denied)................................................................................................57 Robertson v. ADJ Partnership, Ltd.,
204 S.W.3d 484(Tex. App.—Beaumont 2006, pet. denied) ................. 39, 43-44 Shoemake v. Fogel,
826 S.W.3d 933(Tex. 1992) ..............................................................................24 Snyder v. Eanes Indep. Sch. Dist.,
860 S.W.2d 692(Tex. App.—Austin 1993, writ denied)...................................35 Stewart Title Guar. Co. v. Aiello,
941 S.W.2d 68(Tex. 1997)...........................................................................46, 60 xiii MHDocs 6062453_7 12690.2 Stewart Title Guar. Co. v. Sterling,
822 S.W.2d 1(Tex. 1992).................................................................24, 39, 58, 60 Sugar Land Props., Inc. v. Becnel,
26 S.W.3d 113(Tex. App.—Houston [1st Dist.] 2000, no pet.) ........................57 Sun Oil Co. v. Robicheaux,
23 S.W.2d 713(Tex. Comm. App. 1930).....................................................20, 22 Szczepanik v. First S. Trust Co.,
883 S.W.2d 648(Tex. 1994) ..............................................................................41 Tesfa v. Stewart,
135 S.W.3d 272(Tex. App.—Fort Worth 2004, pet. denied) ............................42 Tex. & Pac. Ry. v. Levi & Bro.,
59 Tex. 674(1883)..............................................................................................33 THPD, Inc. v. Cont’l Imports, Inc.,
260 S.W.3d 593(Tex. App.—Austin 2008, no pet.) ..........................................41 Tony Gullo Motors I, L.P. v. Chapa,
212 S.W.3d 299(Tex. 2006) ........................................................................46, 60 Travelers Ins. Co. v. Joachim,
315 S.W.3d 860(Tex. 2010) ..............................................................................31 Western Technologies, Inc. v. All-American Golf Center, Inc.,
139 P.3d 858(Nev. 2006) ...................................................................................44 White Budd VanNess P’ship v. Major-Gladys Drive Joint Venture,
798 S.W.2d 805(Tex. App.—Beaumont 1990), writ dism’d,
811 S.W.2d 541(Tex. 1991), cert. denied,
502 U.S. 861(1991).....................................23, 37 Wood Motor Co. v. Nebel,
150 Tex. 86,
238 S.W.2d 181(1951) .................................................................54 Zidell v. Bird,
692 S.W.2d 550(Tex. App.—Austin 1985, no writ) .........................................26 xiv MHDocs 6062453_7 12690.2 STATUTES TEX. OCCUP. CODE §1051.701 .................................................................................35 TEX. CIV. PRAC. & REM. CODE §§32.001.................................................................50 TEX. CIV. PRAC. & REM. CODE §33.0001 et seq. .....................................................48 TEX. CIV. PRAC. & REM. CODE §§33.002.................................................................29 TEX. CIV. PRAC. & REM. CODE §33.012.......................................................30, 50, 52 TEX. CIV. PRAC. & REM. CODE §33.013...................................................................30 Chapter 38 of the Texas Civil Practice and Remedies Code ...................................59 OTHER AUTHORITIES Article 2212........................................................................................................ 21-23 Hodges, Contribution and Indemnity Among Tortfeasors,
26 Tex. L. Rev. 150, 151 n.11 (1947) ...........................................................................................21 House Bill 4 .............................................................................................................52 Senate Bill 890 .........................................................................................................52 TEX. R. CIV. P. 90 .....................................................................................................56 TEX. R. CIV. P. 94 ............................................................................................... 57-58 TEX. R. CIV. P. 278 ...................................................................................................56 Article I, §16 of the Texas Constitution ..................................................5, 14, 53, 56 Wigmore, Joint Tortfeasors and Severance of Damages: Making the Innocent Party Suffer Without Redress,
17 Ill. L. Rev. 458, 459) (1922) .......... 21 Williston on Contracts, §§ 36:1 ...............................................................................26 xv MHDocs 6062453_7 12690.2 I. STATEMENT OF THE CASE This is a breach of contract case involving a local Courtyard by Marriott Hotel (the “Project”), located on East Ben White Boulevard, near Bergstrom International Airport. (CR187; App. A). 1 The foundation of the Project failed in numerous respects and resulted in varied injuries to the property, resulting in $7,536,624.00 of claimed past, present, and future damages. (7RR48; 9RR123- 124, 136; 7RR16-18, 26-39; 3RR133-136; PX-151, 16RR1-1145; 10RR29-31). As the original owner’s successor in interest and assignee, RLJ II-C Austin Air, LP; RLJ II-C Austin Air Lessee, LP; and RLJ Lodging Fund II Acquisitions, LLC (“RLJ” collectively), 2 alleged that the general contractor, EBCO General Contractor, Ltd. (the “General Contractor”), the geotechnical engineer, Terracon Consultants, Inc. (the “Soils Engineer”), and the architect, Elness, Swenson, Graham, Inc. (the “Architect”) failed to perform as specifically and individually promised in three separate and independent contracts. (CR184-218; App. A). After the trial court entered rulings on various pre-trial motions, the only claims being prosecuted were for breach of contract against the Architect, the General Contractor, and the Soils Engineer. (CR1057-62; 1063-64; 1083-84; CR1708-1710). The Soils Engineer settled its contractual liability with RLJ before 1 The Clerk’s Record is cited as “CR”; First Supplemental Clerk’s Record as “1SCR”; Second Supplemental Clerk’s Record as “2SCR”; Third Supplemental Clerk’s Record as “3SCR”. 2 White Lodging Services Corporation, Inc. “assigned the contracts and causes of action in this lawsuit to the RLJ Plaintiffs in this case.” (CR1124; App. B.) 1 MHDocs 6062453_7 12690.2 trial. (CR1080-81; CR1710). The General Contractor settled during trial. (7RR105- 108; CR1710).3 Trial proceeded on RLJ’s breach of contract claim against the Architect. The jury found that the Architect “fail[ed] to comply with the Architectural Contract regarding the structural engineering services required by the contract” in answer to Question 2 (the “Structural Engineering Question”) (CR1126; App. B). The jury then determined the amount that would reasonably compensate for damages “that resulted from [the Architect’s] failure to comply with the Architectural Contract” as found in the Structural Engineering Question. (CR1125- 27; App. B). The total amount of damages found by the jury was $700,000 for the difference in value from the hotel as constructed and the value had the Architect complied with the Architectural Contract, $70,000 for the cost of barrier remediation resulting from the Architect’s failure to comply, and $15,000 for the reasonable and necessary cost of repairs to the hotel due to the Architect’s failure to comply. (Id.) After trial, the Architect moved for credit under the “one satisfaction rule” for sums the General Contractor and the Soils Engineer (“Settling Defendants” collectively) paid in settlement of the contract claims against them. (CR1173- 1228). The trial court deemed the credit applicable because it concluded the 3 The Reporter’s Record is cited by “[Volume Number]RR.” Exhibits are cited to page or pages of the Reporter’s Record on which they or the pertinent parts thereof appear. 2 MHDocs 6062453_7 12690.2 damages were indivisible, despite the fact the court submitted and the jury found damages limited to those “that resulted from [the Architect’s] failure to comply with the Architectural Contract . . . .” (CR1437-41; CR1127; App. B, C). Moreover, the trial court concluded that the absence of contractual joint and several liability did not render the one satisfaction rule inapplicable. (CR1437-41; App. C). Applying the one satisfaction rule, the Court ordered that RLJ recover the from the Architect $516,650.96, which was the sum of the jury’s award of $785,000 as actual damages resulting from the Architect’s breach of contract and the attorney’s fee award of $901,650.96, less $1,170,000, which was the amount of the settlements of the Settling Defendants. (CR1711; App. D). The parties agreed to try the attorney’s fees to the court instead of the jury. RLJ presented evidence of its reasonable and necessary attorney’s fees for asserting the contractual claims against the Architect, the General Contractor, and the Soils Engineer. (3SCR3-611; 2SCR1603-05). However, the trial court only awarded fees for the contractual claim against the Architect and rendered judgment according to its application of the one satisfaction rule and its segregation of attorney’s fees. (CR1708-1712; App. D). The Architect timely filed its notice of appeal (CR1907-13) and RLJ timely perfected its cross-appeal (1SCR3-4). 3 MHDocs 6062453_7 12690.2 II. ISSUES PRESENTED A. Whether the trial court erred in applying the one satisfaction rule and thus reducing the damages found to have resulted from the specific breach of the Architectural Contract by the Architect by the amounts received in settlement for damages resulting from the breach of the different contractual duties owed by the Soils Engineer and the General Contractor (CR1173-79, 1437-41; 2SCR1578-97, 1637-1745) including but not limited to the following sub-issues: 1. Whether, in addition to an indivisible injury, joint and several liability is required for application of the one satisfaction rule, and, if so, whether the liable and settling parties must have contracted for the same performance to deem a contractual liability joint and several? 2. Whether the one satisfaction rule does not apply due to the absence of an “indivisible injury” because: (a) the damages found by the jury were specifically limited to those caused by the contractual breach of the non-settling defendant; (b) the non-settling defendant in its closing argument advised the jury that it should not include damages it deemed attributable to the Settling Defendants; or (c) both? 3. Whether the one satisfaction rule does not apply unless the liability of the non-settling defendant is based on a non-contractual theory? 4 MHDocs 6062453_7 12690.2 4. Whether application of the one satisfaction rule violates article I, §16 of the Texas Constitution guaranteeing freedom of contract by depriving a party of the benefit of a contractual agreement with another and applying those benefits to offset the liability of a third- party? 5. Whether the Architect waived the right to seek application of the one satisfaction rule by any one or more of the following: (a) failing to specially except to a lack of settlement allocation; (b) failing to plead the rule as an affirmative defense, (c) inviting the jury to exclude from its damage finding damages caused by the Settling Defendants; or (d)failing to object to a jury question that permitted the jury to only find damages attributable to the Architect’s breach of contract? B. Either if there was a joint and several contractual liability between the Architect and the Settling Defendants or if the damages were awarded for an indivisible injury, whether the trial court erred in refusing to award RLJ reasonable and necessary attorney’s fees incurred in the presentation of the breach of contract claims against the Architect, the General Contractor and the Soils Engineer and in awarding those fees attributable only to the presentation of the claim against the Architect? (3SCR3-611; 2SCR1603-05, 1600-01, 1711). 5 MHDocs 6062453_7 12690.2 III. STATEMENT OF FACTS The record in this case does not support the application of the one satisfaction offset against the damages found caused by the Architect. First, the evidence shows separate contractual duties, not common or overlapping duties. Thus, there is no basis for joint and several liability, a sine qua non for application of the one satisfaction rule. Second, the jury, in answer to Question 3, determined the damages caused by the Architect. The jury did not find an indivisible amount of damages caused by the settling defendants and the Architect. Third, the Architect invited the jury to reduce the damages finding based on damages caused by the settling defendants. Indeed, the Architect did not raise the issue of one satisfaction until after the trial, failing to plead it, specially except regarding it, and failing to object to either the omission of a segregated damages question or to Question 3, which focused on damages caused by the Architect only. Finally, Question 3 and the record show that the jury reduced the amount of damages it awarded resulting from the Architect’s breach to remove amounts caused by the non-settling parties. Thus, the record shows that recovery of the full amount awarded in answer to Question 3 did not present even the possibility of a double recovery or more than one satisfaction. Having suffered over $7 million in damages, receiving settlement funds of $1,170,000 for the damages caused by the breaches by the General Contractor and 6 MHDocs 6062453_7 12690.2 Soils Engineer, plus the jury award of $785,000 for the damages caused by the Architect, certainly would not amount to more than one satisfaction. Indeed, despite three contracts for millions of dollars and separate and distinct promised performances, RLJ received a building with serious deficiencies that have caused loss and will continue to do so. Yet, RLJ is forced to accept the Architect benefiting from the other’s breaches of contract to which it was not a party by receiving two damage reductions or offsets: one by the limited damage inquiry in the jury charge and a second from the application of the one satisfaction rule. A. Separate Contracts With Separate and Distinct Promised Performances on the Project. The contracts with the Architect, the General Contractor, and the Soils Engineer did not promise the same performance. • The Soils Engineer agreed to assess site conditions and recommend specific foundation design parameters based on the same. (PX-3; 12RR6-11; 3RR161; App. E). • The General Contractor agreed to build the structure designed by the Architect with the assistance of its Structural Engineer, and comply with the plans and specifications of the Project. (PX-48; 12RR569-75; App. F). • The Architect, with the assistance of its Structural Engineer, agreed to prepare an appropriate foundation plan. (PX-15; 12RR30, 35, 47, 49; App. G). The Architectural Contract (PX-15; 12RR26-77; App. G) provided, among other things, that the Architect’s design services “include normal structural, 7 MHDocs 6062453_7 12690.2 mechanical and electrical engineering” (12RR39) along with “[s]tructural [e]ngineering design, document preparation and coordination” through “[o]ur Structural Engineering firm...Marlin Bridges Associates, Inc.” (12RR47). In conjunction with its retained Structural Engineer (PX-15; 12RR28), the Architect promised to provide a foundation design for the Project. (PX-15; 12RR30, 35, 47, 49; PX-13; 12RR17-25). The original owner White Lodging Services Corporation, Inc. contracted for the services of the Soils Engineer to provide “geotechnical services” including evaluating soil conditions and providing recommendations which would address “[f]oundation design and construction.” (PX-3; 12RR6-11; App. E). This information was to be supplied to the Architect and its Structural Engineer in connection with the Project’s foundation design. (PX-15; 12RR48; App. G). The original owner also separately contracted with the General Contractor to build the Project according to the Architect’s plans and specifications. (PX-48; 12RR569-75; App. F). The General Contractor agreed “that materials and equipment furnished will be of good quality[,]…that the work will be free from defect…and will conform to the requirements” (PX-48; 12RR616; App. F) of the Architect’s plans and specifications. (PX-48; 12RR610-11). After the construction was completed, the Project was found to have cracks in the slab and grade, shifting door frames, cracks in partition walls, cracks in the 8 MHDocs 6062453_7 12690.2 swimming pool, and perimeter drainage problems. (3RR118; 4RR78-79; 7RR47). Investigation revealed that the Project suffered from geotechnical engineering deficiencies, foundation design defects, and construction defects (DX-147; 17RR514; 7RR49-62), in breach of the separate contractual duties undertaken by the Architect, the General Contractor, and the Soils Engineer. B. Separate and Distinct Acts and Omissions Breaching Separate and Distinct Contractual Obligations. The Soils Engineer allegedly breached its contract by, among other things, failing to account for the amount of necessary site excavation. This breach resulted in soil expansion greater than the estimate in the Soils Engineer’s report. (CR192- 93, 197-98, 200-01, 209-12). The Soils Engineer miscalculated the potential vertical rise (PVR) of the soil and failed to recommend that enough of the soil be dug out and replaced with special engineered soil that did not have the expansive properties of the native soil, called “select fill.” (DX-147; 17RR510). The Architect breached its contract by failing to provide a foundation design that was adequate for the site. Specifically, the Architect’s Structural Engineer improperly designed the foundation and other structures by, among other things, failing to account for the limitations and recommendations in the Soils Engineer’s report, including designing a foundation insufficiently robust for the conditions reported by the Soils Engineer. (4RR122-124; 4RR150-151). The Architect’s Structural Engineer further failed to follow the Soil Engineer’s recommendations 9 MHDocs 6062453_7 12690.2 concerning the appropriate type of foundation design. (4RR122-124; 4RR150- 151). The General Contractor was alleged to have failed to build according to the plans and specifications supplied and provide a building free from defects, contrary to its promised contractual performance. (CR188-89). Richard Reeves, a construction manager expert, testified concerning the General Contractor’s specific construction omissions and defects, meaning that certain construction failed to comply with the plans and specifications provided by the Architect. (7RR49-62). These included: • A missing foundation grade beam (7RR53-54), • Reinforcement of the concrete slab with welded wire mesh lacking polypropylene fibers (7RR58), • Unconnected and improperly constructed drains (7RR49-51, 55-58, 60-62), • Improperly constructed “clean-out” access points to drains, sewer lines and vents that were covered with flooring and drywall (7RR51-53, 56-57), and • Concrete overpours that improperly encased pipes in concrete. (7RR58-60). Under Question 3 in the charge, the jury was asked to determine the amount of damages caused by the Architect, and thus it was allowed and indeed encouraged 10 MHDocs 6062453_7 12690.2 to reduce its damages award based on breaches of contract by the Settling Defendants. (CR1127; App. B). C. Suit and Settlements By the Soils Engineer and the General Contractor. As the original owner’s successor in interest and assignee, RLJ sued, among others, the Architect, the Soils Engineer, and the General Contractor for damages to the Project resulting from various breaches of contract that caused foundation and drainage problems. (CR188-218; App. A). Through pre-trial summary judgments and non-suits, the suit was confined as matter of law to RLJ’s contract claims against the General Contractor, the Soils Engineer and the Architect. (CR1708, 1710; 2SCR42; App. D). Before trial, and after the trial court restricted the case to contract claims, the Soils Engineer settled the contract claim against it for $70,000. (CR1080-81; CR1710; App. D). During trial, RLJ settled its contract claims against the General Contractor for $1.1 million. (7RR105-08; CR1710, 1226; App. D). As noted, the evidence showed that the damages to the Project from all contractual breaches of the Architect and Settling Defendants was at least $7,536,224. (7RR48; 9RR123-124, 136; 7RR16-18, 26-39; 3RR133-136; PX-151, 16RR1-1145; 10RR29-31). During closing arguments, RLJ argued that only $6,029,299 in damages was attributable to the Architect, the rest being attributable to the Settling Defendants and other responsible parties. (10RR29-31). The Architect similarly argued that the portion of RLJ’s damages attributable to the 11 MHDocs 6062453_7 12690.2 Architect was “zero,” because the fault was attributable to other parties. (10RR54- 56). RLJ’s contract claims against the Architect were then submitted to the jury. (CR1121-29; App. B). The jury found that the Architect breached its contract “by failing to comply … regarding the structural engineering services required.” (CR1126; App. B). Finding that the Architect breached the Architectural Contract in response to the Structural Engineering Question, the jury awarded $785,000 in damages that resulted from the Architect’s breach. (CR1125, 1127; App. B). D. The Trial Court Rules That the One Satisfaction Rule Applies. Four days later, the Architect claimed for the first time a credit for the General Contractor’s and Soils Engineer’s settlements under the one satisfaction rule. (CR1173-79). After entertaining RLJ’s response (2SCR1578-97), the trial court ruled that the one satisfaction rule applied solely because it deemed the claims against the Architect, the General Contractor, and the Soils Engineer all to be for one “indivisible injury.” (CR1439). It presumed the General Contractor’s and Soils Engineer’s settlements were payment for the same injury for which the jury awarded damages against the Architect. (CR1438). The trial court further reasoned “RLJ needed to identify that category of [divisible] damages [against the 12 MHDocs 6062453_7 12690.2 General Contractor] and state the amount apportioned to it.” 4 (CR1438). RLJ sought reconsideration of the trial court’s letter ruling via a Motion for Judgment (2SCR1606-1636) and a Motion for Reconsideration (2SCR1637-1745). The trial court denied both motions. (CR1905; 2SCR2102). E. Attorney’s Fees Allowed Only for Breach of Contract Claim Against the Architect. Per stipulation, RLJ submitted its attorney’s fees claim for resolution by the court. The trial court’s letter ruling suggested that RLJ was entitled to recover fees for presenting the contractual claims against the Architect, the General Contractor and the Soils Engineer. (CR1400; App. C). RLJ filed an amended application for those attorney’s fees in the amount of $1,388,019. (3SCR3-611; 2SCR1603-05). The trial court, however, ultimately decided to award attorney’s fees only for the breach of contract case against the Architect. (CR1711; App. D). F. The Trial Court Renders Final Judgment. The trial court rendered judgment for RLJ in the principal sum of $551,650.96, being the difference between the sum of the damage and attorney’s fees award against the Architect, less the sum of the settlements from the Settling Defendants. (CR1711; App. D). 4 The trial court was not clear whether this identification needed to be contained in the settlement agreements themselves or be presented in the evidence to the jury. (CR1438). RLJ was not given the opportunity to segregate or apportion damages to satisfy the trial court’s reasoning before the case was submitted to the jury. 13 MHDocs 6062453_7 12690.2 IV. SUMMARY OF ARGUMENT A. The One Satisfaction Rule Does Not Apply. The one satisfaction rule applies if, and only if, the liability of judgment debtor and settling defendants is joint and several. Indivisible injury alone is only sufficient to establish joint and several tort, not contractual, liability. If the one satisfaction rule applies at all, it applies in this case only if there is joint and several contractual liability. To have such liability, the Architect and the Settling Defendants must each have breached a promise to provide the same performance. Here, the promised performances were not the same, so the one satisfaction rule does not apply. Even if “indivisible” damages alone somehow is assumed arguendo to have created joint and several contractual liability, the jury’s damages finding was limited to the damages resulting from the Architect’s failure to comply. (CR1127; App. B). Further, RLJ would urge that the one satisfaction rule simply should not apply in contract cases such as this. The one satisfaction rule was judicially created to address a problem created by a statute that only applied to tort liability. Applying it in contract cases deprives the injured party of the benefit of its settlement agreement and transfers that benefit to the wrongdoer in violation of the freedom of contract guaranteed by Texas Constitution article I, section 16. 14 MHDocs 6062453_7 12690.2 In any event, the Architect waived application of the one satisfaction rule. It failed to plead this affirmative defense, was guilty of laches in waiting until after the verdict to assert it, failed to object to the failure of the damages question to segregate damages as it contends should have been done, and argued for the apportionment of damages in its closing argument. For all these reasons, as more fully articulated below, the trial court’s decision to credit RLJ’s settlement with the General Contractor and Soils Engineer to the damages the jury assessed against the Architect was erroneous. Accordingly, the judgment must be modified to restore the damages awarded to RLJ by the jury for the Architect’s breach of contract. B. RLJ Entitled To Attorney’s Fees For the Presentation of the Breach of Contract Claims Against the Architect, General Contractor, and Soils Engineer Either If These Parties Shared a Joint and Several Contractual Duty Or If the Damages Were “Indivisible.” If multiple defendants breached the same contractual duty, RLJ was entitled to recover attorney’s fees for the presentation against all those defendants because the preparation and proof would have been necessary for the case against any one of them. RLJ maintains that the Architect and the Settling Defendants here did not breach contractual undertakings to perform the same duties and, therefore, there was no joint and several contractual liability among the Architect and the Settling Defendants. However, if this Court holds otherwise, then it necessarily follows that RLJ is entitled to recover its attorney’s fees for cases against the Architect, the 15 MHDocs 6062453_7 12690.2 General Contractor and the Soils Engineer because the same preparation and proof would have been necessary for the case against any one of them. If so, there was no need to limit the recoverable attorney’s fees only to those attributable to the breach of contract case against the Architect. The same is also true if the trial court correctly ruled that the damages for the Architect’s breach were indivisible from those allegedly caused by the Settling Defendants. Again, RLJ maintains that the damages here were necessarily segregated by the nature of the damages question and under the arguments of the parties to the jury and presents this contention only if this Court determines that the one satisfaction rule applies. V. ARGUMENT AND AUTHORITIES The one satisfaction rule is intended under appropriate circumstances to prevent a plaintiff from receiving a double recovery. It was never been intended to be used to reduce damages found to have been caused by the remaining defendant by the amount of settlements entered with settling defendants. As applied in this case, the one satisfaction rule does not achieve the purpose of defeating a double recovery absent joint and several liability and indivisible damages. In fact, as applied, the rule violates Texas public policy encouraging settlement and the freedom to contract. The application here provides a strong disincentive to partial settlements, particularly in construction contract cases. In any event, the rule was 16 MHDocs 6062453_7 12690.2 not timely and appropriately raised by the Architect through timely pleading, exceptions, objections to the charge, and indeed the Architect invited the jury to do its own reduction in answering the damages question prior to applying the one satisfaction rule. A. The One Satisfaction Rule Does Not Apply. The decision to apply the one satisfaction rule was erroneous for many reasons. First, the rule requires at a minimum joint and several liability of the defendants. Here, the Architect was tried only on a breach of contract theory. Joint and several liability is limited to tort law. There was no evidence here of a joint and common contractual duty among the settling defendants and the Architect. Second, the damages reduced by the trial court here were not so-called common or indivisible damages. Instead, the jury found only “damages that resulted from [the Architect’s] failure to comply with the Architectural Contract . . . .” Finally, the record does not in any way support the notion that RLJ would be getting a double recovery absent application of the one satisfaction rule. The damages sought and as to which evidence was presented involved a claim of over $7 million. The jury was permitted and invited by counsel for the Architect to reduce its damage finding as to damages caused by others based on the fact the Court’s charge required that the damages had to have resulted from the Architect’s breach of contract. The jury is presumed to have read the charge and followed it. Thus, this is not a case of a 17 MHDocs 6062453_7 12690.2 double recovery; instead, with application of the settlements relating to separate contractual duties under the one satisfaction rule, it is the Architect who is unfairly receiving a double reduction. 1. This Case Involves Contractual, Not Tort, Liability. Because of pre-trial rulings and non-suits, the only claims pending before trial were RLJ’s contract claims against the General Contractor, the Soils Engineer and the Architect. (CR1708,1710; 2SCR42; App. D). Before trial, RLJ settled with the Soils Engineer for $70,000. (CR1080-81; CR1710; App. D). During trial, RLJ settled with the General Contractor for $1.1 million. (7RR105-08l; CR1226, 1710; App. D). Only RLJ’s contract claims against the Architect were submitted to the jury. Not only was the Architect’s liability purely contractual, the damages sought were only recoverable in contract. (CR1127; App. B). The alleged harm was economic loss to the subject of the contract itself – i.e., the Project. “When the injury is only the economic loss to the subject of a contract itself, the action sounds in contract alone.” Jim Walters Homes v. Reed,
711 S.W.2d 617, 617-18 (Tex. 1986). After trial, the Architect asserted for the first time it was entitled to credit under the one satisfaction rule for the Settling Defendants’ settlements. (CR1173- 1179). The trial court agreed (CR1710; 1437-41; App. C, D), conflating the tort 18 MHDocs 6062453_7 12690.2 joint and several liability with contract. According to the trial court, “Each party is liable for its own [contractual] breach which by itself results in indivisible damages[, j]ust as with tortfeasors who breach different common law duties that each proximately cause an indivisible damage.” (CR1439; App. C; emphasis added). 2. The One Satisfaction Rule Was Developed to Address Settlements In Tort Cases With Less Than All Defendants After the Legislature Authorized Joint and Several Liability. More than sixty years ago, the Texas Supreme Court deemed the risk of a double recovery no justification for depriving a plaintiff of a favorable settlement. [O]ur courts seem to have embraced the philosophy … that it is better that the injured party lose all of his damages than that any of several wrongdoers should pay more of the damages than he individually and separately caused. If such has been the law, from the standpoint of justice it should not have been …. Landers v. East Texas Salt Water Disposal Co.,
151 Tex. 251,
248 S.W.2d 731, 734 (1952) (emphasis added). Fully understanding when the one satisfaction rule should and should not apply requires an appreciation of its history and why it was created in the first place. The one satisfaction rule was developed to correct a statutorily-created anomaly. In the early Twentieth Century, the Legislature attempted to alleviate the harshness of the common law prohibition of contribution claims by creating a contribution cause of action against other tortfeasors when a defendant was held 19 MHDocs 6062453_7 12690.2 liable for more than its per capita share of liability. But the statute did not address what happened if the plaintiff settled with one of the other defendants. The courts responded by creating the one satisfaction rule. If a defendant is subject to liability through joint and several liability for more than the damages he or she caused, a settlement by that defendant involves something that overlaps with a remaining non-settling joint and several defendant, thus allowing consideration of double recovery issues. Therefore, outside the context of joint and several tort liability, there is no other recognized justification for imposing the one satisfaction rule. a. Generally There Was No Joint & Several Tort Liability at Common Law. At common law, a tort suit could not be asserted against multiple defendants for damages to which each defendant contributed unless the defendants acted according to a common plan or scheme. Sun Oil Co. v. Robicheaux,
23 S.W.2d 713, 715 (Tex. Comm. App. 1930) (judgment adopted). Otherwise, there could be no joint tort liability. Instead, the plaintiff had to sue each defendant separately and establish that particular part of the injury that particular defendant caused.
Id. b. ThereWas No General Right of Contribution at Common Law. Also, defendants were not permitted a right of contribution generally under Texas common law. Gattegno v. The Parisian,
53 S.W.2d 1005, 1007 (Tex. Comm’n App. 1932, holding approved). It was “against the policy of the law to 20 MHDocs 6062453_7 12690.2 adjust equities between wrongdoers, or to allow a [liable] person to found an action on his own wrong.” Austin Road Co. v. Pope,
147 Tex. 430,
216 S.W.2d 563, 564- 65 (1949). c. Statute Allowed Collection of All Damages From Any Defendant and Gave Defendant the Right to Contribution from the Other Tortfeasors, But Fails to Address Settlement With Less Than All Tortfeasors. The Legislature passed article 2212 (now Texas Civil Practice & Remedies Code chapter 32) to change these two perceived deficiencies. First, article 2212 allowed a tort defendant to be liable for all damages even if the common result of multiple actors’ independent torts. A plaintiff no longer bore the “intolerable burden” of proving particular damages attributable to a particular tort defendant in common injury cases. Hodges, Contribution and Indemnity Among Tortfeasors,
26 Tex. L. Rev. 150, 151 n.11 (1947); Wigmore, Joint Tortfeasors and Severance of Damages: Making the Innocent Party Suffer Without Redress,
17 Ill. L. Rev. 458, 459 (1922). Instead, the plaintiff could recover all tort damages from a single defendant. Deal v.
Madison, 576 S.W.2d at 414. Article 2212 also created a right of action so that the defendant who was held liable for the total common damages and, thereby, paid more than its per capita 5 share of the total tort liability could sue to collect the excess payment from 5 At the time, liability was established by judgment and statutorily allocated equally among joint tortfeasors so the amount of potential contribution liability was fixed. Accordingly, there was no need to plead the one satisfaction rule. The rules concerning contribution are today vastly 21 MHDocs 6062453_7 12690.2 the other jointly liable defendants. Id.;
Hodges, 26 Tex. L. Rev. at 151n.11. Article 2212, however, made no provision for cases in which fewer than all tortfeasors settled.
Deal, 576 S.W.2d at 414. (Tex. Civ. App.—Dallas 1978, writ ref’d n.r.e.). To address a situation unique to tort claims involving defendants jointly and severally liable for common injuries from independent torts, the courts created the one satisfaction rule. Under it, a plaintiff who settled with less than all tortfeasors for more than the settlors’ share of damages could not recover from the non- settling tortfeasors more than the difference between total damages and the sum of all settlements. Hodges, 26 Texas L. Rev. at 171-72; see
Gattegno, 53 S.W.2d at 1007; Bradshaw v. Baylor University,
126 Tex. 99,
84 S.W.2d 703, 705 (1935). d. The One Satisfaction Rule Was Designed to Address Joint and Several Liability In Tort Cases Only. After the one satisfaction rule was adopted, the Texas Supreme Court abolished the common-law rule in
Robicheaux, 23 S.W.2d at 715, that prevented joining multiple defendants in a single suit to impose joint and several liability for independent torts. In Landers v. East Texas Salt Water Disposal Co., the court ruled that when tortious acts of two or more wrongdoers join to produce an indivisible injury, that is, an injury which from its nature cannot be apportioned with reasonable certainty to the individual wrongdoers, all of the wrongdoers will be held jointly and severally liable for the entire different, but cases continue, we would respectfully submit, to incorrectly recite that it is unnecessary to plead the one satisfaction rule though the reason why no longer exists. 22 MHDocs 6062453_7 12690.2 damages and the injured party may proceed to judgment against any one separately or against all in one suit. If fewer than the whole number of wrongdoers are joined as defendants to plaintiff’s suit, those joined may by proper cross action under the governing rules bring in those
omitted. 248 S.W.2d at 734(emphasis added). Landers abolished Robicheaux’s concerted action requirement for establishing joint and several tort liability. Under Landers, indivisible injury alone was enough in tort cases to establish joint and several liability. A party had to be jointly and severally liable for the entire damages, not just its share. Thus, when that party settled, they theoretically could have settled for more than just their individual liability for just the damages they caused. Accordingly, in that setting, the plaintiff had the opportunity to ultimately settle with multiple defendants for an amount greater than the plaintiff’s overall injury. 3. The One Satisfaction Rule Only Applies In Cases Involving Joint Liability. The one satisfaction rule’s historical development demonstrates it was intended to address a problem unique to settlements with less than all jointly and severally liable defendants in tort cases – the only cases to which article 2212 applied. Even assuming for the sake of argument that the one satisfaction rule applies in a contract case, which RLJ disputes, the one satisfaction rule does not apply unless the liability of the liable defendant and the settling defendant is joint and several. GE Capital Commercial Inc. v. Worthington Nat’l Bank,
754 F.3d 297, 306 (5th Cir. 2014); Crown Life Ins. Co. v. Casteel,
22 S.W.3d 378, 390 (Tex. 23 MHDocs 6062453_7 12690.2 2000); First Title Co. of Waco v. Garrett,
860 S.W.2d 74, 78 (Tex. 1993); Stewart Title Guar. Co. v. Sterling,
822 S.W.2d 1, 8 (Tex. 1992); CTTI Priesmeyer, Inc. v. K&O Limited Partnership,
164 S.W.3d 675, 684 (Tex. App.—Austin 2005, no pet.); LJ Charter, LLC v. Air America Jet Charter, Inc., No. 14-08-00534-CV,
2009 WL 4794242at *9 (Tex. App.—Houston [14th Dist.] Dec. 15, 2009, pet. denied). Joint and several liability is essential,
Garrett, 860 S.W.2d at 79;
Sterling, 822 S.W.2d at 8, because the contribution right is derivative of the plaintiff’s right to recover from the contribution defendant. Shoemake v. Fogel,
826 S.W.3d 933, 935 (Tex. 1992). A non-settling defendant may successfully urge the one satisfaction rule only to reduce damages for which all the defendants are jointly liable.
Casteel, 22 S.W.3d at 391;
Garrett, 860 S.W.2d at 78. In other words, if the plaintiff could not impose joint and several liability, it would have no right to sue for damages other than those caused by a particular defendant. Accordingly, a non- settling defendant would have no right to seek an offset or credit from a settling defendant since the plaintiff had no right to do so against the settling defendant or the non-settling defendant. Just last summer, the Fifth Circuit was persuaded by Garrett, Sterling, and this Court’s reasoning in CTTI that joint and several liability was essential to the application of the one satisfaction rule. GE
Capital, 754 F.3d at 306. The suit arose when a predecessor’s employee fraudulently induced wire transfers to a bank that 24 MHDocs 6062453_7 12690.2 accepted them in bad faith in violation of a Texas statute. GE Capital sued the predecessor for contractual remedies under the purchase and sale agreement and sued the bank for statutory tort.
Id. at 300.GE Capital settled its contractual claims with the predecessor, but successfully tried the statutory tort claim against the bank.
Id. at 301.The bank asserted the one satisfaction rule applied and GE Capital should recover nothing because its contract damages were for the same loss settled by the bank.
Id. at 303.The Fifth Circuit held there was no legal duty shared by the settling and liable defendants and, therefore, the one satisfaction rule did not apply.
Id. at 306-07, 309. A common factual origin for the damages claimed against the settling and liable defendants was not enough. [The settling defendant’s] alleged contractual breach and the TUFTA action against [the liable defendant] may share common underlying facts – the three fraudulent transfers …. But such factual commonality does not suffice … to render [the settling defendant] a joint tortfeasor for one-satisfaction rule purposes.
Id. at 309(emphasis added). The Fifth Circuit agreed with CTTI’s analysis that the one satisfaction rule did not apply in any case where the duty allegedly breached by the liable and settling defendants was not the same.
Id. at 306-07. a. Unlike Tort Cases, Joint Liability in Contract Cases Requires More Than Common, Indivisible Damages. Tort duties are universal; contractual duties are not. Landers implicitly recognized the joint duty requirement would necessarily be satisfied in tort cases so that joint and several tort liability need only focus on existence of a common, 25 MHDocs 6062453_7 12690.2 indivisible
injury. 248 S.W.2d at 734. For purposes of tort liability, “the law imposes on all persons a duty to act as a reasonably prudent person would act under same or similar circumstances, considering any reasonably foreseeable risks or probability of injury to others.” Zidell v. Bird,
692 S.W.2d 550, 553 (Tex. App.—Austin 1985, no writ). Undertakings in a contract, however, are binding only on the contracting parties and their privies. McClellan v. Scardello Ford, Inc.,
619 S.W.2d 593, 597 (Tex. Civ. App.—Amarillo 1981, no writ); Buckner Orphans Home v. Berry,
332 S.W.2d 771, 776 (Tex. Civ. App.—Dallas 1960, writ ref’d n.r.e.). Thus, joint and several contractual liability requires more than indivisible injury. It also requires that the parties separately promise the same performance,6 whether under the same or separate contracts. 12 Richard A. Lord, Williston on Contracts, §§ 36:1; In re Sewell,
413 B.R. 562, 568 n.5 (Bankr. E.D. Tex. 2009);
CTTI, 164 S.W.3d at 679, 684 (joint and several contractual liability under separate contracts requires promise of the same performance); LJ Charter,
2009 WL 4794242at *9. But not all undertakings for the same performance are necessarily joint. Under the common law doctrine of joint, joint and several, and several obligations in a contract, the question is whether multiple promisors of the same performance have promised as a unit (jointly), or have 6 Whether the performance promised by the both parties must be exactly the same for the liability to be joint is not an issue that need be resolved here. As will be discussed in greater detail below, the Architect’s deficient performance concerned obligations that were not and could not lawfully have been undertaken by others. 26 MHDocs 6062453_7 12690.2 promised the same performance separately (severally), or both as a unit and separately (jointly and severally).… The problem does not arise, however, unless the promises relate to the same performance. InvestIn.com v. Europa Int’l , Ltd.,
293 S.W.3d 819, 828 (Tex. App.—Dallas 2009, pet. denied); accord K-Bar Servs., Inc. v. English, No. 03-05-00076-CV,
2006 WL 903735at *3 (Tex. App.—Austin Apr. 7, 2006, no pet.). In other words, to be jointly liable under contract, the parties must effectively promise the same performance. Export Worldwide, Ltd. v. Knight, No. SA 05 CA 647 XR,
2007 WL 628746(W.D. Tex. Feb. 27, 2007) (joint promises); InvestIN.com
Corp., 293 S.W.3d at 829; English,
2006 WL 903735at *3. The Texas Supreme Court has not yet decided whether joint and several liability is necessary for application of the one satisfaction rule to a contractual liability. GE
Capital, 754 F.3d at 305. This and other courts, however, have concluded that it does not apply unless both the liable and settling defendants’ alleged liability arises out of the breach of a common contractual duty. Like this case, CTTI involved a contract suit by an owner against the architect and general contractor for a new building’s foundation
defects. 164 S.W.3d at 679. The CTTI architect’s contract required design and “supervisory
services.” 164 S.W.3d at 685. A separate contract required CTTI, the general contractor, to build according to the architect’s plans and specifications. 164 27 MHDocs 6062453_7 12690.2 S.W.3d at 678. Before trial, the owner settled with several parties involved in the building’s construction and settled with the architect during trial.
Id. After thejury returned its verdict, the general contractor sought to have its contractual liability reduced by the other defendants’ settlement payments.
Id. at 680.After carefully reviewing Texas Supreme Court authorities, this Court held the one satisfaction rule inapplicable unless the liable and settling defendants breached the same contractual duty.
Id. at 685.It concluded the architect’s and general contractor’s promised performances differed so that the one satisfaction rule did not apply.
Id. Necessity ofa joint liability is also illustrated by this Court’s decision in Galle, Inc. v. Pool,
262 S.W.3d 564, 574 (Tex. App.—Austin 2008, pet. denied). Galle involved a suit by an insured homeowner against his insurer and a mold remediator, alleging contractual and tort liabilities against both.
Id. at 568,570. The homeowner settled all claims against the insurer before trial.
Id. at 569.Post- verdict, the homeowner elected to recover in tort against the remediator.
Id. at 570.The remediator claimed a credit for the insurer’s settlement because the damages allegedly caused by the insurer and the remediator were indivisible. Implicitly recognizing indivisible injury alone is sufficient for the joint and several tort liability under Landers, this Court held the one satisfaction rule applied. It further ruled that the entire amount of the insurer’s settlement must be credited against the 28 MHDocs 6062453_7 12690.2 tort damages because the plaintiff did not segregate the settlement between “separate and joint damages” or between the tort and contractual liability theories.
Id. at 574.Osborne v. Jauregui,
252 S.W.3d 70, 74 (Tex. App.—Austin 2008, pet. denied), presented the obverse situation to Galle. In Osborne, it was the liable defendant, not the settling defendant, who allegedly had a contractual liability in addition to joint tort and DTPA liability with the settling defendants. See also GE
Capital, 754 F.3d at 307n.9. The Osborne jury found no liability for breach of contract, only for negligence and breaches of implied warranties actionable under the
DTPA. 252 S.W.3d at 74. Because the case involved alleged DTPA claims, unlike the verdict in Galle, the jury determined the percentage responsibility of the liable and settling defendants. Id.; see TEX. CIV. PRAC. & REM. CODE §§33.002 (proportionate responsibility applicable to “any action brought under the DTPA”); 33.012 (under 2005 version, defendant had option of percentage reduction or dollar credit for settlement). The jury also decided the total amount of the plaintiff’s damages attributable to both the liable and settling defendant in an amount less than the amount paid by the settling defendants. The liable defendant elected the dollar-for-dollar credit which more than offset the total amount of damages awarded by the jury. The plaintiff apparently elected to recover under the DTPA because the issue before the court was whether attorney’s fees could be recovered 29 MHDocs 6062453_7 12690.2 when the total amount of settlement exceeded the amount of the total damages awarded by the jury for the injuries caused by both the liable and settling defendants.
Id. at 75-76.Thus, Osborne is a straightforward application of Civil Practice and Remedies Code chapter 33 to a case to which it explicitly applies: a DTPA/tort claim for which the liable and settling defendants were jointly liable involving an injury this Court deemed indivisible. The joint and several liability in that case was created by statute, not common law. TEX. CIV. PRAC. & REM. CODE §33.013, and the amount of damages awarded in that case were for the amount of damages caused by all responsible persons. TEX. CIV. PRAC. & REM. CODE §33.012. The distinctions between Osborne and this case are manifold. Here, there was no joint and several tort liability. Indeed, there was no joint and several liability of any description. See V.A.3.e., infra. Further, the damages awarded in Osborne were those found to have been caused by both the liable and settling defendants. Here, the damages awarded were explicitly limited to those caused by the Architect. See V.A.4., infra. Nevertheless, this Court’s decision in Osborne confirms that the application of either a common law or statutory credit for settlement hinges on joint and several liability. Four years after CTTI, the Houston Fourteenth Court of Appeals also refused to apply the one satisfaction rule absent a shared contractual duty. In LJ Charter, 30 MHDocs 6062453_7 12690.2 No. 14-08-00534-CV,
2009 WL 4794242at **8-9 (Tex. App.—Houston [14th Dist.] Dec. 15, 2009, pet. denied), the plaintiff received a judgment against the liable defendant for damages for breach of contract, breach of fiduciary duty and fraud.
Id. at *6n.12. The plaintiff previously settled claims for the alleged breach of two contracts by two other parties. The liable defendant was not a party to either of the contracts that were the basis of the settled claims.
Id. at 9.The court refused the liable defendant’s request for credit under the one satisfaction rule because the liable defendant was not a party to, and could not have been liable under, those contracts.
Id. When therewas no joint liability, the one satisfaction rule did not apply. b. Without a Joint Contractual Obligation, Settlement Credit Under the One Satisfaction Rule Allowed the Architect to Do Indirectly What It Could Not Do Directly. CTTI correctly observed if an indivisible injury alone created a joint and several liability between contract and tort defendants, applying the one satisfaction rule would permit “hold[ing] a person not a party to a contract liable for the breach of that contract.”
Id. at 685.Such result is legally impermissible because contractual privity is necessary for standing to sue. OAIC Commercial Assets, L.L.C. v. Stonegate Village, L.P.,
234 S.W.3d 726, 738 (Tex. App.—Dallas 2007, pet. denied). Standing to sue is essential to subject-matter jurisdiction. Travelers Ins. Co. v. Joachim,
315 S.W.3d 860, 865 (Tex. 2010). No privity of contract exists 31 MHDocs 6062453_7 12690.2 between persons not parties to the same contract without promises of the same performance. See Amco Trust, Inc. v. Naylor,
159 Tex. 146, 150,
317 S.W.2d 47, 50 (1958). Under these circumstances, a contractually liable defendant who shared no contractual obligation would have no standing to recover from the settling defendant. The liable defendant is a stranger to the contract between the plaintiff and the settling defendant. If credit under the one satisfaction rule were permitted absent a shared performance obligation, the liable defendant could achieve indirectly what could not have been achieved directly; a stranger without privity could in effect wrest a credit based on settlement of that contractual obligation. Regardless of whether the injury was “indivisible,” the one satisfaction rule could not apply without a common promise to perform the same contractual duty.
Id. at 684.c. This Court Has Rejected Application of the One Satisfaction Rule to Contractual Liability Without a Joint Contractual Obligation. The trial court in this case applied the one satisfaction rule solely on the basis of perceived “indivisible” damages. (CR1438-39). In CTTI, this Court: acknowledge[d] that there are cases in which the courts have applied the one satisfaction rule and granted settlement credits or required an election of remedies where there are co-existing tort and contract claims. . . .In those cases, the courts have focused on the indivisible nature of the injury to the plaintiffs, and have not discussed the requirement of joint liability. We find that focus to be misplaced and 32 MHDocs 6062453_7 12690.2 decline to follow those decisions.… If we were to hold that, due to the indivisible nature of the resulting injury, breach of contract defendants and tort defendants are jointly and severally liable for all damages, we would be forced to hold a person not a party to a contract liable for the breach of that contract. (164 S.W.3d at 684-85; emphasis added). The same rationale applies when the liable and settling defendants’ liability rests on distinct contractual obligations under different contracts. Therefore, the trial court erred in applying the one satisfaction credit based solely on perceived “indivisible” damages. d. Applying the One Satisfaction Rule Without Joint Contractual Liability Obliterates the Collateral Source Exception. The collateral source rule is an exception to the one satisfaction rule. Brown v. Am. Transfer and Storage Co.,
601 S.W.2d 931, 936 (Tex. 1980). If indivisible injury alone were enough for applying the one satisfaction rule, this exception would be meaningless. Under the collateral source rule, a wrongdoer cannot reduce its liability because of benefits the plaintiff independently procures from another to which the wrongdoer was not privy. Haygood v. DeEscabedo,
356 S.W.3d 390, 395 (Tex. 2012); Tex. & Pac. Ry. v. Levi & Bro.,
59 Tex. 674(1883). Typically, the collateral source is an insurer’s contractual obligation to pay for all or part of same damages sought from the defendant. Brown v. Am. Transfer & Storage Co.,
601 S.W.2d 931, 934 (Tex. 1980). If an indivisible injury or the “same damages” alone triggered the one satisfaction rule, such insurance benefits would serve to 33 MHDocs 6062453_7 12690.2 reduce the liable defendant’s liability and prevent a double recovery. Thus, the existence of the collateral source exception belies the notion that indivisible injury alone is sufficient for application of the one satisfaction rule. For this additional reason, a joint and several liability is essential for application of the one satisfaction rule to contractual liabilities. e. This Case Involved No Joint Contractual Liability of the Architect and the Settling Defendants. Because joint and several contractual liability is essential, the question here narrows to whether the Architect’s contractual liability was joint with that of the Settling Defendants; i.e., was the liability imposed on the Architect for the same contractual promise or promises also made by each Settling Defendant. As acknowledged in CTTI, the contractual obligations of an architect are distinct from those of a general
contractor. 164 S.W.3d at 685. Only the Architect’s contractual liability was submitted to the jury. (CR1125-26, 1708-10). There could be no common promised performance between the Architect and the Settling Defendants. 1) The Performance Could Not Be the Same by Operation of Law: General Contractors Legally Precluded From Preparing Plans & Specifications. Neither the Soils Engineer nor the General Contractor in this case were a registered architect and were not retained to perform architectural duties. (PX-15; 12RR26-77; PX-48; 12RR569-75; App. F, G). As a matter of Texas law, the obligations of an architect cannot be undertaken by one who is not a registered 34 MHDocs 6062453_7 12690.2 architect. TEX. OCCUP. CODE §1051.701. This statute is part of the contracts as if written in explicitly because the parties are conclusively presumed to know and contract with reference to existing law. Snyder v. Eanes Indep. Sch. Dist.,
860 S.W.2d 692, 697 (Tex. App.—Austin 1993, writ denied). By operation of law, therefore, the Architect’s duties were not and could not be the same as those of the Settling Defendants. 2) The Performance of the Architect and the Settling Defendants Was Not Alleged To Be the Same. According to the live portions of the petition on which the case was tried, the General Contractor “agreed to construct the Project free from defects” (2SCR44; App. A), but failed to do so. It was alleged the General Contractor did not comply with the Project’s plans and specifications and contract documents, the promise to build free from defects, and the duty perform in a good and workmanlike manner. (2SCR43-44, 47; App. A). RLJ alleged that the Soils Engineer 7 was retained by the owner to “conduct a geotechnical engineering study,” provide “geotechnical engineering services,” and “materials testing and construction inspection services.” (2SCR45; App. A). RLJ alleged that the Soils Engineer breached these undertakings by failing to properly estimate the potential of the soil at the site for swelling and underestimating the 7 Terracon, a settling defendant, was the successor-in-interest to HBC, a party to the Geotechnical Study Contract. (CR186; App. A). 35 MHDocs 6062453_7 12690.2 amount of soil that needed to be replaced to control soil expansion. (2SCR66-67; App. A). The allegations against the Architect, on the other hand, were that it agreed to “provide overall architectural, civil, and structural engineering design, document preparation, and coordination for the Project.” (2SCR44; App. A). RLJ alleged the Architect “breached the Architectural Contract by deviating from the applicable standard of care, failing to produce design plans free from defects, and failing to properly administer the construction of the Project.” (2SCR47; App. A). The legal injury sustained when an architect breaches its contractual obligation to provide appropriate building plans and supervisory services is separate from that sustained when a general contractor fails to build in accordance with those plans and specifications. Hunt v. Ellisor & Tanner,
739 S.W.2d 933, 936, 938 (Tex. App.—Dallas 1987, writ denied). “The [architect’s] obligation was non-construction; the general contractor’s obligation was construction.”
Hunt, 739 S.W.2d at 938. Because of the lack of a joint or common contractual undertaking, the court in Hunt ruled: [W]hen the situation is pure contract, the special issues should not include comparative causation [under the Uniform Comparative Fault Act]…[because] if the acts of others (whether wrongful or not) are contributing factors, those others are not thereby joined with the defendant as having committed the breach of the contract. 36 MHDocs 6062453_7 12690.2 (Emphasis added; quoting 5 A. Corbin, Corbin on Contracts §§ 999 n.21 & 999 - 1,000 (1964)). The court in White Budd VanNess P’ship v. Major-Gladys Drive Joint Venture,
798 S.W.2d 805, 819 (Tex. App.—Beaumont 1990), writ dism’d,
811 S.W.2d 541(Tex. 1991), cert. denied,
502 U.S. 861(1991), followed Hunt’s reasoning to conclude that want of joint liability prevented submission of comparative fault to reduce the architect’s contractual liability. Under Hunt and White Budd, the architect’s liability arose from the architect’s unique contractual obligations, not a promise to perform the same duty as the general contractor. Just as there can be no comparative submission of a general contractor’s fault, the one satisfaction rule cannot be invoked to reduce the Architect’s liability with the General Contractor’s settlement. The same is true for the Architect’s particular failings concerning the foundation design detailed in the certificate of merit. (2SCR60-61; App. A). The duty breached is the same if the evidence supporting the various causes of action is the same. Buccaneer Homes of Alabama, Inc. v. Pelis,
43 S.W.3d 586, 590 (Tex. App.—Houston [1st Dist.] 2001, no pet.). It is not the same if different evidence would be required to prove the breach. These included failing to follow the various recommendations and reports of the Soils Engineer. (2SCR61; App. A). Here, the promised performances of the Architect could not have been the same because the evidence necessary to prove the Architect’s breach differed from that which would 37 MHDocs 6062453_7 12690.2 have been necessary to prove the alleged breaches of the Soils Engineer and the General Contractor. Thus, the claims settled were for breaches of differing and separate contractual duties from those of the Architect, both as a matter of fact and by operation of law. 3) The Architect Argued That Its Duty Was Different From Those of the Settling Defendants. The Architect emphasized to the jury in closing arguments that the duties of the Architect and the other participants were different. The Architect urged the jury that it should not be found liable because the breaches of duties undertaken by others, not the Architect, caused the damage. The Architect argued it was not serving as an engineer or a general contractor. (10RR33-34). It essentially denied any common duty, arguing it could not second-guess the Soils Engineer’s predictions about the potential vertical rise or provisions groundwater drainage at the Project. (10RR34-37). According to the Architect, the foundation design was “doomed from the start” due to the Soils Engineer’s faulty performance. (10RR39). Such clear, deliberate and unequivocal assertions during closing arguments are judicial admissions foreclosing application of the one satisfaction rule. See Price Pfister, Inc. v. Moore & Kimmey, Inc.,
48 S.W.3d 341, 349 (Tex. App.—Houston [14th Dist.] 2001, pet. denied); see also Medina v. Hart,
240 S.W.3d 16, 23 (Tex. App.—Corpus Christi 2007, pet. denied). 38 MHDocs 6062453_7 12690.2 In summary, the Architect and Settling Defendants did not promise the same performance. Therefore, the one satisfaction rule does not apply because the contractual liability of the Architect and the Settling Defendants was not joint. 4. The One Satisfaction Rule Does Not Apply Because the Jury’s Verdict Did Not Award Damages for an “Indivisible” Injury. The one satisfaction rule also requires an indivisible injury common to the wrongdoing of the liable and settling defendants.
Sterling, 822 S.W.2d at 7;
Landers, 248 S.W.2d at 734. The one satisfaction rule is inapplicable in this case also because the damages were not for an “indivisible” injury as the trial court supposed. (2SCR1599-1600; App. C). “Under the one satisfaction rule, the non- settling defendant may only claim a credit based on the damages for which all tortfeasors are jointly liable.” Crown Life Ins. Co. v. Casteel,
22 S.W.3d 378, 391 (Tex. 2000). Where the jury charge limits its inquiry to damages caused by the non-settling defendant, there is no basis for application of the one satisfaction rule. Robertson v. ADJ Partnership, Ltd.,
204 S.W.3d 484, 485 (Tex. App.—Beaumont 2006, pet. denied); accord Byer Custom Builders v. Franks,
389 S.W.3d 880, 881 (Tex. App.—Houston [14 Dist.] 2012, no pet. hist.) (holding that because the finder of fact, an arbitrator, “did not award any damages against the non-settling defendant for any of the alleged damage he plaintiffs claimed was caused by the alleged settling defendant, there could be no violation of the one-satisfaction rule if 39 MHDocs 6062453_7 12690.2 the [plaintiffs] received compensation on those claims from [the settling defendant].”). The jury was not asked to and did not assess damages to the Project as a whole. Rather it was asked to assess only those damages for the Architect’s particular breach. What sum of money, if any, if paid now in cash, would fairly and reasonably compensate [RLJ] for its damages, if any, that resulted from [the Architect’s] failure to comply with the Architectural Contract that you found in answer to Question[] 2 [concerning the required structural engineering services]? (CR1127; App. B; emphasis added). The trial court acknowledged the narrow focus of this question in its letter ruling. The damage question in the Charge asked for damages “due to [the Architect’s] failure to comply.” The question had to ask specifically about damages resulting from [the Architect’s] failure to inquire about cause-in-fact. (2SCR1599; App. B; emphasis in original). Nevertheless, the trial court concluded specification of the particular party and contractual breach did “not mean, without more, that the damages found were divisible and attributable only to [the Architect].” (2SCR1599; App. B). a. The Charge Submitted Apportioned Damages. The trial court’s analysis is irreconcilable with the principle that, without a sufficient charge objection to the question’s form, the effect of the answer is measured by the question actually asked, not the question that ought to have been 40 MHDocs 6062453_7 12690.2 asked. See THPD, Inc. v. Cont’l Imports, Inc.,
260 S.W.3d 593, 608 (Tex. App.— Austin 2008, no pet.); see also Osterberg v. Peca,
12 S.W.3d 31, 55 (Tex. 2000). The Architect did not object to the damages question’s form, and never objected that the question was improperly limited to those damages caused by the Architect’s breach of its own contract. The Architect only complained there was no legally and factually sufficient evidence to support a damage award. 8 (9RR140, 143-44, 153). 1) The Plain Language of the Question Asked Determines What the Jury Found. Absent objection, whether the damages were necessarily attributable to the Architect alone is governed by the plain meaning of the language in the question. See Reliant Energy Servs., Inc. v. Cotton Valley Compression, L.L.C.,
336 S.W.3d 764, 788 (Tex. App.—Houston [1st Dist.] 2011, no pet.). This presumption applies whenever the charge does not include a different definition. C.H. v. Dep’t of Family & Protective Servs., No. 01-11-00385-CV,
2012 WL 586972, at *6 (Tex. App.—Houston [1st. Dist.] Feb. 23, 2012, pet. denied) (mem. op.). When the 8 This objection did not assert there was no evidence of allocation or segregation. (9RR153). If it had, the objection was meritless. Unsegregated damages evidence is legally sufficient evidence of segregated damages. Minn. Min. & Mfg. Co. v. Nishika,
953 S.W.2d 733, 739 (Tex. 1997). The factual insufficiency objection preserved nothing. Green v. Flournoy, No. 03-10-00299-CV,
2011 WL 3435735, at *4 (Tex. App.—Austin Aug. 5, 2011, no pet.) (mem. op.). Such complaints must be presented in a new trial motion. The court is required to submit charge questions on any issue if legally sufficient evidence supported an affirmative answer, Szczepanik v. First S. Trust Co.,
883 S.W.2d 648, 649 (Tex. 1994), even if the evidence was factually insufficient. The Architect filed no new trial motion. 41 MHDocs 6062453_7 12690.2 question limits the subject of the jury’s consideration, the court must presume compliance unless the record shows otherwise. See Columbia Rio Grande Healthcare, L.P. v. Hawley,
284 S.W.3d 851, 861-62 (Tex. 2009). Under circumstances similar to those here, in Tesfa v. Stewart,
135 S.W.3d 272, 273 (Tex. App.—Fort Worth 2004, pet. denied), the court held that this presumption applied to discharge a segregation requirement when the question asked the amount of damages “for injuries prior to [plaintiff’s] death, if any, that reasonably resulted from” the doctor’s negligence. The case was one for medical malpractice case during treatment of auto accident injuries. The doctor did not object to the form of the question but nonetheless asserted the charge did not segregate damages caused in the auto collision from those caused by the alleged malpractice.
Id. at 274.Finding nothing to rebut the presumption of compliance, the court held the jury’s damages finding was “limited in accordance with the trial court’s express instruction” and determined damages “for injuries attributable to Dr. Tesfa’s negligence alone.”
Id. at 279.2) The Plain Language of the Question Limited Damages to Those Resulting from the Architect’s “[F]ailure to [C]omply [W]ith the Architectural Contract.” Concerning the effect of the damages finding, this case is indistinguishable from Tesfa. The damages question here clearly limited its inquiry to the Architect’s “failure to comply with the Architectural Contract ….” (CR1127; App. B). 42 MHDocs 6062453_7 12690.2 Similarly, in
Hunt, 739 S.W.2d at 940, an owner sued an architect for design deficiencies and various contractors for construction defects in a parking deck. All but the Architect settled before trial.
Id. at 935.The Architect claimed credit under the one satisfaction rule. The damages question was: What sum of money, if any, if paid now in cash will fully compensate [the owner] for any permanent diminution in market value of [the shopping center and office complex] which was caused by the acts or omissions of the defendant(s), despite the completion of all reasonable repair procedures? (Id.; emphasis in original). The Architect urged that the question permitted a double recovery because it included damages for the settled claims.
Id. at 940.The court denied the credit because the jury compensated [the owner] only for the separate wrong … by [the Architect’s] breach of []its duties …. [T]he consideration received under the prior settlement compensated [the owner] for acts and omissions of others…. [The Architect] was not a party to the settlement agreement. Therefore, the present case presents the situation where each wrongdoer pays separately for its own acts or omissions. (Id.; emphasis added). Similarly, in Robertson v. ADJ Partnership,
Ltd., 204 S.W.3d at 485, the court held that where the jury charge limits its inquiry to damages caused by the non-settling defendant, there is no basis for application of the one satisfaction rule. The same conclusion was reached in Byer Custom Builders v.
Franks, 389 S.W.3d at 881. In that case, the finder of fact, an arbitrator, “did not award any damages 43 MHDocs 6062453_7 12690.2 against the [non-settling defendant] for any of the alleged damage the [plaintiffs] claimed was caused by [the alleged settling defendant], there could be no violation of the one-satisfaction rule if the [plaintiffs] received compensation on those claims from [the settling defendant].” Like the damages questions in Tesfa, Hunt and Robertson, the plain language of the damage question here removed any possibility the damages included those for breaches of a different contract or party. For this reason alone, there could have been no finding of damages common to those caused by the Settling Defendants. Contrast these decisions with Allan v. Nersesova,
307 S.W.3d 564, 574 (Tex. App.—Dallas 2010, no pet.), penned by CTTI’s author. In Nersesova, the jury charge contained a single damages question for damages “resulting from the occurrences in question.” The jury did not make separate damages findings for the negligence and breach-of-contract claims. [Plaintiff]’s injuries, as found by the jury, included the damage to her unit and personal property and the additional living expenses she incurred. [Plaintiff] alleged these injuries were caused by both the settling defendants and appellees. Nothing in the settlement agreement shows the settlement amount was for anything other than the damages found by the jury. If appellees were not given credit for the settlement, [the Plaintiff] would receive a double recovery for her injuries.
Id. (emphasis added);accord Western Technologies, Inc. v. All-American Golf Center, Inc.,
139 P.3d 858, 862 (Nev. 2006) (charge did not limit damages to those caused by a particular party’s breaches; presumed the jury awarded all damages 44 MHDocs 6062453_7 12690.2 sustained from all parties’ breaches). A verdict that allocates damages eliminates any risk of double recovery. See Duncan v. Cessna Aircraft Co.,
665 S.W.2d 414, 431 (Tex. 1984). The damage question here itself allocated damages; a “double recovery” was impossible. b. The Jury Was Asked To Apportion and in Fact Apportioned Damages. The Architect, not RLJ, is getting the double dip here. The Architect invited the jury in closing argument for, and in fact received, a damages reduction in the jury verdict before obtaining another by raising the one satisfaction rule for the first time post-verdict. 9 Counsel for both parties urged the jury in closing arguments to adjust its damages award. RLJ suggested without objection that the jury could and should make a 20% reduction for the damages attributable to the Settling Defendants. (10RR29). In light of the evidence, the jury clearly limited the damages to those caused by the Architect. The Architect went further, suggesting the jury “in Question 3 … answer zero” if it believed “there’s no causal connection” between the Architect’s breaches and RLJ’s damages. (10RR54). The Architect devoted much of its argument faulting Terracon for the too-light 9 RLJ’s evidence supported damages in excess of $7 million. (7RR48; 9RR123-124, 136; 7RR16-18, 26-39; 3RR133-136; PX-151, 16RR1-1145; 10RR29-31). Had the architect pleaded the one satisfaction rule or asserted it before submission to the jury, RLJ could have elected to submit damages based on the total amount of all damages and risk the application of one satisfaction rule. It did not have this option, however, because the architect first asserted that it was entitled to settlement credit under the one satisfaction rule long after the jury returned its verdict. 45 MHDocs 6062453_7 12690.2 foundation design and urging the reasonableness of its blind reliance on Terracon’s work. (10RR36-39, 44-48, 50-51). The jury clearly understood from both the charge and closing arguments it should limit damages to those specifically caused by the Architect’s breach.10 The jury usually may decide causation when general experience and common sense enable a layperson to fairly determine that relationship between event and result. Pilgrim’s Pride Corp. v. Smoak,
134 S.W.3d 880, 894 (Tex. App.—Texarkana 2004, pet. denied). The damages awarded were significantly reduced from the total costs of repair and residual diminution in value. RLJ provided evidence and sought over $7 million in total damages. (7RR48; 9RR123- 124, 136; 7RR16-18, 26-39; 3RR133-136; PX-151, 16RR1-1145; 10RR29-31). The jury awarded much less. Indeed, the trial court commented on this reduction: “The source of RLJ’s disappointment regarding damages is the jury verdict….” (2SCR1600; App. C). The jury clearly used its skill and common sense to apportion damages. The jury was asked to determine the amount that would fairly “compensate” RLJ for 10 There can be no complaint that the jury’s apportionment was not sufficiently precise. Segregation by “rough percentage” is sufficient.
Chapa, 212 S.W.3d at 314n. 83; see, e.g., Stewart Title Guar. Co. v. Aiello,
941 S.W.2d 68, 73 (Tex. 1997) (testimony based on percentage of attorney and paralegal time); Med. Specialist Group, P.A. v. Radiology Assocs., L.L.P.,
171 S.W.3d 727, 738 (Tex. App.—Corpus Christi 2005, pet. denied) (fee segregation based percentage time attribution). 46 MHDocs 6062453_7 12690.2 damages caused by the Architect. Applying a further reduction does not assure one satisfaction; instead, it assures less than one satisfaction. For all these reasons, the damages question required apportionment and the jury’s verdict reflects the apportionment the charge required. The jury was also asked to apportion damages by both parties. Based on the evidence and the trial court’s own observation, the jury must have responded to the instructions of the Court and the party’s requests to do so. “[T]he reasoning of the one recovery rule no longer applies” if the jury is “allow[ed] allocation of liability between the parties, even when the injury is indivisible.”
Duncan, 665 S.W.2d at 431(emphasis added). The one satisfaction rule is not an insuperable barrier to plaintiff benefitting from a favorable settlement. [T]he one recovery rule does not prevent … adopting a system that reduces the plaintiff’s recovery and the non-settling defendants’ liability by the percentage of causation assigned to any tortfeasor with whom plaintiff has settled. [Such reductions] leave defendants unaffected by settlements in which they do not participate.... Allowing plaintiffs to keep the excess from a good settlements may violate the one recovery rule, but no one is harmed [if the jury allocates the damages].
Id. at 432(emphasis added). The same is no less true here. The charge permitted and the parties invited and the jury’s answer provided the necessary damage allocation. Therefore, “the reasoning of the one recovery rule no longer applies” and its application here cannot be justified. See
Duncan, 665 S.W.2d at 431. 47 MHDocs 6062453_7 12690.2 5. No Right to Application of One Satisfaction Rule or Contribution Exists In Contract Cases In Light of Section 33.001. RLJ acknowledges that there are some cases suggesting that tort liability does not necessarily have to be present in order for the one satisfaction rule to apply. As we have demonstrated above, even assuming the rule could be applied in a breach of contract case, the rule is inapplicable in the present case because there is no basis for joint and several contractual liability and because the damages found were those resulting from the breach of contract by the Architect. RLJ would further show that the cases suggesting tort liability is not necessarily required are distinguishable in light of a complete analysis of the authority relied upon to make that suggestion. Moreover, the history and subsequent adoption of TEX. CIV. PRAC. & REM. CODE §33.0001 et seq., strongly suggests that the rule was applicable only in tort and was in any event abolished by the statutory scheme adopted in section 33.001. The Texas Supreme Court refused to permit the one satisfaction rule to prevent its adoption of a pure comparative causation scheme or requiring an injured person to prove the precise damages caused by a particular defendant.
Landers, 248 S.W.2d at 734;
Duncan, 665 S.W.2d at 431-32. By statute, contribution is allowed only among joint tortfeasors. Bonniwell v. Beech Aircraft Corp.,
663 S.W.2d 816, 818 (Tex.1984); see also Merit Drilling Co. v. Honish, 48 MHDocs 6062453_7 12690.2
715 S.W.2d 87, 89 (Tex. App.—Corpus Christi 1986, writ ref’d n.r.e.) (suggesting one satisfaction rule survived Duncan only to the extent necessary under former article 2212a, now TEX. CIV. PRAC. & REM. CODE ch. 32). As explained, the one satisfaction rule was created to address a problem unique to tort cases created by article 2212. GE
Capital, 754 F.3d at 305; see V.
B., supra. Indeed, the Texas Supreme Court has only applied the one satisfaction rule to joint tort liability.
Id. at 306; Casteel, 22 S.W.3d at 391-392(“the non- settling defendant may only claim a credit based on the damages for which all tortfeasors are jointly liable.”). This Court has suggested on more than one occasion that the credit is only available in tort cases.
CTTI, 164 S.W.3d at 684; Paschall v. Peevey,
813 S.W.2d 710, 712 (Tex. App.—Austin 1991, writ denied) (“The non-settling tortfeasor may only claim a credit based on the damages for which all tortfeasors are jointly liable.”). RLJ is aware there are cases stating “the absence of tort liability does not preclude the application of the one satisfaction rule.” See, e.g., Hudspeth v. Enter. Life Ins. Co.,
358 S.W.3d 373, 383 (Tex. App.—Houston [1st Dist. 2011, no pet.); AMX Enters., Inc. v. Bank One, N.A.,
196 S.W.3d 202, 206 (Tex. App.—Houston [1st Dist.] 2006, pet. denied). Insofar as research reveals, this proposition first appeared in Oyster Creek Fin. Corp. v. Richwood Investments II, Inc.,
176 S.W.3d 307, 327 (Tex. App.—Houston [1st Dist.] 2004, pet. denied). The only support 49 MHDocs 6062453_7 12690.2 Oyster Creek cited, however, was the per curiam opinion in El Paso Natural Gas Co. v. Berryman,
858 S.W.2d 362, 364 (Tex. 1993). However, Berryman involved whether an alleged alter ego could be liable for a judgment against a corporate entity after the corporation’s settlement extinguished the judgment.
Id. at 326.The alter ego doctrine applies when there is such unity between two entities that they are, in law, are one and the same. See Mancorp, Inc. v. Culpepper,
802 S.W.2d 226, 228 (Tex. 1990); Hoffmann v. Dandurand,
180 S.W.3d 340, 347 (Tex. App.— Dallas 2005, no pet.). Berryman did not involve any question of joint liability between two different parties, but rather whether there was any liability remaining against what was, in legal effect, the same party. Thus, Berryman did not involve an application of the one satisfaction rule at all and cannot support its application in non-tort cases. This conclusion is further confirmed by the legislative history of section 33.012 of the Texas Civil Practice and Remedies Code. Chapters 32 and 33 codify not only contribution rights, but also the common-law one satisfaction doctrine. In doing so, the Legislature explicitly limited the application of the one satisfaction rule generally to tort and DTPA cases. TEX. CIV. PRAC. & REM. CODE §§32.001 (“applies only to tort actions;” 33.002 applies to any cause of action based on tort or any action under the DTPA). 50 MHDocs 6062453_7 12690.2 It follows from the plain language of the statute that when the Legislature generally limited contribution and settlement credits to tort cases, it precluded other common-law contribution and settlement credits in other cases. When the Legislature expressly provides for an exclusive remedy, it pre-empts the common law. Coleman v. United Savings Ass’n of Texas,
846 S.W.2d 128, 132 (Tex. App.—Fort Worth 1993, no writ). For example, when the Legislature abolished the common law equitable trust fund theory for pre-dissolution claims to protect corporate directors, officers and shareholders, the Texas Supreme Court ruled that the statute preclude further application of the previous common law doctrine. Hunter v. Fort Worth Capital Corp.,
620 S.W.2d 547, 551 (Tex. 1981). Part of the court’s reasoning was that application of the doctrine outside the restrictions imposed by the statute would render the statute meaningless and impermissibly presume the Legislature intended to do something that was effectively useless.
Id. The sameis no less true here. Chapters 32 and 33 and their rules for settlement credits are explicitly limited to tort and DTPA claims. If the Legislature had intended to include other claims, it could have easily done so. By not including breach of contract actions, it must be presumed that the Legislature intended to limit application of the one satisfaction rule to the cases and methods specified in the statute. 51 MHDocs 6062453_7 12690.2 Legislative history confirms this intent. In 2005, the Legislature enacted Senate Bill 890 to amend section 33.0012 to restore the dollar-for-dollar credit. This credit was eliminated in 2003 when the Legislature enacted “tort reform” by adopting House Bill 4. Senate Bill 890 was accompanied by a statement of intent from the author and sponsor stating, Since the 1930s, Texas has recognized that an injured party is entitled to recover only once for an injury. (Bradshaw v. Baylor,
126 Tex. 99, 101;
84 S.W.2d 703, 704 (1935)). The “one-satisfaction” rule was codified by the Legislature in Chapter 33, Civil Practice and Remedies Code, in 1987…. The settlement credit scheme created by H.B. 4 eliminates the one-satisfaction rule that has been part of Texas law for more than 70 years, except in medical liability cases. Senate Committee on State Affairs, Bill Analysis, Tex. S.B. 890, 79th Leg. R.S. (2005) and Senate Committee on State Affairs, Bill Analysis, Tex. C.S.S.B. 890, 79th Leg. R.S.(2005) (emphasis added); available at Capitol Research Services., The Legislative History of Tex. S.B. 890, 79th Leg., R.S. (2005), Regarding Settlement Credit 20, 82, 89 (App. I). The Legislature’s declaration that the 2003 tort reform bill “eliminate[d]” the common-law one satisfaction rule confirms that, except as permitted by statute, the common-law one satisfaction rule had otherwise been “eliminate[d]” when House Bill 4 was passed. Its continued application by the courts outside the scope of chapters 32 and 33 is legally erroneous. The error is understandable because the courts were likely unaware of the not-readily-available declaration of Legislative 52 MHDocs 6062453_7 12690.2 intent in the legislative history of the statute. Thus, they naturally continued to resort to case law antedating H.B.4 without fully appreciating the historical reason why the one satisfaction rule was developed or fully realizing that chapters 32 and 33 of the Civil Practice and Remedies Code supplanted the common-law one satisfaction rule after September 1, 2003. It is, nonetheless, erroneous to apply the one satisfaction rule outside the statutory parameters of chapters 32 and 33. 6. Applying the One Satisfaction Rule in Contractual Liability Cases Impairs Contract Obligations In Violation of Texas Constitution Article I, §16. Applying the one satisfaction rule outside tort cases where it is ostensibly still necessary threatens to impair contractual obligations in violation of article I, §16 of the Texas Constitution. a. Texas Public Policy Strongly Favors Freedom of Contract. The Texas Supreme Court has “long recognized Texas’ strong public policy in favor of preserving the freedom of contract.” Fairfield Insurance Co. v. Stephens Martin Paving, LP,
246 S.W.3d 653, 664 (Tex. 2004). This constitutionally guaranteed contractual freedom strongly favors the parties’ right to “bargain for mutually agreeable terms and [to] allocate risks as they see fit.” Gym- N-1 Playgrounds, Inc. v. Snider,
220 S.W.3d 905, 912 (Tex. 2007). It outweighs court-created general policies, such as that prohibiting insuring punitive damages. Fairfield Insurance
Co., 246 S.W.3d at 664. 53 MHDocs 6062453_7 12690.2 [I]f there is one thing which more than another public policy requires it is that [persons] of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice. Therefore, you have this paramount public policy to consider – that you are not lightly to interfere with this freedom of contract. Wood Motor Co. v. Nebel,
150 Tex. 86,
238 S.W.2d 181, 185 (1951) (quoting Printing & Numerical Registering Co. v. Sampson, LR 19 Eq 462, 465,
1874 WL 16322(1875)). This freedom outweighs application in contract cases of a judicial doctrine to remedy a conundrum unique to tort actions. b. The One Satisfaction Rule Impermissibly Impairs Contractual Obligations. Whether a law violates the freedom of contract depends on three-part test: (1) it must not substantially impair a contractual relationship; (2) it “must have a significant and legitimate purpose behind the regulation, such as the remedying of a broad and general social or economic problem”; and (3) it must be reasonable and appropriate for its intended purpose. Energy Reserves Group v. Kansas Power & Light,
459 U.S. 400, 410, 411-13 (1983). The one satisfaction rule cannot satisfy the first test because it substantially impairs a contractual relationship. It effectively takes from the injured party the benefit of its settlement with another defendant to reduce the wrongdoer’s liability. See, e.g., Langever v. Miller,
124 Tex. 80,
76 S.W.2d 1025, 1028 (1934) (law reducing collectible amount of deficiency judgments to difference between actual 54 MHDocs 6062453_7 12690.2 property value and foreclosure price void as a substantial contractual impairment). In contract cases, the one satisfaction rule’s reduction of damages by credit for another’s settlement substantially and unconstitutionally impairs contractual freedom. It also creates, as applied here, a disincentive to settle, which is contrary to the strong Texas public policy in favor of settlements. c. Freedom of Contract Outweighs One Satisfaction’s Questionable Objectives. The Texas Supreme Court has refused to accept that preventing recovery of more than the jury’s damage assessment is a more important than preventing a wrongdoer from escaping its full liability.
Landers, 248 S.W.2d at 734. It justified overruling Bradshaw’s one satisfaction rule the extent it conflicted with its creation of a purely comparative negligence system because the one satisfaction rule unfairly allowed the non-settling defendant to unfairly “benefit from a generous settlement in which they refused to participate” for this reason.
Duncan, 665 S.W.2d at 431. It recognized that settlement consideration includes benefits other than relief from paying damages.
Id. “There isno conceptual inconsistency in allowing a plaintiff to recover more from a settlement or partial settlement than he could receive as damages.”
Id. “Plaintiffs willbenefit from good settlements and bear the risk of bad ones, just as they do in single-tortfeasor cases. Allowing plaintiffs to keep the excess from a good settlements may violate the one recovery 55 MHDocs 6062453_7 12690.2 rule, but no one is harmed” when the jury apportions liability. Allowing plaintiffs to keep the excess from a good settlement is not overpayment of damages. The one satisfaction rule has a questionable objective based on questionable reasoning. It ought to be and is trumped by the freedom of contract guarantee in Texas Constitution article I, §16. 7. The Architect Is Procedurally Barred From Asserting the One Satisfaction Rule. a. Waived by Failure to Specially Except. The Architect’s post-verdict motion urging credit under the one satisfaction rule for the first time asserted “Plaintiff’s damages resulted from ‘the breaches of contract’ Plaintiffs alleged were committed by [all remaining defendants]” and that RLJ failed to allocate those damages. (CR1174). Complaint about the damages allegations was waived by failure to urge them in writing before charge submission. TEX. R. CIV. P. 90; Bullock v. Regular Veteran’s Ass’n of U.S.,
806 S.W.2d 311, 314 (Tex. App.—Austin 1991, no writ). b. Waived by Failure to Request Question or Instruction. Neither did the Architect object to the charge on this ground. Failure to object to the charge’s failure to segregate failure to request an instruction requiring allocation waives complaint about failure to segregate. TEX. R. CIV. P. 278 (failure to request properly worded question); see Dick’s Last Resort of West End, Inc. v. Market/Ross, Ltd.,
273 S.W.3d 905, 919 (Tex. App.—Dallas 2008, pet. denied); 56 MHDocs 6062453_7 12690.2 McCarty v. Wani Venture, A.S.,
251 S.W.3d 573, 585 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (failure to request instruction). c. Waived By Failure to Plead as an Affirmative Defense. A party must affirmatively plead “accord and satisfaction, arbitration and award, … discharge in bankruptcy, … payment, release … and any other matter constituting an avoidance or affirmative defense.” TEX. R. CIV. P. 94. Each of these involves prior payment or other discharge that is waived if not pleaded. Bejjani v. TRC Servs., Inc., No. 14-08-00750-CV,
2009 WL 3856924, at *5 (Tex. App.— Houston [14th Dist.] Nov. 19, 2009, no pet.) (right to offset); Sugar Land Props., Inc. v. Becnel,
26 S.W.3d 113, 121 (Tex. App.—Houston [1st Dist.] 2000, no pet.) (payment of medical expenses). Settlement credit under the one satisfaction rule, though not specifically named, is an “other matter constituting an avoidance or affirmative defense” that must be pleaded. This Court specifically acknowledged that the one satisfaction rule is in the nature of an affirmative defense. RenewData Corp. v. eMag Solutions, LLC, No. 03–05–00509–CV,
2009 WL 1255583, at *1 n. 1 (Tex. App.—Austin May 6, 2009, pet. denied) (mem. op.; unasserted one satisfaction rule could not be considered as alternative summary judgment ground); accord Pagosa Oil & Gas, L.L.C. v. Marrs & Smith P’ship,
323 S.W.3d 203, 217 (Tex. App.—El Paso 2010, pet. denied); Brewer & Pritchard, P.C. v. AMKO Res. Int’l, LLC, No. 14-13-00113-CV,
2014 WL 3512836, at *1 (Tex. App.—Houston 57 MHDocs 6062453_7 12690.2 [14th Dist.] July 15, 2014, no pet.) (mem. op.). Cases holding otherwise are irreconcilable with rule 94 because the opponent must be notified of the need to prove damages allocation plus the elements of the asserted claims. See Dalworth Restoration, Inc. v. Rife-Marshall,
433 S.W.3d 773, 783-84 (Tex. App.—Fort Worth 2014. pet. dism’d w.o.j.). The Architect did not plead this affirmative defense (CR46-79; App. H) and RLJ was given no notice or opportunity to present evidence meeting any allocation requirement before the jury was discharged. d. Barred By Laches. The post-verdict assertion of the one settlement rule is also precluded by laches. The one satisfaction rule developed as an equitable principle,
Sterling, 822 S.W.2d at 6, subject to equitable defenses. See Brewer v. Nationsbank of Texas, N.A.,
28 S.W.3d 801(Tex. App.—Corpus Christi 2000, no writ), and is subject to equitable defense for unreasonable delay and another’s good faith detrimental change in position. See City of Fort Worth v. Johnson,
388 S.W.2d 400, 403 (Tex. 1964). By the Architect’s failure to raise the one satisfaction rule prior to verdict, RLJ had no reason whatsoever to anticipate any need to adduce any evidence segregating damages. Similarly, the Architect waived any argument on the one satisfaction rule by specifically asking the jury to apportion damages and award only those damages caused by the Architect. (10RR54-56). 58 MHDocs 6062453_7 12690.2 For any one or all of the foregoing reasons, the one satisfaction rule did not and could not apply to reduce the Architect’s liability to RLJ. The trial court erred in concluding otherwise. Accordingly, the judgment must be reformed to restore recovery for the damages awarded by the jury together with interest. B. No Segregation of Attorney’s Fees Was Required. RLJ sought its reasonable and necessary attorney’s fees under chapter 38 of the Texas Civil Practice and Remedies Code. (CR201; App. A). The parties agreed to submit the attorney’s fees claim to the court rather than the jury. After the jury’s verdict, RLJ moved for its attorney’s fees and submitted its proof by affidavit and supporting documents showing RLJ expended a total of $1,388,019 in reasonable and necessary attorney’s fees to prosecute the breach of contract claims against the Architect, Soils Engineer, and the General Contractor. (3SCR3-611; 2SCR1603- 05). However, the trial court determined for purposes of attorney’s fees it was necessary to segregate those expended on RLJ’s claim against the Architect from those on its claims against the Settling Defendants. (CR1711; App. D). The trial court awarded attorney’s fees attributable to the prosecution of the breach of contract claim against the Architect only, even though it considered the damages “indivisible.” (CR1711; 2SCR1600; App. C, D). Accordingly, of the $1,388,019 in attorney’s fees for presenting all its contract claims, the trial court allowed RLJ 59 MHDocs 6062453_7 12690.2 only $901,650.96 as fees attributable to the contract claim against the Architect only. (CR1711; App. D). RLJ timely moved conditionally to modify the judgment so that, if the one satisfaction rule applied, it could recover its unsegregated attorney’s fees for breach of contract claims against the Architect and the Settling Defendants. (CR1747-48). The trial court denied this motion. (CR1905). RLJ continues to maintain that the one satisfaction rule does not apply. If and only if this Court decides otherwise, RLJ was not obliged to segregate its attorney’s fees for the breach of contract claims against the Architect from those for the breach of contract claims against the Settling Defendants. 1. There Is No Need to Segregate Fees For Claims Requiring Proof of the Same Facts. Generally, reasonable and necessary attorney’s fees requires proof of the fees incurred for suit on a claim for which such fees are recoverable.
Sterling, 822 S.W.2d at 10. If the causes of action depend upon the same facts or circumstances, they may be “intertwined to the point of being inseparable.”
Id. Attorney’s feesshould be allowed for inseparable claims even if some issues also relate to matters for which attorney’s fees are not recoverable,
Aiello, 941 S.W.2d at 73;
Sterling, 822 S.W.2d at 11, provided the underlying services advance both.
Chapa, 212 S.W.3d at 314. Whether fees can be segregated is a mixed question of law and fact. Tony Gullo Motors I, L.P. v. Chapa,
212 S.W.3d 299, 303 (Tex. 2006). For example, 60 MHDocs 6062453_7 12690.2 when an attorney testified that the issue common to all claims was the right of control over a corporation, this Court deemed the recoverable and unrecoverable claims so interrelated that it was unnecessary to segregate fees. Fortenberry v. Cavanaugh, No. 03-07-00310-CV,
2008 WL 4997568, at *12 (Tex. App.—Austin Nov. 26, 2008, pet. denied) (mem. op.). 2. If the One Satisfaction Rule Applies, It Requires Proof of Breach of the Same Promised Performance and an Indivisible Injury. The one satisfaction rule may apply in contract case only if there was a joint and several contractual liability, which in turn requires a promise of the same performance by the settling and liable defendants, see
V.A.3., supra., and an indivisible injury. See
V.A.4., supra. If the Architect and Settling Defendants breached a promise for the same performance causing an indivisible injury, then the activities of RLJ’s attorneys to prove the Settling Defendants’ liability would have necessarily also served as proof of the Architect’s liability. If the one satisfaction rule applies at all, no segregation could have been required. 3. Alternatively, If Proof of Indivisible Injury Alone is Enough for the Application of the One Satisfaction Rule, Segregation of Fees Was Still Not Required. Regardless of whether the one satisfaction rule otherwise applies, if the trial court correctly determined that there was an indivisible injury or damages in this case for purposes of the one-satisfaction analysis, then segregation of fees was not 61 MHDocs 6062453_7 12690.2 required. The Architect, General Contractor and Soils Engineer undertook different duties. (CR192-93, 197-98, 200-01, 205-18). For these breaches to coalesce in an “indivisible” injury would necessarily require RLJ to have proved each breach to establish the full scope of its damages. “Where the tortious acts of two or more wrongdoers join to produce an indivisible injury, … all of the wrongdoers will be held jointly and severally liable for the entire damages ….”.
Landers, 248 S.W.2d at 734(1952). If the one satisfaction rule applies at all and if only an indivisible injury is required, as the trial court reasoned, the breaches of the Settling Defendants were sufficiently conjoined with those of the Architect, then proof of the harm resulting from the breaches of the Settling Defendants were also essential and no segregation was required. VI. CONCLUSION AND PRAYER For the foregoing reasons, RLJ asks the Court to: 1) reverse the trial court’s judgment applying the one satisfaction rule and delete the credit for the amount of the Settling Defendants’ settlements; 2) if and only if the one satisfaction rule applies, reverse the trial court’s judgment concerning the award of attorney’s fees and either reform it to award RLJ unsegregated fees or remand the case to the trial court solely for a 62 MHDocs 6062453_7 12690.2 determination of reasonable and necessary attorney’s fees for the prosecution of all contract claims against the Architect, and the Settling Defendants; and 3) any one or more of 1) – 2) above subject to the conditions prescribed. RLJ further requests such other relief to which they are justly entitled, provided such relief requested does not include a retrial on the merits of its claims against the Architect. Respectfully submitted, MUNSCH HARDT KOPF & HARR PC /s/ Michael W. Huddleston Michael W. Huddleston State Bar No. 10148415 J. Stephen Gibson State Bar No. 07866000 3800 Ross Tower 500 North Akard Street Dallas, TX 75201 (214) 855-7500 Main Tel. (214) 855-7584 Main Fax mhuddleston@munsch.com sgibson@munsch.com Attorneys For Appellees and Cross- Appellants 63 MHDocs 6062453_7 12690.2 CERTIFICATE OF COMPLIANCE I hereby certify that this Brief of Cross-Appellants was prepared using Microsoft Word 2010, which indicated that the total word count (exclusive of those items listed in Tex. R. App. P. 9.4(i)(1)) is 13,844 words. /s/ Michael W. Huddleston 64 MHDocs 6062453_7 12690.2 CERTIFICATE OF SERVICE I certify that I served a true and correct copy of the foregoing document upon counsel listed below on this 10th day of April, 2015 by e-file: Weston M. Davis Gregory N. Ziegler Matthew Mumm Macdonald Devin, P.C. 1201 Elm Street 3800 Renaissance Tower Dallas, TX 75270 /s/ Michael W. Huddleston 65 MHDocs 6062453_7 12690.2 APPENDIX IN SUPPORT OF CROSS-APPELLANTS’ BRIEF TAB DESCRIPTION OF DOCUMENT CR/RR A Plaintiffs’ Seventh Amended Original CR184-218 Petition 2SCR39-73 (duplicate) B Charge of the Court CR1121-29 2SCR1563-71 (duplicate) C June 13, 2014 Letter from Hon. Judge CR1437-41 Yelenosky 2SCR1598-1602 (duplicate) D Final Judgment CR1708-12 CR1905-09 (duplicate) E Contract with Soils Engineer PX-3; 12RR6-11 F Contract with General Contractor PX-48; 12RR567-651 G Contract with Architect PX-15; 12RR26-128 H Architect’s Second Amended Answer CR46-79 2SCR5-38 (duplicate) I Report of SB 890 (2005) n/a 66 MHDocs 6062453_7 12690.2 APPENDIX A 2/18/2014 9:33:34 AM Amalia Rodriguez-Mendoza District Clerk Travis County CAUSE NO. D-1-GN-10-002325 D-1-GN-1 0-002325 RLJ II-C AUSTIN AIR, LP; RLJ II-C AUSTIN § IN THE DISTRICT COURT OF AIR LESSEE, LP; and RLJ LODGING FUND § II ACQUISITIONS, LLC, § § Plaintiffs, § § vs. § § EBCO GENERAL CONTRACTOR, LTD; § EBCO/WARRIOR MANAGEMENT LLC; § ELNESS, SWENSON, GRAHAM § TRAVIS COUNTY, TEXAS ARCHITECTS, INC.; MARK SWENSON, § Individually; TERRACON CONSULTANTS, § INC.; TODD E. SWOBODA, P.E., § Individually; and ALCADIO CHAPA, JR. § formerly D/B/A JR'S CONCRETE § CONSTRUCTION, § § Defendants and Third-Party Defendants. § 200TH JUDICIAL DISTRICT PLAINTIFFS' SEVENTH AMENDED ORIGINAL PETITION TO THE HONORABLE JUDGE OF THIS COURT: Plaintiffs RLJ II-C Austin Air, LP; RLJ II-C Austin Air Lessee, LP; and RLJ Lodging Fund II Acquisitions, LLC (collectively, "Plaintiffs" or "RLJ") file their Seventh Amended Original Petition, and make allegations and complaints against EBCO General Contractor, Ltd.; EBCO Advanced Building Systems, Ltd.; EBCO/Warrior Management LLC; Elness, Swenson, Graham Architects, Inc.; Mark G. Swenson, individually; Terracon Consultants, Inc.; Todd E. Swoboda, P.E., individually; MBA Structural Engineers, Inc.; DaVinci Pools, LLC; Bridgeview Plumbing, Inc.; and Champion Site Prep, L.P. (collectively, "Defendants") as follows: I. DISCOVERY CONTROL PLAN 1. Discovery is intended to be conducted pursuant to Rule 190.4, Texas Rules of Civil Procedure. Plaintiffs' Seventh Amended Original Petition Page 1 MHDocs 4896391 1 12690.2 184 II. PARTIES 2. Plaintiff RLJ II-C Austin Air, LP ("RLJ Austin") is a Delaware limited partnership authorized to do business in Texas, and is the current fee owner of the "Project" as defined in paragraph 14 of this Petition. Plaintiff RLJ II -C Austin Air Lessee, LP ("RLJ Austin Lessee") is a Delaware limited partnership authorized to do business in Texas, and is the current leasehold owner of the Project. Plaintiff RLJ Lodging Fund II Acquisitions, LLC ("RLJ Lodging") is a Delaware limited liability company which entered into a contract to purchase the Project, and assigned the fee ownership rights and obligations of that purchase contract to RLJ Austin, which now owns the Project and leases it to RLJ Austin Lessee. 3. Defendant EBCO General Contractor, Ltd. is a limited partnership authorized to do business in Texas. Defendant EBCO Advanced Building Systems, Ltd. is a predecessor limited partnership previously authorized to do business in Texas. Defendant EBCO/Warrior Management, LLC is the general partner of EBCO General Contractor, Ltd. These defendants will hereafter collectively be referred to as "EBCO." EBCO has been served with process and answered herein. 4. Defendant Elness, Swenson, Graham Architects, Inc. ("ESG") is a foreign for- profit corporation authorized to do business in Texas. This court has long-arm jurisdiction over ESG because the actions brought against it in this suit arise from ESG's business in this state. See Texas Civil Practice & Remedies Code Ann. § 17.042(1) and (2). ESG has been served with process and answered herein. 5. Defendant Mark G. Swenson ("Swenson") is a nonresident individual. This court has long-arm jurisdiction over Swenson because the actions brought against him in this suit arose from or are connected with his purposeful acts committed in Texas. These purposeful acts are described more fully below but mainly entail signing and sealing plans and specifications for the Plaintiffs' Seventh Amended Original Petition Page 2 MHDocs 4896391 1 12690.2 185 construction of the Project m Austin, Texas. Swenson has been served with process and answered herein. 6. Defendant Terracon Consultants, Inc. ("Terracon") is a foreign for-profit corporation authorized to do business in Texas. Terracon has been served with process and answered herein. On information and belief, Plaintiffs allege that Terracon, Inc. purchased the stock of HBC Engineers, Inc. ("HBC") in 1998 and merged HBC with Terracon, Inc. in 2001. On further information and belief, Terracon, Inc. merged with Terracon in 2004. 7. Defendant Todd E. Swoboda, P.E. is a Texas resident and has been served with process and answered herein. 8. Defendant MBA Structural Engineers, Inc. f/k/a Marlin, Bridges & Associates, Inc. ("MBA") is a foreign for-profit corporation authorized to do business in Texas. This court has long-arm jurisdiction over MBA because the actions brought against it in this suit arose from or are connected with the purposeful acts MBA committed in Texas. These acts are described more fully below but mainly entail contracting to provide structural plans and specifications for the construction of the Project in Austin, Texas. MBA has been served with process and answered herein. 9. Defendant DaVinci Pools, LLC ("DaVinci") is a Texas limited liability company which is a party to this action. DaVinci has been served with process and has answered herein. 10. Defendant Bridgeview Plumbing, Inc. ("Bridgeview") is a Texas corporation which is a party to this action. DaVinci has been served with process and has answered herein. 11. Defendant Champion Site Prep, L.P ("Champion") is a Texas limited partnership which is a party to this action. Champion has been served with process and has answered herein. Plaintiffs' Seventh Amended Original Petition Page 3 MHDocs 4896391 1 12690.2 186 III. VENUE AND JURISDICTION 12. Venue is proper in Travis County, Texas under Texas Civil Practice & Remedies Code Ann. §§ 15.002(a)(1), 15.005, 15.011, 15.035 and 15.092 (a) & (b), which require that this suit be brought in the county where the Project (as defined below) is located. 13. Defendants ESG, Swenson, EBCO, Terracon, Swoboda, MBA, DaVinci, Bridgeview, and Champion are either residents of Texas or purposely availed themselves to the jurisdiction of Texas by entering into contracts involving real property and improvements to real property in Texas and/or by signing and sealing plans, specifications, or other reports for real property or constructing improvements to real property in Texas that is the subject of this lawsuit. Furthermore, assumption of jurisdiction by Texas would not offend traditional notions of fair play and substantial justice. Finally, RLJ's damages are within the jurisdictional limits of this court and do not exceed $10,000,000.00. IV. FACTS 14. This action arises from construction of the Courtyard Austin Airport Hotel located at 7809 East Ben White Boulevard in Austin, Texas (the "Project"). 15. As set forth below, Plaintiffs assert the following: a. Breach of contract against EBCO, ESG, Swenson, Terracon, and Swoboda; b. Suit for declaratory relief against Terracon; c. Breach of warranty against EBCO; d. Equitable subrogation against EBCO, ESG, Swenson, MBA, Terracon, Swoboda, DaVinci, Bridgeview, and Champion, including a direct equitable subrogation claim, and equitable subrogation claims for breach of contract, negligence, negligent undertaking, and negligent misrepresentation that were directly assigned, or assigned as a matter of law, to RLJ; and Plaintiffs' Seventh Amended Original Petition Page 4 MHDocs 4896391 1 12690.2 187 e. A tort/negligence claim against EBCO for breach of a fiduciary duty arising from EBCO's failure to construct the Project in a manner consistent with the owner's interests and with the contract documents, which are the source of the fiduciary duty. 16. Except for MBA, DaVinci, Bridgeview, and Champion, Defendants all entered into valid and enforceable contracts with the Project's developer, White Lodging Services Corp. ("White"), to perform the services listed below. 17. White, as developer, delivered and assigned the Project, the contracts, fiduciary duties, intangibles and all of the warranties, representations, and causes of action related thereto, to a White affiliate, South Ausaircourt, L.P., as owner ("Ausaircourt"). Ausaircourt then assigned the Project, the contracts, fiduciary duties, intangibles, and all of the warranties, representations, and causes of action related thereto, to RLJ Lodging, which purchased the Project, and then assigned its rights and obligations under the Project contracts to RLJ Austin. 18. EBCO was the general contractor and/or construction manager on the Project. EBCO performed work on the Project, and also retained subcontractors who performed work on the Project. EBCO and its subcontractors failed to construct the Project free from defects, including, but not limited to, the following: (a) Failed to construct the Project foundation free from defect or in compliance with the Project plans and specifications, including missing beams and improper placement of wire reinforcing mesh. Plaintiffs allege that the damage from this negligent work began to occur during construction and continues to this day. Plaintiffs also allege that not only was the foundation itself damaged, but this negligent work caused significant damage to other component parts of the Project; (b) Failed to provide "select fill" soils which complied with the Project specifications. Plaintiffs allege that the damage from this negligent work began to occur during construction and continues to this day. Plaintiffs also allege that this negligent work caused significant damage to other component parts of the Project; (c) Failed to construct the pool and its drains free from defect. Plaintiffs allege that the damage from this negligent work began to occur during construction and Plaintiffs' Seventh Amended Original Petition Page 5 MHDocs 4896391 1 12690.2 188 continues to this day. Plaintiffs also allege that not only was the pool itself damaged but this negligent work caused significant damage to other component parts of the Project; (d) Failed to construct the under-slab plumbing free from defect. Plaintiffs allege that the damages from this negligent work began to occur during construction and continues to this day. Plaintiffs also allege that this negligent work caused damage to other component parts of the Project; and (e) Failed to construct the Project site work in a manner consistent with the Project plans and specifications. Plaintiffs allege that the damages from this negligent work began to occur during construction and continues to this day. Plaintiffs also allege that not only was the site work itself damaged but this negligent work caused significant damage to other component parts of the Project. 19. The terms of the contract between EBCO and White (the "General Contract") created a "fiduciary relationship of trust and confidence." Pursuant to the General Contract, EBCO agreed to construct the Project free from defects in a "manner consistent with the interests of the Owner." EBCO failed to construct the Project free from defects and in a manner consistent with the interests of the owner, thereby breaching its fiduciary duty, which is a tort in Texas. See Douglas v. Aztec Pet. Corp.,695 S.W.2d 312, 318 (Tex. App.-Tyler 1985, no writ). 20. ESG contracted for architectural services with White (the "Architectural Contract"), and Swenson signed and sealed the architectural plans and drawings for the Project. Under the Architectural Contract, ESG agreed to, among other things, provide overall architectural, civil, and structural engineering design, document preparation, and coordination for the Project. This work was to be performed expeditiously and consistent with professional skill and care. Because Texas does not allow corporations to sign or seal architectural plans or specifications, Swenson could not have been acting as an agent of ESG when he signed and sealed the architectural plans and drawings, as an agent can only act to the extent of the Plaintiffs' Seventh Amended Original Petition Page 6 MHDocs 4896391 1 12690.2 189 principal's legal authority. Therefore, ESG constructively assigned portions of the Architectural Contract to Swenson, without first obtaining written consent from White. 21. ESG consented to the assignment of the Architectural Contract between White and Ausaircourt, in writing. This assignment provided Ausaircourt with all of the interests referenced above, but none of the obligations. 22. Pursuant to a written contract dated October 30, 2000 (the "Geotechnical Study Contract"), HBC was retained to conduct a geotechnical engineering study (the "Geotechnical Engineering Study"). Swoboda signed, sealed, and submitted the Geotechnical Engineering Study to White on November 21, 2000. Because Texas does not allow corporations to sign or seal architectural plans or specifications, Swoboda could not have been acting as an agent of HBC when he signed and sealed the Geotechnical Engineering Study, as an agent can only act to the extent of the principal's legal authority. Therefore, HBC constructively assigned portions of the Geotechnical Engineering Study contract to Swoboda, without first obtaining written consent from White. 23. The Geotechnical Study Contract was completed sometime in late 2000 or early 2001, when White made final payment to HBC for these services. 24. Pursuant to an oral agreement or undertaking, which was separate and distinct from the Geotechnical Study Contract, Terracon provided geotechnical engineering services to White and its affiliates during construction of the Project in 2005 and after the Project's completion. No written contract for such services between Terracon and any White affiliate exists. 25. Terracon entered into a written contract to provide materials testing and construction inspection services for the Project in 2005 (the "Materials Testing Contract"). Plaintiffs' Seventh Amended Original Petition Page 7 MHDocs 4896391 1 12690.2 190 26. MBA performed the structural engineering for the Project and Andrew Marlin signed and sealed the structural plans MBA provided to ESG. 27. DaVinci constructed the Project pool pursuant to a subcontract between it and EBCO. 28. Bridgeview constructed the Project plumbing system pursuant to a subcontract between it and EBCO. 29. Champion provided site preparation services, labor, and materials pursuant to a subcontract between it and EBCO. 30. On March 16, 2006, PlaintiffRLJ Lodging entered into the "New Hotels Purchase and Sale Agreement" (the "New Hotels PSA") between Whiteco Industries, Inc., numerous sellers identified on Exhibit A of the PSA, and White. This PSA was one of two PSA's executed concerning the purchase of the Project and 99 other similar projects. One PSA concerned projects that were already constructed, and the New Hotels PSA concerned projects, like the Project, that were in various stages of construction. 31. Pursuant to the New Hotels PSA, Plaintiff RLJ Lodging was legally obligated to take possession of the Project on or about December 20, 2007, a few months after it was completed. 32. Plaintiffs noticed property damage, including foundation movement, a cracked swimming pool, cracks in the slab and grade, shifting door frames, cracks in partition walls, and drainage issues on the perimeter of the building in the Project. 33. EBCO, ESG, Swenson, Terracon, Swoboda, MBA, DaVinci, Bridgeview, and Champion provided services, labor, or materials that were defective, or deviated from the Plaintiffs' Seventh Amended Original Petition Page 8 MHDocs 4896391 1 12690.2 191 applicable standards of care, and that either caused, or contributed to cause, damages to the Project and RLJ. 34. These defective and damaging serv1ces, labor or materials all had certain characteristics which prevented Plaintiffs from immediately discovering the damage, and it was not until verifiable issues with the Project were physically made manifest that Plaintiffs knew of or should have known of the damages to the Project. As such, the Discovery Rule applies to effect accrual of all of Plaintiffs' causes of action. V. CAUSES OF ACTION A. Breach of Contract 35. Plaintiffs incorporate the foregoing paragraphs. 36. EBCO breached the General Contract by failing to perform said contract in a good and workmanlike manner, failing to construct the Project according to the contract documents, and failing to construct the Project in a manner consistent with the interests of the owner. 37. ESG and Swenson breached the Architectural Contract by deviating from the applicable standard of care, failing to produce design plans free from defects, and failing to properly administer the construction of the Project. See Exhibit A, Certificate of Merit of John Nyfeler, FAIA, describing ESG and Swenson's negligent acts, or acts in breach of the Architectural Contract, pursuant to the Certificate of Merit requirements of applicable state law. 38. HBC and Swoboda breached the Geotechnical Study Contract as set forth in Kirby Meyer's Certificate of Merit, attached as Exhibit B, pursuant to the Certificate of Merit requirements of applicable state law. Terracon is responsible for HBC's and Swoboda's negligent acts, errors, or omissions as a result of its merger with HBC. 39. Terracon breached the Materials Testing Contract, as set forth in Exhibit B. Plaintiffs' Seventh Amended Original Petition Page 9 MHDocs 4896391 1 12690.2 192 40. Terracon breached its oral contract with White for geotechnical engmeenng services, as set forth in Exhibit B. 41. Defendants ESG, Swenson, and EBCO assert that anti-assignment clauses contained in the Architectural Contract and the General Contract prohibit RLJ from asserting these contract claims. 42. The anti-assignment clause in the Architectural Contract and the General Contract have no force or effect on the assignments between White and RLJ because these contracts were no longer executory at the time of assignment. 43. To the extent that Terracon or Swoboda assert contractual anti-assignment clauses, those clauses have no force or effect on the assignments between White and RLJ because these contracts were no longer executory at the time of assignment. 44. In the alternative, the anti-assignment clauses do not render the Contract assignments void. Instead, they merely potentially entitle ESG, EBCO, or Terracon to a breach of contract claim. However, because ESG, HBC, and Terracon materially breached their contracts prior to the date of the assignments, as more fully described below, White and RLJ are excused from performance. 45. Specifically, ESG committed the first material breach of the Architectural Contract with White when it assigned the signing and sealing function of its contract to Swenson, without White's express written consent, while those obligations were still executory. Because corporations are not authorized to sign or seal construction documents in Texas, Swenson could not have been acting as ESG's agent. As a result of these actions, ESG is estopped from enforcement of the referenced anti-assignment clause, and White and RLJ are thereby excused from performance of its contract obligations concerning consent of assignment. In the Plaintiffs' Seventh Amended Original Petition Page 10 MHDocs 4896391 1 12690.2 193 alternative, ESG relinquished a known right and therefore waived enforcement of the anti- assignment clause, by virtue of the referenced constructive assignment. 46. Specifically, HBC committed the first material breach of the Geotechnical Study Contract with White when it assigned the signing and sealing function of its contract to Swoboda, without White's express written consent, while those obligations were still executory. Because corporations are not authorized to sign or seal construction documents in Texas, Swoboda could not have been acting as HBC's agent. As a result of these actions, Terracon (on behalf of HBC) is estopped from enforcement of the referenced anti-assignment clause, and White and RLJ are thereby excused from performance of its contract obligations concerning consent of assignment. In the alternative, HBC relinquished a known right and therefore waived enforcement of the anti-assignment clause, by virtue of the referenced constructive assignment. 47. Specifically, Terracon committed the first material breach of the Materials Testing Contract with White when it assigned the signing and sealing function of its contract to others, without White's express written consent, while those obligations were still executory. Because corporations are not authorized to sign or seal construction documents in Texas, the individuals who signed and sealed testing reports could not have been acting as Terracon's agent. As a result of these actions, Terracon is estopped from enforcement of the referenced anti- assignment clause, and White and RLJ are thereby excused from performance of its contract obligations concerning consent of assignment. In the alternative, Terracon relinquished a known right and therefore waived enforcement of the anti-assignment clause, by virtue of the referenced constructive assignment. 48. Plaintiffs also challenge the applicability of the purported "waiver of consequential damages" clauses contained in the Architectural Contract, General Contract, the Plaintiffs' Seventh Amended Original Petition Page 11 MHDocs 4896391 1 12690.2 194 Geotechnical Study Contract, and/or the Materials Testing Contract. Plaintiffs seek to recover the difference between the value of the Project as constructed, and its value had it been designed and constructed in accordance with the respective Contracts. This is not a consequential damage as defined by the Contracts, but instead is the primary measure of damages in a breach of contract action under Texas law. 49. As a direct, natural, probable, and foreseeable consequence associated with breaches of contract by EBCO, ESG, Swenson, HBC, Swoboda, and Terracon, Plaintiffs have sustained damages for which they sue herein. B. Declaratory Judgment and Suit for Declaratory Relief 50. Plaintiffs incorporate the foregoing paragraphs. 51. Pursuant to the Uniform Declaratory Judgment Act, Texas Civil Practice & Remedies Code §37.001 et seq., Plaintiffs are interested parties whose rights are affected by a contract or contracts with Terracon or HBC. 52. Issues and disagreements currently exist between Plaintiffs and Terracon concemmg whether Terracon's geotechnical engmeenng serv1ces provided in 2005 and thereafter are the subject of any contractual limitations of liability. Terracon asserts that limitations of liability contained in either the Geotechnical Study or Materials Testing Contract apply to the geotechnical engineering services provided by Terracon in 2005 and thereafter. 53. By way of a declaratory action, Plaintiffs seek certainty regarding the respective parties' rights and obligations under the Geotechnical Study Contract with HBC and the Materials Testing Contract with Terracon at issue in this lawsuit. Specifically, RLJ seeks a declaration that: (a) the scope of the Geotechnical Engineering Study contract with HBC was to provide a Geotechnical Engineering Study, which was provided on November 21, 2000 and which was completed shortly thereafter; (b) the Materials Testing Contract specifically excludes Plaintiffs' Seventh Amended Original Petition Page 12 MHDocs 4896391 1 12690.2 195 geotechnical engineering services; and (c) the geotechnical engineering services provided by Terracon in 2005 and thereafter were provided pursuant to an oral contract separate and distinct from the Geotechnical Study or Materials Testing Contract, or in the alternative pursuant to a negligent undertaking by Terracon, but in either event the 2005 and beyond geotechnical engineering services provided by Terracon are not the subject of contractual limitations of liability contained in either the Geotechnical Study or Materials Testing Contract. 54. Based on the foregoing, there is presently an actual, justiciable controversy between and among the parties. C Breach of Warranty 55. Plaintiffs incorporate the foregoing paragraphs. 56. Plaintiffs assert that EBCO expressly represented and warranted that the Project, and all of its incorporated elements and materials, would be of good quality, that the Project would be free from defects, and that the Project would conform to the requirements of the contract documents. Specifically, Plaintiffs would show that EBCO breached its warranty that services be performed in a good and workmanlike manner, because the Project is not fit for its intended use, was not constructed in accordance with the contract documents or industry standards, and is not free from defects. 57. In the alternative, Plaintiffs assert that EBCO impliedly represented and warranted that the Project, and all of its incorporated elements and materials, would be of good quality, that the Project would be free from defects, and that the Project would conform to the requirements of the contract documents. Specifically, Plaintiffs would show that EBCO breached its common law implied warranty that serv1ces be performed in a good and workmanlike manner, because the Project is not fit for its intended use, was not constructed in accordance with the contract documents or industry standards, and is not free from defects. Plaintiffs' Seventh Amended Original Petition Page 13 MHDocs 4896391 1 12690.2 196 58. As a direct, natural, probable, and foreseeable consequence associated with EBCO's breach of warranty, Plaintiffs have sustained damages for which they sue herein. D. Equitable Subrogation 59. Plaintiffs incorporate the foregoing paragraphs. 60. Plaintiffs will show that EBCO had a duty to construct the Project without negligence, free from defects, in a manner consistent with construction industry standards for similar projects in this location, and to refrain from negligent misrepresentation concerning the Project. EBCO failed to meet its duties when performing its work on the Project, all of which caused or contributed to cause damages to Plaintiffs. 61. Plaintiffs will also show that ESG had a duty to provide design plans and to administer the Project's construction in accordance with the Architectural Contract, without negligence, free from errors and omissions, and in a manner consistent with the applicable standard of professional skill and care. ESG also had a duty to refrain from negligent misrepresentation concerning the Project. ESG failed to meet its duties in performing the services for the Project, all of which caused or contributed to cause damages to Plaintiffs. See Exhibit A. 62. Plaintiffs will show that Swenson owed a duty to provide design plans without negligence, free from errors and omissions, and in a manner consistent with the Architectural Contract and all applicable standards of professional skill and care. Swenson also had a duty to refrain from negligent misrepresentation concerning the Project. Swenson failed to meet his duties in performing the services for the Project, which caused or contributed to cause damages to Plaintiffs. See Exhibit A. 63. Plaintiffs will show that HBC and Swoboda owed a duty to provide a geotechnical engineering study without negligence, free from errors and omissions, and in a Plaintiffs' Seventh Amended Original Petition Page 14 MHDocs 4896391 1 12690.2 197 manner consistent with applicable standard of professional skill and care. Plaintiffs will also show HBC and Swoboda owed a duty to refrain from negligent misrepresentation concerning the Project. HBC and Swoboda failed to meet these duties in performing their services for the Project, which caused or contributed to cause damages to Plaintiffs. See Exhibit B, Certificate of Merit of Kirby Meyer, describing HBC or Swoboda's negligent acts, pursuant to the Certificate of Merit requirements of applicable state law. Terracon is responsible for HBC's and Swoboda's negligent acts, errors, or omissions as a result of its merger with HBC. 64. Plaintiffs will show that Terracon owed a duty to provide geotechnical engineering without negligence, free from errors and omissions, and in a manner consistent with applicable standard of professional skill and care. Plaintiffs will also show that Terracon owed a duty to refrain from negligent misrepresentation concerning the Project. Terracon failed to meet these duties in performing their services for the Project, which caused or contributed to cause damages to Plaintiffs. See Exhibit B, Certificate of Merit of Kirby Meyer, describing Terracon's negligent acts, pursuant to the Certificate of Merit requirements of applicable state law. 65. Plaintiffs will show that Terracon owed a duty to provide materials testing/construction inspection services without negligence, free from errors and omissions, and in a manner consistent with applicable standard of professional skill and care. Plaintiffs will also show that Terracon owed a duty to refrain from negligent misrepresentation concerning the Project. Terracon failed to meet these duties in performing their services for the Project, which caused or contributed to cause damages to Plaintiffs. See Exhibit B, Certificate of Merit of Kirby Meyer, describing Terracon's negligent acts, pursuant to the Certificate of Merit requirements of applicable state law. Plaintiffs' Seventh Amended Original Petition Page 15 MHDocs 4896391 1 12690.2 198 66. Plaintiffs will show that MBA owed a duty to provide structural engmeenng services in accordance with its contract without negligence, free from errors and omissions, and in a manner consistent with applicable standard of professional skill and care. Plaintiffs will also show MBA owed a duty to refrain from negligent misrepresentation concerning the Project. MBA failed to meet its duties in performing these services for the Project, which caused or contributed to cause damages to Plaintiffs. See Exhibit C, Certificate of Merit of Dean Read, describing MBA's negligent acts, pursuant to the Certificate of Merit requirements of applicable state law. 67. Plaintiffs will show that DaVinci owed a duty to provide its labor, material, and services in accordance with its contract, without negligence, free from errors and omissions, and in a manner consistent with the applicable standards of care. Plaintiffs will show that DaVinci also owed a duty to refrain from negligent misrepresentation concerning the Project. DaVinci failed in these duties, which caused or contributed to cause damage to Plaintiffs. 68. Plaintiffs will show that Bridgeview owed a duty to provide its labor, material, and services in accordance with its contract, without negligence, free from errors and omissions, and in a manner consistent with the applicable standards of care. Plaintiffs will show that Bridgeview also owed a duty to refrain from negligent misrepresentation concerning the Project. Bridgeview failed in these duties, which caused or contributed to cause damage to Plaintiffs. 69. Plaintiffs will show that Champion owed a duty to provide its labor, material, and services in accordance with its contract, without negligence, free from errors and omissions, and in a manner consistent with the applicable standards of care. Plaintiffs will show that Champion also owed a duty to refrain from negligent misrepresentation concerning the Project. Champion failed in these duties, which caused or contributed to cause damage to Plaintiffs. Plaintiffs' Seventh Amended Original Petition Page 16 MHDocs 4896391 1 12690.2 199 70. EBCO, ESG, Swenson, MBA, Terracon (and HBC), Swoboda, DaVinci, Bridgeview, and Champion all deviated from the applicable standards of care in the provisions of their respective work or services. In addition, EBCO failed to perform its contract in a good and workmanlike manner and to construct the project in accordance with its fiduciary duty or the General Contract. As a direct result, Plaintiffs suffered damages from the costs to correct or compensate for the Defendants' acts, errors, and omissions. Plaintiffs were contractually and otherwise obligated to undertake costly repair to the Project, and to pay those costs, for which the Defendants are responsible. Each of the Defendants benefited from these payments, for which they are actually responsible, and any related claims they might have had regarding the Project are assigned to Plaintiffs as a matter of law. Thus, Plaintiffs are entitled to an equitable subrogation recovery of those Project remediation costs actually paid as of the date of the trial in this matter from Defendants. E. Negligence/Tort 71. Plaintiffs incorporate the foregoing paragraphs. 72. Breach of a Fiduciary Duty is a tort, grounded in negligence principles. EBCO owed a fiduciary duty to construct the Project in a manner consistent with the owner's interests. The rights to the cause of action for EBCO' s breach of this negligence/tort duty were assigned to RLJ. EBCO breached this duty, causing damage to the Project and RLJ. VI. DAMAGES 73. As a result of the breaches of contract, breach of fiduciary duties, breach of warranty, tort/negligence breaches, and negligent acts alleged above, Plaintiffs have sustained damages in excess of the minimal jurisdictional requirements of this court. The appropriate measure of damages for the breach of contract and breach of warranty claims is the difference in value between the building as constructed, and the value of the building had it been designed and Plaintiffs' Seventh Amended Original Petition Page 17 MHDocs 4896391 1 12690.2 200 constructed pursuant to the respective contracts. In the alternative, the measure of damages is the cost to fully and completely repair the Project. 74. The measure of damages for the tort/negligence causes of action are all out-of- pocket costs, plus all current and future lost revenue, profits, diminution in value, future repair costs, along with all other direct, special or consequential damages. Plaintiffs also request that EBCO be required to disgorge and forfeit all fees from the Project, as a result of the breach of its fiduciary duty. 75. Plaintiffs further seek a declaration that the geotechnical engineering services provided by Terracon during and after construction of the Project, in 2005 and thereafter are not subject to a contractual limitation ofliability, thereby not limiting the damages sought herein. VII. CONDITIONS PRECEDENT 76. All conditions precedent to the Plaintiffs' rights to recover as herein alleged have been performed, have occurred, or have been waived or excused. VIII. ATTORNEY'S FEES 77. Plaintiffs are entitled to recover their attorneys' fees pursuant to Chapters 37.009 and 38 of the Texas Civil Practice and Remedies Code. 78. Plaintiffs will further seek to recover their attorney's fees for declaratory relief sought against Terracon pursuant to Chapter 37 of the Texas Civil Practice and Remedies Code. IX. REQUEST FOR JURY TRIAL 79. Plaintiffs assert their right to a trial by jury, under Texas Constitution, article 1, section 15, and make this demand for a jury trial at least thirty (30) days before the date this case is set for trial, in accordance with Texas Rules of Civil Procedure 216. Plaintiffs have tendered the fee of $30.00 to the clerk of this court, as required by Texas Government Code section 51.604. Plaintiffs' Seventh Amended Original Petition Page 18 MHDocs 4896391 1 12690.2 201 WHEREFORE, PREMISES CONSIDERED, Plaintiff's request that upon final hearing, they have judgment against the Defendants, jointly and severally, for their damages, interest, attorneys' fees, costs, and any other relief to which they may be entitled. Respectfully submitted, ,.«"``---') .,If ;.<>'/ ,(/~:;;; ~ By: ---``~,``-``\``···~----~-+~-------- Benton T. Wheatley ~, Texas Bar No. 24015171 Tracy McCreight Texas Bar No. 24037064 Jessica C. Neufeld Texas Bar No. 24059270 Munsch Hardt Kopf & Harr, P.C. 401 Congress Avenue, Suite 3050 Austin, Texas 78701 Telephone: 512.391.6100 Facsimile: 512.391.6149 Email: bwheatley(f[lmunsch.com Email: tmccreight(a}munsch.com Email: jneufeld(a~munsch.com ATTORNEYS FOR RLJ II-C AUSTIN AIR, LP, RLJ II-C A US TIN AIR LESSEE, LP; RLJ LODGING FUND II ACQUISITIONS, LLC Plaintiffs' Seventh Amended Original Petition Page 19 MHDocs 4896391 1 12690.2 202 CERTIFICATE OF SERVICE I hereby certifY that on this 18th day of February, 2014, a true and correct copy of the foregoing was forwarded via facsimile, U.S. First Class mail, certified mail, return receipt requested, and/or hand-delivery to the following: David P. Benjamin Gregory N. Ziegler Brent A. Biggs Matthew Mumm Benjamin, Vana, Martinez & Biggs, LLP Macdonald Devin, P.C. 2161 N.W. Military Highway, Suite Ill 3800 Renaissance Tower San Antonio, Texas 78213 1201 Elm Street Fax: 210.881.0668 Dallas, Texas 75270-52130 db en j amin(a~ benlawsa.com Fax: 214.747.0942 bbiggs(a1benlawsa.com gziegler((i;macdonalddevin.com mmumm({l),macdonalddevin.com Attorneys for EBCO General Contractor, Ltd. and EBCO/Warrior Management, LLC Attorneys for Elness, Swenson, Graham Architects, Inc. and Mark Swenson, Individually Stephen K. Yungblut WilliamS. Rhea Pratt & Yungblut, P.C. DuBois Bryant & Campbell, LLP 2221 East Lamar Blvd., Suite 150 700 Lavaca Street, Suite 1300 Arlington, Texas 76006 Austin, TX 78701 Fax: 817.633.6188 Fax: 512.457.8008 steve(@,pratt-yungblut.com brhea@dbcllp.com Co-Counsel for Terracon Consultants, Inc. and Lead Counsel for Terracon Consultants, Inc. Todd E. Swoboda, P.E., Individually and Todd E. Swoboda, P.E., Individually Jeffrey G. House Cumey, Farmer, House & Osuna, P.C. 411 Heimer Road San Antonio, Texas 78232-4854 Fax: 210.377.1065 jhouse@.cgfph.com Attorneys for Alcadio Chapa, Jr. formerly d/b/a JR 's Concrete Construction Plaintiffs' Seventh Amended Original Petition Page 20 MHDocs 4896391 1 12690.2 203 2/18/2014 9:33:34 AM Amalia Rodriguez-Mendoza District Clerk Travis County D-1-GN-1 0-002325 EXHIBIT A 204 AFFIDAVIT OF JOHN V. NYFELER STATE OF TEXAS COUNTY OF TRAVIS BEFORE ME, the undersigned authority, on this day personally appeared John V. Nyfeler, who being duly sworn, deposed as follows: 1. My name is John V. Nyfeler. I am of sound mind and capable of making this . affidavit. I am personally acquainted with the facts herein stated and they are true and correct. 2. This matter relates to the building project: RU/Marriott Courtyard Hotel, Austln Airport, located at 7809 .Ben White Boulevard, Austin, Texas 78744- 1774. 3. I am President ofThe Nyfeler Organization, Inc. d/b/a/ John Nyfeler, FAIA and have worked in that capacity since February 1, 2010. For the previous ten years I worked for Aguirre Roden, Inc., a Texas based architect, engineer firm, in the capacity of Senior Vice President. I have been a registered architect in the State ofTexas since 1970. 4. I have reviewed the construction documents for the referenced building project, prepared by Etness Swenson Graham Architects, Inc. and its Principal, Mark G. Swenson; Texas Architect Registration No. 13193, (collectively "Architect") and its sub-consultants and have reviewed other related documents provided to me. During the year 2009 and 2010, I have visited the site of the building and have visually examined the building and have made inspections of the construction at selected locations in the building. The documents that I reviewed and my observations and inspections of the site and of the building form the factual basls for the professional opinion that the Architect's acts, errors and omissions deviated from the appropriate standard of care for example: 1 205 a. The Architect and its consultants in the design of the building foundation failed to follow the recommendations of the Geotechnical Engineering Study dated November 21, 2000 prepared by HBC Engineering, Inc., which failure to follow the recommendations in the Geotechnical Engineering Study caused or contributed to the physical damage to the building including: 1 The Architect failed to advise the geotechnical consultant of the final finished floor elevations. 2 The Architect failed to take into account that the geotechnical borings were taken before the site excavation was done. 3 The Architect did not take into account the admonition set out in 6.3 of the Geotechnical Report, " ...zones of shallow groundwater seepage are possible along pervious seams/fissures of the near surface soils (particularly during or soon after periods of wet weather)." 4 The Architect accepted the estimated potential vertical rise (PVR) ofthree inches (j"} and designed the building to that unacceptable range. 5 The Architect failed to advise the geotechnical consultant of the design which would setfinished floor elevation more than two feet below the existing grade even though the geotechnical report states: "lffinished grade Is planned to be more than two feet above or below existing grade, HBC should be contacted to revise our recommendations." 6 The Architect failed to provide effective drainage around the building even though the geotechnical report (p.8) states: ".,.moisture variations in the sub-grade soils due to poor drainage, leakage of utilities, etc. could induce volumetric changes resulting in movements which are in excess of those estimated by the PVR procedure." 7 The Architect failed to design a wall drain recommended by the geotechnical report (p.l4). The report states: "A wall drain is recommended for collection and removal of surface water percolation along the base of the walls." 2 206 8 The Architect failed to specify backfill of cohesive (clay} soil around the building to control surface water percolation which backfill will help to prevent buildup of higher wall pressures even though the geotechnical report (p.14) states: "The flnal12 inches of backfill should preferably consist of cohesive soil to help reduce percolation of surface water into the backfilL 9 The Architect failed to have HBC Engineering, Inc. to review the final cons~ruction documents for concurrence that the documents conformed with the geotechnical report even though the geotechnical report states (p.19, Art.8.0} "HBC should be provided the opportunity to review the final plans and specifications to check that these and subsequent recommendations are properly interpreted." There is no record of this final review being done. 10 The Architect failed to design the surface water drain age around the building to prevent pending of water near the building even though the geotechnical report states (p.15, Art.7.7) " ...we highly recommend that the site drainage be developed so that ponding of surface water runoff near the structure does not occur." b. The Architect and its consultants may have committed other acts, errors or omissions in its professional servlces rendered in connection with the project which acts, errors or omissions deviate from the applicable standard of carte. These statements of fault made herein are true and correct of my own personal knowledge. Further Affiant Sayeth No~? .•· SWORN AND SUBSCRIBED BEFORE ME, this la_day of June, 2010. T. DECKER Notary Public, Stale of Texas My C, 929 (Tex. 1998) 3 In Galle, the court stated the expansiveness of the release demonstrated that the settlement funds were not apportioned between types of damage. Since a paying party will always expect a full release, the scope of the release, if the determining factor, would always preclude apportionment. In any event, this part of the Galle opinion is dicta because the court found that the plaintiff had the burden to prove apportionment and had not done so; the court's ruling was not dependent on what the release said but what the settlement did not say. In Ellender, the Supreme Court looked for language of apportionment between types of damage rather than the scope of the release. 4 Whether RLJ could have, consistent with the pleadings and the evidence, identified divisible damages is another question. There was evidence of repair costs due to EBCO's failure to build to specifications, but RLJ may not have presented those as divisible damages in its pleading or evidence. The damage question in the Charge asked for damages "due to ESG's failure to comply." The question had to ask specifically about damages resulting from ESG 's failure to inquire about cause-in-fact. That specification, however, does not mean, without more, that the damages found were divisible and attributable only to ESG. 1438 D-1-GN-1 0-002325 Page 3 of5 other's breach. Each party is liable for its own breach which by itself results in indivisible damages. Just as with joint tortfeasors who breach different common law duties that each proximately cause an indivisible damage. (As the Pattern Jury Charge states, there may be more than one proximate cause of an occurrence.) Any perception that applying the one-satisfaction rule here would be unfair may arise from the fact that RLJ sought more in damages than the jury awarded and received more in settlement with EBCO alone than the jury awarded in damages. Had there been no settlement, though, the jury's determination of diminished value would be the amount owed jointly by EBCO and ESG, even less than what RLJ received in settlement from EBCO. The source of RLJ's disappointment regarding damages is the jury verdict, not the application of settlement credits to it. The one satisfaction rule as applied to attorney's fees Regarding ESG' s objection to Plaintiffs Motion for Attorney's fees, the only aspect before the court now is a pure question of law - when settlement credit equal or exceed the damages awarded against the non-settling party does it extinguish any claim for attorney's fees? Historically, as RLJ has pointed out, the one-satisfaction rule has been discussed in both cases and commentary almost exclusively in the context of torts, which of course do not involve attorney's fee claims. The limitation to the full amount of damages, therefore, should be read in that context and not taken as a deliberate decision to disregard attorney's fees claims. There are but a few cases addressing the application of the one-satisfaction rule to an attorney's fees claim associated with a contract claim. Just as with the application to contract damages, the application to attorney's fees is new and developing. ESG is correct that the net-payment cases do not address settlement credits for the same claim and damages. However, in the primary authority relied upon by ESG, Osborne, there was a comparative fault question to which the jury answered that Jauregi was less than 50% liable. Osborne also involved a procedural background very different from the one here. In neither Osborne nor any other case cited was there a settlement half-way through a jury trial after years of litigation. The Osborne opinion begins by noting, "[a]fter mold was discovered in the house, State Farm paid $1,874,687 in mold-related claims. Despite receiving those payments, the Osbornes sued Jauregi and numerous subcontractors, settling before trial for more than $1 million." Later in the analysis, the court again observes that the settlement was pre-trial. Obsborne and Hamra cite and rely upon Blizzard and quote this particular sentence, "[h]owever, it is quite another to allow attorney's fees on a claim that, although successful, was paid in full before trial [emphasis added]." By contrast, here, the settlement with EBCO came in the midst of trial, when RLJ was just days away from a verdict after incurring, it claims, hundreds of thousands in attorney's fees. ESG's position is effectively that RLJ, after settling with EBCO, should have abandoned the trial and non-suited ESG, which had conceded nothing and settled nothing. Or, RLJ should not have settled because they would have been much better 1439 D-1-GN-1 0-002325 Page 4 of5 off with the very same verdict against both defendants. By such a verdict they would have been awarded the $700,000 against the defendants jointly, they would have prevailed and RLJ would have had the potential of a significant award in attorney's fees. If ESG is correct, RLJ has not prevailed, directly and only, because it reached a settlement with EBCO. This disincentive to settle is explained more fully below. The procedural background aside, there is more than one reason a settlement credit exceeding damages should not automatically extinguish a claim for attorney's fees. First, in contract, a plaintiff with an associated attorney's fees claim is not given one satisfaction by damages alone. The plaintiff is not made whole or returned to its position before the breach. Full satisfaction for RLJ would be the jury's verdict on damages, the fact-finder's }_ Gury or judge by agreement as here) determination of fees shown to be incurred against the defendants jointly or segregated as to those incurred against ESG alone, less the settlement amount. The one-satisfaction rule is intended to limit a plaintiff to no more than full redress, not to restrict the plaintiff to less than that. Second, the legislature has provided for the possibility of attorney's fees, even if not provided in the contract itself, to hold individuals and entities to their agreements. There are of course several factors to consider in awarding attorney's fees, but the law recognizes that fees equal to or exceeding damages may be properly awarded. 5 Otherwise, no agreement worth less than the attorney's fees required to enforce it would ever be enforced. That is the result if fees can be extinguished, not just reduced, by a verdict that is less than another defendant's settlement of indivisible damages. A plaintiff who settles with one defendant for the full amount it seeks in indivisible damages and the full amount of the fees attributable to that defendant (indivisible and segregated) would be foolish to continue to litigate against a remaining defendant with little or no divisible damages even if the plaintiff knew liability could be established and had a high expectation of proving significant fees. The remaining defendant does not receive a mere windfall but rather a free pass at the expense of contract enforceability. Third, the possibility that attorney's fees wi.ll be extinguished by a settlement with one defendant skews the parties' calculation of probabilities and risks so as to greatly discourage all parties from settling. Litigants consciously or subconsciously conduct a calculation of the 5 ESG's case law does not hold otherwise. The Smith v. Tam holding is that the appellate court erred in reversing a verdict for zero attorney's fees and rendering judgment for attorney's fees (1) as a matter of law (2) in an amount roughly equivalent to the total damages awarded and (3) equivalent to the full amount fees sought by plaintiffs (4) even though the plaintiffs were awarded less than a third of the damages sought, and (5) "in the absence of evidence that such fees were warranted due circumstances unique to this case." Smith v. Patrick W. Y. Tam Trust,
296 S.W.3d 545, 548 (Tex. 2009). ESG's description of the holding included none of those four crucial points. Barker is unremarkable; a remand for redetermination of fees after the appellate court reduced the damages from $111,000 to $16,000. If the law were, as ESG claims, that a court simply compares the amount awarded to the amount of fees and make a determination the latter's reasonableness "on its face," surely there would be better authority for that proposition. 1440 D-1-GN-1 0-002325 Page 5 of5 probabilities of gain and loss. Because attorney's fees in a contract case may equal or even exceed damages, the probability of significant fees cannot be disregarded based on the probable amount of damages alone. Defendants' calculations of course also entail this understanding. Because of the probability of an award of some attorney's fees that will not necessarily be reduced in proportion to the award in damages, the opposing parties' valuations of the case come closer to converging. If, however, the award of attorney's fees becomes a function of receiving damages above a certain amount, it radically changes the equation all parties have employed to calculate the probabilities of gain and loss and greatly discourages settlement between the plaintiff and each defendant. A plaintiff with a large fee claim will hesitate to enter an otherwise reasonable settlement with one defendant because the entitlement to any fees (not already compensated) against the remaining, non-settling party, rides on a verdict for damages above the settlement. If the plaintiff, as here, nonetheless does settle with one defendant, the plaintiff and remaining defendant lose all incentive to settle. The plaintiff now compares the probability of a larger verdict with attorney's fees versus the probability of receiving nothing in additional damages and nothing in fees. The remaining defendant compares the probability of owing a larger verdict and fees versus the probability of owing nothing. It becomes a crap-shoot in which it would be only logical for both parties to roll the dice. Judgment cannot be entered without a determination of attorney's fees, if any. Sincerely, ~----S-tep n Yelefosky Judge, 345t~istrict Court SY/ar Orig: Amalia Rodriguez Mendoza, District Clerk 1441 APPENDIX D Notice sent: ~ lnierlocutory None DC BK14239 PG58 Oisp Parties: ~ J..l W1?J -'0tf Dlsp code:GG>/ CLS Redact pgs: _ ___,..-----:=----r- Judge s 5AJ Clerk CAUSE NO. D-1-GN-10-002325 RLJ 11-C AUSTIN AIR, LP; RLJ 11-C AUSTIN § AIR LESSEE, LP; and RLJ LODGING FUND § II ACQUISITIONS, LLC, § § Plaintiffs, § § vs. § § EBCO GENERAL CONTRACTOR, LTD; § EBCO/W ARRIOR MANAGEMENT LLC; § ELNESS, SWENSON, GRAHAM § TRAVIS COUNTY, TEXAS ARCHITECTS, INC.; MARK SWENSON, § Individually; TERRACON CONSULTANTS, § INC.; TODD E. SWOBODA, P.E., § Individually; and ALCADIO CHAPA, JR. § formerly D/B/A JR'S CONCRETE § CONSTRUCTION, § § Defendants and Third-Party Defendants. § 200TH JUDICIAL DISTRICT FINAL JUDGMENT On May 5, 2014, this case was called for trial. Plaintiffs RLJ II-C AUSTIN AIR, LP; RLJ II-C AUSTIN AIR LESSEE, LP; and RLJ LODGING FUND II ACQUISITIONS, LLC ("Plaintiffs") appeared through a representative and announced ready for trial. Defendants ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. ("ESG") and EBCO GENERAL CONTRACTOR, LTD and EBCO/WARRIOR MANAGEMENT LLC (collectively, "EBCO") each appeared through a representative and announced ready for trial. Before trial, Plaintiffs asserted claims pursuant to the doctrine of equitable subrogation against defendants EBCO, ESG, and Terracon Consultants, Inc. ("Terracon"), which were disposed of on partial summary judgment that Plaintiffs take nothing on these claims against EBCO, ESG, and Terracon. FINAL JUDGMENT Page 1 819658 402.122 1708 DC BK14239 PG59 Plaintiffs also asserted claims against defendants MBA Structural Engineers, Inc. ("MBA"), Mark Swenson, and Todd Swoboda, which were disposed of before trial by partial summary judgment that Plaintiffs take nothing against MBA, Swenson, and Swoboda. Before trial, Plaintiffs also non-suited all their claims against the following defendants: Andrew Marlin, Davinci Pools, LLC ("Davinci"), Bridgeview Plumbing, Inc. ("Bridgeview"), and Champion Site Prep, LP ("Champion"). Plaintiffs also asserted claims against EBCO Advanced Building Systems, Ltd. ("EBCO Systems") , which were disposed of before trial by partial summary judgment that Plaintiffs take nothing against EBCO Systems. EBCO asserted third-party claims against third-party defendants Davinici, Bridgeview, and Champion, which were disposed of before trial by partial summary judgment that EBCO take nothing against Davinci, Bridgeview, and Champion. Before trial, EBCO also non-suited all its claims against third-party defendants, White Lodging Services Corporation. Before trial, EBCO also non-suited all its claims against third-party defendant Alacadio Chapa, Jr. formerly d/b/a JR's Concrete Construction. EBCO also asserted claims against Andrew Marlin and MBA, which were disposed of before trial by summary judgment that EBCO take nothing against Marlin and MBA. Before trial, ESG non-suited all its claims against third-party defendants Griffin Engineering and Gregory Griffin. ESG also asserted claims against Andrew Marlin and MBA, which were disposed of before trial by summary judgment that ESG take nothing against Marlin and MBA. FINAL JUDGMENT Page2 819658 402.122 1709 DC BK14239 PG60 Before trial, the Court dismissed Plaintiffs' claim against Terracon for breach of the Materials Testing Contract pursuant to Texas Civil Practice & Remedies Code section 150.002(e). Before trial, Plaintiffs non-suited all their claims against Terracon and all remaining claims against Todd Swoboda. Before trial, the Court rendered partial summary judgment that Plaintiffs take nothing on their tort claims against Defendants and thereby rendered moot all defendants' and third-party defendants' cross-claims for contribution. During trial, Plaintiffs voluntarily dismissed all remaining claims that it had against EBCO pursuant to the agreement of the parties. The remaining issues in the case proceeded to trial to the jury. After a jury was impaneled and sworn, it heard evidence and arguments of counsel. In response to the jury charge, the jury made findings that the Court received, fil~, and entered of record. The questions submitted to the jury and the jury's findings are a``8e8 ~tE~kih~A and incorporated ~ by reference. ~ After a post-verdict hearing, the Court granted the motion of ESG for the application of the one-satisfaction rule to apply the sum of the amount of the settlements between Plaintiffs and EBCO and Plaintiffs and Terracon as credits ("the Settlement Credit") against the amount awarded by the jury to Plaintiffs as damages for ESG's failure to comply with the Architectural Contract. Accordingly, pursuant to the "one-satisfaction rule," the Court applies the Settlement Credit of$1,170,000 against the sum of the jury award of damages and the attorney's fees award. By agreement of the parties, the matter of attorney's fees was submitted to the Court for determination. After considering the Plaintiffs' Amended Motion for Attorney's Fees and ESG's FINAL JUDGMENT Page3 819658 402.122 1710 DC BK14239 PG61 Response to Plaintiffs' Amended Motion and the arguments of counsel, the Court overruled ESG's objections to Plaintiffs' Amended Motion for Attorney's fees and finds that $901,650.96 was a reasonable and necessary attorney's fee for the presentation of Plaintiffs' claims for breach of contract claim against ESG. The Court also considered by submission only the issue of Plaintiffs' entitlement to attorney's fees despite the application of the Settlement Credit. The Court overruled ESG's objection to Plaintiffs' entitlement to attorney's fees despite the application of the Settlement Credit and found that Plaintiffs were entitled to attorney's fees and to present evidence of attorney's fees. The Court hereby RENDERS judgment as follows: 1. The Court ORDERS that Plaintiffs collectively recover the following from ESG: a. The amount of$516,650.96, being the sum ofthejury's award of$785,000 as actual damages and the attorney's fee award of $901,650.96, less the Settlements Credit of $1, 170,000; b. Court costs; and c. Post-judgment interest on all of the above at the rate of 5% compounded annually from the date this judgment is signed until all amounts are paid in full. 2. The Court further ORDERS that if this judgment is appealed to an intermediate court of appeal and modified or reversed in favor of Plaintiffs, Plaintiffs will additionally recover from ESG the amount of $125,000, representing the anticipated reasonably and necessary fees and expenses that would be incurred by Plaintiffs. FINAL JUDGMENT Page4 819658 402.122 1711 DC BK14239 PG62 3. The Court further ORDERS that if this judgment is appealed to the Texas Supreme Court and modified or reversed in favor of Plaintiffs, Plaintiffs will additionally recover from ESG the amount of $50,000, representing the anticipated reasonable and necessary fees and expenses that would be incurred by Plaintiffs. 4. This judgment is intended to be an appealable judgment that fully and finally disposes of all claims between and among all parties to this proceeding and hereby finally disposes of all claims and all parties to this proceeding. 5. All relief requested by any party to this proceeding not expressly granted in this judgment is hereby denied. Such denial includes but is not limited to all declaratory relief sought by ESG pursuant to chapter 37 of the Texas Civil Practice and Remedies Code against Plaintiffs. 6. The Court ORDERS execution to issue for this judgment. FINAL JUDGMENT PageS 819658 402.122 1712 APPENDIX E Page 1 ·. .. October 30, 2000 Mr. Scott Casanova ENGINEERINO,INC. White Lodging Services Corporation· 1000 East 80u. Place, Suite 500 North a(Ji•M"nof lferracon MerriUville. Indiana 46410 Telephone: (219) 769-3267 Fax: (219} 756-5484 Re: Proposal for Geotechnical and Environmental Services Marriott Courtyard Hotel Highway 71 at Riverside Drive Austin, Texas HBC Proposal No. 62-6366.00 Dear Mr. Casanova: HBC Engineering, Inc. (HBC) appreciates the opportunity to submit ·this proposal to perform a geotechnical engineering study and environmental site assessment (ESA) for the above referenced property. This proposal outlines our understanding ofthe scope ofservices to be perfOrmed by HBC for this project: and provides an estimate of the cost of our services. PROJECf INFORMATION Plans are to construct a five-stozy hotel on a site located at the intersection of Highway 71 and • -· Riverside Drive in Austin. Texas. We understand that the proposed structure is planne.d to consist of metal frame construction with steel studs. Based on discussions with the structural engineer, anticipated wall loads for the proposed structure are on the order of 5 to 6 kips per linear foot. Adjacent swface parking areas are inso planned, along with a detention pond. SCOPE OF SERVICES A brief summary of the services to be provided by HBC is presented in the following paragraphs. Geotechni~l Services · The geOtechnical study will be performed to develop geotecbuical engineering recommendatiom for the project. The project will be performed by a registered professional engineer experienced in geotechnical engine_erlng in the Austin area. l HBC 00172 H<>uslm o.au.. Auy ltood 8901 Co'P<'OIIY Frwy. ' 391:\ Todd Lane 3100 Seymour Hwy. SuikJCU Soit.IOO Suit.;\12: Sviti: lOS HCIU1Il<>n, TX 7704,, Dalla._ TX 75247 A...ti~>,TXW44 Wid>itlo Falls. TX 76310 !Jll) 69(1.11989 (214)63ti>Ull0 (!>12} 44:Z..ll:l2. (!144) 766-60!12 F.•x (71:11 ~<;o.J;7fl7 Fn C2l4!6.'!0-,7070 "· (~ll) 442-1 t8l Pox (94()) 766-60'1.\ PLAINTIFF'S EXHIBIT 3 Page 18 Mr. Soott Casanova October 30, 2000 Page2of6 Field Program. As requested by the client, a total offour test borings to depths of25 feet are planned in the pfoposed building area. In addition; five borings are planned to depths of 5 feet in the proposed pavement areas. along with one boring to 10 feet in the proposed detention pond area. During drilling, ~ samples will generally be collected utilizing either thin-walled tube samplers {shelby tubes) or the Standard Penetmtion Test. Once the samples have been oollected and ofassified in the field, they will be properly prepared and placed in appropriate sample containers for transport to our laboratory. This proposal·assumes that the site can be acce.'lSed with standard truck-mounted drilling equipment and does no~ include services associated with site clearing, location ofunderground utilities, or site access fur unusually ooft or wet surlkce conditions. Ifsuch conditions are known to exist on the site, HBC should be notified so that we may adjust our scope of seiVices, ifnecessary. · Labomtotv Testing. The sample ciassifications will be reviewed by a geotecbnica1 engineer in the • laboratory, and a laboratory testing program will be assigned which will be specific to the project requirements and the subsut:fhee ~ons observed. The testing program could include, but may not be limited to, moisturo contents. unit ENSATION AND PAYMENTS FOR PRECONSTRUCTION PHASE SERVICES The Owner shall compensate and make payments to the Construction Manager for Preconstruction Phase services as follows: 4.1 COMPENSATION 4.1.1 For the services described in Paragraphs 2.1 and 2.2 the Construction Manager's compensation shall be calculated as follows: 4 .1.2 Compensation for Preconstruction Phase services shall be equitably adjusted if the originally contemplated scope of services is significantly increased. 4.1.3 RESERVED. 4.2 PAYMENTS 4 .2.1 Payments shall be made monthly within thirty days following presentation of the Construction Manager's appropriate invoice and, where applicable, shall be in proportion to services properly performed. EBCO 002809 --------- - ···-------------- __ _________ .. 4.2.2 Amounts unpaid after the date on which payment is due shall bear interest at the i:ate of 6% per annum or if lower at the legal rate prevailing from time to time at the place where the Project is located. ARTICLE 5 COMPENSATION FOR CONSTRUCTION PHASE SERVICES 5.1 COMPENSATION 5.1.1 For the Construction Manager's performance of the Work, the Owner shall pay the Construction Manager, subject to the Guaranteed Maximum Price as provided in Paragraph 5.2, the Contract Sum consisting of the Cost of the Work as de:fmed in Article 6 and the Construction Manager's Fee detennined as follows: 5.2 GUARANTEED MAXlMUM PRICE 5.2.1 The Sum of the Cost of the Work and the Construction Manager's Fee are guaranteed by the Construction Manager not to exceed the amount provided in Amendment No. 1, subject to additions and deductions by changes in the Work as provided in the Contract Documents. Such maximum sum is referred to in the Contract Documents as the "Guaranteed Maximum Price". Costs which would cause the Guaranteed Maximum Price to be exceeded shall be paid by the Construction Manager without reimbursement by the Owner. Any savings realized below the Guaranteed Maximum Price shall accrue to Owner. Notwithstanding the provisions of the paragraph, the Construction Manager shall not be eligible for any bonus if it has defaulted in its performance under or with respect to this Agreement and no bonus will be due until such time as the Construction Manager has fully and completed performed its obligations under or with respect to this Agreement and the Construction Documents. 5.3 CHANGES IN THE WORK 5.;3.1 The Construction Manager shall receive no fee for any Changes in the Work. 5.3.2 In calculating adjustments to subcontracts (except those awarded with the Owner's prior written consent on the basis of cost plus a fee), the tenns "cost" and "fee" as used in Clause 7.3.3.3 of the General Conditions and the tenns "costs" and· "a reasonable allowance for overhead and profit" as used in Subparagraph 7.3.6 of the General Conditions shall have the. meanings assigned in that document and shall not be modified by this Article 5. Adjustments to subcontracts awarded with the Owner's prior written consent on the basis of cost pius a fee shall be calculated in accordance with the terms of those subcontracts. 5.3.3 In calculating adjustments to the Guaranteed Maximum Price, the tenns "cost" and "costs" as used in the above- referenced provisions of the General Conditions shall mean the Cost of the Work as defmed in Article 6 of this Agreement and the terms "and a reasonable allowance for overhead and profit" shall mean the Construction i Manager's Fee as defmed in Subparagraph 5.1.1 of this Agreement. l 5.3.4 If no specific provision is made in Subparagraph 5.1.1 of this Agreement or the General Conditions Guaranteed I Maximum Cost, as defined in Article 6, in the case of changes in the Work, the General Conditions Guaranteed Maximum Cost shall be equitably adjusted and the Guaranteed Maximum Price shall be adjusted accordingly; provided, however, that Construction the General Conditions Guaranteed Maximum Cost shall not be increased unless ! the total amount of payments made, or to be made, to Subcontractors in the aggregate ("Subcontract Costs"). is ! increased by Change Orders and/or Construction Change Directives by more than ten percent (1 0~) in which event l such equitable adjustment shall be derived with reference only to that part of the increased Subcontract Costs which exceeds one hundred ten percent (11 0%) of the original Subcontract Costs. ARTICLE6 COST OF THE WORK FOR CONSTRUCTION PHASE 6.1 COSTS TO BE REIMBURSED EBCO 002810 .... :~: ......... ,. . ... . .. .:.... ~,;___::: .~ ... -: ...... ·.. ~-: ·-·: 6.1.1 Except as otherwise provided in this Agreement or the Contract Documents, the tenn "Cost of the Work" shall mean costs necessarily incurred by the Construction Manager in the proper performance ofthe Work. Such costs shall be at rates not higher than those customarily paid at the place of the Project except with prior written consent of the Owner. The Cost of the Work shall include only the items set forth in this Article 6. The Cost of the Work, excluding those costs described in Clause 6.1.2.1, Clause 6.1.4.1 and in Subparagraph 6.1.3, constitutes the Cost of the General Conditions. The Costs of the General Conditions is guaranteed by the Construction Manager not to exceed the amount provided in Amendment No. 1, subject to additions and deductions by changes in· the Work as provided in the Contract Documents. Such maximum Costs of the General Conditions is referred to in the Contract Documents as the "General Conditions Guaranteed Maximum Cost". Costs of the General Conditions which would cause the General Conditions Guaranteed Maximum Cost to be exceeded shalf be paid by the Construction Manager without reimbursement by the Owner. In the event that actual Costs of the General Conditions is less than the General Conditions Guaranteed Maximum Cost, Owner shall pay the Construction Manager forty percent ( 40%) of the savings 6.1.2 LABOR COSTS .1 Wages of construction workers directly employed by the Construction Manager to perform the construction of the Work at the site or, with the Owner's agreement, nt off-site workshops . .2 Wages or salaries of the Construction Manager's supervisory and administrative personnel when stationed at the site with the Owner's written approval; provided that bonuses and the like paid to such personnel shall be excluded . .3 Wages·and salaries of tbe Construction Manager's supervisory or administrative personnel engaged at factories, workshops or on the road, in expediting the production or transportation of materials or equipment required for the Work, but only for that pm1ion of their time required for the Work; provided that bonuses and the like paid to such personnel shall be excluded . .4 Costs paid or incurred by the Construction Manager for payroll taxes;Redacted contributions, assessments and benefits required by law or collective bargaining agreements, and; for personnel not covered by such agreements, sick leave, medical and health benefits, holidays, vacations and pensions, provided that such costs are based on wages and salaries included in the Cost of the Work under Clauses 6.1.2.1 through 6.1.2.3. · l l 6.1.3 SUBCONTRACT COSTS l Payments made by the Construction Manager to Subcontractors in accordance with the requirements of the ! :! subcontracts. 6.1.4 COSTS OF MATERIALS AND EQUIPMENT TI-l CORPORA TED IN THE COMPLETED CONSTRUCTION ·'i .1 Costs, including transportation, of materials and equipment incorporated or to be incorporated in the completed construction. .2 Costs of materials described in the preceding Clause 6.1.4.1 in excess of those actually installed but required to provide reasonable allowance for waste and for spoilage. Unused excess materials, if any, shall become the Owner's property at the completion of the Work or, at the Owner's option, shall be sold by the Construction Manager; amounts realized, if any, .from such sales shall be credited to the Owner as a deduction from the ·cost of the Work. 6.1.5 COSTS OF OTIIER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND RELATED ITEMS .1 Costs, including transportation, installation, maintenance, dismantling and removal of materials, supplies, temporary facilities, machinery, equipment, and hand tools not customarily owned by the construction workers, which are provided by the Construction Manager at the site and fully consumed in the performance of the W ark; and cost Jess salvage value on such items if not fully consumed, whether sold to others or retained by the Construction Manager. Cost for items previously used by the Construction Manager shall mean fair market value at the time of such use. EBCO 002811 .2 RESERVED. ;·. .3 Costs of removal of debris from the site ;: . .4 Reproduction costs, facsimile transmissions and long-distance telephone calls, postage and express delivery charges, telephone service at the site and necessary and reasonable petty cash expenses of the site office. .5 That portion of the necessary and reasonable travel and subsistence expenses of the Construction Manager's personnel incurred while traveling in discharge of duties directly connected with the Work. ,.. 6.1.6 MISCELLANEOUS COSTS .1 Redacted Redacted .2 Sales, use or similar taxes imposed by a governmental authority which are related to the Work and for which the Construction Manager is liable. : . .3 Fees and assessments for ·the building permit and for other permits, licenses and inspections for which the Construction Manager is required by the Contract Documents to pay. .4 Fees of testing laboratories for tests required by the Contract Documents and paid by the Construction Manager, except those related to nonconforming Worl~, other than that for which payment is permitted by Clause 6.1.8.2. . .5 Royalties and license fees paid by Construction Manager for the use of a particular design, process or product required by the Contract Documents; the reasonable and necessary cost of defending suits or claims for infringement of patent or other intellectual property rights arising from such requirement by the Contract Documents; payments made in accordance with legal judgments against the Construction Manager resulting from such suits or claims and payments of settlements made with the Owner's written consent; provided, however, that such costs of legal defenses, judgments and settlements shall not be included in the calculation of the Construction Manager's Fee or the Guaranteed Maximum Price and provided that such royalties, fees and costs are not excluded by the last sentence of Subparagraph 3.17.1 of General Conditions, as modified, or other provisions of the Contract Documents . .6 Data processing costs directly related to the Work, provided that such costs shall not include any hardware, software, or CADD costs unless previously approved by the owTier in writing . .7 RESERVED . .8 RESERVED . .9 Expenses incurred in accordance with the ConstrUction Manager's standard personnel policy for relocation and temporary living allowances of personnel required for the Work, if approved in writing by the Owner. 6.1.7 OTHER COSTS .1 Other costs properly incurred in the performance of the Work if and to the extent approved in advance why in advance here and not elsewhere in writing by the Owner. 6.1.8 EMERGENCIES AND REPArRS TO DAMAGED OR NONCONFORMING WORK The cost of the Work shall also include costs described in Subparagraph 6.1.1 which are reasonably incurred by the Construction.Manager; .1 In taking action to prevent threatened damage, injury or loss in case of an emergency affecting the safety of persons and property, as provided in Paragraph 10.6 of General Conditions, as modified, and not resulting from !lie negligence of the Construction Manager, its subcontractors, or the Construction Manager's failure to properly perform its duties under this Agreement or the Construction Documents. EBCO 002812 y 1 I .2 ln repairing or con:ecting damaged or nonconfomrlng Work executed by the Construction Manager or the Construction Manager's Subcontractors or suppliers, provided that such damaged or nonconforming Work was not I caused. by the negligence or failure to fulfill a specific responsibility lo the O>Vncr set forth in this Agreement, of the Construction Manager or the Construction Manager's foremen, engineers or superintendents, or other supc:rvisory, administrative, or managerial personnel of the Construction Manager, or the failure of Lie Construction Manager's l personnel to supervise adequately the Work of the Subcontractors or suppliers, and only to the extent that the cost of repair or correction is not recoverable by the Construction Manager from Redacted Subcontractors or suppliers. I I 6.1.9 The costs described in Subparagraphs 6.1.1 through 6.1.8 shall, subject to the provisions hereof, be ·included in the Cost of the Work no!vr1thstanding any provision of General Conditions, as modified, which may require the Construction Manager to pay such costs, unless such costs are excluded by the provisions of Paragraph 6.2. ! 6.2 COSTS NOT TO BE REIMBURSED i f 6.2.1 The Cost of the Work shall not include; ~ i .1 Salaries and other compe'nsation of the Construction Manager's personnel stationed at the Construction Manager's principal office or offices other than the site office, except ns specifically provided in Clauses 6.!.2.2 and 6.1.2.3. I ~ i •2 Expenses ofl)te Construction Manager's principal office and offices other than the site office except as specifically provided in Paragraph 6.1. I .3 Overhead and general expenses, except as may be expressly included in Paragraph 6.1. ' I l .4 The Construction Manager's capital expenses, including interest on the Construction Manager's capital employed for the Work. i .5 Rental costs of machinery and equipment, except as, and if, specifically provided in Subparagraph 6.1.5.2 . I .6 E-xcept as provided in Clause 6.1.8.2, costs due to (he negligence of the Construction Manager or to the foilure of the Construction Manager !o fulfill a specific responsibility to the O>Vner as set forth in this Agreement. II ' . f .7 Costs incurred in the performance ofPreconstruction Phase Services. .8 Except as provided in Clause 6.1.7J, any costs not specifical!y and expressly descnlled in Paragraph 6.1. .9 Costs which would cause the Guaranteed Maximum Price !o be exceeded. . 10 Costs of the General Conditions which would cause the General Conditions Guaranteed Maximum Cost to be exceeded. 6.3 DISCOUNTS, REBATES AND REFUl'-.'DS 6.3.1 Cash discounts available to the Construction Manager shall accrue to the Owner if(l) before mnking the payment, the Construction Manager received payment therefore from the Owner during the cash discount period and in sufficient time for the Construction Manager to obtain such discount, or (2) the Owner has deposited funds with the Construction Manager with which to rnak~;: payments; otherwise, cash discounts shall accrue to the Construction Manager. Trade discounts, rebates, refunds and amounts received from sales of surplus materials and equipment shall accrue to the Owner, and the Construction Manager shall make provisions so that they will be available to the owner, 6.3.2 Amounts which accroe !o 1he Owner in accordance with the provisions of Subparagraph 6.3.1 shall be credited to the Owner as a deduction from the Cost of!hc Work. 6.4 ACCOUNT1NG RECORDS 6.4.1 The Construction Man~ger shall keep full and detailed accounts and exercise such controls as may be necessa..ry for proper finauci~l numagemt:nt under this Agreement; the accounting ;~nd control systems shall be sallsfactory to the EBCO 002813 • .~ •• :.· •• ,. <••• :.:-' ~I:·. ,• ····-·.:,_:· .... ; . Owner. The Owner and the Owner's accountants and agents shall be ~fforded access to, and shall be pennitted to audit and copy, ilie Construction Manager's records, books, correspondence, :blstructions, drawings, receipts, subcontracts, purchase orders, vouchers, memoranda and other data relating to this Project, and ilie Construction Manager shall preserve all such items for a period of no less than three years after fmal.payment under this Agreement, or for such longer period as may be required by law. ARTICLE 7 CONSTRUCTION. PHASE 7.1 PROGRESS PAYMENTS 7.1.1 Based upon Applications for Payment properly submitted to ilie Architect and ·the Owner by ilie Construction Manager and Recommendations for Payment issued by the Architect to the Owner the Owner shall make progress payments· on account of the Contract Sum to the Construction Manager as provided below and elsewhere in tbe Contract Documents. 7.1.2 The period covered by each Application for Payment shall be one calendar month ending on the last day of the month. 7.1.3 Provided an Application for Payment is received by the Architect and Owner, not later than 1st, the Owner shall make payment to the Construction Manager not later tban the 30th. If an Application for Payment is received by the Architect or Owner, or both, after the application date fiXed above, payment shall be made by the Owner not later than 35_ days after the Architect and Owner receive the Application for Payment. ·7.1.4 With each Application for Payment, the Construction Manager shall submit certified payrolls for itself and all subcontractors of any tier with subcontract prices of $250,000 or more, petty cash accoWlts, receipted invoices or invoices with check vouchers attached, and any other evidence required by the Owner or the Architect to demonstrate that cash disbursements already made by the Construction Manager on account of the Cost of the Work equal or exceed ( 1) progress payments already received by the Construction Manager; le~s (2) that portion of those payments attnoutable to the Construction Manager's Fee; plus (3) payrolls for the period covered by the present Application for Payment. 7.1 .5 Each Application for Payment shall be based upon the most recent schedule of values submitted by the Construction Manager and approved in writing by the Architect aod the Owner in accordance with the Contract Documents. The schedule. of values shall allocate the entire Guaraoteed Maximum Price among the various portions of tbe Work, except that the Construction Manager's Fee shall be shown as a single separate item. The schedule of values shall be prepared in such form and supported by such data as to substantiate its accuracy as the Architect and the Owner may require. This schedule, when, and only when, approved in writing by the Architect and the Owner, shall be used as a basis for reviewing the Construction Manager's Applications for Payment. 7.1.6 Applications for Payinent shall set forth the percentage of completion of each portion of the Work as of the end of the period covered by the Application for Payment. The percentage of completion shall be the lesser of: (1) the ! percentage of that portion of the Work which has actually been completed; or (2) the percentage obtained by dividing I! (a) the expense which has actually been incurred by the Construction Manager on account of that portion of the Work for which the Construction Manager has made or intends to make actual payments prior to the next Application for Payment by (b) the share of the Guaranteed Maximum Price allocated to that portion oftbe Work in the schedule of I 7.1. 7 values. Subject to other provisions of the Contract Documents, the amount of each progress payment shall be computed as follows: I .1 Take that portion of tbe Guaranteed Maximum Price properly allocable to completed Work as determined by multiplying the percentage completion of each portion of the Work by the share of the Guaranteed Maximum Price allocated to that portion of the Work in the approved schedule of values less retainage of ten percent (10%). Pending fmal deterroination of cost to the Owner of changes in the Work, amoWlls not in dispute may be included as provided \ in Subparagraphs 7.3.7 and 7 .3.8 of General Conditions, as modified, even though the Guaranteed Maximum Price i has not yet been adjusted by Change Order. .2 Add that portion of the Guaranteed Maximum Price properly allocable to materials and equipment delivered and EBCO 002814 ---------- ------ suitably stored at the site for subsequent incorporation in the Work or, if approved in writing in advance by the Owner, suitably stored off the site at a location agreed upon in writing, less retainage often percent (10%) . .3 Add an appropriate portion of the Construction Manager's Fee, Jess retainage often percent (1 0%). An appropriate portion of the Construction Manager's fee shall be computed upon the Cost of the Work descn'bed in the two preceding Clauses at the rate stated in Subparagraph 5.1.1 or, if the Construction Manager's Fee is stated as a fixed sum in that Subparagraph, shall be an amount which bears the same ratio to that fixed-sum Fee as the Cost of the Work in the two preceding Clauses bears to the Architect's reasonable estimate of the probable Cost of the Work upon its completion . .4 Subtract the aggregate of previous payments made by the Owner. .5 Subtract the shortfall, if any, indicated by the Construction Manager in the documentation required by Subparagraph 7.1.4 to substantiate prior Applic~tions for Payment, or resulting from errors subsequently discovered by. the Owner's accountants in such documentation . .6 Subtract amounts, if any, for which the Architect has withheld or nullified a Recommendation for Payment as provided in Paragraph 9.5 of General Conditions, as modified . .7 Subtract amounts, if any, being withheld by the Owner as provided in the Contract Documents. 7.1.8 Except with the Owner's prior approval, payments to Subcontracts shall be subject to retention of not less than ten perc:ent(lO%). - · 7.1.9 Except with the Owner's prior approval, the Construction Manager shall not make advance payments to suppliers for materials or equipment which have not been delivered to and stored at the site. 7.1.10 In taking action on the Construction Manager's Applications for Payment, the Architect and the Owner shall be entitled to reiy on the accuracy and completeness of the information furnished by the Construction Manager. Such examinations, audits and verifications, if required by the Owner, will be performed by the Owner's accountants acting in the sole interest of the Owner. !I ·1 7.2 FINAL PAYMENT 7.2.1 Final payment, constitutmg the entire unpaid balance of the Contract Sum, shall be made by the Owner to the :! Construction Manager when: (1) the Contract has been fully performed by the Construction Manager except for the \ Construction Manager's responsibility to correct nonconfonning Work, as provided in Subparagraph 12.2.2 of ; General Conditions, as modified, and to satisfy other requirements, if any, which necessarily survive final payment; ;t I (2) a final Application for Payment and a final accounting for the Cost of the Work have been submitted by the :i '! Construction Manager and reviewed by the Owner's accountants; and (3) a fmal Recommendation for Payment has ! then been issued by the Architect. Such final payment shall bt: made by the Owner not more than thirty (30) days after the issuance of the Architect's final Recommendation for Payment. 7.2.2 RESERVED. ~ d' l 7.2.3.1 Upon the Owner's Direction, the Owner's accountants \vill review and report in writing on the Construction· Manager's final accounting within thirty (30) days after delivery of the final accounting to the Architect and Owner by .''j the Construction Manager. Based upon the Cost of Work as acknowledged by the Owner, or, if the Owner has l directed its accountants to· report thereon, based upon such Cost of Work as the Owner's accountants report to be j substantiated by the Construction Manager's final accounting, and provided the other conditions of Subparagraph 'i.:,.:; 7 .2.1 have been met, the Architect will, within thirty (30) days after receipt of the Construction Manager's final accounting either issue to the Owner a fmal Recommendation for Payment with a copy to the Construction Manager, 'l or notify the Construction Manager and Owner in writing of the Architect's reasons for withholding the '! recommendation as provided in Subparagraph 9.5.1 of the General Conditions. The time periods slated in the ' Paragraph 7.2 supersede those stated in Subparagraph 9.4.1 of the General Conditions. :'1 7 .2.3.2 If the Owner disputes the Cost of Work as substantiated by the Construction Manager's final accounting, the Construction Manager shall be entitled to assert a claim in accordance with Article 4 of the General Conditions. The EBCO 002815 ' .. :· . ... ·-``~ ·-· •• -· ~ --- ·•-· ;.._. ~..;.::• .;._:._,.:;. . • w:- . :;: Owner shall, pending resolution of any such dispute, pay the Construction Manager all sums otherwise payable and not i;a dispute. 7.2.3.3 If, subsequent to final payment and at the Owner's request, the Construction Manager incurs costs described in Paragraph 6.1 and not excluded by Paragraph 6.2 to correct nonconforming Work, the Owner shall reimburse the Construction Manager such costs and Construction Manager's Fee, if any, related thereto on the same basis as if such costs had been incurred ·prior to final payment, but not ·in excess of the Guaranteed Maximum Price. If the Construction Manager has participated in savings, the amount of such savings shall be recalculated and appropriate credit given to the Owner in dete:mining the net amount to be paid by the Owner to the Construction Manager. ARTICLE 8 Redacted Redacted I I i 1 t II \ l i l ·; 1 ~ i ·:i Redacted ~ ! .! ~ 1 -;: ; \ i EBCO 002816 .. ·--------- .. - - - - - - ~:·i.:~:.·. :, ..J.~;~·. :- ..: .:~-::~:::-.:.:.;...;:_· ... -:-.·.:~.· .. ~: .. ;,· .. :-.-::. ·.: ·-~ ·.. ·. . .. '• __ .....:.:~ .;.:.... :... -· .. :. ;,_·_. •,.:. ..·..:;.;:,._..;, ..~:. _...:.~ : ... . ,:.;- __ . ,; .:. _;_:.,; ___ .:..:.:. ___ ,;_;.::.-· ... :. - ·: ..· Redacted ARTILCE9 MISCELLANEOUS PROVISIONS 9.1 DISPUTE RESOLUTION FOR THE PRECONSTRUCT! ON PHASE 9.1.1.1 Claims, disputes or other matters in question between the par1ies to this Agreement which arise prior to the commencement of the Construction Phase or which relate solely to the Preconstruction phase services of the Construction Manager or the Owner's obligations to the Construction Manager during the Preconstruction Phase, shall be resolved by mediation or by litigation or, at the sole option of the Owner, by arbitration. 9.1.1.2 Any mediation conducted pursuant to this Paragraph 9.1 shall be held in accordance with the Construction Industry Mediation Rules of the American Arbitration Association currently in effect, unless the parties mutually agree otherwise. Demand for mediation shall be filed in writing with the other party to the Agreement and with the American Arbitration Association. Any demand for mediation shall be made within a reasonable time after the claim, dispute or other matter in question arises. 1n no event shall the demand for mediation be made after the date when institution of legal or equitable proceedings based upon such claim, dispute or other matter in question would be barred by the applicable statute oflimitations or repose. 9. I .1.3 Any claim, dispute or other matter in question not resolved by mediation shall be decided by litigation or, at the sole option of the Owner, by arbitration in accordance with the Construction Industry Arbitration Ru1es of the American Arbitration Association currently in effect unless the parties mutually agree otherwise. 9.1.1.4 At the sole option of the Owner, any claim, dispute or other matter in question arising out of or related to this Agreement shall be subject to arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect. Any such arbitration may include, at the sole option of the Owner, by consolidation, joiner or otherwise, one or more persons or entities who, although not a party to this Agreement, have consented to such inclusion. In the event Owner becomes a party in a separate arbitration proceeding and 'chooses to add the Construction Manager as a party to such arbitration proceedings, the Construction Manager consents to being so added. 9.1.2 RESERVED 9.1.2.1 The award rendered by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable Jaw in any court having jurisdiction thereof. 9.1.2.2 Waiver of Trial by Jury. The Owner and the Construction Manager, both of whom are represented by counsel, believe that the complex commercial and professional aspects of the their dealing with one another make a trial by jury and any disputes between them neither desirable nor appropriate. Accordingly, the Owner and the Construction Manager each specifically waives any right to a trial by jury in any court with respect to any contractual, tortuous or statutory claim, counterclaim or cross-claim against the other arising out of, or connected in any way to, the Project or this Agreement or any of the Construction Documents. 9.2 DISPUTE RESOLUTION FOR THE CONSTRUCTION PHASE 9 .2.1.1 Any other claim, dispute or other matter in question arising out of or related to thls Agreement or breach thereof shall be settled in accordance with Paragraph 4.4 of the General Conditions. · I . ' EBCO 002817 ·--·-··-··---·· ··-------· ... ---- . .:. ~ ..:: .: ..... •' ~; ... >'~. .:. : •• . •. ~ •••••. ~ • .: .... _ •• ·• - 9.3 OTHERPROVISIONS 9.3.1.1 Unless o1herwise noted, the tenns used w this Agreement shall have the same meaning as those in the General Conditions of the Contract. 9.3.2 EXTENT OF THE CONTRACT This Agreement, which includes this Agreement and the other documents incorporated herein by reference, represents the entire and integrated agreement between the Owner and the Construction Manager and supersedes all prior negotiations, representations or agreements, either written or oral. This Agreement may be amended only by written instrument signed by both the Owner and the Construction Manager. If anything in any document incorporated into this Agreement is inconsistent with Agreement, this Agreement shall govern. 9.3.3 OWNERSHIP AND USE OF DOCUMENTS The Drawings and Specifications prepared by 1he Architect for the Work shall be and remain the property of the Owner. Upon the termination of this Agreement, the Construction Manager shall furnish the Owner with copies of all schedules, budgets, Shop Drawings, samples, and other work papers and Contract Documents prepared by the Construction Manager in connection with the Project, as property of the Owner. 9.3.4 GOVERNING LAW Thls Agreement shall be governed by the law ofthe place where the Project is located. 9.3.5 ASSIGNMENT In the event this Agreement is tenninated by the Owner for cause, the Owner shall be entitled upon demand, and at no additional cost, to an assignment of the Construction Manager's rights in and to any or all of the Construction Manager's contracts· with its Subcontractors and the Construction Manager shall promptly deliver such assigmnent. In each of its contracts with its Subcontractors, the Construction Manager shall provide for such assignments and the ~ consent thereto by each such Subcontractor. I I I ARTICLE 10 I TERMINATION OR SUSPENSION ·I1 10.1 TERMINATION PRIOR TO ESTA.BLISHJNG GUARANTEED MAXIMUM PRICE I 0.1.1.1 Prior to execution by both parties of Amendment No. 1 establishing the Guaranteed Maximum Price, the Owner may tenninate this Agreement at any time without cause, and the Construction Manager may terminate this Agreement for any of the reasons described in Subparagraph 14. 1.1, 14.1.2 and 14.1.4 of the General Conditions. ; : 10.1.1.2 If the Owner or the Construction Manager tenninates this Agreement pursuant to this Paragraph 10.1 prior to I i commencement of the Construction Phase, the Construction Manager shall be _equitably compensated for -1 Preconstruction Phase services performed prior to receipt of notice of termination; provided, however, that the l., compensation for such services shall not exceed the compensation set forth in Subparagraph 4.1.1 . ! 10.1.3 If the Owner or the Con.struclion Manager terminates th.is Agreement pursuant to th.is Paragraph 10.1 after \l commencement ofthe Construction Phase, the Construction Manager shall, in addition to the compensation provided ·t in Subparagraph 10.1.2, be paid an amount calculated as follows: "l .1 Take the Cost of the Work incurred by the Construction Manager. .2 Add the Construction Manager's Fee computed upon the Cost of Work to the date oftermination the rate stated in I Paragraph 5.1 or, if the Construction Manager's Fee is stated as a fixed sum in the Paragraph, an amount which bears ;i the same ratio to the fixed-sum Fee as the Cost of Work at the time of termination bears to the Architect's estimate of ·~ the probable Cost of the Work upon its completion. .3 Subtract the aggregate of previous payments made by the Owner on account of the Construction Phase. EBCO 002818 -----·'-------------~- "·- ----------------- ... ·------ .... ,............. . ·.... · ·.::.· The Owner shall also pay the Construction Manager fair compensation, either by purchase or rental at the election of the Owner, for any equipment owned by the Construction Manager which the Owner elects to retain and which is not otherwise included in the Cost of the· Work under Clause 10.1.3. L To the extent that the Owner elects to take legal assignment of subcontracts and purchase orders (including rental agreements), the Construction Manager shall, as a condition of receiving the payments referred to in this Article 10, execute and deliver all such papers and take all such steps, including the legal assigmnent of such subcontracts and other contractual rights of the Construction Manager, as the Owner may require for the purpose of fully vesting in the Owner the rights and benefits of the Construction Manager under such subcontracts or purchase orders. ~- --- Subcontracts, purchase orders and rental agreements entered into by the Construction Manager with the Owner's written approval prior to the execution of Amendment No. 1 shall contain provisions permitting assignment to the Owner as described above. If the Owner accepts such assignment, the Owner shall reimblirse or indemnify the Construction Manager with respect to all costs arising under the subcontract, purchase order or rental agreement except those which would not have been reimbursable as Cost of the Work if this Agreement had not been terminated. 1f the Owner elects not to accept the assignment of any subcontract, purchase order or rental agreement which would have constituted a Cost of the Work bad this Agreement not been terminated, the Construction Manager shall terminate such subcontract, purchase order or rental agreement and the Owner shall pay the Construction Manager the costs necessarily incurred by the Construction Manager by reason of such termination. 10.2 TERMINATION SUBSEQUENT TO ESTABLISHING GUARANTEED MAXIMUM PRICE Subsequent to execution by both parties of Amendment No.1, this Agreement may be terminated as provided in Article 14 of the General Conditions. 10.2.1.1 In the event of termination, any amount payable- to the Construction Manager shall not exceed the amount the Construction Manager would have been entitled to receive pursuant to Subparagraphs 10.1.2 and 10.1.3 of this Agreement, and in no event shall the Guaranteed Maximum Price be exceeded, nor shall any contrary provisions of Subparagraph 14.2.4 of the General Conditions. 10.2.2 RESERVED 10.3 SUSPENSION The Work may be suspended by the Owner as provided in Article 14 of the General Conditions; in such case, the Guaranteed Maximum Price, if established, may be increased as provided in Subparagraph 6.3.1 of the Supplemental Conditions. ARTICLEll OTHER CONDITIONS AND SERVICES This Agreement is entered into as of the day and.year first written above. EBCO General Contractor, LTD. OWNER CONSTRUCTION MANAGER BY: John R. Egger, President of the General Partner C a met, L.C. ATTEST: EBCO 002819 ------·--··--------· Attachment Number 1 (One) Pursuant to Paragraph 2.2 of the Agreement, dated August 17,2005 between ("Owner") and EBCO General Contractor, LTD. ("Construction Manager"), for construction of a Courtyard by Maniott hotel located at 7_809 East Ben White Boulevard in Austin, Texas (the "Project"), the Owner and Construction Manager establish a Guaranteed Maximum Price and Contract Time for the Work as set forth below. ARTICLE I GUARANTEED MAXIMUM PRICE The Construction Manager's Guaranteed Maximum Price for the Work, including the Cost of the Work as defmed in Article 6 and the Construction Manager's Fee as defined in Article 5, is Seven Million Two Hundred Twenty-Five Thousand Dollars ($7,225,000.00). This Price is for the performance of the Work in accordance with the Contract Documents listed and attached to this Amendment and marked Exhibits A through J, as follows: Exhibit A: Drawings, Specifications, addenda and General, Supplementary and Other Conditions of the Contract on which the Guaranteed Maximum Price is based; ExhibitB: Document List; Exhibit C: Assumptions and clarifications made in preparing the Guaranteed Maximum Price, dated August 8, 2005; ExhibitD: Allowance Summary; ExhibitE: Monthly Status Report- NOT APPLICABLE; l l J{ ExhibitF: Exhibit G: Owner Required Forms- NOT APPLICABLE; Responsibility Matrix; ·I I Exhibit H: Value Engineering Items; ~\ Exhibit I: Miscellaneous Reports -NOT APPLICABLE; Exhibit J: Liquidated Damages. ARTICLE II CONTRACT TIME .Substantial Completion shall be achieved within three hundred thirty (330) calendar days after a "Notice to Proceed" is issued by the Owner and received by the Construction Manager. Substantial Completion shall be defined as issuance of a "Temporary Certificate of Occupancy" from the City of Austin, Texas. Owner may begin installation of Owner-provided furniture, fixtures, and equipment ("FF&E") prior to the issuance of a "Certificate of Occupancy." Final completion including completion of the punch list and the "Certificate of Occupancy" shall be achieved within three hundred sixty (360). calendar days from the date of commencement. In the event the Construction Manager, without excuse, fails to achieve Substantial Completion on or before the date for Substantial Completion described above, the Construction Manager shall pay to the Owner as liquidated damages, and not as a penalty, the applicable amount set forth in the matrix attached hereto as Exhibit J for each and every calendar day thereafter until fmal completion is achieved; provided that the Construction Manager shall not be liable for liquidated damages for a day, or days, of excusable delay occurring during such j)eriod. In the event the Construction Manager, without excuse, fails to achieve final completion within sixty ( 60) days of achieving Substantial Completion, Construction Manager shall pay to the Owner as liquidated damages and not as a penalty, ten percent (10%) of the applicable daily liquidated damage amount set forth in said Exhibit A for each and every calendar day thereafter l.lJllil fmal completion is achieved; provided that the Construction Manager shall not be liable for such liquidated damages for a day, or days, or excusable delay occurring during such period. EBCO 002820 :.: .._.· .. - ··-·--:.. ... ~ :;· .!. ·.• ARTICLE III GENERAL CONDITIONS GUARANTEED MAXIMUM COST The General Conditions Guaranteed Maximum Cost is three hundred fifty thousand three hundred twenty-five dollars ($350,325.00). EBCO General Contractor, LTD. OWNER CONSTRUCTION MANAGER BY: John R. Egger, President of the General Partner ~· DATE. rYf Sf Zws- ATTEST: EBCO 002821 .;, .. Attachment Number 2 (Two) to Standard Forrn of Agreement Between Owner and General Contractor Paragraph 1.2 shall be modified to delete the second (2nd) to last sentence: .''For the ?reconstruction Phase, or in the event that the ?reconstruction and Construction Phases proceed concurrently, General Conditions, as modified, shall apply to the ?reconstruction Phase only as specifically provided in this Agreement. Paragraph 2.1- PRECONSTUCTION PHASE: This section shall be deleted in its entirety, including sub-paragraphs 2.1.1, 2.1.2, 2.1.3, 2.1.4, 2.I.5, 2.1.5.1, 2.1.5.2, 2.1.5.3, 2.1.5A 2.1.6, 2.1.7, 2.1.8, and 2.1.9. Paragraph 23.2.1: . In the fourth (l~ line, place a 'period' after the work "Work" and delete the following wording: "from the list previously reviewed and, after analyzing such bids, shall deliver such bids to the Owner and Architect. T11e Owner shall then determine, with the advice of the Construction Manager, which bids will be accepted. {tole of the architect? Why is it getting the bids?]" Paragraph 2.3.2·.2: In the first (Is) line after the words "specific bidder", delete the following wording: "among those whose bids are delivered by the Construction Manager to the Owner and the Architect }I. Paragraph 2.3.2.5: In the second (2 11 d) line after the words "prepare a schedule", place a 'period' and delete the following wording: "in accordance with Paragraph 3.10 of the General Conditions, as modified, and the Owner's occupancy requirements". Paragraph 3.L4: In -the first (F) sentence, replace the words "In the Preconstruction" with "Before the Construction". Exhibit K to Standard form of Agreement between Owner and General Contrac1or Page 1 of5 EBCO 002822 ---··· ··-· ----- ··--·--··-·----·· ·-----·· ''• • • •-: .::·,:·•. •·..;' :;•;,.:•:.. :<:·:~ . ·.:·.:::.:.::::: ;;',,•,;; ~· : •': ', ';,,~·~,:? •;::·• :: .:~: •,.·:•_,"1, • • •' 1,~•.:-;':, • ,•:-. ' 4 1 Redacted 3.5.1, 4.2.6, 12.2.1 7.3.6.4,9.6.7,9.10.3, 11.4.9, 11.5 Releases and Waivers of Ll~fi§ Payments, Progress 9.10.2 4.3.3, 9.3, 9.6, 9.8.5, 9.10.3, 13.6, 14.2.3 Representations PAYMENTS AND COMPLETION 1.5.2, 3.5.1, 3.12.6, 6.2.`` 8~+ ~·~·~· 9 9.4.2, 9.5.1, 9.8.2, 9.10.1 •. .J.,), Payment~ to Subcontractors Representatives 5.4.2, 9.5.1.3, 9.6.2, 9.6.3, 9.6.4, 9.6.7, 2.1.1, 3.1.1, 3.9, 4.1.1, 4:iti·l~·to, 5.1.1, 11.4.8, 14.2.1.2 ~ l ') 13 ') 1 •. • ·-·lO' 5 • 1.. t, ..!-. ·-, .-.. PCB Resolution of Claims and Df spat~ l 0.3.1 4.4, 4.5, 4.6 Redacted Responsibility for Those Pel'fQfffiina tJle Work 7.3.6.4, 9.6.7, 9.10.3, 11.4.9, 11.5 ..2, 3.1, 33 84.2.,3438 "'·:.l·V1 ~tl13\V"' . , J:J::5:!•&·f·;•"!::l4: Permits, Fees and Notices 6.3, 9.5.1, 10 , J. ··'; 6,2, 2.2.2, 3.7, 3.13, 7.3.6.4, 10.2.2 Retain age PERSONS AND PROPERTY, . 9.3.1, 9.6.2, 9.8.5, 9.9.l 1 !H83· g.w.~ PROTECTION OF Rev1ew of Contract Documents. ~n,.r.,..,Fr'J<:J~ ..) , ml le'.4A'A, Redacted Royalties, Patents and Cop,yrigltff ' 3-4. 14 Redacted 3.17 11.3 Rules and Notices for Arbitratl8H Project Manual, Definition of the 4.6.2 1.1.7 Safety of Persons and Propeey Project Manuals 10.2, 10.6 ' 2.2.5 Safety Precautions and Program~ Project Representatives 3.3.1, 4.2.2, 4.2.7, 5.3.1, Samples, Definition of 'HJ+ t8·2· ' .2, l(J.6 w.6 4.2.10 Redacted 3.12.3 10.2.5, 11.4 Samples, Shop Drawings, PredH~f P,ata and PROTECTION OF PERSONS AND 3.11,3.12,4.2.7 v ~Jat:tand PROPERTY Samples at the Site, Documenl1! 11Ji(l 10 3.11 ]( ©Copyright 1911, 1915, 1918, 1925, 1937, 1951, 1958, 1961, 1963, 1966, 1967, 1970, The American Institute of Architects. Filteenth Edition. Reproduction of the materia! quotation of its prtwlsions without written permission of the AlA violates the copyright and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying laws and will subject the violator to legal prosecution. This document was electr permission oJ the AlA and can be reproduced in accordance wi!h your license without vr expiration as noted below. This document is not an original AlA® Contract Document, but a tepr Contract Documents software for administrative purposes only and Is not for other Schedule of Values 4.2.9, 8.1.1, 8.L3, 8.2.3, 9.4.2, 9.8, 9.9.1, 9.2, 9.3.1 9.10.3, 9.10.4.2, 12.2, 13.7 Schedules, Construction Substantial Completion, Definition of 1.4.1.2, 3.10, 3.12.1, 3.12.2, 4.3.7.2, 6.1.3 9.8.1 Separate Contracts and Contractors Substitution of Subcontractors LL4, 3.12.5, 3.14.2, 4.2.4, 4.2.7, 4.6.4, 6, 5.2.3, 5.2.4 8.3.1, 11.4.7, 12.1.2, 12.2.5 Substitution of Architect Shop Drawings, Definition of 4.1.3 3.12.1 Substitutions of Materials Shop Drawings, Product Data and Samples 3.4.2, 3.5.1, 7.3.7 3.11, 3.12, 4.2.7 Sub-subcontractor, Definition of Site, Use of 5.1.2 3.13, 6.1.1, 6.2.1 Subsurface Conditions THIS DOCUMENT HAS IMPORTANT Site Inspections 4.3.4 LEGAL CONSEQUENCES. L2.2, 3.2.1, 3.3.3, 3.7.1, 4.2, 4.3.4, 9.4.2, Successors and Assigns CONSULTATION WITH AN 9.10.1, 13.5 13.2 ATTORNEY IS ENCOURAGED WITH Site Vjsits, Architect's RESPECT TO ITS COMPLETION OR Superintendent MODIFICATION. AUTHENTICA T/ON 4.2.2, 4.2.9, 4.3.4, 9.4.2, 9.5.!, 9.9.2, 3.9, !0.2.6 OF THIS ELECTRON/CALLY 9.10.1, 13.5 Supervision and Construction Procedures DRAFTED AlA DOCUMENT MAY BE Special Inspections and Testing 1.2.2, 3.3, 3.4, 3.12.10, 4.2.2, 4.2.7, 4.3.3, MADE BY USING AlA DOCUMENT 0401. 4.2.6, 12.2.1, 13.5 6.1.3, 6.2.4, 7.1.3, 7.3.6, 8.2, 8.3.1, 9.4.2, Specifications, Definition of the 10, 12, !4 11lis document has been approved and L1.6 Redacte endorsed by 11le Associated General Specifications, The 4.4.7, 5.4.1.2, 9.8.5, 9.10.2, 9.10.3, 14.2.2 Contractors of America. l.Ll, 1.1.6, 1.1.7, 1.2.2, 1.6, 3.11, Redacted 3.12.10, 3.17 9.10.2, 9.10.3 Statute of Limitations Surveys 4.6.3, 12.2.6, 13.7 2.2.3 Stopping the Work Suspension by the Owner for Convenience 2.3, 4.3.6, 9.7, 10.3, 14J. 14.4 Stored Materials Suspension of the Work 6.2.1, 9.3.2, 10.2.1.2, 10.2.4, 11.4.1.4 5.4.2, 14.3 Subcontractor, Definition of Suspension or Termination of the Contract 5.1.1 4.3.6, 5.4.1.1, ll.4.9, 14 SUBCONTRACTORS Taxes 5 3.6, 3.8.2.1, 7.3.6.4 Subcontractors, Work by Temunation by the Contractor 1.2.2, 3.3.2, 3.12.1, 4.2.3, 5.2.3, 5.3, 5.4, 4.3.10, 14.1 9.3.1.2, 9.6.7 Termination by the Owner for Cause Subcontractual Relations 4.3JO, 5.4.1.1, 14.2 5.3, 5.4, 9.3.1.2, 9.6, 9.10 10.2.1, 11.4.7, Termination of the Architect 11 A.S, 14.1, 14.2.1, !4.3.2 4.L3 Sub rni ttals Termination of the Contractor 1.6. 3.10, 3.11, 3.12, 4.2.7, 5.2.!, 5.2.3, 14.2.2 7.3.6, 9.2, 9.3, 9.8, 9.9.1, 9.10.2, 9.10.3, TERMINATION OR SUSPENSION OF H.l.3 THE CONTRACT Redacted 14 6.LJ, 11.4.5, 11.4.7 Tests and Inspections Substantial Completion 3.1.3, 3.3.3, 4.2.2, 4.2.6, 4.2.9, 9.4.2, 9.8.3, <\l1W7 AlA® -;,©;::-::::C-op-y~rl,-gh:-:t-:1:-::9:-:-11.,.,"1"'9~15:::-,~1:-::9,-18::o-,-:1:-::9-::::25::::-,-1"9:::::3"'7,'"1;-;:9"'57 1,-1"9"'5-=8,-1,..,9"'6::-1,-1:-:9c::63-=,-1:-:9"s-=s,-i"'9"6-::7,-1'"'9"'7"0,-1"'9"'7"6,-1'"'9"'8-:;7,"'1'"'9"'9-:;77b-y AlA DOCUMENT A201 - 1997 The American lnsli!ule of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and \'l'il! subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan lnstJtute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washington, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 9 9.9.2,9.10.1, 10.3.2, lL4.1.1, 12.2.1,13.5 Waiver of Claims by the Owner TIME 4.3.10, 9.9.3, 9.10.3, 9.10.4, 11.4.3, 11.4.5, 8 11.4.7, 12.2.2.1, 13.4.2, 14.2.4 Time, Delays and Extensions of Waiver of Consequential Damages 3.2.3, 4.3.1, 4.3.4, 4.3.7, 4.4.5, 5.2.3, 7.2.1, 4.3.10, 14.2.4 7.3.1, 7.4.1, 7.5J, 8.3, 9.5.1, 9.7.1, l0.3.2, Waiver of Liens 10.6.1, 14.3.2 9.10.2, 9.10.4 Time Limits Redacted 2.1.2, 2.2, 2.4, 3.2.1, 3.7.3, 3. lO, 3.11, 6.1.1, ll.4.5, 11.4.7 3.12.5, 3.1.5.1, 4.2, 4.3, 4.4, 4.5, 4.6, 5.2, Warranty 5.3, 5.4, 6.2.4, 7.3, 7.4, 8.2, 9.2, 9.3.1, 3.5, 4.2.9, 4.3.5.3, 9.3.3, 9.8.4, 9.9.1, 9.3.3, 9.4.1, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10, 9.10.4, 12.2.2, 13.7.1.3 1 U .3, 1 L4.1.5, 11.4.6, ll.4.10, 12.2, Weather Delays THIS DOCUMENT HAS IMPORTANT 13.5, 13.7, 14 4.3.7.2 LEGAL CONSEQUENCES. Time Limits on Claims Work, Definition of CONSULTATION WITH AN 4.3.2, 4.3.4, 4.3.8, 4.4, 4.5, 4.6 1. L3 ATTORNEY IS ENCOURAGED WITH • RESPECT TO ITS COMPLETION OR Title to Work Wntten Consent ~ MODIFICATION. AUTHENTICATION 9.3.2, 9.3.3 1.6, 3.4.2, 3.12.8, .:>.14.2, 4.1.2, 4.3.4, 4.6.4, OF THIS ELECTRONICALLY UNCOVERING AND CORRECTION OF 9.3.2, 9.8.5,.9.9.1, 9.10.2, 9.10.3, llA.l, DRAFTED A/A DOCUMENT MAYBE WORK 13.2, 13.4.2 MADEBYUS/NGAIADOCUMENT 12 Written Interpretations D401. Uncovering of Work 4.2.11, 4.2.12, 4.3.6 This document has been approved and 12.1 Written Notice endorsed by The Associated General Unforeseen Conditions 2.3, 2.4, 3.3.1, 3.9, 3.12.9, 3.12.10, 4.3, Contractors of America. 4.3.4, 8.3.1, 10.3 4.4.8, 4.6.5, 5.2J, 8.2.2, 9.7, 9.10, 10.2.2, Unit Prices 10.3, 11.1.3, 1 L4.6, 12.2.2, 12.2.4, 13.3, 4.3.9, 7.3.3.2 14 Use of Documents Written Orders 1.1.1, 1.6, 2.2.5, 3.12.6, 5.3 l.L l, 2.3, 3.9, 4.3.6, 7, 8.2.2, 11.4.9, 12.1, Use of Site 12.2, 13.5.2, 14.3.1 3.13, 6.Ll, 6.2.1 Values, Schedule of 9.2, 9.3.1 Waiver of Claims by the Architect 13.4.2 Waiver of Claims by the Contractor 4.3.10, 9.10.5, 11.4.7, 13.4.2 ARTICLE 1 GENERAL PROVISIONS 1.1 BASIC DEFINITIONS 1.1.1 THE CONTRACT DOCUMENTS The Contract Documents consist of the Agreement between Owner and Contractor (hereinafter the Agreement), Conditions of the Contract (General, Supplementary and other Conditions), Drawings, Specifications, Addenda issued prior to execution of the Contract, other documents listed in the Agreement and Modifications issued after execution of the Contract. A Modification is (I) a written amendment to the Contract signed by both parties, (2) a Change Order, (3) a Construction Change Directive or (4) a written order for a minor change in theWork issued by the Architect. Unless specifically enumerated in the Agreement, f&1997 AlP/!; -:©::-=Co_p_y-=rig"'h-:-1-:19"1731-,..,.19"'1"'5-,1.,. .,9"1"'"8,-1-=9c:-25-=-,. .,1,. ,.9"'37"'","'1-:-95"'1,. . ,-19"5"'3-,..,.19"'"'6,..,.1-,1-9-6-3,-1""9"'66.,..,-1'"9-67,...,...,.1"'97"'0-,-19.,..,7"'6-,-19_8....,7-,1_9_9.,..7.,--by AlA DOCUMENT A201 - 199~ The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF I HE quotation of its provisions without written permission of the A!A violates the copyright laws of tho United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . , . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan lnsbtute of Architects permission of !he AlA and can be reproduced in accordance with your license vlithout violation until the date ol 1735 ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AJA® Contract Documents software for administrative purposes only and ls not for other use or resale. 10 the Contract Documents do not include other documents such as bidding requirement> (advertisement or invitation to bid, Instructions to Bidders, sample forms, the Contractor's bid or portions of Addenda relating to bidding requirements). 1.1.2 THE CONTRACT The Contract Documents form the Contract for Construction. The Contract represents the entire and integrated agreement between the parties hereto and supersedes prior negotiations, representations or agreements, either written or oral. The Contract may be amended or modified only by a Modification. The Contract Documents shall not be construed to create a contractual relationship of any kind (1) between the Architect and Contractor, (2) between the Owner and a Subcontractor or Sub-subcontractor, {3) between the Owner and Architect or {4) between any persons or entities other than the Owner and Contractor. The Architect shall, however, be entitled to performance and enforcement of obligations under the Contract THJS DOCUMENT HAS IMPORTANT intended to facilitate performance of the Architect's duties. LEGAL CONSEQUENCE£ CONSULTATION WITH AN 1.1.3 THE WORK AITORNEY IS ENCOURAGED WITH The term "Work" means the construction and services required by the Contract Documents RESPECTTO!TSCOMPLET/ONOR . • • ' MODIFJCATJON. AUTHENTICATION whether completed or partially completed, and mcludes all other .labor, matenals, eqmpment OF THIS ELECTRONlCALL y and services provided or to be provided by the Contractor to fulfill the Contractor's DRAFTED AlA DOCUMENT MAY BE obliaations. The Work may constitute the whole or a part of the Project. MADE BY USING AlA DOCUMENT D `` 1.1.4 THE PROJECT Thisdocumenthasbeenapprovedand The Project is the total construction of which the Work performed under the Contract endorsed by The Associated General Documents may be the whole or a part and which may include construction by the Owner or Contra.clors of America. by separate contractors. 1.1.5 THE DRAWINGS The Drawings are the graphic and pictorial portions of the Contract Documents showing the design, location and dimensions of the Work, generally including plans, elevations, sections, details, schedules and diagrams. 1.1.6 THE SPECIFICATIONS The Specifications are that portion of the Contract Documents consisting of the written requirements for materials, equipment, systems, standa.....:ls and workmanship for the Work, and performance of related services. 1.1.7 THE PROJECT MANUAL The Project Manual is a volume assembled for the Work which may include the bidding requirements, sample forms, Conditions of the Contract and Specifications. 1.2 CORRELATION AND INTENT OF THE CONTRACT DOCUMENTS 1.2.1 The intent of the Contract Documents is to include all items 11ecessary for the proper execution and completion of the \\1ork by the Contractor. The Contract Documents are complementary, and what is required by one shall be as binding as if required by all; performance by the Contractor shall be required only to the extent consistent with the Contract Documents and reasonably inferable from them as being 11ecessary to produce the indicated results. «:l1997 AIM'! ~©'Co~p~y~rig~h~t"1~9~11~.•1~9~15~,•1~9~18~,•1~9~25~,•1~9~37~,~1~9~517,~1~9~58~,~1~9~67 1,~1~9~63~,~1~9~6~6,~1~9~6-~t.~1~9~70~.~1~9~76~.~1~9~87~.~1~9~9~77 b~y AIAOOCUMENTA201-1997 The American Institute of Architects. Flfteenlh Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written pem1ission of lhe AlA violates the copyright laws of !he United Stales CONTRACT FOR CONSTRUCTION and vAll subjacllhe violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright laws and will subject the violator to legal prosecution. This document was electronically produced with The American Institute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 New York Avenue, N.W. expiration as noted below. Washington, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduc!lon produced by AlA® Contract Documents soft.vare for administrative purposes only and is not for other use or resale. 1.2.2 Organization of the Specifications into divisions, sections and articles, and arrangement of Drawings shall not control the Contractor in dividing the Work among Subcontractors or in establishing the extent of Work to be perfonned by any trade. 1.2.3 Unless otherwise stated in the Contract Documents, words which have well-known technical or construction industry meanings are used in the Contract Document~ in accordance with such recognized meanings. 1.3 CAPITALIZATION 1.3.1 Terms capitalized in these General Conditions include those which are (l) specifically defined, (2) the titles of numbered articles and identified references to Paragraphs, Subparagraphs and Clauses in the document or (3) the titles of other documents published by the American Institute of .Architects. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. 1.4 INTERPRETATION CONSULTATION WJTH AN 1.4.1 In the interest of brevity the Contract Documents frequently omit modifying words ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR such as "all" and "any" and articles such as "the" and "an," but the fact that a modifier or an MODIFICATiON. AUTHENTICATION article is absent from one statement and appears in another is not intended to affect the OF THIS ELECTRON/GALL Y interpretation of either statement DRAFTED A!A DOCUMENT MAY BE MADE BY USiNG AlA DOCUMENT 0401. 1.5 EXECUTION OF CONTRACT DOCUMENTS 1.5.1 The Contract Documents sha11 be signed by the Owner and Contractor. 1f either the This document has been approved and Owner or Contractor or both do not sign all the Contract Documents, the Architect shall endorsed by The Associated General identify such unsigned Documents upon request. Contractors of America. 1.5.2 Execution of the Contract by the Contractor is a representation that the Contractor has visited the site, become generally familiar with local conditions under which the Work is to be perfonned and correlated personal observations with requirements of the Contract Documents. 1.6 OWNERSHIP AND USE OF DRAWINGS, SPECIFICATIONS AND OTHER INSTRUMENTS OF SERVICE 1.6.1 The Drawings, Specifications and other documents, including those in electronic fonn, prepared by the Architect and the Architect's consultants are 1nstruments of Service through which the Work to be executed by the Contractor is described. The Contractor may retain one record set Neither the Contractor nor any Subcontractor, Sub-subcontractor or material or equipment supplier shall own or claim a copyright in the Drawings, Specifications and other documents prepared by the Architect or the Architect's consultants, and unless otherwise indicated the Architect and the Architect's consultants shaH be deemed the authors of them and will retain aU common law, statutory and other reserved rights, in addition to the copyrights. All copies of Instruments of Service, except the Contractor's record set, shaH be returned or suitably accounted for to the Architect, on request, upon completion of the Work The Drawings, Specifications and other documents prepared by the Architect and the Architect's consultants, and copies thereof furnished to the Contractor, are for use solely with respect to this Project. They are not to be used by the Contractor or any Subcontractor, Sub- subcontractor or material or equipment supplier on other projects or for additions to this Project outside the scope of the Work without the specific written consent of the Owner, Architect and the Architect's consultants. The Contractor, Subcontractors, Sub-subcontractors and material or equipment suppliers are authorized to use and reproduce applicable portions e1997 NNf; "©'"'Co;::--p-yr.,..ig.,.hl:-i-:-::9:-.-1"1,-1'"9"'1s=-.--.,-=9-:-:18=-,-:-1"92:-::5:-,"'19::-:3"'7,...,"'19='=5"1-,1-:-:9"'5"'8,-1"9-::-61.,...,-:1-=96"3::-,"1"96"6,...,..,.19::-:6,-::7'","'"'19"7"'0-,1""9:-::7"'"6,-1:-:::9"'"87=-,-:1"9"'"'97=-b=--y AlA DOCUMENT A201 ·1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and •Nill subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . : . laws and will subject the violator lo legal prosecution. This document was elec!ronicaUy produced with The Amencan Institute of Architects permission ot the AlA and can be reproduced in accordance with your license v.~thout violation until the date of 1735 ~4ew York Avenue, N.W. expiration as noted below. Wash:ngton, D.C. 20006-5292 This document is not an original AJA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 12 of the Drawings, Specifications and other documents prepared by the Architect and the Architect's consultants appropriate to and for use in !he execution of their Work under the Contract Documents. All copies made under this authorization shall bear the statutory copyright notice, if any, shown on the Drawings, Specifications and other documents prepared by the Architect and the Architect's consultants. Submittal or distribution to meet official regulatory requirements or for other purposes in connection with this Project is not to be construed as publication in derogation of the Architect's or Architect's consultants' copyrights or other reserved rights. ARTICLE 2 OWNER 2.1 GENERAL 2.1.1 The Owner is the person or entity identified as such in the Agreement and is referred to throughout the Contract Documents as if singular in number, The Owner shall designate in THIS DOCUMENT HAS IMPORTANT writing a representative who shall have express authority to bind the Owner with respect to all LEGAL CONSEQUENCES. matters requiring the Owner's approval or authorization. Except as otherwise provided in CONSUL TAT/ON WITH AN Subparagraph 4.2.1, the Architect does not have such authority, The term "Owner" means the ATTORNEY IS ENCOURAGED WITH RESPECT TO JTS COMPLETION OR Owner or the Owner's authorized representative. MODIFICATION. AUTHENTJCA TION OF THIS ELECTRON/CALLY 2.1.2 The Owner shall furnish to the Contractor within fifteen days after receipt of a DRAFTED AlA DOCUMENT MAY BE written request, information necessary and relevant for the Contractor to evaluate, give notice MADE BY USING AlA DOCUMENT 0401. of or enforce mechanic's lien rights. Such infonnation shall include a correct statement of the record legal title to the property on which the Project is located, usually referred to as the site, This document has been approved and and the Owner's interest therein. endorsed by The Associated General Contractors of America. 2.2 INFORMATION AND SERVICES REQUIRED OF THE OWNER 2.2. i The Owner shall, at the written request of the Contractor, prior to commencement of the Work and thereafter, furnish to the Contractor rea.~onable evidence that financial arrangements have been made to fulfill the Owner's' obligations under the Contract Furnishing of such evidence shall be a condition precedent to commencement or continuation of the Work. After such evidence has been furnished, the Ovmer shall not materially vary such financial arrangements without prior notice to the Contractor. 2.2.2 Except for pennits and fees, including those required under Subparagraph 3.7.1, which are the responsibility of the Contractor under the Contract Documents, the Owner shall secure and pay for necessary approvals, easements, assessments and charges required for construction, use or occupancy of permanent structures or for pern1anent changes in existing facilities. 2.2.3 The Owner shall furnish surveys describing physical characteristics, legal !imitations and utility locations for the site of the Project, and a legal description of the site. The Contractor shall be entitled to rely on the accuracy of information furnished by the Owner but shall exercise proper precautions relating to the safe performance of the Work. 2.2.4 Infonnation or services required of the Owner by the Contract Documents shall be furnished by the Owner with reasonable promptness. Any other information or services relevant to the Contractor's performance of the Work under the Owner's control shall be furnished by the Owner after receipt from the Contractor of a '''ritten request for such information or services. ill1SS7 Alm; "'©;;-;:::Co:-:p~y...,-rig:;:h7t 71 ~91;-:;1-,"'19"1;-:::5-,1'"9"'"1-:::-8,-:1:-::9::::25:::-,-:1;-:::9-::c37::-,-:1-::::-95;:::1:-.-::-1"'95=::8:-,719:::-:6::-:-1-,"'19:-:63:::,-1'"'9:-::676,-:1:-::9767",...,1"'97:::-:0::-,..,.1"'97::-:6:-,"'19::::8::7-,1.,-,9:-=9-::::-7-:--by AlA DOCUMENT A201 • 1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and vAll subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright • . • laws and will subject !he violator to legal prosecution. This document was electronically produced with The Amencan lnshtute of Archltacts permission of the AlA and can be reproduced in accordance with your license ~t.ithout violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006-5292 This document ls not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administralive purposes only and is not for other use or resale. 13 2.2.5 Unless otherwise provided in the Contract Documents, the Contractor will be furnished, free of charge, such copies of Drawings and Project Manuals as are reasonably necessary for execution of the Work. 2.3 OWNER'S RIGHT TO STOP THE WORK 2.3.1 If the Contractor fails to correct Work which is not in accordance with the requirement<; of the Contract Documents as required by Paragraph 12.2 or persistently fails to carry out Work in accordance with the Contract Documents, the Owner may issue a written order to the Contractor to stop the Work, or any portion thereof, until the cause for such order has been eliminated; however, the right of the Owner to stop the Work shall not give rise to a duty on the part of the Owner to exercise this right for the benefit of the Contractor or any other person or entity, except to the extent required by Subparagraph 6.1.3. THIS DOCUMENT HAS IMPORTANT 2.4 OWNER'S RIGHT TO CARRY OUT THE WORK LEGAL CONSEQUENCES. 2.4.1 If the Contractor defaults or neglects to carry out the Work in accordance with the CONSUL TAT/ON WITH AN Contract Documents and fails within a seven-day period after receipt of written notice from ATTORNEY IS ENCOURAGED WITH the Owner to commence and continue correction of such default or neglect with diligence and RESPECT TO ITS COMPLETION OR MODIFICATION, AUTHENTICATION promptness, the Owner may after such seven-day period give the Contractor a second written OF THIS ELECTRONICALLY notice to correct such deficiencies within a three-day period. If the Contractor within such DRAFTED AlA DOCUMENT MAY BE three-day period after receipt of such second notice fails to commence and continue to correct MADE BY USING AlA DOCUMENT D40f. any deficiencies, the Owner may, without prejudice to other remedies the Owner may have, correct such deficiencies. In such case an appropriate Change Order shall be issued deducting This document has been approved and from payments then or thereafter due the Contractor the reasonable cost of correcting such endorsed by The Associated General deficiencies, including Owner's expenses and compensation for the Architect's additional Contractors of America services made necessary by such default, neglect or failure. Such action by the Owner and amounts charged to the Contractor are both subject to prior approval of the Architect. If payments then or thereafter due the Contractor are not sufficient to cover such amounts, the Contractor shall pay the difference to the Owner. ARTICLE 3 CONTRACTOR 3.1 GENERAL 3.1.1 The Contractor is the person or entity identified as such in the Agreement and is referred to throughout the Contract Documents as if singular in number. The term "Contractor" means the Contractor or the Contractor's authorized representative. 3.1.2 The Contractor shall perform the Work in accordance with the Contract Document~. 3.1.3 The Contractor shall not be relieved of obligations to perfonn the Work in accordance with the Contract Documents either by activities or duties of the Architect in the Architect's administration of the Contract, or by tests, inspections or approvals required or perfonned by persons other than the Contractor. 3.2 REVIEW OF CONTRACT DOCUMENTS AND FIELD CONDITIONS BY CONTRACTOR 3.2.1 Since the Contract Documents are complementary, before starting each portion of the Work, the Contractor shall carefully study and compare the various Drawings and other Contract Documents relative to that portion of the Work, as well as the information furnished by the Owner pursuant to Subparagraph 2.2.3, sha11 take field measurements of any existing conditions related to that portion of the Work and shall observe any conditions at the site ,~- . ·'""'.,.,..."· (;1997 AINi'J -:;©~C~op:::y::;ri::;ghc:t-::1~97 117,-::1~97 15;:-,-::1~97 18;::-,-::1c:::9~25;:-,-::1c:::9~37::-,-::1c:::9.,.517,-::1:-:::9.,.58::-,-:1:-:::9~6:::-1,-::1:-:::9:-:::63;:-,-:1:-:::96-=6-=,-:1:-:::9~67::-,-:1:-:::9c::70:::-,-:1:-:::9c::76::-,-:1:-:::9-=$7::-,-:1:-:::9:-:::97,.,-b-y AlA DOCUMENT A201 ·1997 The American lnst1tule of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United Slates CONTRACT FOR CONSTRUCTION and will subject !he violate to legal prosec~;1ion. WARNING: Unlicensed pho!occpying violates U.S. copyright . . . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan lostl!ute of Architects permission ofthe AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue, N.W • expiration as noted below. Washmgton, D.C. 20006·5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 14 affecting it. These obligations are for the purpose of facilitating construction by the Contractor and are not for the purpose of discovering errors, omissions, or inconsistencies in the Contract Documents; however, any errors, inconsistencies or omissions ithout further written instructions from the Architect. If the Contractor is then instructed to proceed with the required means, methods, techniques, sequences or procedures without acceptance of changes proposed by the Contractor, the Owner shall be solely responsible for any resulting loss or damage. 3.3.2 The Contractor shall be responsible to the Owner for acts and omissions of the Contractor's employees, Subcontractors and their agents and employees, and other persons or entities perforn1ing portkms of the Work for or on behalf of the Contractor or any of its Subcontractors. @1997 NA'ill -;;;©;-;C"-o=p=yr::::ig:;:h-;-1<.19:;-;i::;-1-,1::::9;-:;i;::-5,-:1;;;9::;-1S;;-,-:;1-;;9"N25;:-,-;1-;:;:93;;:7;-,::;-19;;;5:::;1-,<.19:;;5:-;;8-,,1::::9;-;:571,-:1;-;;9-;:;:63;;-,-;1-;;96::::6::-,-;1;;-96"'7;-,-:;-19;;:7;;;0:-,.,19:;:7;:::6-,,1::::9:-.::8-::::7,-:1:-.::9::::97:;-;-:-:-by AlA DOCUMENT A201 ·1997 The American lnslitute of Architects. Fifteenth Edition. Reproduc!lon ol the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions vi.thoul written permission of the AlA violates the copyright ta..vs of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal proseci,.1ion. WARNING: Unlicensed photocopying violates U.S. copyright , . • laws and wli! subject the violator to legal prosecution. This document was electronically produced lflilh T~e_Amencan lns!tlu!e of Arch1tects permission ot the AlA and can be reproduced ln accordance with your license without violation until the date of i t3::> ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006·5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 15 3.3.3 The Contractor shall be responsible for inspection of portions of Work already perfonned to determine that such portions are in proper condition to receive subsequent Work 3.4 LABOR AND MATERIALS 3.4.1 Unless otherwise provided in the Contract Documents, the Contractor shall provide and pay for labor, materials, equipment, tools, construction equipment and machinery, water, heat, utilities, transportation, and other facilities and services necessary for proper execution and completion of the Work, whether temporary or pennanent and whether or not incorporated or to be incorporated in the Work. 3.4.2 The Contractor may make substitutions only with the consent of the Owner, after evaluation by the Architect and in accordance with a Change Order. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. 3.4.3 The Contractor shall enforce strict discipline and good order among !he Contractor's CONSULTATION WITH AN employees and other persons carrying out the Contract The Contractor shall not pennit ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR employment of unfit persons or persons not sldfled in tasks assigned to them. MODIFICATION. AUTHENTICATION OF THIS ELECTRON/CALLY 3.5 WARRANTY DRAFTED AlA DOCUMENT MAY BE 3.5. i The Contractor warrants to the Owner and Architect that materials and equipment MADE BY USING AlA DOCUMENT D401. furnished under the Contract will be of good quality and new unless otherwise required or permitted by the Contract Documents, that the Work will be free from defects not inherent in This document has been approved and the quality required or pennitted, and that the Work will confonn to tl1e requirements of the endorsed by The Associated General Contract Documents. \York not conforming to these requirements, including substitutions not Contractors of America. properly approved and authorized, may be considered defective. The Contractor's warranty excludes remedy for damage or defect caused by abuse, modifications not executed by the Contractor, improper or insufficient maintenance, improper operation, or normal wear and tear and normal usage. If required by the Architect, the Contractor shall furnish satisfactory evidence as to the kind and quality of materials and equipment. 3.6 TAXES 3.6.1 The Contractor shall pay sales, consumer, use and similar taxes for the Work provided by the Contractor which are legally enacted when bids are received or negotiations concluded, whether or not yet effective or merely scheduled to go into effect. 3.7 PERMITS, FEES AND NOTICES 3.7.1 Unless otherwise provided in the Contract Documents, the Contractor shall secure and pay for the building permit and or.her permits and governmental fees, licenses and inspections necessary for proper execution and completion of the Work which are customarily secured after execution of the Contract and which are legally required when bids are received or negotiations concluded.. 3.7.2 The Contractor shall comply with and give notices required by laws, ordinances, rules, regulations and lawful orders of public authorities applicable to performance of the Work. - 3.7.3 1t is not the Contractor's responsibility to ascertain that the Contract Documents are in accordance with applicable laws, statutes, ordinances, building codes, and rules and ,....J~ regulations. However, if the Contractor observes that portions of the Contract Documents are <:l1897 Alfl® ~©~G~o-p-y~ng~h~t7.19~1~1-,1~9~1``~1~9~18~.~1~92~5~,-.17 93~7~.~19~5~1-,~19~5~8-,i~9~6~1,-1~9~63~,~1~9~66~,~1~96~7~,~19~7~0-,~19~7~6,-1~9~8=~-1~97 97~by AlADOCUMENTA201·1997 The American !nsli!ute of Architects. Fifteenth Edition. Reproductfon oi the material herein or substantia! GENERAL CONDITIONS OF THE quotation of its provisions Vvithout wrilten permission oft he AlA violates the copyright laws of the Unl!ed States CONTRACT FOR CONSTRUCTION and will subjecllhe violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and w1ll subject the violator to legal prosecution. This document vtas electronically produced with The Amencan lnshtute of Archttects permission of the AlA and can be reproduced in accordance with your license without violation until the date ol 1735 ~ew York Avenue, N.W. expiration as noted below. Washtngton, D.C. 20006·5292 This document Is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 16 at variance therewith, the Contractor shall promptly notify the Architect and , Owner in writing, and necessary changes sllall be accomplished by appropriate Modification., 3.7.4 If the Contractor performs Work knowing it to be contrary to laws, statutes, ordinances, building codes, and rules and regulations without such notice to the Architect and Owner, the Contractor shall assume appropriate responsibility for such Work and shall bear the costs attributable to correction. 3.8 ALLOWANCES 3.8.1 The Contractor shall include in the Contract Sum all allowances stated in the Contract Documents. Items covered by allowances shall be supplied for such amounts and by such persons or entities as the Owner may direct, but the Contractor shall not be required to employ persons or entities to whom the Contractor has reasonable objection. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. 3.8.2 Unless otherwise provided in the Contract Documents: CONSUL TAT/ON WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR .1 allowances shall cover the cost to the Contractor of materials and equipment MODIFICATION. AUTHENTICATION delivered at the site and aU required taxes, less applicable trade discounts; OF THIS ELECTRON/CALLY .2 Contractor's costs for unloading and handling at the site, labor, installation costs, DRAFTED AlA DOCUMENT !i,1A Y BE overhead, profit and other expenses contemplated for stated allowance amounts A.fADE BY USING AlA DOCUMENT D401. shall be included in the Contract Sum but not in the allowances; .3 whenever costs are more than or less than allowances, the Contract Sum shall be This document has been approved and adjusted accordingly by Change Order. The amount of the Change Order shall endorsed by The Associated General reflect (1) the difference between actual costs and the allowances under Clause Contractors of America. 3.8.2.1 and {2) changes in Contractor's costs under Clause 3.8.2.2. 3.8.3 .Materials and equipment under an allowance shall be selected by the Owner in sufficient time to avoid delay in the Work. 3.9 SUPERINTENDENT 3.9.1 The Contractor shall employ a competent superintendent and necessary assistants who shall be in attendance at the Project site during performance of the Work. The superintendent shall represent the Contractor, and communications given to the superintendent shall be as binding as if given to the Contractor. Important communications shall be confirmed in writing. Other communications shall be similarly confirmed on written request in each case. 3.10 CONTRACTOR'S CONSTRUCTION SCHEDULES 3.1 0.1 The Contractor, promptly after being awarded the Contract, shall prepare and submit for the Owner's and Architect's information a Contractor's construction schedule for the Work The schedule shall not exceed time limits current under the Contract Documents, shall be revised at appropriate intervals as required by the conditions of the Work and Project, shall be related to the entire Project to the extent required by the Contract Documents, and shall provide for expeditious and practicable execution of the Work. 3.10.2 The Contractor shall prepare and keep current, for the Architect's approval, a schedule of submittals which is coordinated with the Contractor's construction schedule and allows the Architect reasonable time to review submittals. el1997 ~11'/f) -::©::-Co=---p-y..,.rig""h-:-1"'19::-1:-:1-,"19'"'1-=5-,1"'9"1.,.8,-1"'9"25"'",,..,1"'9"'37","'"'1"'95=-1,...,_,19"58=-o--,.,.19:-:6-1-,1-9=6-3,-1"'9"66.,.,.,..,1-9"67,_,...,1"9-"'tO,...,_,19=7'"'6-,-19-8=7,-1=9-9.-7-,---by AlA DOCUMENT A201 ·199~ The American Institute of Architects. Fifteenth Edition. Reproduction ol the material herein or substantial GENERAL CONDITIONS OF l HE quotation of its provisions without written permission of the AlA violates the copyright Jaws of the United Slates CONTRACT FOR CONSTRUCTION and wifl subject the violate to legal prosecution. WARNING: Unlicensed photocopying \~elates U.S. copyright . . . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan Institute of Arch1tects permission of the AlA and can be reproduced in accordance with your license without violation un!i! the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 17 3.10.3 The Contractor shall perform the Work in general accordance with the most recent schedules submitted to the Owner and Architect. 3.11 DOCUMENTS AND SAMPLES AT THE SITE 3.11.1 The Contractor shall maintain at the site for the Owner one record copy of the Drawings, Specifications, Addenda, Change Orders and other Modifications, in good order and marked currently to record field changes and selections made during construction, and one record copy of approved Shop Drawings, Product Data, Samples and similar required submittals. These shall be available to the Architect and shall be delivered to the Architect for submittal to the Owner upon completion of the Work. 3.12 SHOP DRAWINGS, PRODUCT DATA AND SAMPLES 3.12.1 Shop Drawings are drawings, diagrams, schedules and other data specially prepared THIS DOCUMENT HAS IMPORTANT for the Work by the Contractor or a Subcontractor, Sub-subcontractor, manufacturer, supplier LEGAL CONSEQUENCES. or distributor to illustrate some portion of the Work. CONSULTATION WITH AN ATTORNEY IS ENCOURAGED WITH 3.12.2 Product Data are illustrations, standard schedules, performance charts, instructions, RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION brochures, diagrams and other infonnation furnished by the Contractor to illustrate materials OF THJS ELECTRON/CALLY or equipment for some ponlon of the Work. DRAFTED AlA DOCUMENT MAY BE MADE BY USING AlA DOCUMENT 3.12.3 Samples are physical examples which illustrate materials, equipment or D4ot. workmanship and establish standards by which the Work ·will be judged. This document has been appro'led and endorsed by The Associated General 3.12.4 Shop Drawings, Product Data, Samples and similar submittals are not Contract Contractors of America. Documents. The purpose of their submittal is to demonstrate for those portions of the Work for which submittals are required by the Contract Documents the way by which the Contractor proposes to conform to the information given and the design concept expressed in the Contract Documents. Review by the Architect is subject to the limitations of Subparagraph 4.2.7. Informational submittals upon which the Architect is not expected to take responsive action may be so identified in the Contract Documents, Submittals which are not required by the Contract Documents may be returned by the Architect without action. 3.12.5 The Contractor shall review for compliance with the Contract Documents, approve and submit to the Architect Shop Drawings, Product Data, Samples and similar submittals required by the Contract Documents with reasonable promptness and in such sequence as to cause no delay in the Work or in the activities of the Owner or of separate contractors. Submittals which are not marked as reviewed for compliance with the Contract Documents and approved by the Contractor may be returned by the Architect without action. 3.12.6 By approving and submitting Shop Drawings, Product Data, Samples and similar submittals, the Contractor represents that the Contractor has determined and verified materials, field measurements and field construction criteria related thereto, or will do so, and has checked and coordinated the infonnation contained within such submittals with the requirements of the Work and of the Contract Documents. 3.12.7 The Contractor shall perform no portion of the Work for which the Contra.ct Documents require submittal and review of Shop Drawings, Product Data, Samples or similar submittals until the respective submittal has been approved by the Architect. lOl$$7 AIN/!'; "©"'C"'"o-p-yr"'ig-,..h7l "19"'1--::1-,1"'9'"1-=5,-1:-::9'"'"1s=-,-=1-=92"5=-,-.1::-93:-::7:-,"'19::-:5::-:1-,"'19"5"'"8,-1"9"6"'"1,-1'"9"'63"'","'1"96"6::-,..,.1.,..96:-::7:-,719:::7:-:0-,-:-:19::-::7:-::6,-:1'"'9"'"8=7,-:1:-::9"'97:-:--by AlA DOCUMENT A201 • 1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GEN~RAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright lavvs of the United States CON I RACT FOR CONSTRUCTION and will subject 1he violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S, copyright . • . laws and will subject the violator to legal prosecution. This document was· electronically produced with T~e Arnencan Institute of Arch:tects permission of the AlA and can be reproduced in accordance vlith your license without violation unlll the date of 1t35 ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006·5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software tor administrative purposes only and Is not for other use or resale. 18 3.12.8 The Work shall be in accordance with approved submittals except that the Contractor shall not be relieved of responsibility for deviations from requirements of the Contract Documents by the Architect's approval of Shop Drawings, Product Data, Samples or similar submittals unless the Contractor has specifically informed the Architect in writing of such deviation at the time of submittal and {1) the Architect has given written approval to the specific deviation as a minor change in the Work, or (2) a Change Order or Construction Change Directive has been issued authorizing the deviation. The Contractor shall not be relieved of responsibility for ;m·ors or omissions in Shop Drawings, Product Data, Samples or similar submittals by the Architect's approval thereof. 3.12.9 The Contractor shall direct specific attention, in writing or on resubmitted Shop Drawings, Product Data, Samples or similar submittals, to revisions other than those requested by the Architect on previous submittals. In the absence of such written notice the THIS DOCUMENT HAS IMPORTANT }\.rchitect's approval of a resubmission shall not apply to such revisions. LEGAL CONSEQUENCES. CONSUL TAT/ON WiTH AN 3.12.1 0 The Contractor shall not be required to provide professional services which ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR constitute the practice of architecture or engineering unless such services are specifically MOD!FICATJON. AUTHENTICA TJON required by the Contract Documents for a portion of the Work or unless the Contractor needs OF THIS ELECTRONICALLY to provide such services in order to carry out the Contractor's responsibilities for construction DRAFTED AlA DOCUMENT MAY BE means, methods, techniques, sequences and procedures. The Contractor shall not be required MADE BY USING AlA DOCUMENT D401. to provide professional services in violation of applicable Jaw. If professional design services or certifications by a design professional related to systems, materials or equipment are This document has been approved and specifically required of the Contractor by the Contract Documents, the Owner and the endorsed by The Associated General Architect will specify all performance and design criteria that such services must satisfy. The Contractors of America. Contractor shall cause such services or certifications to be provided by a properly licensed design professional, whose signature and seal shall appear on a11 drawings, calculations, specifications, certifications, Shop Drawings and other submittals prepared by such professionaL Shop Drawings and other submittals related to the Work designed or certified by such professional, if prepared by others, shall bear such professional's written approval when submitted to the Architect. The Owner and the Architect shall be entitled to rely upon the adequacy, accuracy and completeness of the services, certifications or approvals performed by such design professionals, provided the Owner and Architect have specified to the Contractor all performance and design criteria that such services must satisfy. Pursuant to this Subparagmph 3.12.10, the Architect will review, approve or take other appropriate action on subminals only for the limited purpose of checking for conformance with information given and the design concept expressed in the Contract Documents. The Contractor shall not be responsible for the adequacy of the performance or design criteria required by the Contract Documents. 3.13 USE OF SITE 3.13.1 The Contractor shall confine operations at the site to areas permitted by law, ordinances, permits and the Contract Documents and shall not unreasonably encumber the site with materials or equipment. 3.14 CUTTING AND PATCHING 3.14.1 The Contractor shall be responsible for cutting, fitting or patching required to complete the Work or to make its parts fit together properly. @1997 AI~ "©"Co:::--p-yr..,.ig7h.,..t"19"'1-,.1-,1-:-:9:-:1-=-5,-1'"9..,.18=-,""'1"'=92:::5::-,"'1-:-93==7=-,-,.19:::-:5::-.1-,"'"'19::-:5"8-,-:-: 19:-: 6-.-1,-1:-::9-=-63"",...,1"'9"'66:-,-:-1-:::-96"7:-,"'"19~7=::0:--,"'"'19::-:7"6,-1-:-:9:-::8=7,-1:-::9-::-97:::-:-by AlA DOCUMENT ~01 • 1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL90NDl! IONS OF THE quota:ion of its provisions wilhout written permission ol lhe AlA violates the copyright laws of the United States COI'-lTRAC I FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright _ . . . laws and will subject the viola!or to legal prosecution. This document was eleclronica!!y produced with l he_Amencan lnslltule ol Archrlects permission ol the AlA and can be reproduced in accordance with your license without violation until the date ol 173o ~ew York Avenue:. N.W. expiration as noted below. Washu1g!on, D.C. 2000o·5292 Thls document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 3.14.2 The Contractor shall not damage or endanger a portion of the Work or fully or partially completed cunstruction of the Owner or separate comractors by cutting, patching or otherwise altering such construction, or by excavation. The Contractor shall not cut or otherwise alter such construction by the Owner or a separate contractor except with written consent of the Owner and of such separate contractor; such consent shall not be unreasonably withheld. The Contractor shall not unreasonably withhold from the Owner or a separate contractor the Contractor's consent to cutting or otherwise altering the Work. 3.15 ClEANING UP 3.15.1 The Contractor shall keep the premises and surrounding area free from accumulation of waste materials or rubbish caused by operations under the Contract. At completion of the Work, the Contractor shall remove from and about the Project waste materials, rubbish, the Contractor's tools, construction equipment, machinery and surplus materials. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. 3.15.2 If the Contractor fails to clean up as provided in the Contract Documents, the Owner CONSULTATION WITH AN may do so and the cost thereof shall be charged to the Contractor, ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION 3.16 ACCESS TO WORK OF THIS ELECTRONICALLY 3.16.1 The Contractor shall provide the Owner and Architect access to the Work in DRAFTED AlA DOCUMENT MAY BE preparation and progress wherever located. MADE BY USING AlA DOCUMENT 0401. 3.17 ROYAlTIES, PATENTS AND COPYRIGHTS Tllis document has been approved and 3.17.1 The Contractor shall pay all royalties and license fees. The Contractor shall defend endorsed by Tne Associated General suits or claims for infringement of copyrights and patent rights and shall hold the Owner and Contractors of America. Architect harmless from loss on account thereof, but shall not be responsible for such defense or loss when a particular design, process or product of a particular manufacturer or manufacturers is required by the Contract Documents or where the copyright violations are contained in Drawings, Specifications or other documents prepared by the Owner or Architect. However, if the Contractor has reason to believe that the required design, process or product is an infringement of a copyright or a patent, the Contractor shall be responsible for such loss unless such information is promptly furnished to the Architect. 3.18 INDEMNIFICATION 3.18.1 To the fullest extent permitted by law and to the extent claims, damages, losses or expenses are Redacted Redacted , , the Contractor shall indemnify and hold harmless the Owner, Architect, Architect's consultants, and agents and employees of any of them from and against claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of or resulting from performance of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself), but only to the extent caused by the negligent acts or omissions of the Contractor, a Subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder. Such obligation shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity which would otherwise exist as to a party or person described in this Paragraph 3.18. ¥:;1997 AIMP -;;©;:-C;:;-o:-:p::-:yn7·g::;:h-;-t-=:19~1-::-1-,7;19:::;1"'5,-:1;-;;9::-18;:;-,-:1-:;::9~25:-,-:;1~93;:::7;-,719;:;-;5:-::1-,~19;;;5:-;:;8-,::-;19::;:6::-1,-:1;-;;9:;:-63;:;-,-:1-:;::96::::6:-,-:-1:;::;96;;-::7;-,719;:::7;;:0:-,::-;19;;-::7;;::6,-:1;-;9:;:-8:;-7,-:1:-;:;9~97:;-;:-:-:-by AlA DOCUMENT A201 • 1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and 'Nill subject the violate lo legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . • laws and will subject the violator lo legal prosecution. This document was electronically produced with The Amencan lnstilute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue:. N.W. expiration as noted below. Wash~ngton, D.C. 2000o-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 20 3.18.2 In claims against any person or entity indemnified under this Paragraph 3.18 by an employee of the Contractor, a Subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, the indemnification obligation under Subparagraph 3.18.1 shall not be limited by a limitation on amount or type of damages, compensation or benefits payable by or for the Contractor or a Subcontractor under workers' compensation acts, disability benefit acts or ot.'ler employee benefit acts. ARTICLE 4 ADMINISTRATJON OF THE CONTRACT 4.1 ARCHITECT 4.1.1 The Architect is the person lawfully licensed to practice architecture or an entity lawfully practicing architecture identified as such in t11e Agreement and is referred to tllroughout the Contract Documents as if singular in number. The term "Architect" means the i~.rchitect or the Architect's autllorized representative. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCE& 4.1.2 Duties, responsibilities and limitations of authority of the Architect as set fortll in the CONSULTATION WITH AN Contract Documents shall not be restricted modified or extended without written consent of A ITORNEY IS ENCOURAGED WITH • • ' . • • ·. RESPECT TO ITS COMPLETION OR tlle Owner, Contractor and Architect. Consent shall not be unreasonably wtthheld. MOD/FICA TION. AUTHENTICATION OF THIS ELECTRON/CALLY 4.1 .3 If the employment of the Architect is terminated, the Owner shall employ a new DRAFTED AlA DOCUMENT MAY BE Architect against whom the Contractor has no reasonable objection and whose status under MADE BY USING AlA DOCUMENT 0401. the Contract Documents shall be that of the former Architect. This document has been approved and 4.2 ARCHITECT'S ADMINISTRATION OF THE CONTRACT endorsed by Tlie Associated General 4.2.1 The Architect will provide administration of the Contract as described in the Contractors of America Contract Documents, and will be an Owner's representative (1) during construction, (2) until final payment is due and (3) with the Owner's concurrence, from time to time during the one- year period for correction of Work described in Paragraph 12.2. The Architect will have authority to act on behalf of the Owner only to the extent provided in tlle Contract Documents, unless otherwise modified in v.-Titing in accordance with other provisions of tlle Contract. 4.2.2 The Architect, as a representative of the Owner, will visit the site at intervals appropriate to the stage of the Contractor's operations (I) to become generally familiar with and to keep the Owner informed about the progress and quality of the portion of the Work completed, (2) to endeavor to guard tlle Owner against defects and deficiencies in the Work, and (3) to determine in general if tlle Work is being performed in a manner indicating that the Work, when fu1ly completed, will be in accordance with tlle Contract Documents. However, the Architect will not be required to make exhaustive or continuous on-site inspections to check the quality or quantity of the Work. The Architect v:ill neither have control over or charge of, nor be responsible for, the construction means, methods, techniques, sequences or procedures, or for the safety precautions and programs in connection with tlle Work, since these are solely the Contractor's rights and responsibilities under the Contract Documents, except as provided in Subparagraph 3.3.1. 4.2.3 The Architect will not be responsible for the Contractor's failure to perforrn the Work in accordance \Vitll the requirements of the Contract Documents. The Architect will not have control over or charge of and will not be responsible for acts or omissions of the Contractor, Subcontractors, or their agents or employees, or any other persons or entities performing portions of the Work. ©1997 AlA$ -.:©:-C"o_p_y~rig"'h-:-t-,-1,-91::-:1-,-,-19""1'"5-,1-,9,_1..,..8,-1,...,9"'2-=-5,-1,..,9"'"37",_,1...,.95.,-1.,-,-,1.,..95""'8,_,..,.19_,6,_1-,-19,_,6...,.3-,1-,9-6.,...6,-1,_,9..,67",_,1...,.9-="'Jo=-,_,.1..,.,97""'6,..,...,.19.,..,8"'7-,""'19'"9"'7..,-by- AlA DOCUMENT A201 - 1997 r The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THe quotation of its provisions without written permission of the AlA violates the copyright lav..s of the United Slates CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecu-tion. WARNING: Unlicensed photocopying violates U.S. copyright . . . . . laws and 'Nill subject the violator to legal prosecution. This document was electronically produced with T~e Arnencan lnslitute oi Architects permission oi the AlA and can be reproduced in accordance with you; ltcense without violation until the date of 1t35 !'Jew York Avenue, ~W. expiration as noted below. Washmgton, D.G. 20006-:::.292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is no! for other use or resale. 21 4.2.4 Communications Facilitating Contract Administration. Except as othenvise provided in the Contract Documents or when direct communications I1ave been specially authorized, the Owner and Contractor shall endeavor to communicate with each other through the Architect about matters arising out of or relating to the Contract. Communications by and with the Architect's consultants shall be through the Architect. Communications by and with Subcontractors and material suppliers shall be through the Contractor. Communications by and with separate contractors shall be through the Owner. 4.2.5 Based on the Architect's evaluations of the Contractor's Applications for Payment, the Architect will review and certify the amounts due the Contractor and will issue Certificates for Payment in such amounts. THIS DOCUMENT HAS IMPORTANT 4.2.6 The Architect will have authority to reject Work that does not conform to the LEGALCONSEQUENCES. Contract Documents. Whenever the Architect considers it necessary or advisable, the CONSULTATIONWITHAN Architect will have authority to require inspection or testing of the Work in accordance with ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR Subparagraphs 13.5.2 and 13.5.3, whether or not such Work is fabricated, installed or MODIFICATION.AUTHENTfCATION completed. However, neither this authority of the Architect nor a decision made in good faith OF THIS ELECTRON/CALL y either to exercise or not to exercise such authority shall give rise to a duty or responsibility of DRAFTED AlA DOCUMENT MAY BE the Architect to the Contractor, Subcontractors, material and equipment suppliers, their agents MADE BY USING AlA DOCUMENT 0401 or employees, or other persons or entities performing portions of the Work · This document has been approved and 4.2.7 The Architect w1ll review and approve or take other appropriate action upon the endorsed by The Associated General Contractor's submittals such as Shop Drawings, Product Data and Samples, but only for the Contractors of America. limited purpose of checking for conformance with information given and the design concept expressed in the Contract Documents, The Architect's action will be taken with such reasonable promptness as to cause no delay in the \Vork or in the activities of the Owner, Contractor or separate contractors, while allowing sufficient time in the Architect's professional judgment to permit adequate review. Review of such submittals is not conducted for the purpose of determining the accuracy and completeness of other details such as dimensions and quantities, or for substantiating instructions for installation or performance of equipment or systems, all of which remain the .responsibility of the Contractor as required by the Contract Documents. The Architect's review of the Contractor's submittals shall not relieve the Contractor of the obligations under Paragraphs 3.3, 3.5 and 3.12. The Architect's review shall not constitute approval of safety precautions or, unless otherwise specifically stated by the Architect, of any construction means, methods, te-ehniques, sequences or procedures. The Architect's approval of a speCific item shall not indicate approval of an assembly of which the item is a component. 4.2.8 The Architect will prepare Change Orders and Construction Change Directives, and may authorize minor changes in the Work as provided in Paragraph 7A. 4.2.9 The Architect will conduct inspections to determine the dare or dates of Substantial Completion and the date of final completion, will receive and forward to the Owner, for the Owner's review and records, written warranties and related documents required by the Contract and assembled by the Contractor, and will issue a final Certificate for Payment upon compliance with the .requirements of the Contract Documents. 1[;\1997 AfNJ!; ~©~C``~p-y~rig~h7 !719~1~1-.~19~1~5-,1~.9~1~8.-1~9~25~,~1~93~7~,~19~5~1-,7 7 19~5~8~,~19~6~1,-1~9~63~,~1~9~66 ,~1~9~67~,~1~97~0~,~19~7=6-,~100~7,-1~9~97~by AJADOCUMENTA201-1997 The American Institute oi Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF TtJE quotation of its provisions without writlen permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUe !ION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright , . . laws and will subject the violator to legal prosecution. This document was electronically produced with The fmencan lnsl•tute of Architects permission of !he AlA and can be reproduced in accordance with your license without violation until the date of 173o !-.lew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006·5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for adminls!rative purposes only and is not tor other use or resale. 22 4.2.1 0 If the Owner and Architect agree, the Architect will provide one or more project representatives to assist in carrying out the Architect's responsibilities at the site. The duties, responsibiJities and limitations of authority of such project representatives shall be as set forth in an exhibit to be incorporated in the Contract Documents. 4.2.11 The Architect will interpret and decide matters concerning performance under and requirements of, the Contract Documents on written request of either the Owner or Contractor. The Architect's response to such requests will be made in writing within any time limits agreed upon or otherwise with reasonable promptness. If no agreement is made ccncerning the time within which interpretations .required of the Architect shall be furnished in compliance with this Paragraph 4.2, then delay shall not be recognized on account of failure by the Architect to furnish such interpretations until 15 days after written request is made for them. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. 4.2.12 Interpretations and decisions of the Architect will be consistent with the intent of and CONSUL TAT/ON WITH AN reasonably inferable from the Contract Documents and will be in writing or in the form of A ITORNEY IS ENCOURAGED WITH · drawmgs. W'- 1·' Hen ma.ung sue h mterpretatJOns · · and ·mttla · · 1 declsiOns, · · h A h. ·11 d RESPECT TO ITS COMPLETION OR t e rc Itect w: en eavor MODJFICATIOIV. AUTHENTICATION to secure faithful performance by both Owner and Contractor, will not show partiaJity to OF THIS ELECTRONICALLY . either and will not be liable for results of interpretations or decisions so rendered in good DRAFTED AlA DOCUMENT MAY BE faitll. MADE BY USING AlA DOCUMENT 0401. 4.2.13 The Architect's decisions on matters relating to aesthetic effect will be final if This document has been approved and consistent with the intent expressed in the Contract Documents. endorsed by The Associated Generci Contmctors of America. 4.3 CLAIMS AND DISPUTES 4.3.1 Definition. A Claim is a demand or assertion by one of the parties seeking, as a matter of right, adjustment or interpretation of Contract terms, payment of money, extension of time or other relief with respect to the terms of the Contract The term "Claim" also includes other disputes and matters in question between the Owner and Contractor arising out of or relating to the Contract Claims must be initiated by written notice. The responsibility to substantiate Claims shall rest with the party making the Claim. 4.3.2 Time Limits on Claims. Claims by either party must be initiated within 21 days after occurrence of the event giving rise to such Claim or withln 21 days after the claimant first recognizes the condition giving rise to the Claim, whichever is later. Claims must be initiated by written notice to the Architect and the other party. 4.3.3 Continulng Contract Performance. Pending final resolution of a Claim except as otherwise agreed in v:riting or as provided in Subparagraph 9.7.1 and Article 14, the Contractor shall proceed diligently with perforn1ance of the Contract and the Owner shall continue to make payments in accordance with the Contract Documents. 4.3.4 Claims for Concealed or Unknown Conditions. If conditions are encountered at the site which are {1) subsurface or otherwise concealed physical conditions which differ materially from those indicated in the Contract Documents or (2) unknown physical conditions of an unusual nature, which differ materially from those ordinarily found to exist and generally recognized as inherent in construction activities of the character provided for in the Contract Documents, then notice by the obsen~ing party shall be given to the other party promptly before conditions are disturbed and in no event later than 21 days after first ·ww·--"' e1S97 AlA'!!> C"o-p-y"'rig-:h-:-1-:-19"1:-:1-,-:-19:-:1-::5-,1:-:9'"'1"'"8,-c1c::9"'2s=-,-=1-:::9::-:37=-,"1"'95"'1:-,-:-19"5::-::8:-,"19:.--::6'"'"1-.i"9'"63-.-,-1::-::9-:-667 ,'"1..,.9"'"'67",...,1"'"97:=:0:-,..,.19"7"6-,"'19::-:8-=7,-1.,.,9"'9"="7.,.....by "©"'"· AlA DOCUMENT A201 -1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright ta\\'S of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright _ . . . laws and viii! subject the violator to legal prosecution. This document was electronically produced >'lith I he Amencan ,lnst1tute of Architects permission of the AlA and can be reproduced in accordance with your license without violation unlil the date of 1735 ~ew Yon~ Avenue, N.W. expiration as noted below. Wash1ngton, D.C. 20006·5292 This document Js not an orlginal AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 23 observance of the conditions. The Architect will promptly investigate such conditions and, if they differ materially and cause an increase or decrease in the Contractor's cost of, or time required for, performance of any part of the Work, will recommend an equitable adjustment in the Contract Sum or Contract Time, or both. If the Architect determines that the conditions at the site are not materially different from those indicated in the Contract Documents and that no change in the terms of the Contract is justified, the Architect s1mll so notify the Owner and Contractor in writing, stating the reasons. Claims by either party in opposition to such determination must be made within 21 days after the Architect has given notice of the decision. If the conditions encountered are materially different, the Contract Sum and Contract Time shall be equitably adjusted, but if the Owner and Contractor cannot agree on an adjustment in the Contract Sum or Contract Time, the adjustment shall be referred to the Architect for initial determination, subject to further proceedings pursuant to Paragraph 4.4. THIS DOCUMENT HAS IMPORTANT 4.3.5 Claims for Additional Cost. If the Contractor wishes to make Claim for an LEGAL CONSEQUENCES. increase in the Contract Sum, written notice as provided herein shall be given before CONSULTATION WITH AN proceeding to execute the Work. Prior notice is not required for Claims relating to an A ITORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR emergency endangering life Qf property arising under Paragraph 10.6. MOD/FICA TION. AUTHENTICATION OF THIS ELECTRON/CALLY 4.3.6 If the Contractor believes additional cost is involved for reasons including but not DRAFTED AlA DOCUMENT MAY BE limited to ( 1) a written interpretation from the Architect, (2) an order by the Owner to stop the MADE BY USING AlA DOCUMENT 0401 Work where the Contractor was not at fault, (3) a written order for a minor change in the • Work issued by the Architect, (4) failure (lf payment by the Owner, (5) termination of the This document has been approved and Contract by the Owner, (6) Owner's suspension or (7) other reasonable grounds, Claim shall endorsed by The AS$OCiated General be filed in accordance with this Paragraph 4.3. Contractors of America. 4.3.7 Claims for Additional Time 4.3.7.1 lf the Contractor wishes to make Claim for an increase in the Contract Time, written notice as provided herein shall be given. The Contractor's Claim shall include an estimate of cost and of probable effect of delay on progress of the Work. In the case of a continuing delay only one Claim is necessary. 4.3.7 .2 If adverse weather conditions are the basis for a Claim for additional time, such Claim shall be documented by data substantiating that weather conditions were abnormal for the period of time, could not have been reasonably anticipated and had an adverse effect on the scheduled construction. 4.3.8 Injury or Damage to Person or Property. If either party to the Contract suffers injury or damage to person or property because of an act or omission of the other party, or of others for whose acts such party is legally responsible, written notice of such injury or damage, whether or not insured, shall be given to the other party within a reasonable time not exceeding 21 days after discovery. The notice shall provide sufficient detail to enable the other party to investigate the matter. 4.3.9 If unit prices are stated in the Contract Documents or subsequently agreed upon, and if quantities originally contemplated are materially changed in a proposed Change Order or Construction Change Directive so that application of such unit prices to quantities of Work proposed will cause substantial inequity to the Owner or Contractor, the applicable unit prices shall be equitably adjusted. !9$7 Alt.fi!l -;:;@:-;C::;-op:-:-yr.,..ig7h:-t:-:19::-: 171,....,1:-:9:::1;;-5,-:1::::9718::-,-::1::::92"5::-,-::1-:::-93::::7;-,'719::::5"1-,719"'5::;:8-.i:-:9::;:67"1,-:1:-::.9c::63::-,-:1"'9"66;-,-::1"'96::::7;-,'719::::7::::0-,,"19"7"6,....,1'"'9"8"7,-:1"9"'97:;-;-by AlA DOCUMENT A201 -1997 The American Institute of Architects. Rfteenlh Edition. Reproduction of the material herein or substantial GENERAL COND!TlONS OF THE quotation of ils provisions without writ!en permission of the AlA violates the copyright laws of ihe United States CONTRACT FOR CONSTRUCTION and will subject lhe violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright • . . . laws and will subject the violator to legal prosecution. This document was electronically produced with fhe Amencan lnstttute of Arch!tects permission of !he AlA and can be reproduced in accordance with your license •Nithout violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006·5292 This document is not an original AJA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 31 Documents, costs for the purposes of this Subparagraph 7.3.6 shall be limited to the following: .1 costs of labor, including social se<:urity, old age and Redacted fringe benefits required by agreement or custom, and Redacted Redacted .2 costs of materials, supplies and equipment, including cost of transportation, whether incorporated or consumed; .3 rental costs of machinery and equipment, exclusive of hand tools, whether rented from the Contractor or others; A Redacted , permit fees, and sales, use or similar taxes related to the Work; and .5 additional costs of supervision and field office personnel directly attributable to the change. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCE& 7.3.7 The amount of credit to be allowed by the Contractor to the 0\vner for a deletion or CONSULTATION WITH AN change which results in a net decrease in the Contract Sum shall be actual net cost as ATTORNEY JS ENCOURAGED WITH - . . . .. • , . . • RESPECT TO ITS COMPLETION OR confirmed by the Architect When both addJtrons and cred1ts covenng related Work or MODIFICATION.AUTHENTICATJON substitutions are involved in a change, the allowance for overhead and profit shall be figured OF THIS ELECTRON/CALL y on the basis of net increase, if any, with respect to that change. DRAFTED A/A DOCUMENT MAY BE MADE BY USING AlA DOCUMENT 0401. 7.3.8 Pending final determination of the total cost of a Construction Change Directive to the Owner, amounts not in dispute for such changes in the Work shall be included in This document has been approved and Applications for Payment accompanied by a Change Order indicating the parties' agreement endorsed by Tne As~ociated General with part or all of such costs. For any portion of such cost that remains in dispute, the Contractors of Amenca Architect will make an interim determination for purposes of monthly certification for payment for those costs. That detennination of cost shall adjust the Contract Sum on the same basis as a Change Order, subject to the right of either party to disagree and assert a claim in accordance with Article 4. · 7.3.9 When the Owner and Contractor agree with the determination made by the Architect concerning the adjustments in the Contract Sum and Contract Time, or otherwise reach agreement upon the adjustments, such agreement shall be effective immediately and shall be recorded by preparation and execution of an appropriate Change Order. 7.4 MINOR CHANGES IN THE WORK 7.4.1 The Architect will have authority to order minor chattges in t11e \Vork not involving adjustment in the Contract Sum or extension of the Contract Time and not inconsistent with the intent of the Contract Documents. Such changes shall be effected by written order and sl1all be binding on the Owner and Contractor. The Contractor shall carry out such written orders promptly. ARTiCLE 8 TIME 8.1 DEFINITIONS 8.1.1 Unless othenvise provided, Contract Time is the period of time, including authorized adjustments, allotted in the Contract Documents for Substantial Completion of the Work. 8.1.2 The date of commencement of the Work is the date established in the Agreement. ~1997 Al/<3 ~©~C~o~p~yr~ig~h7 t7i9~1~1-,~19~1~5.~1~9~1~B.~1~9~25~.~1~93~7~,7 19~5~1-,~19~5~8,~1~96``7 1,~1~9~63~,~1~9~66~,"1~96~7~,7 19~7~0~,~19~7~6,~1~9~S~7.~1~9~97~by AIADOCUMENTA201·1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and wilt subject the violator to legal prosecution. This document was electronically produced with The Amencan lnslltute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted be!ow. Washmgton, D.C. 20006·5292 Thls document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and ls not for other use or resale. 32 8.1.3 The date of Substantial Completion is the date certified by the Architect in accordance with Paragraph 9.8. 8.1.4 The term "day" as used in the Contract Documents shall mean calendar day unless otherwise specifically defined. 8.2 PROGRESS AND COMPLETION 8.2.1 Time limits stated in the Contract Documents are of the essence of the Contract. By executing the Agreement the Contractor confirms that the Contract Time is a reasonable period for performing the \Vork. 8.2.2 Redacted Redaded THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. CONSUL TAT/ON WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFJCAT!ON. AUTHENTICATION OF THIS ELECTRON/CALLY DRAFTED AlA DOCUMENT MAY BE MADE BY USING AlA DOCUMENT 0401 8.2.3 The Contractor sha11 proceed expeditiously with adequate forces and shall achieve. · Substantial Completion within the Contract Time. This document has been approved and enporsed by The Associated General 8.3 DELAYS AND EXTENSIONS OF TIME Contractors of America. 8.3.1 Jf the Contractor is delayed at any time in the commencement or progress of the Work by an act or neglect of the Owner or Architect, or of an employee of either, or of a separate contractor employed by the Owner, or by changes ordered in the Work, or by labor disputes, fire, tmusual delay in deliveries, unavoidable casualties or other causes beyond the Contractor's control, or by delay authodzed by the Owner pending mediation and arbitration, or by other causes which the Architect detennines may justify delay, then the Contract Time shall be extended by Change Order for such reasonable time as the Architect may detennine. 8.3.2 Claims relating to time shall be made in accordance with applicable provisions of Paragraph 4.3. 8.3.3 This Paragraph 8.3 does not preclude recovery of damages for delay by either party under other provisions of the Contract Documents. ARTICLE 9 PAYMENTS AND COMPLETION 9.1 CONTRACT SUM 9.1. i The Contract Sum is stated in the Agreement and, including authorized adjustments, is the total amount payable by the Owner to the Contractor for performance of the Work under the Contract Document<;. 9.2 SCHEDULE OF VALUES 9.2.1 Before the first Application for Payment, the Contractor shall submit to the Architect a schedule of values allocated to various portions of the Work, prepared in such form and supp01ted by such data to substantiate its accuracy as the Architect may require. This 1:1#1997 AlP$ _,(f;).,..c-=-o-p_y..,.rig-:-hc:-17197 1"1-,-.19'"'1-=5,-1'"'9"'18..,..,-1'"9.,..25=-,-1..,.93=7,_,-1.,...95"1-,-19'"'5'"8-,.,...19,....6-1,-i,_9_63_,_i_,.9..,..66-,-1-96_7.,...,...,.19"7=0-,...-i9=7=6-,1-9-8=7,-1-9-97=-by AlA DOCUMENT A201 • 1997 The American Institute of Archllects. fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation oi its provisions illithout written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright , . . laws and will subject the \~o!ator to legal prosecution. This document was electionical!y produced with T~e Amencan lnstlllrte ol Architects permission of the AlA and can be reproduced in accordance with your license illithout violation until the date of expiration as noted below. 1r35 ~ew York Avenue, r::.w. Washmg!on, D.C. 20006-::.292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 33 schedule, unless objected to by the Architect, shall be used as a basis for re\·iewing the Contractor's Applications for Payment 9.3 APPLICATIONS FOR PAYMENT 9.3.1 At least ten days before the date established for each progress payment, the Contractor shall submit to the Architect an itemized Application for Payment for operations completed in accordance with the schedule of values. Such application shall be notarized, if required, and supported by such data substantiating the Contractor's right to payment as the Owner or Architect may require, such as copies of requisitions from Subcontractors and material suppliers, and reflecting retainage if provided fodn the Contract Documents. 9.3.1.1 As provided in Subparagraph 7.3.8, such applications may include requests for payment on account of changes in the Work which have been properly authorized by THIS DOCUMENT HAS IMPORTANT Construction Change Directives, or by interim determinations of the Architect, but not yet LEGAL CONSEQUENCE& included in Change Orders. CONSULTATION WITH AN A ITORNEY JS ENCOURAGED WITH • • • RESPECT TO ITS COMPLETION OR • 1 • 9.3.1.2 Such applications may not mclude requests for payment for portJOns of the 'VI ork for MODIFICATION. AUTHENTICATION which the Contractor does not intend to pay to a Subcontractor or material supplier, unless OF THIS ELECTRONICALLY such Work has been performed by others whom the Contractor intends to pay. DRAFTED AlA DOCUMENT MAY BE MADE BY USING AlA DOCUMENT 0401. 9.3.2 Unless otherwise provided in the Contract Documents, payments shall be made on account of materials and equipment delivered and suitably stored at the site for subsequent This document has been approved and incorpomtion in the Work. If approved in advance by the Owner, payment may similarly be endorsed by Tne Associated General made for materials and equipment suitably stored off the site at a location agreed. upon in Contractors of America. writing. Payment for materials and equipment stored on or off the site shall be conditioned upon eompliance by the Contractor with procedures satisfactory to the Owner to establish the '- Owner's title to such.materials and equipment or otherwise protect the Owner's interest, and shall include the costs of applicabkfedacted , storage and transportation to the site for such materials and equipment stored off the site. 9.3.3 The Contractor warrants that title to all Work covered by an Application for Payment will pass to the Owner no later than the time of payment. The Contractor further warrants that upon submittal of an Applicati011 for Payment all Work for which Certificates for Payment have been previously issued and payments received from the Owner shall, to the best of the Contractor's knowledge, Information and belief, be free and clear of liens, claims, security interests or encumbrances in favor of the Contractor, Subcontractors, material suppliers, or other persons or entities making a claim by reason of having provided labor, materials and equipment relating to the Work. 9.4 CERTIFICATES FOR PAYMENT 9.4.1 The Architect will, within seven days after receipt of the Contractor's Application for Payment, either issue to the Owner a Certificate for Payment, with a copy to the Contractor, for such amount as the Architect determines is properly due, or notify the Contractor and Owner in writing of the Architect's reasons for withholding certification in whole or in part as provided in Subparagraph 9.5. 1. 9.4.2 The issuance of a Certificate for Payment will constitute a representation by the Architect to the Owner, based on the Architect's evaluation of the Work and the data comprising the Application for Payment, that the Work has progressed to the point indicated ©19971\JN!!J -;:;©:-:C~o:-:p-:-:yn 7'g::;:h:;-t7.19~1:-:-1-,~19:;-;1~5,-:1:-:::9::;-18:::-,-::1-:::9~25",-::1c;c93;;::7;-,~19::::5::::1-,"'19;;::5::::8-,1~9;-;;67 1,-:1:-:::9-:::63:::-,-::1-:::96:;:-;6:;-,-o-1:::::96::::7:-,-::19;;::7;;:;0-,7.19"7:;::6,-:1:;;9::;:8::-7,-:1:-:::9:::::97:;-;::-:-by AlA DOCUMENT A201·1997 The American Institute of Arclli!ects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions wllhout wri!!en permission of the AlA violates the copyright Jaws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and will subject the violator to legal prosecution. This document was electronically produced vJith The Amencan Institute of Architects permission of the AlA and can be·reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006·5292 This document ls not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 34 and that, to the best of the Architect's kno\vledge, information and belief, the quality of the Work is in accordance with the Contract Documents. The foregoing representations are subject to an evaluarion of the Work for conformance with the Contract Documents upon Substantial Completion, to results of subsequent tests and inspections, to correction of minor deviations from the Contract Documents prior to completion and to specific qualifications expressed by the Architect. The issuance of a Certificate for Payment will further constitute a representation that the Contractor is entitled to payment in the amount certified. However, the issuance of a Certificate for Payment will not be a representation that the Architect has (1) made exhaustive or continuous on-site inspections to check the quality or quantity of the Work, (2) reviewed construction means, methods, techniques, sequences or procedures, (3) reviewed copies of requisitions received from Subcontractors and material suppliers and other data requested by the Owner to substantiate the Contractor's right to payment, or (4) made examination to ascertain how or for what purpose the Contractor has used money previously THIS DOCUMENT HAS IMPORTANT paid on account of the Contract Sum. LEGAL CONSEQUENCES. CONSULTATION WITH AN 9.5 DECISIONS TO WITHHOLD CERTIFICATION ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR 9.5.1 The Architect may withhold a Certificate for Payment in whole or in part, to the MODIF!CATJON. AUTHENTICATION extent reasonably necessary to protect the Owner, if in the Architect's opinion the OF THIS ELECTRON/CALL y representations to the Owner required by Subparagraph 9.4.2 cannot be made. If the Architect DRAFTED AlA DOCUMENT MAY BE is unable to certify payment in the amount of the Application, the Architect will notify the MADE BY USING AlA DOCUMENT 0401 Contractor and Owner as provided in Subparagraph 9.4.1. If the Contractor and Architect • cannot agree on a revised amount, the Architect will promptly issue a Certificate for Payment This document has been approved and for the amount for which the Architect is able to make such representations to the Owner. The endorsed by The Associated General Architect may also withhold a Certificate for Payment or, because of subsequently discovered Contractors of America. evidence, may nullify the whole or a part of a Certificate for Payment previously issued, to such extent as may be necessary in the Architect's opinion to protect the Owner from loss for which the Contractor is responsible, including loss resulting from acts and omissions described in Subparagraph 3.3.2, because of: .1 defective Work not remedied; .2 third party claims filed or reasonable evidence indicating probable filing of such claims unless security acceptable to the Owner is provided by the Contractor; .3 failure of the Contractor to make payments properly to Subcontractors or for labor, materials or equipment; .4 reasonable evidence that the Work cannot be completed for the unpaid balance of the Contract Sum; .5 damage to the Owner or another contractor; .6 reasonable evidence that the Work will not be completed within the Contract Time, and that the unpaid balance would not be adequate to cover actual or liquidated damages for the anticipated delay; or .7 persistent failure to carry out the Work in accordance with the Contract Documents. · 9.5.2 When the above reasons for withholding certification are removed, ce11:ification will be made for amounts previously withheld. 9.6 PROGRESS PAYMENTS - 9.6.1 After the Architect has issued a Certificate for Payment, the Owner shall make payment in the manner and within the time provided in the Contract Documents, and shall so .. ~ notify the Architect. i!:l19$7 AINI'> -;:©,-C"o-p-y'"'rig-:h-:-l-::1-:::S:-:11::-,"'1"'9i"5:-,-1-=-91"'8::-,-.1-:::9c:c25:-."'1"9"37:o-,-:ic:::9-=51:-,'"1"9-::58::-,-1"9"'51.,..,..,1'"9.,.63"',"'1"9"'66::-,-.1-=9"'67=-,-:1-=9-=7o::-,-:1-=9-=76::-,-:1-=9"'87=-,-1"9"97:-:-by- AlA DOCUMENT A201 ·1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial ~ENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the Unlled States vONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright • • , laws and wlll subject the violator to legal prosecution. This document was electronically produced with The_Amencan lnst.1tute of Architects permission of !he AlA and can be reproduced in accordance 'hith your license without violation until the date of 173:> ~ew York AventJe, N.W• expiration as noted below. Washmgton, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 35 9.6.2 The Contractor shall promptly pay each Subcontractor, upon receipt of payment from the Owner, out of the amount paid to the Contractor on account of such Subcontractor's portion of "the Work, the amount to which said Subcontractor is entitled, reflecting percentages actually retained from payments to the Contractor on account of such Subcontractor's porti~n of the Work. The Contractor shaH, by appropriate agreement with each Subcontractor, require each Subcontractor to make payments to Sub-subcontractors in a similar manner. 9.6.3 The Architect will, on request, furnish to a Subcontractor, if practicable, information regarding percentages of completion or amounts applied for by the Contractor and action taken thereon by the Architect and Owner 011 account of portions of the Work done by such Subcontractor. THIS DOCUMENT HAS iMPORTANT LEGAL CONSEQUENCES. 9.6.4 Neither the Owner nor Architect shall have an obligation to pay or to see to the CONSULTATION WITH AN payment of money to a Subcontractor except as may otherwise be required by law. ATTORNEY JS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTJCA TJON 9.6.5 Payment to material suppliers shall be treated in a manner similar to that provided in OF THIS ELECTRON/CALLY Subparagraphs 9.6.2, 9.6.3 and 9.6.4. DRAFTED AlA DOCUMENT MAY BE MADE BY USING AlA DOCUMENT D4(}1. 9.6.6 A Certificate for Payment, a progress payment, or partial or entire use or occupancy of the Project by the Owner shall not constitute acceptance of Work not in accordance with This document has been approved and the Contract Documents. endorsed by The Associated General Contractors of America. 9.6.7 Unless the Contractor provides the Owner with Redacted in the full penal sum of the Contract Sum, payments received by the Contractor for Work properly performed by Subcontractors and suppliers shall be held by the Contractor for those Subcontractors or suppliers who performed Work or furnished materials, or both, under contract with the Contractor for which payment was made by the Owner. Nothing contained herein shall require money to be placed in a separate account ru1d not conuningled with money of the Contractor, shall create imy fiduciary liability or tort liability on the part of the Contractor for breach of trust or shall entitle any person or entity to an award of punitive damages against the Contractor for breach of the requirements of this provision. 9.7 FAILURE OF PAYMENT 9.7.1 If the Architect does not issue a Certificate for Payment, through no fault of the Contructor, within seven days after receipt of the Contractor's Application for Payment, or if the Owner does not pay the Contractor within seven days after the date established in the Contract Documents the amount certified by the Architect or awarded by arbitration, then the Contractor may, upon seven additional days' written notice to the Owner and Architect, stop the Work until payment of the amount owing has been received. The Contract Time shall be extended appropriately and the Contract Sum shall be increased by the amoum of the Contractor's reasonable costs of shut-down, delay and start-up, plus interest as provided for in the Contract Documents. 9.8 SUBSTANTIAL COMPLETION 9.8.1 Substantial Completion is the stage in the progress of the Work when the Work or designated portion t..l-Jereof is sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use. e>i997 AlA® '©;:-;::C~op:-:y~ri~gh:::t--:;1-::::97 11::-,-::1::::97 15:::-,-::1::::97 18;:-,-::1-::::9~25;:-,-::1::::9-;::37::-,-::1-::::9-.=-51::-,-::1-::::9-.=-58;:-,-::1-::::9~61::-,-::1::::9~63;:-,-:i:-:::9~66:::-,-:1::::9~67::-,-:1r:::9:::;7:::-0,-:1r:::9:::;76:::-,-:1r:::9~87::-,-:i~9~97::;-;:-by":' AlA DOCUMENT A201 ·1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provislons w~hout written permission of the AlA violates the copyright laws of the United States CONTRAC'f FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright laws and will subject the violator to legal prosecution. This document was electronically produced with The American lns!ltule of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date o1 1735 New York Avenue, N.W. expiration as noted below. Washington, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by A!MJ) Contract Documents software for administrative purposes only and is not for other use or resale. 36 9.8.2 When the Contractor considers that the Work, or a portion thereof which the Owner agrees to accept separately, is substantially complete, the Contractor shall prepare and submit to the Architect a comprehensive list of items to he completed or corrected prior to final payment. Failure to include an item on such list does not alter the responsibility of the Contractor to complete all Work in accordance with the Contract Documents. 9.8.3 Upon receipt of the Contractor's list, the Architect will make an inspection to determine whether the Work or designated portion thereof is substantially complete. If the Architect's inspection discloses any item, whether or not included on the Contractor's list, which is not sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work or designated portion thereof for its intended use, the Contractor shall, before issuance of the Certificate of Substantial Completion, complete or THIS DOCUMENT HAS IMPORTANT correct such item upon notification by the Architect In such case, the Contractor shall then LEGAL CONSEQUENCES. submit a request for another inspection by the Architect to determine Substantial Completion. CONSULTATiON WITH AN ATTORNEY IS ENCOURAGED WITH . . • . • . RESPECT TO JTS COMPLETION OR 9.8.4 When the Work or desJgnated portton thereof IS substantially complete, the Arch1tect MODIFICATION AUTHENTICATION will prepare a Certificate of Substantial Completion which shall establish the date of OF THIS ELECTRON/CALL y · Substantial Completion, shall establish responsibilities of the Owner and Contractor for DRAFTED AlA DOCUMENT MAY BE security, maintenance, heat, utilities, damage to the Work and Redacted , and shall fix the time MADE BY USING AlA DOCUMENT 0401 within which the Contractor shall finish all items on the list accompanying the Certificate. · Warranties required by the Contract Documents shall commence on the date of Substantial This document has been approved and Completion of the Work or designated portion thereof unless otherwise provided in the endorsedbyTheAssociatedGeneral Certificate of Substantial Completion. Contractors of America. 9.8.5 The Certificate of Substantial Completion shall be submitted to the Owner and Contractor for their \vritten acceptance of responsibilities assigned to them in such Certificate. Upon such acceptance and consent of ~edacte, if any, the Owner shall make payment of retainage applying to such Work or designated portion thereof. Such payment shall be adjusted for Work that is incomplete or not in accordance with the requirements of the Contract Documents. 9.9 PARTIAL OCCUPANCY OR USE 9.9.1 The Owner may occupy or use any completed or partially completed portion of the Work at any stage when such portion is designated by separate agreement with the Contractor, provided such occupancy or use is consented to by tht:f'edacted as required under Clause 11.4.1.5 and authorized by public authorities having jurisdiction over the Work. Such partial occupancy or use may commence whether or not the portion is substantially comp1ete, provided the Owner and Contractor have accepted in writing the responsibilities assigned to each of them for payments, retainage, if any, security, maintenance, heat, utilities, damage to the Work and Redacted ,, and have agreed in writing concerning the period for correcrion of the Work and conm1encement of warranties required by the Contract Documents. When the Contractor considers a portion subsrantialiy complete, the Contractor shall prepare and submit a list to the Architect as provided under Subparagraph 9.8.2. Consent of the Contractor to partial occupancy or use shall not be unreasonably withheld. The stage of the progress of the Work shall be determined by written agreement between the Owner and Contractor or, if no agreement is reached, by decision of the Architect. !ill997 Al~ "'©"'C:::-o-p-yr-,-ig-:-h.,-t-:-:19::-::1-..,.1-,1'"'9:-:-1-=5,...,1'"9"'"18",'"'1-=9"25=-,"'1"93"7=-,"19"5'"'i-,"'19:-:5"8-,-.-:19:-:6-:-1,-1:-::9-::-63",'"1"9"66",'"'1""96=7'",-:-19"7"0-,"19"7':'::6,-1.....,9"8"7,-1'"9"97::-:--by AlA DOCUMENT A201 • 1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright taws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and will subject the violator to legal prosecution. This document was electronically produced v.'ith T~e Amencan Institute of Architects permission of the AlA and can be reproduced in accordance with your license without dolalion until the date of 1t35 New York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006·5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 37 9.9.2 Immediately prior to such partial occupancy or use, the Owner, Contractor and Architect shall jointly inspect the area to be occupied or portion of the Work to be used in order to determine and record the condition of the Work. 9.9.3 Unless otherwise agreed upon, partial occupancy or use of a portion or portions of the Work shaH not constitute acceptance of Work not complying with the requirements of the Contract Documents. 9.10 FINAL COMPLETION AND FINAL PAYMENT 9.1 0.1 Upon receipt of written notice that the Work is ready for final inspection and acceptance and upon receipt of a final Application for Payment, the Architect will promptly make such inspection and, when the Architect finds the Work acceptable under the Contract Documents and the Contract fully performed, the Architect will promptly issue a final THIS DOCUMENT HAS IMPORTANT Certificate for Payment stating that to the best of the Architect's knowledge, information and LEGAL CONSEOUENCES. belief, and on the basis of the Architect's on-site visits and inspections, the Work .has been CONSULTATION WITH AN completed in accordance with temlS and conditions of the Coutract Documents and that the AITORNEY IS ENCOURAGED WITH · b . · .. 1 · · RESPECT TO ITS COMPLETION OR enure balance found to e due the Contractor and noted m the fina Cerllficate ts due and MOD!FlCATION. AUTHENTICATION payable. The Architect's final Certificate for Payment will constitute a further representation OF THIS £L£CTRONJCALL y that conditions listed in Subparagraph 9.10.2 as precedent to the Contra.ctor's being entitled to DRAFTED AlA DOCUMENT MAY BE final payment have been fulfilled. MAD£ BY USING AlA DOCUMENT ' D401. 9.1 0.2 Neither final payment nor any remaining retained percentage shall become due until This document has been approved and the Contntctor submits to the Architect (1) an affidavit that payrolls, bills for materials and endorsed by The Associated General equipment, and other indebtedness connected with the Work for which the Owner or the Contractors of America. Owner's properly might be responsible or encumbered (less amounts wit.ihcld by Owner) have been paid or otherwise satisfied, (2)'edacted Redacted Redacted (3) Redacted (4) consent of ~edacte, if any, to final payment and (5), if required by the Owner, other data establishing payment or satisfaction of obligations, such as receipts, releases and waivers of liens, claims, security interests or encumbrances arising out of the Contract, to the extent and in such form as may be designated by the Owner. If a Subcontractor refuses to furnish a release or waiver required by the Owner, the Contractor may furnish a~!dact satisfactory to the Owner to indemnify the Owner agrtinst such lien. If such lien remains unsatisfied after payments are made, the Contractor shall refund to the Owner all money that the Owner may be compelled to pay in discharging such lien, including all costs and reasonable attorneys' fees. 9.10.3 If, after Substantial Completion of the Work, final completion thereof is materiaiJy delayed through no fault of the Contractor or by issuance of Change Orders affecting final completion, and the Architect so contirms, the Owner shall, upon application by the Contractor and certification by the Architect, and without terminating the Contract, make payment of the balance due for that portion of the Work fully completed and accepted. If the remaining balance for Work not fully completed or corrected is less than retainage stipulated in the Contract Documents, and if~edacte have been furnished, the written consent o~edacte to payment of the balance due for that portion of the \Vork fully completed and accepted shall be submitted by the Contractor to the Architect prior to cemfication of such payment Such <:lHl97 AlA® "©,..C"'"o_p_y..,.rig-:-h-:-1-.-19"1,-:1-,.,.,19'"'1"'5-,1'"'9,-:1"'8,-1"9""25",-:1"93"'7=-,-:-19'="5"1-,"'"19"'5"8-,1"'9"6"'"1,-1'"9"'63"'",""1"9'="66,...,-:1"96:::7::--,-:-19'="7::-:0c-,"19"7"'6,-1'"'9:-:::8=7,-i:-:::9"97:::-:--by AlA DOCUMENT A201 • 1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantia! GENERAL CONDITIONS OF THE Cfi,JOlalion of its provisions v.ithout written permission of the AlA violates the copyright laws of the United Slates CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . . laws and \viii subject the violator to legal prosecution. This document was electronically produced with The Amencan Institute of Architects permission of the AlA and can be reproduced in accordance with your license without violation umil the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washmglon, D.C. 20006-5292 This document is not an origlnal AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 38 ' payment shall be made under terms and conditions governing final payment, except that it shall not constitute a waiver of claims. 9.10.4 The making of final payment shall constitute a waiver of Claims by the Owner except those arising from: .i liens, Claims, security interests or encumbrances arising out of the Contract and unsettled; .2 failure of the Work to comply with the requirements of the Contract Documents; or .3 terms of special warranties required by the Contract Documents. 9.1 0.5 Acceptance of final payment by the Contractor, a Subcontractor or material supplier shall constitute a waiver of claims by that payee except those previously made in writing and THIS DOCUMENT HAS iMPORTANT identified by that payee as unsettled at the time of final Application for Payment. LEGAL CONSEQUENCES. CONSULTATION WITH AN ARTICLE 10 PROTECTION OF PERSONS AND PROPERTY ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR 10.1 SAFETY PRECAUTIONS AND PROGRAMS MODIFICATION. AUTHENTICATION 10.1.1 The Contractor shall be responsible for initiating, maintaining and supervising all OF THIS ELECTRON/CALLY safety precautions and programs in connection with the performance of the Contract DRAFTED AlA DOCUMENT MAY BE MADE BY USING AlA DOCUMENT D401. 10.2 SAFETY OF PERSONS AND PROPERTY 10.2.1 The Contractor shall take reasonable precautions for safety of, and shall provide This document has been approved End reasonable protection to prevent damage, )njury or loss to: endorsed by The Associated General .1 employees on the Work and other persons who may be affected thereby; Contractors of AmeriCE. .2 the Work and materials and equipment to be incorporated therein, whether in storage on or off the site, under care, custody or control of the Contractor or the Contractor's Subcontractors or Sub-subcontractors; and .3 other property at the site or adjacent thereto, such as trees, shrubs, lawns, walks, pavements, roadways, structures and utilities not designated for removal, relocation or replacement in the course of construction. 10.2.2 The Contractor shall give notices and comply with applicable Jaws, ordinances, rules, regulations and lawful orders of public authorities bearing on safety of persons or property or their protection from damage, injury or loss. 10.2.3 The Contractor shall erect and maintain, as required by existing conditions and perfom1ance of the Contract, reasonable safeguards for safety and protection, including posting danger signs and other warnings against hazards, promulgating safety regulations and notifying owners and users of adjacent sites and utilities. 10.2.4 When usc or storage of explosives or other hazardous materials or equipment or unusual methods are necessary for execution of the Work, the Contractor shall exercise utmost care and carry on such activities under supervision of properly qualified personnel. 10.2.5 The Contractor shall promptly remedy damage and loss (other than damage or loss Redacted required by the Contract Documents) to property referred to in Clauses 10.2.1.2 and 10.2.1.3 caused in whole or in part by the Contractor, a Subcontractor, a Sub-subcontractor, or anyone directly or indirectly employed by any of them, or by anyone for whose acts they may be liable and for which the Contractor is responsible under Clauses @1997 AlA'S! "'©=-=Co-p_y....,rl,..gh"'t--1'"'9"1-:-1,-1"9'"1.,.5,-1'"9..,.1"8,-1"9725"',-1'"9"3"'7,-1,..,9"'5.,..1,-1-,9"5"8,-1~9..,.6.,..1,-1-9-6~3-,1__9_6_6-,1-9-6=7,-1-9"'7,_0-,1-9=7=6,-1-9_8_7_,1-9,....9.,_7..,.b-y AlA DOCUMENT A201 - 19~7 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL COI>lD!TJONS Or THE quotation of l!s provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and wi!l subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . • !aws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan lnstilule of Arch!te~ts permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006·5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 39 10.2.1.2 and 10.2.1.3, except damage or loss attributable to acts or omissions of the Owner or Architect or anyone directly or indirectly employed by either of them, or by anyone for whose acts either of them may be liable, and not attributable to the fau1t or negligence of the Contractor. The foregoing obligations of the Contractor are in addition to the Contractor's obligations under Paragraph 3 .18. 10.2.6 The Contr-actor shall designate a responsible member of the Contractor's organization at the site whose duty shall be the prevention of accidents. This person shall be the Contractor's superintendent unless otherwise designated by the Contractor in \Vtiting to the Owner and Architect. 1 0.2. 7 The Contractor shall not load or penn it any parr of the construction or site to be loaded so as to endanger its safety. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. 10.3 HAZARDOUS MATERIALS CONSULTATION WITH AN 1 0.3.1 If reasonable precautions will be inadequate to prevent foreseeable bodily injury or ATTORNEY IS ENCOURAGED WITH · · · . · · b . · · d ·b death to persons resultmg from a rnatenal or substance, mcludmg ut not lmute to as estos RESPECT TO ITS COMPLETION OR MODIFICATION AUTHENTICATION or polychlorinated biphenyl (PCB), encountered on the site by the Contractor, the Contractor oF THIS ELECTRONICALLY shall, upon recognizing the condition, immediately stop Work in the affected area and report DRAFTED AlA DOCUMENT MAY BE the condition to the Owner and Architect in writing. - MADE BY USING AlA DOCUMENT `` 10.3.2 The Owner shall obtain the services of a licensed laboratory to verify the presence or This document has been approved and absence of the material or substance reported by the Contractor and, in the event such material endorsed by Tile Associated General or substance is found to be present, to verify that it has been rendered hannless. Unless contractors of America. otherwise required by the Contract Documents, t11e Owner shall furnish in writing to the Contractor and Architect the names and qualifications of persons or entities who are to perform tests verifying the presence or absence of such material or substance or who are to pe1forrn the task of removal or safe containment of such material or substance, The Contractor and the Architect will promptly reply to the Owner in writing stating whether or not either has reasonable objection to the persons or entities proposed by the Owner. If either the Contractor or .Architect has an objection to a person or entity proposed by the Owner, the Owner shall propose another to whom the Contractor and the Architect have no reasonable objection. When the material or ~ubstance has been rendered hannless, Work in the affected area shall resume upon written agreement of the Owner and Contractor. The Contract Time shall be extended appropriate1y and the Contract Sum shall be increased in the amount of the Contractor's reasonable additional costs of shut-down, delay and starr-up, which adjustments shall be accomplished as provided in Article 7. 10.3.3 To the fullest extent permitted by law, the Owner shall indemnify and hold harmless the Contractor, Subcontractors, Architect, Architect's consultants and agents and employees of any of them from and against claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of or resulting from performance of the Work in the affected area if in fact the material or substance presents the risk of bodily injury or death as described in Subparagraph 10.3.1 and has not been rendered harmless, provided that such claim, damage, loss or expense is atrributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself) and provided that such damage, loss or expense is not due to the sole negligence of a party seeking indemnity. 01997 AlA~ ""co_p_yr-:ig-:h-:-t..,.19'="1'"1-,.,..19'"1-=5-,1....,9,_,1.,.8,-1,...,9""'2::>-=--,-1'"9"'37",-:1-:-95="1,...,..,.19"'5'"8-,-19,_6_,.1.-1""9-63"'"'".-1-9-66-,-1..,.96'"'7"",-1'"97'"'"0,...,...,.19..,7"6-,.,.19,....8=7,-1,...,9-9"7.,.-by "'©"· AlA DOCUME~ A201 -1997 The American Institute of Architects. Fifteenth Edition. Reproduclion of the material herein or substantial GENERAL CO. mlTIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . • . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan lnst1tute of Architects permission ol the AlA and can be reproduced in accordance vvith your license without violation untillhe date of 1735 ~ew YorK Avenue, N.W. expiration as noted below. Washington, D.O. 20006-5292 This document is not an original t>JA® Contract Document, but a reproduction produced by I>JA® Contract Documents software for administrative purposes only and ls not for other use or resale. 40 10.4 The Ovvner shall not be responsible under Paragraph 10.3 for materials and substances brought to the site by the Contractor unless such materials or substances were required by the Contract Documents. 10.5 If, \Vithout negligence on the part of the Contractor, the Contractor is held liable for the cost of remediation of a hazardous material or substance solely by reason of performing Work as required by the Contract Documents, the Owner shall indemnify the Contractor for all cost and expense thereby incurred. 10.6 EMERGENCIES 10.6.1 In an emergency affecting safety of persons or property, the Contractor shall act. at the Contractor's discretion, to prevent t.fJreatened damage, injury or loss. Additional compensation or extension of time claimed by the Contractor on account of an emergency THIS DOCUMENT HAS IMPORTANT shall be determined as provided in Paragraph 4.3 and Article 7. LEGAL CONSEQUENCES. CONSULTATION WITH AN ARTICLE 11 Redacted ATTORNEY IS ENCOURAGED WITH ~edacted "1ESPECT TO ITS COMPLETION OR lAODIF!CA TION. AUTHENTICA TJON JF THIS ELECTRON/CALLY JRAFTED AlA DOCUMENT MAY BE lAADE BY USiNG AlA DOCUMENT )401. This document has been approved and mdorsed by The Associated General -:Jontractors of America. 1:>11?97 Ali'IU '"'©:-C-=o-p-y...,.rig...,.h..,..t...,.19""1,-,1-,..,..19"'1"5-,1"'9'"'"1"'"8,-1'""9..,..25,_,-,1~9"37=-,~1..,..95,_1.,-,-19,..5=8-,-19.,..,6_,1-,1-9-63-,-1-9-66-,...,1-9~67-,....,1-97,....0-,-19_,7,_6-,-19_8..,..7,-1-9_9.,..7-by- AlA DOCUMENT A201 - 1997 TI1e American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions wilhout written permission of the AlA violates the copyright laws of !he United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . .. . laws and will subject !he violator to legal prosecution. This document was electronically produced vlith Th~ Amencan Institute of Archtlects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 17.:>5 New York Avenue, N.W. expiration as noted below. Washtngton, D.C. 20006·5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 41 Redacted THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. CONSULTATION WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION OF THIS ELECTRON/CALLY DRAFTED AfA DOCUMENT MAY BE MADE BY USING AlA DOCUMENT 0401. This document has been approved and endorsed by The Associated General Contractors of America. ~1997 AIM!> ©~C~o~p~y~rig``~t~19n,1~1-,<-19~1c``1~9~18n,<1~9~25o,<1~93~7o,~19~5~1-,7.19~5~8-,1~9~67 6 1,~1~9~ro~.'1~9~66~,~1~96~7~.~19~7~0~,7.19~7~6-,1~9~8=7,-1~97 97~by AIADOCUMENTA201·1~7 The Amencan Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subj:ct th~ violate to. legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and 11r.ll subJeCt the VJolator to JegaJ prosf:\."'Ution. This document was electronically produced with The Amencan lnslitute of Archt!ects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 New York Avenue, N.W. expiration as noted below. Washington, D.C. 20006-5292 This document is not an orlglnal AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 42 Redacted THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. CONSULTATION WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION OF THIS ELECTRON/CALLY DRAFTED AlA DOCUMENT MAY BE MADE BY USING AlA DOCUMENT D401. This document has been approved end endorsed by The Associated General Contractors of America. @1997 AJMJ -;:;;@;:-;C;:;;o::::p:::yr::Cig:r;h;-t1:;-;9:;<1<1,~1;r9;-.1;:;5,-:1;-;;9::;-18",'1"92;:;;5;-,-:;i;:;;93:;=7;-,"19:;;;5::;1-,1;-;9;:;:5:;:;8,~1-;;9;::6-:;-1,-:1;-;:9:-z63;;;-,-::1-;;9;:;;66::-,-:;1"96"7',719:;=7;:::0-,-:-.19"'7"'"6,-:1"9"'87:::-,-::1::::9~97::-:-by AlA DOCUMENT A201·1997_ The American Institute oi Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF I HE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright laws and will subject the violator to legal proseculion. This document was electronically produced with The American Institute of Architects permission of the AlA and can be reproduced in accordance vlith your license without violation unlil the date of 1735 New York Avenue, N.W. expiration as noted below. Washington, D.C. 20006-5292 Thls document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 43 Redacted THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. CONSULTATION WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENT/CA TION OF THIS ELECTRON/CALLY DRAFTED AlA DOCUMENT A1A Y BE MADE BY USING AlA DOCUMENT D401. This document has been approved and endorsed by The Associated General Contractors of Amerioa. Q1997 AIM! -;;;©"'C"-o::p::yr::::ig:;:h:-t:;;19:;-::1-::-1-,1::;-;9:-:;1-;:5,-:1;-;::9~18~.-::1,-;::9~25:::-,-::1~93;::7;-,719;::5=-;1-,"'19::-::5:-:::8-,1'"'9"'67 1,-:1"9"63::-.-.1~96"'6:-,...,.19"6::-:7:-,.,..19::-::7"0-,1"9"'7"6,-1"9"=a7=,-1'"9"97=-:--by AlA DOCUMENT A201 ~ 1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without wri!len permission ol the AlA violates the copyright laws of the United Slates CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecu!ion. WARNING: Unlicensed photocopying violates U.S. copyright • . . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan lnst1tute of Arch1tects permission of the. AlA and can be reproduced in accordance with your license withoulllio!ation until the date of 1735 NewYorkAvenue, N.W. expiration as noted below. Washington, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 44 Redacted THIS DOCUMENT HAS iMPORTANT LEGAL CONSEQUENCES. CONSUL TAT/ON WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR ARTICLE 12 UNCOVERING AND CORRECTION OF WORK MODIFICATION. AUTHENTICATION 12.1 UNCOVERING OF WORK OF THIS ELECTRON/CALLY 12.1.1 If a portion of the Work is covered contrary to the Architect's request or to DRAFTED AlA DOCUMENT MAY BE requirements specifically expressed in the Contract Documents, it must, if required in \\-Titing MADE BY USING AlA DOCUMENT by the Architect, be uncovered for the Architect's examination and be replaced at the D401. Contractor's expense without change in the Contract Time. This document has been approved and endorsed by The Associated General 12.1.2 If a portion of the Work has been covered which the Architect has not specifically Contractors of America. requested to examine prior to its being covered, the Architect may request to see such Work and it shall be uncovered by the Contractor. If such Work is in accordance with the Contract Docun1ents, costs of uncovering and replacement shall, by appropriate Change Order, be at the Owner's expense. If such Work is not in accordance with the Contract Documents, correction shall be at the Contractor's expense unless the condition was caused by the Owner or a separate contractor in which event the Owner shall be responsible for payment of such costs. 12.2 CORRECTION OF WORK 12.2.1 BEFORE OR AFTER SUBSTANTIA!.. COMPLETION 12.2.1.1 The Contractor shall promptly correct Work rejected by the Architect or failing to conform to the requirements of the Contract Documents, whether discovered before or after Substantial Completion and whether or not fabricated, installed or completed. Costs of correcting such rejected Work, including additional testing and inspections and compensation for the Architect's services and expenses made necessary thereby, shall be at the Contractor's expense. 12.2.2 AFTER SUBSTANTIAL COMPLETION 12.2.2.1 In addition to the Contractor's obligations under Paragraph 3.5, if, within one year after the date of Substantial Completion of the Work or designated portion thereof or after the date for commencement of warranties established under Subparagraph 9.9.1, or by terms of an applicable special warranty required by the Contract Documents, any of the Work is found to be not in accordance with the requirements of the Contract Documents, the Contractor shall :1. correct it promptly after receipt of written notice from the Owner to do so unless the Owner _JI!I!IIii!!I!IE has previously given the Contractor a written acceptance of such condition. The Owner shall 1:11997 AIM!> ~©"'C"o-p-yr..,.ig-:h-,-t-:-19"'1:-:-i-,"'"'19'"1.,.5,-i:-:9:-:-18"'","'1"'9"25=-,-:1-:-93"'7=-,...,.1"'"'95::-:1-,..,..19:-::5'"8-,1.,.,9"'5..,.1,-1'"9"63=-,"'1"'9.,..56,_,..,.1"'"95:-::7:-,--:-19::-:7::-:0-,..,..19::-::7=-=6-,io-:9:-::8=7,-1'"9-:-:97=-=--by AlA DOCUMENT A201 • 1997 The American Institute ol Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL C1997 NA'!l -;;©;;-C;::;o::-:p::-:y:::-rig::;:h7t 719;:::1;:;1-,:;-;19~1"5,-:1:-::9:::-18;;-,-::1c:::92:;:;5::-,-:;i-;::93~7::-,"'19;:-;5"'1-,:;-;19;:-;:5"'8-,1::-;9:;:::671 ,-:1:-::9c::63;;-,-::1:-::9:;:;66::-,""1"'96;;-::7::-,719"'7:::::0:-,-::-:19~7"6,-:1:;-;9"'8"'"7,-:1:-::9-:::c97:;-;-by AlA DOCUMENT A201 • 1997 The American Institute of Architects. Fifteenth Edition. Reproduction ol the material herein or substantial GENEP.AL CONDITIONS OF THE quotation of its provisions without written pennission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution, WARNING: Unlicensed photocopying violates U.S. copyright . . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan lnst1tute of Architects permission of the AlA and can be reproduced in accordance with your license v.tilhout violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. • Washington, D.C. 20006·5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 46 ,, the other. If either party attempts to make such an assignment without such consent, that party shall nevertheless remain legally responsible for all obligations under the Contract. 13.2.2 The Owner may, without consent of the Contractor, assign the Contract to an institutional lender providing construction financing for the Project. In such event, the lender shall assume the Owner's rights and obligations under the Contract Documents. The Contractor shall execute all consent~ reasonably required to facilitate such assignment. 13.3 WRITTEN NOTICE 13.3.1 Written notice shall be deemed to have been duly served if delivered in person to the individual or a member of the firm or entity or to an officer of the corporation for which it was intended, or if delivered at or sent by registered or certified mail to the last business address known to the party giving notice. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. 13.4 RIGHTS AND REMEDIES CONSULTATION WITH AN 13.4.1 Duties and obligations imposed by the Contract Documents and rights and remedies A ITORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR available thereunder shall be in addition to and not a limitation of duties, obligations, rights MODIFICATION. AUTHENTICATION and remedies otherwise imposed or avuilable by Jaw. OF THIS ELECTRONICALLY DRAFTED AlA DOCUMENT MAY BE 13.4.2 No action or failure to act by the Owner, Architect or Contractor shall constitute a MADE BY USING AlA DOCUMENT 0401. waiver of a right or duty afforded them under the Contract, nor shall such action or failure to act constitute approval of or acquiescence in a breach thereunder, except as may be This document has been approved and specifically agreed in writing. endorsed by The Associated General Contractors of America. 13.5 TESTS AND INSPECTIONS 13.5.1 Tests, inspections and approvals of portions of the Work required by the Contract Documents or by laws, ordinances, rules, regulations or orders of public authorities having jurisdiction shall be made at an appropriate time. Unless othenvise provided, the Contractor shall make arrangements for such tests, inspections and approvals with an independent testing laboratory or entity acceptable to the Owner, or with the appropriate public authority, and shall bear all related costs of tests, inspections and approvals. The Contractor shall give the Architect timely notice of when and where tests and inspections are to be made so that the Architect may be present for such procedures. The Owner shall bear costs of tests, inspections or approvals which do not become requirements until after bids are received or negotiations concluded. 13.5.2 If the Architect, Owner or public authorities having jurisdiction determine that portions of the Work require additional testing, inspection or approval not included under Subparagraph 13.5.1, the Architect will, upon written authorization from the Owner, instruct the Contractor to make arrangements for such additional testing, inspection or approval by an entity acceptable to the Ov.ner, and the Contractor shall give timely notice to the Architect of when and where tests and inspections are to be made so that the Architect may be present for such procedures. Such costs, except as provided in Subparagraph 13.5.3, shall be at the Owner's expense. 13.5.3 If such procedures for testing, inspection or approval under Subparagraphs 13.5.1 and 13.5.2 reveal failure of the portions of the Work to comply with requirements established by the Contract Documents, all costs made necessary by such failure including those of ~1997 Al/lt!i -.::©'"'C:::-o-p-yn-=-·g-:-h-:-t1"'9:-:1-.-1,-1:-::9:-.-1-:::-5,-.1"'9"'"'18~,-.17 92::-:5=-,-.1-:c93::-::7:-,-.-19::-:5::-:1-,.,.,19::-::5:::-8-,1"'96:-:::-.-1,-1:-::9-:::63=-,-:1-::-966"'=-, - -:1::-96::-::7:-,-.-19"'7:::::0-,1-:-:9::-::7:::-6,-1:-::9"'S=7,-.1c::9"'97,..,-by AlA DOCUMENT A201 - 1997 The American lnslitute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF T~E quotation of ils provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCt ION and will subjeclthe violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . • , la\\'S and will subject the violator to legal prosecution. This document was electronically produced wlth The Amencan Institute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washmg!on, D.C. 20006·5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents soft'.vare for admlnlstralive purposes only and is not for other use or resale. 47 .. repeated procedures and compensation for the Architect's services and expenses shall be at the Contractor's expense. 13.5.4 Required certificates of testing, inspection or approval shall, unless otherwise required by the Contract Documents, be secured by the Contractor and promptly delivered to the Architect. 13.5.5 If the Architect is to observe tests, inspections or approvals required by the Contract Documents, the Architect will do so promptly and, where practicable, at the normal place of testing. 13.5.6 Tests or inspections conducted pursuant to the Contract Documents shall be made promptly to avoid unreasonable delay in the Work. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. 13.6 INTEREST CONSULTATION WITH AN 13.6.1 Payments due and unpaid under the Contract Documents shall bear interest from the A ITORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETiON OR date payment is due at such rate as the parties may agree upon in writing or, in the absence MODIFICATION. AUTHENTICATION thereof, at the legal rate prevailing from time to time at the place where the Project is located. OF THIS ELECTRON/CALLY DRAFTED AlA DOCUMENT MAY BE 13.7 COMMENCEMENT OF STATUTORY LIMITATION PERIOD MADE BY USING AlA DOCUMENT D401. 13.7.1 As between the Owner and Contractor: .1 Before Substantial Completion. As to acts or failures to act occurring prior This document has bean approved and to the relevant date of Substantial Completion, any applicable statute of endorsed by The Associated General limitations shall commence to nm and any alleged cause of action shall be Contractors of America. deemed to have accrued in any and all events not later than such date of Substantial Completion; .2 Between Substantial Completion and Final Certificate for Payment. As to acts or failures to act occurring subsequent to the relevant date· of Substantial Completion and prior to issuance of the final Certificate for Payment, any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than the date of issuunce of the final Certificate for Payment; and .3 After Final Certificate for Payment As to acts or failures to act occurring after the relevant date of issuance of the final Certificate for Paymen~ any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than the date of any act or failure to act by the Contractor pursuant to any Warranty provided under Paragraph 3.5, the date of any correction of the Work or failure to correct the Work by the Contractor under Paragraph 12.2, or the date of actual commission of any other act or failure to perform any duty or obligation by the Contractor or Owner, whichever occurs last ARTICLE 14 TERMINATION OR SUSPENSION OF THE CONTRACT 14.1 TERMINATION BY THE CONTRACTOR 14.i. i The Contractor may terminate the Contract if the Work is stopped for a period of 30 consecutive days through no act or fault of the Contractor or a Subcontractor, Sub· ,. subcontractor or their agents or employees or any other persons or entities performing ponions of the Work under direct or indirect contract with the Contractor, for any of the ,JIIIIII!I!I!.Ii . following reasons: 01997 AIM!> "'©'"C:::-o-p_y..,.rig..,.h"'"t-.-19"1,_,1-,1"'9'"'1'='5,-i"'9..,.18:::-,'"1c::9'="25"',"'"i"93"7",'"19"'5:-:1-,-:-19::-::5~8-,1"'9"'6.,.1,-1_,9..,.63.,..,...,1"9.,.66=-,-:1:::-96:-:7:-,.,.19"7::-::0-,"19"7"'6-,1,..,9"'8.,.7,-1'"9"97=-=--'by AI A DOCUMENT A201 • 1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject lhe violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright ' . . . laws and will subject the violator to legal prosecution. This document was electranicalfy produced with The Amencan lnsl!tute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ewYor'i\ Avenue, N.W. expiration as noted below. · Washmgton, D.C. 20006·5292 This document ls not an origlnal AlA® Contract Document, but a reproduction produced by AlAf{P Contract Documents software for administrative purposes only and is not for other use or resale. 48 .1 issuance of an order of a court or other public authority having jurisdiction which requires all Work to be stopped; .2 an act of government, such as a declaration of national emergency which requires all Work to be stopped; .3 because the Architect has not issued a Certificate for Payment and has not notified the Contractor of the reason for withholding certification as provided in Subparagraph 9.4.], or because the Owner has not made payment on a Certificate for Payment within the time stated in the Contract Documents; or .4 the Owner has failed to furnish to the Contractor promptly, upon the Contractor's request, reasonable evidence as required by Subparagraph 2.2.1. 14.1.2 The Contractor may tenninate the Contract if, through no act or fault of the Contractor or a Subcontractor, Sub-subcontractor or their agents or employees or any other THIS DOCUMENT HAS IMPORTANT persons or entities performing portions of the Work under direct or indirect contract with the LEGAL CONSEQUENCES. Contractor, repeated suspensions, delays or interruptions of the entire Work by the Owner as CONSUL TAT/ON WiTH AN described in .Paragraph 14.3 constitute in the aggregate more than 100 percent of the total ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR number of days scheduled for completion, or 120 days in any 365-day period, whichever is MOD/FICA TfON. AUTHENTICATION less. OF THIS ELECTRON/CALLY DRAFTED AlA DOCUMENT MAY BE 14.1.3 If one of the reasons described in Subparagraph 14J.l or I4J,2 exists, the MADE BY USING AlA DOCUMENT D401. Contractor may, upon seven days' written notice to the Owner and Architect, temrinate the Contract and recover from the Owner payment for Work executed and for proven loss with This document has bean approved and respect to materials, equipment, tools, and construction equipment and machinery, including endorsed by The Associated General reasonable overhead, profit and damages. Conlraclors of America, 14. i .4 lf the Work is stopped for a period of 60 consecutive days through no act or fault of the Contractor or a Subcontractor or their agents or employees or any other persons performing portions of the Work under contract with the Contractor because the Owner has persistently failed to fulfill the Owner's obligations under the Contract Documents with respect to matters important to the progress of the Work, the Contractor may, upon seven additional days' written notice to the 01i1'!1er and tl1e Architect, tenninate the Contract and recover from the Owner as provided in Subparagraph 14.1 .3. 14.2 TERMINATION BY THE OWNER FOR CAUSE 14.2.1 The Owner may terminate the Contract if the Contractor: .1 persistently or repeatedly refuses or fails to supply enough properly skilled workers or proper materials; .2 fails to make payment to Subcontractors for materials or labor in accordance with the respective agreements between the Contractor and the Subcontractors; .3 persistently disregards laws, ordinances, or rules, regulations or orders of a public authority having jurisdiction; or .4 otherwise is guilty of substantial breach of a provision of the Contract Documents. 14.2.2 \\Then any of the above reasons exist, the Owner, upon certification by the Architect that sufficient cause exists to justify such action, may without prejudice to any other rights or remedies of the Owner and after giving the Contractor and the Contmctor'!f'edacted if any, seven days' written notice, terminate employment of the Contractor and may, subject to any prior rights ofRedacted ~1997 NM!> "©"'C:::-o-p-yn..,.·g"h..,..t"19"'1:-:-1-,1c-:9"'1"'5,-1"9,..,.1"'"8,-1'"9-::-25=-,-ci"93"7"'","'1~95"1-,-:-19"'5'"'"8-,"19:-.:6..,.i,-1"9-:-S3-=-,"'i"9.,..66"',"'1...,.96.,..,7,..,"'i"97::-:0:-,..,.19"'7"6-,1"'9:-::8=7,-1'"'9"0'97:::-:-by AlA DOCUMENT A201 ·1997 The American Institute of Architects, Fifteenth Edition. Reoroduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of !he AiA violates the copyright laws of ihe United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying viola!es U.S, copyright . . . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan lnslttule of Architects permission ol the AlA and can be reproduced Jn accordance with your license without violation unlillhe date of 173~ !'Jew York Avenue, N.W. expiration as noted below. Wasnmgton, D.C. 20006·5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 49 .1 take possession of the site and of all materials, equipment, tools, and construction equipment and machinery thereon owned by the Contractor; .2 accept assignment of subcontracts pursuant to Paragraph 5.4; and .3 finish the Work by whatever reasonable merhod the Owner may deem expedient. Upon request of the Contractor, the Owner shall furnish to rhe Contractor a detalled accounting of the costs incurred by the Owner in finishing the Work. 14.2.3 When the Owner terminates the Contract for one of the reasons stated in Subparagraph 14.2.1, the Contractor shall not be entitled to receive further payment until the Work is finished. 14.2.4 If the unpaid balance of the Contract Sum exceeds costs of finishing the Work, THIS DOCUMENT HAS IMPORTANT including compensation for the Architect's services and expenses made necessary thereby, and LEGAL CONSEQUENCES. other damages incurred by the Owner and not expressly waived, such excess sha11 be paid to CONSULTATION WITH AN the Contractor. If such costs and damaoes exceed the unpaid balance the Contractor shall pay ATTORNEY IS ENCOURAGED WITH . . "' • ' RESPECT TO ITS COMPLETION OR the dtfference to the Owner. The amount to be pa1d to the Contractor or Owner, as the case MODIFICATION. AUTHENTICATION may be, shall be certified by the Architect, upon application, and this obligation for payment OF THIS ELECTRON/CALL y shall survive termination of the Contract. DRAFTED AfA DOCUMENT MAY BE MADE BY USING AlA DOCUMENT 14.3 SUSPENSION BY THE OWNER FOR CONVENIENCE D40t 14.3.1 The Owner may, without cause, order the Contractor in writing to suspend, delay or This document has been approved and interrupt the Work in whole or in part for such period of til!le as the Owner may determine. endorsed by The Associated General Contractors of America 14.3.2 The Contract Sum and Contract Time shall be adjusted for increases in the cost and time caused by suspension, delay or interruption as described in Subparagraph 14.3.L Adjustment of the Contract Sum shall include profit. No adjustment shall be made to the extent: .1 that performance is, was or would have been so suspended, delayed or interrupted by another cause for which the Contractor is responsible; or .2 that an equitable adjustment is made or denied under another provision of the Contract. 14.4 TERMINATION BY THE OWNER FOR CONVENIENCE 14.4.1 The Owner may, at any time, terminate the Contract for tlte Owner's convenience and without cause. 14.4.2 Upon receipt of written notice from the Owner of such termination for the 0\vner's convenience, the Contractor shall: .1 cease operations as directed by the Owner in the notice; .2 take actions necessary, or that the Owner may direct, !nr the protection and preservation of the \Vork; and .3 except for Work directed to be performed prior to the effective date of termination stated in the notice, terminate all existing subcontract~ and purchase orders and enter into no further subcontracts and purchase orders. 14.4.3 Jn case of such termination for the Owner's convenience, the Contractor shall be entitled to receive payment for Work executed, and costs incurred by reason of such termination, along with reasonable overhead and profit on the Work not executed. !;)j 997 1'JNl) "©~Co-=-p-y'"rig~h..,.t""19-::-1:-:1-,.,.19"'1c::5-,"'19'"1~8,-1:-.9"25=-,"'1"93"7",...,1-=-95"'1:-,..,.19"5:-:8-,"'19:-:6'"1-,1.,..,9'"6.,..3,-1'"96'"'"6",....,1..,.96"'7"",...,1"'97"o'",..,.19"'7"6-,"'19:-:8=7-,1"'9"'9"7-:-b-y AlA OOCUME~ A201 ·1997 The American lnstitule of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the Un1!ed States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright • . . · laws and will subject the violator to legal prosecution. This document vros electronically produced with T~e Amencan Institute of Architects permission of the AlA and can be reproduced in accordance with your license without Violation un!il the date of i !35 ~ew York Avenue, N.W. expiration as noted below, Washmgton, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software tor administrative purposes only and is not for other use or resale. 50 THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. CONSUL TAT/ON WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICA T!ON. AUTHENTICATION OF THIS ELECTRONICALLY DRAFTED AlA DOCUMENT MAY BE MADE BY USING AlA DOCUMENT 0401. This document has been approved and endorsed by The Associated General Contractors of America. @1997 NNJj -,;©~c=op::y::ri'=gh;::;t~1;;:9:-;1-;-1.~1;;:9:-;15:=-,~1;;:9:-;18;::,~1;;:9:;;2:=-5,-1:-.:9:;;3-:;7,-1"9"'571 ,-1:-.:.9:-::5'=8,-1'"'9"671,-1"9,:,6"3,-1"'9=-=6-=6,-1'"9'"6=7,-1.,.,9"7'"0,-1"'9'"7"'"6,-1.,.,9~8=7-,1....,9"'9=7-:-b-y AlA ~OCUMENT ~01 • i 997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material hereln or substantial GENt:::RAL CONDlilONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United Stales CONTRACT FOR CONSTRUCTION and will subj:ct lh~ violate to. !ega! prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws •a~d Will subject the Violator to legal prosecution. This document was electronical!y produced with The Amencan Jnstltu!e of Arch1tects permiSSIOn of the AlA and can be reproduced 1n accordance with your license without violation until !he date of 1735 New York Avenue, N.W. expiration as noted below. Washington, D.C. 20006·5292 This document is not an original AlA® Contract Document, but a reproduction produced by AJA® Contract Documents software for administretive purposes on! y and is not for other use or resale. 51 APPENDIX G (S./ AlA Document B14f·--1997 Part 1 . >,\}Sif;hiJard Foim of Agreement Between Owner and Architect ':,_::;:-Mf/lstandard Form ofArchitect's Services ADDITIOHS AND DElE1'10HS: The aulhor ollhls document has added lnfonnalion needed for its complefian. The author may also haw nrvlsed the lex! olDie original AlA slanclard loon. An Additions and lJelelionl> Repott lbatiiO!eS added fnfoonalioo as weiss revisions 1o the slandard ronn text Is available from !he author and shoulcl be reviewed. • BEJwi:EH fue ~·~-~t-idealified as the Owner: A vertlcaJ 1ne in the left margin ol , ·{,N``ess~,``n) ,;o,.Wbite'Lodgm·'·SerYice$CiHwration,Jnc. * l"\c..''"P 6/z.tf.~s ``and``?~ ,'f wuc"''""'"~ • ....,..,......,, ; -.-IOOO&st~PliiCc.·sUi~500North f p .I -=-/'>- F~"" ~addedtoordeleledfromlhe Metril.vme.:iN 464-io::s666: · ,_ e.d !... "' oliglnal AlA text. . · ·.:-·. ·· :· · : ·- ::<.... · O'F=-lCt CoAT. 2 /dos TtisooclJtner« has irrtp:;ml't. legal consequences. • ]?:6-'{ I!:./ o A~ fls. rz_ Consullalon wilb an atlomey Is encouraged witlt respecllo 'oi.·· ~AIL.~ bi-).T6 .l:. ils complefon or modification. Z/'1.. "?-/ o <:: . :·.... -~ .. :?.loti<::>'-" :l/z..r/os "ted contract administration for the coostrUCtion of a ·n Austin. Texas. ... ·.: . .. ·:: 'Thi: ownJiJ;``t~ agree as follows: SF.P 2 2 Z007 PLAINTIFF'S ESG001454 EXHIBIT ARTICLE 1.1 INITIAL INFORMATION .... _.$ M·1. This Agreemoot is based on tbe following information and assumptions. . · :.' TX 7&745 __ ;:_{:,,;,!;``bther important initial information is: § _1.1.5 Wbe~ the~ under this Agreement iaclude COtUract administration services, the General Conditions of ~ ColllractfotConslniction sball be the edition of AlA Document A201 cum:otns of the dale of this Agreement, :-- Qi-$ folloWs: : ..:_, - .. · '·.·· ·:· . ~--- - §1.U 'Jk -``in this Article Ll may be reasonably relied upon by the Owner and Architect in deterniming the ``-s c:Oihpensation. Both parties, however, recognize that such information may change and. .:ift tbai::evenr.llie ·awner. and {lie Architect shall negotiate appropriate adjustments in schedule, compensation and :_: ~-,Iii s,erriecs in-accordance with Section 1.3.3. ARliCU:U:R``OFTHEPARTIES ·.; .. __-:~ 1:.2.1 ~-~wn~.~ ~:~shall cooperate with onc another to fulfil1 theic n:spective obligations under this . 'Agreeiiient,- Both pai1ics sh311 endeavor to maintain good working relationships among all membm; of the Project ·.:-~ . :-_.:. ·..- ·..-t·;• . §u.f<>WNER . ,_ ,_ . . :-:· § 1ll1'Unl~ ~ ptoyided tmdec this Agreement, the Owner sball provide full information in a timely -;: mamier regarifuig ·. · · · · · ts for and limitations on the Project The Owner shall furnish ID the Architect, within .15;dii}'i altcl'reeei~ request, information necessacy and .tclevant for the Architect to evaluate, give ·,: rioti~'oro~ cDroi.W liCnJ;igliiS. .... ,;.:-. ;- .. ·~·:t·.-_.· ··-";.+ ·.·.• ·. ; §1m ThWwne.r..shaii P:n~r~are the budget for the Project. including that portion allocated for the cost . :-of the Wor:l:.·nC ~ sball_~sjgn.ipCantly inaease 01: deaease the ovcxaU budget, the portion of the budget .:aDOca~- foi: tlie;:qMit"Of~,)VOit;:on:oolingencies included in the oveaill bodget or a portion of the budget, . ,_.-~tlie'`` of £~H.>' Architect IDa corresponding cbaugc in the Project scope and quality. .·. .··• . . •·.:.:, .":'. ··:>:;;)).{~ . . · ·: §1~_,TheO``-Des_igoaiCd_~taliveidenlifiedinSectionl.l.3sball be authorized to acton the OM!er'sJidtalf:with respect,to tlie Project. The Owner or the Owner's Desigoared Representative shall render i: ·~·· :' ·iJecisiofiS· iii a ni:neJY'manner j?eiwning ID docu1Deuts submitted by the Architect in order ID avoid uareasonable ·~ d& § 1.2.i7 ~ Owna shall provide prompt written notice ID the hcbitect if the Owner becomes aware of any fault or defect mlhe Project, including any e.rrors, omissions or ioconsistencies mthe Architect's Instrnments of Service. AIAilocumenltB141"'-1997Part1.~ 01917,1925.1948,1951.1953.1958,1961,1963,1966,1967,1970, 1974,1977,1987and1997byThe Am y arlriti'ation. . ' -=.· · §'1.3..4.2 The Owncritud.Arcliitect sball eodeavoc to resolve claims, disputes and other nmtters in queslioo between •.. ...... them by med.iafion ~- Wiil:Ss the parties mntnally agree oibe=i.se, sball be in accocdaocc with the Construction . ~ ~ ~:0( tJMi American Albitration Association currently in effect. Request for mediation shall be · · file•:fio writing:wit!(the'oihti!: party to tbis Agreement and with the American Arbitration Association. The request _inaybe m:uJe ~y 'wj~ the filing of a demand for atbi.tration but, in such event, mediation shall proceed in ._··advance pf !l,lb~on:iirle~I or equitlble proceedings, which shall be stayed pending mediation for a period of 60 days_ from lbe·._date Of:filiDg; unleSs stayed for a longcc period by' agreement of the parties or court ot:dec. :§ 1.3.4.3 Thi: ~es. ~bltll~ ihe mediator's fee and any filing fees equally. The mediation shall be held in the · place wbere the Pro_je(;t~ locati:d, unless anolh« location is mntnally agreed upon. Agreements reached in medi,ation shan.be enforce;lbleas seul.emeot agreements in any coort having jurisdiction thereof. . . . ··• . ..j.~ § 1:35 ARBlrRATlON,, · . · '§ 1;3``1 AJ.y claiin; ``:Of: other matter in question arising oot of or related to this Agreement shall be subject to .. -· · ·.:.· athilrillioo..PrioJ:-to arlHttmon. the parties shall endeavor to resolve cfisputes by oiediation in accordance with ·~. Secti9111.3.4. .:· ;. . .. ,,. :··'.·· :§:``:5.2 Claims, disputes mid other~ in question between the parties that are Dot resolved by mediation shall · be decided by :ubltration ·irJmch,.dDJe$5'die -es mutnall otherwise, sball be in accordance with the ::·· . ···;:.; ~a Industiy Arbitrati?~ :Rbi~r::UAmerican kuag:tioa Association cum:ntly in effect. The demand for ·ai:bilratign Shall be filed in 'l'{rifuig'Wilb the other party to this ~ment and with the American Arbitration ASSociation;_ .. . . .: ::,_: .· § 1.3_.5.3 A. dtimand for :ubil¢1ian sbiill'-be made within a reasonable lime aftec the claim, dispute or oth« matter in ·A:~;;qll``Jii.no e¥~:``i}idie demand foe atbi.tration be made after the date when institution of legal or \':';'; . . ·;·.;-'' le'j:io&ediniS based . flimilati .... onSOCb claim, dispute or other matter in question would be barred by the applicable . ~:· } . , ,, -§ 1;3:'5..4 N``~trati'J .:-·l~f or relating to this Agreement shall include, by coJUOiidation or joinder or in . . . .~YOthe-r-~ an additiO!iiiJ person or entity not a party to this Agreement, except by written consent containing ' '·'-' "···--.-.•:.:· '{'-/i?,~,;s ... this Agreement and signed by the Owner, Architect, and any oth« person oceotity sought to ').~p· · ·on involving an additional person or entity shall not constitute coment to arbitration of --~ ,-.·:any:claim, . \«X}fitber matter in question not described in lhe written consent or with a person or entity not named or described therein.. The foregoing agreement to :ubitrate and otha- agreeruents to arbitrate with an .··:·.· ·: ,•,~d.!t:i~:~-or entity duly eoarented to by parties to this Agreement shall be specifically enforceable in :O\ ``-'\#J!I:~ilpplicable law in any court having jurisdiction thereof. §ii~.```` rendered by the :ubitrator or atbi.ttators shall be final, and judgment may be entered upon it in -'' ._,_·:. . . ·" :·aero.~·~'f!!~lipplicable law in any court having jurisdiction thereof. AlA-B141 110 -1997Par11.COpyrlght 01917,1926,1948,1951,1953,1958.1961,1963,1966,1967,1970. 1974,11177,1987and1997byTha American- o l - All rfilhls reserved. WARMNG: This AlA• Document Is p.-cled by U.S. COpyrlgbtlaw an pireson211512006,lllldl&ootfor.-...ale. . SCANNED (J868894002) SEP 22 2007 ESG001461 suspeiiSioo of se.rvices, the An:hitect shall give seven days' wriltetl notice Co the Ownec.In the event of a suspension · the Architect shall have no liability to the Owner foe delay or damage caused the Owner because of such of services. Before resuming services, the Architect shall be paid all sulllS due prior lo suspension and , incurred in the intemlption and resumptioo oflhe Architect's services. The Arcbitect's fees for the g services and the time schedules shall be equitably adjusted. ·If the Project is suspended by the Owner for more than 30 consecutive day.s.lhe A.rcbitect shall be ed for services ped'onned prior to notice of such suspension. When. the Project is resumed, lhe Arcbili:ct - shall be compensated l,Ur CltpCllSCS incuned in the intarupliou and reswnption of lhe Architect's services. The .:. ..,:rchitect's fees for meiemaining services and the lime schedules shall be equitllbly !Uijusted. . .. ,.,_ .·. ·§ f~.8.3 If the i'.roje(;t is stispeuded or the Architect's services are SllSpellded foe more than 90 coiiSOCUtive days. the . Architect may ~te:tbis Agreement by giving not less than seven days" wriltlln notice. ... § 1.3.8.4 This-~ ~y.'be terminated by either party upon not less than sevcu days' written notice should the ·. othec party f:ill'st``y IO'perfonn inaccocdance with the terms oftbis Agreement through no fanlt of the party .. · :.:· ~li!C.~:::: ·:\ · .§ 1:!:S,s This isreemeni·jiiiiy be terminated by the Owner upon not less than seven days' written notice to the .: Architect for the . Owner's·.convcuience . :.;# . • . and .without cause. .§1ft-6 Inthe.eveJ.:r~n not the fault of the Architect, tbe Architect shall be compensated for services ·.pClronncd j,dOr to-~ together with Reimbursable Expenses then due and all Termination Expenses as ...... defined in Secti0n:t:J.8:7.. · .. -~:-·t'··.. '§1n7T~on-~·l!IC in addition to compensation for the services oftbe Aga:cmentand include ·, expenses directly;~bu!abie·~.termination for wbich the Architect is not otherwise compensated. pius an amount for the Arcb.itcct' s•anlic~ .Profit on the value of the services not performed by tbe Architect . ._: . '· . . -- ~- . .... ::·...',' •:: ::-§:1.3.9 PAYMEIJTS TO THE-ARCHrTECT '.:§ 1.3.9.1 Pa~tS oo account of services rendered and foe Reimbursable Expenses incuaed shall be made monthly : IJP.Oilfxesentaiion oftheAjchitect~s state~nentofservices. No deductions shall be made from the Architect's · coinpcnsation.on accciuntof peoaity;)iqoidated da1113ges or other StlDlS withheld from payments to contractors, or on .-_~of the cost of changes iri:'t!lliWi:ilk other than those for which lhe Arcbitect bas been !Uijudged to be liable• . ,;· .: ·:· . . ·. . :· ·-: ~:·. . ·~-:·. :: § 1~ Rcimbni'sab!e Expenses arc in addition to compensation for the Arc:b.itect's services and include expenses ·~·by~ Amiliect and~,$ employees and consultants directly related to the Project, as identified in : .: :the-following pauses: "'~>:.:<.-: .. ·. . ... .··~ · ·· .- · :1 . ~on·li~ection with the Project, authorized out-of-town travel and subsistence, and . ,electroniii dmimunications; .2 ..·,'`` fii~ ~g approval of authorities having jurisdiction over tbe Project; .3 ~ns, plotS;· standard form documents, postage. handling and delivecy oflnsiiUments of :· ·~. ``a``~ ;·o~ertime work requiring bigber than regular rates if authorized in adVliDCC by tbe Owner; .5';/i~n.. ·'-=~· models and mocl::-u psreq nested b the Owner: y • . :/_ ...~.inbursable expenses as designated in Section L5.5; _;.,iL ~;!, ·. ~-~- ,_. Othecsi.mil direc Proj lated pendi : ~(\'::', :;:: /·t''i·. ar t ect-re ex tures. ,; ;:::.';``:§:1``.~\JfReimbursable Expenses, of expenses pertaining to a Otange in Services, and of services performed on tbe basis of hourly rntes or a multiple of Direct Pcnonnel Expense shall be available to tbe Owner or the Owner's authorized representative at mulllally coovenient times. AIA~B141"'-f997Pm:t1.Ccpyrlghl 01917,1926,1948.1951.1953,1958,1961,1963,1966,1967,19711, 1914,1977, 1987and1997byThe American lnstilule ol Archllocts. AU right$ reseM>d. WARNING: This AlA• Document is pwtec~ed by ILS. Copyright law and ln-ionol T~ IJnauthotized ~or dtr.1ri>ullon ollhls IdA• Docwnen~ or any po ws: (list ather~ i.(imy;jomzing partqfthe Agreement.) -~ sweosoii Grabani~tec~s· schemalic design documents dated January 28,2005, wbich are allacbed by re(ereoce : as ~Exhibit . B.". . ·. :-·:'.. ~·· ·::::·-.·:: ··;. ;§ 1,•1.2 Special T~ ariif'~Jitioos. Special terms and conditions that modify this Agreement are as follows: . . . .. . ......·· . .. ~ .: :·.·· .-. ;AiilJct.E 1.5' 'c~J>EN~f.ION ..:.• .•.. :§ 1;5.1 For the:``~&~ as~ under Article 1.4, compensation shall be computed as follows: I·``-``,;``:~and Electrical Engineering= $112,500. See schedule for Phases •M.]>JS:ri.. D.O. CD. c.o. To!alFees 10,800 18,000 28,800 14,400 72,000 ~ ' .. ; a;:/50 4,SSQ. ~ 0 J:5;S6& / ·.~ ... -.: -~2.5~ 3,750 15,000 3,750 25,000 ····:_. ...11·050 2.6,300 51000 18 150 .... ., cnn .:. . ' . . ~o.JJ./l the Arcb.itect are changed as described in Section 1.3.3.1, the Architect's sball ~mpensation shall be calculated as descdbed below oc, if no method of adjnstment is indicated in s citable manner. (Insert basis ofc:ompauation, including rates and mullipks qf Direct Persormel Expense for Principals and employees. and identify Principals and classify employees, if rl!quired. Identify SIH'cific services to which particular methods qfc;ompi=ation apply.) . I .See $Cb(:d.u,lj: of~ly rates attached as "Exhibit E." •:M·-.: .; . '·"·:::.'1: '§15~·~;; ~in Services of the Architect's oonsultan~ compensation shall be computed as a multiple of One ( 1.00 ) times the amounts billed to the Architect for such services. AIAIJoculami6141,.-1997Part1.Copyrtglll 01917,1926. IS48,19S1.1953, 1958.1961,1963,1966,1967,1970, 1974,1977,1987and1997bJTho Jlmo 3eCtdedlo tbe ll'lllXImum exb:nt possible- tbe law. This~ was produced by A!Asolwaro 1!1.14:32:19 on 03/2SI2005 und mthedareoftheArcbitect'sinvoicc. ; Amounts unpaid ·sixty ;·: ( · 60 · ) days after the invoice date sball bear inr=t. at the rate enten:d below, or in the .. absence thereo(at tbCJ``rnte prevailing from time to time at the principal place of business of the Archilect. •· (insert role ofinle1U( ~C~ UjJOn.) I:. U.S. Federat~·.Prime _ii.atc: plus 2%. . : . ·-:. ·.~·:.. ': ·:-:..::. .·.l {Usury laws and:~uirements:!l'llier the Federal Truth in Lending~ similar state and local COIZSIUtU!r credit laws '·and other reJW]aifun& qrffie.:Owllt!r's and Architect•s principal places ofbusiness, the locaticn ofthe Project and · ·.. '· ..· dstwhere nu:ij ·affect tM 'Validity of this provision. Specific legal advice should be obtained with. respect to deletlans or nuNI:ifications, Ondlilso:r(:garding requlrt:ments such as written disclosures or waiw:rs.) ',,. §1.5.9 Ifthe ~-~;z:y this Agreement bave not been completed within Three ( 3) months of the date ..hereof,lhronghll!J~Ofthe Architect, exlensioo of the Architect's services beyond that time shall be · · compensate(fas providec:l.in:~ 1.5.2. L: . . ._.:.. Paul Mittendorff, AIA Principal and VICe President (Printed name arrd title) ``.;:;ou10!llch e: rtant legal coosequences. 2.3 EVALUATION AND PlANNING SERVICES Consullalion with an attorney is oocouraged wilh respect to 2.4 DESIGN SERVICES its complelion or modification. 2.5 CONSTRUCTION I'ROCUREMENT SERVICES 2.6 CONTRACT ADMINISTRATION SERVICES 2.7 FACILITY OPERATION SERVICES 2.8 SCHEDULE OF SERVICES 2.9 tiiODIFICATIONS ARTICLE 2.1 PROJECT ADMINISTRATION SERVICES § 2.1.1 The Architect shall manage the Archirect's services and administer the Project. The Architect shall consuk with the Ownec, research applicable design criteria, attend Project meetiDgs, communicate with membcn of tbe Project team and issue progress reports. The Arcbilect shall coortlinate the servi<:es provided by the Archicect and tbe Arcbirect' s collSil!tanU with those service$ pl!;)~ided by tbe Owner and the Owner's consultants. § 2.1.2 WlJe.n ~ject reqUiieiilen~ flave been sufficiently identified, the Archilect shall prepare, and periodically update, a· Project schedule that shall identify milestone dates for decisions required pft!te Owner, design services furnished by the Architect, completion of documentation prov~JiY:Iilc'Architect. commencement of COtlSIIUC!ion and Substantial Completion of tbe ~orki.5ahject to tbe limitations indicated in E1ness Swenson QrahamArchitects' Proposal letter :~· ;:.. :: ::··~ '". . . . . ~ '. )~\:.~r-·.;:-.:.s· ·:·H+1.):m ``:~wnlmi_s;~'@;i& COst ef the WOO., the .~Gt shall be pemHtted te iaelude eellliageooies fe£ ~ biddiitg and fia~- essalatiilu; te det&miBe what mateM!s, e'¥'ipmem; eempeaeat S)'fltems and !ytles ef '::ee~ea~ge ~ ``~d;in the Celllmet Daeamellb; ~ ~ rease....ele adjiistmea~ iu the se~e ef the · eJ<~ealie~J, ~-~e'(f.``'tilitweea the Owae£ 1111d the Ce~r eeuses the budget fur the Cast ef the \\~lk te be · · :e``eeeded; ``.:tili}h:~ shell be inerea!led aooeiliiBgly. ; · §·~1.1.4 If·~i``,:``alialiea has net oomme11eed wi!l!iu 9Q days after the t.rehiteet submits the Cei1Stmetia& Daeuments te the O..vaer, lhe budget fur the Cest ef the Walk sWt be adjusl!ld te rel:leet <.ibanges iu the geaefill . le?~el.ef p!i~.,lhe eBIIStflleliea iadest£y. ·, :·§~1~1~,:lf$a .h.~et fur the Cast ef!l!e Wade is emeeelerJ by the le\WSI: beaa fide bid eruegeliated prepesal.lhe Qw&ef.ss;lill; . ·.1'. · · :give •Nffitee IIJI!ml'lal ef 1111 illerease ill the budget feF the Cest ef !he Wml:; ..! atitBeft.ze robiddiag e£ renegeliatiug ef the Pl'9jest wi!l!ia a reaseoollle lime; .3 temlisatB ill aeeeAleee w.ilh Seetien 1.3-8.5; er ,4 eaeperote ill fflisiug the Praje 'mer ellaases IB pmseed uooerSestiaB 2,1.75.4,1he ...rnl!i1B6t; witl!oot a!ldiliooal e Bfiag ll!e develepmest of ll!e Cooslroetien DaGUmlmts, the Arehiteet shaY W~sist tile Owner in the Ele\•elepmeat IIBft fJ Ade elwifiea!ieas and ielel.'pAltatiens ef the Bidding IloGumeets le all prospedi>Je bidders-in the fa 111m) Cell!H!ie!IS; SpeeifieetiellS ood I>Jv:,·.iegs. § ~u.:z If ~d l!y me OwfteF, the fuehiteel shall llf£8Rge fer preElllrillg the rep£9duetien efPrepesal :Q~-``~ fer dislrillalien te preSIJeeli¥e ooaliaelef& The Owner shall pay llireelly fet !he e9SI efrepreEiaelien er shaY reimbuP.Je !be f.rehiteet fer sueh el -o OOBtraetem. 'The· t.,relliteel; !;!;if# suhseqeenlly prepare a s~mmary report ef the negeliatiea resul15, as dirested lly the Owner,. . ARTICLE 2.6 CONTRACT ADMINISTRATION SS{VICES § 2.6.1 GENERAL ADMINISTRATION § 2.6.1.'1 The Alcbi`` provide administration of the Contract between the Owner and tbe Contractor as set furth below-and in the eoition of AIA Document A201, General Conditions of the Contract for Constnu:tion, cnrrent ·as of the date of this Agri:e.'nini. M.od.i.licalioos made to the General Conditions, when adopccd as part of the Contract Documents, shall be enfon:eable under this Agreement only to the extent thai: !bey are consistent with this Agreement or appro\fed in writing by the An::bi.lect. Site visits by the Arcbit.ect will be limited to the Dumber Or meetings indicated in Elncss Swet!son Gt;mam Architects' Proposal letter dated November 12, 2004. reyised January 21. 20()4. attacheil as "Exhibit A." § 2.6.1.2 The Architect's responsibility to provide the Contract Administration Secvices under Ibis Agreement COIDillCilCCS with the awaro of the initial Contract for Construction and terminates at tbe issrumce to the Owner of the linnl Certificate for Payment. However, the Architect shall be entitled tn a Change in Services in accordance with Section 2.8.2 wl!en. Contract AdministratiOn Services extend 60 days after the date of Substantial Completion of the Work. § 2.6.1.3 The Architect shall be a represenaalive of and shall advise and consult with the Owner during the provision of the Contract Administration Services. The Architect shall have authority tn act on behalf of the Owner only to the extent provided in Ibis Agreement unless otherwise modified by written amendment § 2.6.1.4 Duties, responsibilities and limitations of authority of the Acchitect under Ibis Article 2.6 shall not be restricted, modified or extended without wriaen agreement of the Ownec and Architect with consent of the Contractor, which consent will not be unreasonably withheld. § 2.6.1.5 The Architect shall review properly prepared, timely requests by the O:mtractor for additional information about the Contract Documents. A properly prepared request for additional information about the Contract Documents shall be in a fonn prepared or approved by the An::l!itect and shall include a detailed written statement that indicates the specific Drnwings or Specifications in need of clarification and the nalUre of the clarification requested. § 2.6.1.6 If deemed appropriate by the Architect, the Architect shall on the Owner's behalf prepare, reproduce and distribute supplemental Drnv.ings and SpecifiCations in response to requests for information by the Contractor. § 2.6.1.7 The Architect shall interpret and decide matters concerning performance of the Ownec and Contractor under, and requirements of, the Contract Docnments on written request of eilhec the Ownec or Contractor. The Acchilect's response to such requests shall be made in writing within any lime li.mits agreed npon or otherwise with reasonable promptness.. AIA-8141"'-1!197Port2.Copyrlghl C1917,1926.1948, 1951,1953,1958,1961,1963,1966,1967,1970. 1974,19n,t997and1997byThe American lnstilulu of An:ldteds. AD r f g l l l s - - . WARNIHG: This AlA• Doeumentls:Jli'OII!ded by U.S. Copyright l.ut and lnlamatlonal Treaties. Unaut!-.1 reproducdoft or dl$lributlon ot tbho AlA• llccument. or any portiOn alit, may result In ,.,.,.,.... c:t eeumeDIS fll'ier to OODlflletiae, MEl (4) to speeilie qualliieatieas Gllpressell by the .\fehiteet. §_ AlA DoWIRent 8141"'-1!197 Part2. Copyrlglll c 1917. 1926, 1948, 1951. 1953, 1958. 1961. 1963, 1968. 1967, 1970, 1974, 1977. 19117 and 1997 by The Ametlcan Nltuleol Ard1llects. All rlgltls""""- WARNING: This AlA'" t>ocomontts protected by U.S..Copyrlgllll.awand lnlamatlonaiTreatlec. llpaulhorized reproduclioo or dislrlbullon oftbb PdA" Document, orany portlonofit,mayresullln aevemciv8 andc:riminal penallles,andwlllbe 6 ~lolhe"'x!Mumext..ntpo•sibleunderlhelaw. TnisciocumentwasprodocedbyAIA-.,ott0:43:17ono:il:23r.l.oosun:lerOrder No.1000156203_1 'IVhlc:h OlqlO:es on 2115/2006, and Is rot lor resale. Us« Noles: SCANNED (12094700) SEP 22 2007 ESG001470 § 2.&.3.2 The issuaBee efe Certifieate far Payment shall DOl be a representlliea that !he ,'\Jehiteet has (I) mede l!llhauslive er ooalieuees 011 sile ia!;peeliees 1e eheek !be fiUality et 'f''E:tity ef lhe Wea, ~ w;ie\1 le under !he law. This document woo produced by A!Asoftwareatl0:43:17on03'2:112005under0rdor ``:::oo-1\0dichexpir... on211512006.andlsnotlor.-. SCANNED (12094700} SEP 22 2007 ESG001471 § 2.6..5.4 .The Arcbiteet shall maintain recocds relative to changes in tbe Wort. .§ U.& PR.OJEa COMPle:IQN § Ui,U The A a::rureGt sball Gondl:lilt iaspeecieos to deteanis.e !he date ar dates of Sllbstantial CempiGCiea and !he liale ef fiBal OO!Bflleliell; shall reeehe frem !he Ceatrnster mul fefWllRI te !he Owner, fee ~ Owue£'s re.-iew and ~written waffeeties ftfld re1ateEI deeuments ~by !he Ceetmet 9eell!Jiell!5 aad essemhled by !he . (::eBk'lllltOF, aad shall i-95.iiil a ·filial. Cemfieaie fer~ymeml!ased upea a fiaal iml{lesliea iadiGa!ing !he WeEk eemplies with llle reqHirements of !he C e - D e s - . § 2~&.2 The ··~st,.s jiispesliea shall be seadueled wit!llhe Ovmer' s 9esigoated Repfeselllali'le te Ghesk eeefenaande aflheW.erk with !he requiremeal5 eflhe Cemraet 9eeumelll5 and 1e ·!eflf,y !he llE!E!tffli£Y aad t Jced by AIAooltwanl at 10:-43:17 on0312312005urde< Order No.100015S2ll3_1 o.l1ictl ell:(llres on 21151:1006, and io not lot rnoale. OserN01eS: SCANNED (12094700) SEP 22 2007 ESG001472 .6 evaluation of subslitutions proposed by tbc Owner's ronsultants or contractors and making subsequent revisions to Instruments of Service resulting tbcrefrom; ·..r preparation of design and documentation for alternate bid or proposal reqDe$ts proposed by the Owner; or .8 Contract Admini.stration Services provided 60 days after the date of Substantial Completion of the Worlt. § 2.8.3 The Aichitcct shall funUsb or provide tbc following services ouly if specifically designated: Servic:es Respon&ibility location of Servio& Description (Architect, Owner or Not Provided) .. .1· ····· -- ...• I .2 .3 land Survey SeMces Geolechnical Se!vices --Q ---Q ---Q I .4 .5 .. Space SchematicsiFiow Diagrams Exising Fa::ililies Surveys -NP --l:re I .& .7 .8 Ec:onomC Feasllilily stulies Sill AnaMis and Seledioo EnWa1memal Studies and~ I~ --NP ---Q .9 0\!ner-Supplied Data Coordlnatioo ---Q .10 Sd!edule and Monitoring ---Q .11 CiviOesign ---Q I .12 l.........,._n.,..;, ---Q .13 lmeOOr Design ---0 .14 Special BWn!l (X' ---Q I .15 v~ Analy:sjs ---Q .1& Detailed Cost Es1inafina ---Q .17 . OlrSile l'l'oject ---Q .. .18 . .construclion .. ---Q .. StaikJp.Asslstane&•:·;· ·:·. ... .19 ---Q .28 .·.. Reoonl Orawirl!r.\' -- -··. -. · --NP .21 Post-Contract Evaklalion --NP .22' Tenat-Rela!ed Services --NP .23 ., :24 -·· .. .25' . Description of Secvi~;: . . . (~rt descriptions of the seniil:.es·duigno.ted.) ARTIClE 2.9 MODIFICATIONS §2.9.1 Modifications to this Standard Fonn of Architect's Services: ~ign and Contract Administration. if any, are as follows: .AlA Docmnent 8141,.-19!17 Part 2. Copyright c 1917, 1926, 1948. 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 11174, 11177, 11187 and 1997 by Too AmerlcanlnstituleoiAn:hltecls. Allllghts-. WARNlNG:ThlsAIA•Doeumentts~byU.S.C<>pyrigbtlawandrntomatlonoiT-. Unauthorized repn>duetion or diStribution of lhisAIA• Documenl.,or any p<> the maximum •xtent --under the law. This documeot""' prodlK:Udby AJAsoltwam at 10:43:17 on 0312312005 unde cu1nent 8141"' -1991 Port2. Copyrlg!>t 0 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1960, 1957, 1970, 1974, 1977, 1987 ond 1997 by Tho Amecieon mtl1ule of Altllitticto. All rights~ WARNING! This-· Doeutru!nt Is proll>dod by U.S. COpyright Law OJ\4 I~ T . - _ Unaulhortted ~c!lon cuistrlbulloo <>ttllls A!A• Document...- any portion ot it, may result In ""ern civil and crirtrin:ll penal~ pro3eCU!edtotbe.-lmum ""''r>OS5lble unde nd- be 10 No.1000156203_1 wtlich expires" 2115'2006. and is not for resale. -~ SCANNEDP~ SEP 22 2007 ESG001474 - EXHIBIT "A" - IIJI elness swenson graham archi[ects i n c . - November 12, 2004 Revisedjanuary 21, 2005 Mr. Trent Sarber White lodging Services Corporation 1000 East 80th Place Suite SOO North Merrillville, IN 46410 RE: Courtyard by Marriott Austin, Texas Dear Trent,. Thank you for the opportunity to present this proposal for professional Archil:ectural services for the Courtyard Hotel by Marriott in Austin,. Texas. Jim Timm has created a sketch of the current approved site plan showing the Courtyard Hotel superimposed so we can see that the only real change required to the Site Piau is the patio in the courtyard. The entrances, port cochere canopy, service bay, parking and driveway areas all stay the same. • Scope of Work • Einess Swenson Graham Architects, Inc. (ESG) will provide overall Architecture, Civil and Structural Engineering design, document preparation and coordination .for the Courtyard Hotel building for White Lodging Services (WIS). Our Stiuctural Engineering firm is Marlin Bridges Associates, Inc. MechanicaL Electrical and Plumbing Engineering will be provided by Lindsey Engineers, Inc. who are located in Austin, Texas. Our proposal is based on utilizing the prototypical Courtyard Hotel as built in ESG anticipates the following schedule for delivery of d chi . th tructi .t. HlorkPhases~-~- · · ·%Set tr.Set Length of eekS Time days) Cumulative 1 weeks 4weeks 7weeks 10Weeks Probable · Jan24 Jan31 Feb21 Marl4 Dates -Jan28 -Feb 18 -Marll -Aprl SCANNED 1 Based on S worlcing days per weel:. NOV 07 2007 jsoowashington avenue south· suite 1080 ·minneapolis, mn 55415 · p: 612.339.5508 · f: 612.339.5382 · www.esgarchitects.com I ESG001703 Trent Barber White lodging Services Corp. january 21, 2005 Page 2 of4 This sdtedule offers the opportunity of meeting WIS s goal of receiving the building permit April 15th with start of construction as soon after that as possible. This schedule does not offer the opportunity to fast-track the documents and submittals - there is simply not enough time for ESG to complete the change over of the documents from the p~ject to work at the Austin ~ite any faster than this indicates. • Assumptions • We based our fee proposal on the following assumptions about the site conditions, the constitution and roles for the Design Team. the Owner, the General Contractor and other Consultants. 1. CiviL Landscape Architecture and Interior Design services are not a part of this proposal E.SG can provide any of these design services as needed. ESG will coordinate the work of these or any of your other consultants. 2. PSG will make adjustments to the Courtyard fit wiihin the existing site plan thC;\t will accommodate a re-application for Planning and Zoning approvaL • 3. The existing report by your Geotechnical Engineer is adequate and current enough for this new project and their recommendations for foundation design still hold true. WLS will initiate an update to this report - which will be prepared and submitted in a timely manner for the design process. 4. ESG will use the current prototypical CAD drawing files for the Courtyard Hotel just completed in 5. ·The structural system will NOT match the prototypical design as documented in the drawings provided from Marriott Corporation. You are contemplating a light gage steel framing system as documented in the project. 6. Identifying and satisfying the requirements of the local planning department as to site layout and approvals will be by others. "ESG will provide one set of building plan and elevation exhibits depicting extent and appearance of the project for planning submittals. ESG will incorporate the requirements for building massing, exterior materials and amenities as communicated by you or your consultants. 7. Any changes to the documents after completion of the Schematic Design may result in a revision to our schedule and compensation. 8. Other than planning subri:tittal documents, ESG will not create any special drawings or exl:ubits. Additional documents or other work efforts required after planning submittals or for further governmental agency review will be R."\205302\Do<::s\Whlt•Austin 050121 Pr.doc SCANNED NOV 07 2007 ESG001704 Trent Barber White lodging Services Corp. january 21,2005 Page 3 of4 identified immediately upon acceptance of this proposal and may result in a revision to our schedule and compensation. 9. · WI.S will select a highly qualified General Contractor who will provide and be responsible for all cost estimating and construction coordination services during bidding and construction. 10. The cost of reproduction of construction drawings and specifications will be borne by WLS or the Contractor. ESG will provide periodic check sets for WLS' review, at the 30%, 60% and 90"/o incremental Marriott Corporation reviews and for the consultant's use. Additional print sets will be supplied at cost as a reimbursable expense. 11. Site visits by the design team will be provided on an hourly basis as requested by WL5 or Regulator] Agencies having jurisdiction on the project See attached schedule of hourly rates. 12. Upon your acceptance of this proposal,. ESG will put together an experienced team of Architects and support staff to execute this project and will keep the team together as long as there are no delays in the progress of the work for the design and document preparation phases. • Compensation • The following breakdown indicates the extent of the design fees for this project Architecture 10,800 18,000 28,800 14_400 72,000 MEPEng. 3,750 4,550 7,200 0 15,500 Struct. Eng.. b:?.QQ. 3,750 15,000 ~ 25,000 Total Fees 17,050 26,300 51,000 18,150 $112,500 • Reimbursable Expenses • We will bill reimbursable expenses at direct cost. We don't anticipate any visits for ihe Design Team will be required for this project The following is an estimate of our reimbursable expeil!>CS: • Reproduction of documents (G.C. does bid set printing) $6,500 • Express maiL mail, deliveries $3,000 • Photography, miscellaneous +$2,000 Total Estimated Reimbursables $11,500 We anticipate that each trip to the job site by ESG' s design team members would cost about $1,200. Any changes in the project schedule or our scope of services will be performed with your authorization_ either verbally or in writing. We will perform lt:\205302\0ocs\Whtte Au"ln 050121 Pr.doc SCANNED NOV 07 2007 ESG001705 Trent Barber White Lodging Services Corp. January 21, 2005 Page4 of4 sud:t services on an hourly basis at our current compensation rates or revise our schedule and contract fee. If you have any questions, concerns, or comments please caii PauL If this proposal meets with your approval, we will execute an AlA B141 -Owner Ardritect agreement and get starf:ed immediately. Sincerely, Elnes Swenson Graham Architects Inc. Enc. cc: Mark Swenson Pam Stenzel JimTimm File: 205302.00 -15.1 SCANNED R:\20S302\Docs\'MllteAustin 050121 Pr.doc NOV 07 2UU7 ESG001706 ._,. ·- ..· - - - - - , - """""' =- _ , White Lodging Services Corporation j T-'lf/ • GullrtY&n:l Hl:ltef bv Murioct I ____ -.---- - .. ---- ------ _,.., -- ! -- :.- -:-.. ==:-o::. i I l = ESG001712 . ! ! l_ ESG001713 f"!f --- - ESG001714 0 -- @ -~e ®--..:u.~ ~=``:j=~::::=+="'-----'::·- ~+=; :.::~ . ., !"f • .; ..... o::t •:ot .. ; : , .::±: \ ~®® 1 l t.O@W``:-P"------------ ``EE=:.:::- I !" = a.:.- A1.3 C__ _ ESG001715 r' "- _._ • i01.21lt1 1....,_15t i== ~--- A1.4 ESG001716 I i t_ ESG001717 • 0 0 0 , _:, __ ~- ! 1- I ·-- I. L_ l Al.6 ESG001718 ... 0@0\h®C~ . ! I [___ tiJV 07 lllli ESG001719 -., c...._.., =- . - _._ ----·----~-~---•-- I i • ® ® @, ®- ~- __ , ___ . 0 i i i -i : ""r I .. ~ .... : -~ .. ... i .- i ... . . : ... i __,'d. ~ ®® e 0 ~ 0 e ~ 0 0 0 0 0 0 ~ ~ 0 0 `` 0 SC NNE 07 2011 l ! I ----- - I ~ A2.1 I_ I ESG001720 ' I i L_ ESG001721 II --- .......... 2 .. 2001 HOV 07liiG7 ,~, 1-- ,=-=- I ' i A3.2 ESG001722 II -~-- ::::..- :=::::::- ·- =---::.... ~ ·==- ;::s_-:::._ ,.,..._. -- ............ "' ==--=- l --- ~ ~ :s~ i l ~ ! I l==-- i I I . jf -= @-""" SCANNED! NOV 07 11187 AS.l '---- I L__ ESG001723 f ' ~fl:.I ````~,-~....``~;a.d~$-&a``~--~ ~- II ~!m:tr i 1 ! I i I ---t II ·--- ; :.=-- I ~ I ~------````·------i 11--------·``~JJ------``.-- ·- ·- S"- ;:.::~- ·-- =---.. ~--- a===- ~ I --- ==:_-_ ~ l I ,-~ i ~-------------~- . I ~--..;;;;;------ @~ @-""' SCANNE t__ ~v 012001 A5.2 ESG001724 "'= • ! ~ ! I ! L_ r ``---·- HOV 07111111 AlO.l ESG001725 r- 0 ~:,;,,s;m Q I .i !_,__}S·I ' --- ! i SCANNEU . A7.1 I_' @-'-----~lil!~vo=728111 ~ ESG001726 ESG001727 "'-II _._ ~--........_ ___ L__ ... __ j ESG001728 II r=-..- - SCANNED:::::: f()V 07 2007 A&fBAs=-=;;::;.- "¥-..-...... 52.1 ESG001729 . ., cr. . ,-;;-. --- r •' ® (.) - ·- <7. 0 € ·"' ' ·- - i_....- r- •Z: € ~ - :-?`` II € . ~ --·- - . G)' <) "' ""' . .... I"' ill- :' - IP L ~- 'L -~ ,-..Q) q) .... - ~ lllbo .... ~ .... .... -f ~r- "'~. .... .... ~ -_, -- ~ {II- !"> .... .... .... 10 "~ t" - -~ .~ & [,.!/; F J .1:9' '0- ..h ~ ~ ~ ~ ~ .. ....,. ~ ~ ' ~ ...... ;Q~ ~ .... -q)-~ -. ~ `` Qi 1/ ;!l ._ `` ~- ~ ~J- ~ ~ .... !I!-~ .... .... .... "' !->~ .... 1 7 - - -· .... .... - ::. .... .... ..... Qj. . " fir ~- -.a.· .... Iii". '"ij) <;; < l - - ,- -r - '-'ill'`` I ~ T fi ~ .. ' - F f> ~ Ill 1 ill- 1 L~ . .J0!,__ I 1 i i . 8 ~ ~---- .... --- SCANNED:::::::: ........... ``-==--=- HOY 07 2fj1 ·~=..~ 52.2 ESG001730 iif'"· ~€1 "_? . '"' ·- "' y_ , ·- 0 .,_7_._ "' ........ ~ ·- ;f.> 0- ~ ~ ~I:' - - ~ ~ ~ - ~ -;j""' h: ~ ~ ~ ~ ~ -- ~ ~ 0-.-' .'II ~ `` '-i ~ ~ 1=- .· ;, _l ..l _,.,_ 4' ·cc ~ 41 ~ - 'il ,,..,..,I - - ~ ~ 4 ~-~ ~- Ql J- ~r ~- - ~- -- ~ ~ - - ...,- - - -~ :---_ -, -1\ f0 ; -· ' .. Ql"l!l ~ 0 - 'QI - II- e ~e· ;,.0-' - Ql" ~ - -"'il ~1'11§0 J.N[_'I fO!$f-ffJW T~r£~ . .'£r!i 2:-m.=t--- !"----- ESG001731 -- f'lf - . __ 7 II 1>._<~' ·- ·- "' ·- - --.~ "~ ® ® 'f ·- " r,, ·- ·- ''" j ~.;:; ..Iii . '0. . ~ '0 •.:-- 1~. IP . ~-~ . -~ ~- ~_. " .... - 0 J Qr - - - - - - - - - - - - - - - - - ~ ~ ,.... ~ I I -• ., l l. -~ ... J I lp i" I lJ1 I- b-! _... f0_ - - f4l- - - - - - - - - _0 b_ 0· ... 0 _r '0 -·-· Ill '"Ill -· - .. - - ~f-i~ '-•0 ~-·``~ . " . Ql- ''-~ ® - ~0- - '{!I Ill (!)§'?.?[.'lii.~J! -·-- F ,.., ESG001732 E~r ~-=- ESG001733 .'---- elness swenson graham architects Inc. EXHIBIT"C' Elness Swenson Graham Architects Inc. ElECTRONIC MEDIA RELEASE - CLIENT This release for electronic media is dated as of the 1st day of January, 2005, between White Lodging Services, Inc. ("Client") and Elness Swenson Graham Architects, Inc. (ESG). It is understood that the Client has requested ESG to supply the Client with electronic media (disks, tapes, optical disk, etc.) containing information on the Courtyard Hotel by Marriott in Austin. Texas ("Project") for use by the Client or the Client's agents, representatives of consultants as the Client deems appropriate. ESG desires to accommodate Oienl's request,. therefore, in consideration of the release of the materials, and according to the terms of the Agreement between ESG and the Client, Client and ESG agree as follows: 1. The electronic files provided to Client by ESG for the Project are limited to floor plans and reflected ceiling plans only. 2 The electronic .files may be used by Client solely for use on the Project or for the maintenance of the Project If the Client chooses to use or alter in any way, in whole or in part,. the electronic files provided for the Project, the Client agrees to indemnify FSG and hold ESG harmless from all claims, injuries, losses, damages, costs and expenses (including without limitation, attorneys' fees) arising out of such alteration or use. 3. Because information and data provided electronically may be altered, whether inadvertently or otherwise, ESG reserves the right to retain copies of the electronic file(s) and to remove from the electronic files provided to Client,. all identification (such as logo, surveyor's seal, engineer's certifications, etc.) reflecting the involvement of ESG in the preparation of the electronic ffies. 4. The electronic files are provided solely as a convenience to Client by ESG and shall NOT be considered "Drawings of Record," "Contract Documents" or "Construction Documents" as defined in the Agreement.. All documents considered "Drawings of Record," "Contract Documents" or "Construction Documents" shall be hard copies and shall be accompanied by the Design Professionafs stamp and signature. The hard copy shall be referred to as the "Contract Documents" and shall govern in the event of any inconsistency between the hard copy and the electronic files. 5. The Client is advised to check all electronic media for computer viruses befc>re loading the ffies. The Client is fully responsible for intercepting and disabling viruses, if any, that may be inadvertently transmitted with the electronic files. The Client hereby agrees to indemnify and hold ESG, and its Consultants, harmless from and against all claims of any type or nature asserted by Oient or any lhird party as a result of viruses inadvertently transmitted with the electronic media. SCANNED SEP 22 2007 I500 washington avenue south· suite 1080 ·minneapolis, mn 55415 • p: 612.339.5508 · f: 612.339.5382 • www.esgarchitects.com I ESG001475 Electronic ~ia Release - Client I • Page 2 of2 6. Files distributed electronically are subject to data erosion,. erasure and)or alteration, and computer systems and software become obsolete in time. By accepting these electronic files, Client acknowledges these risks and agrees to waive all claims against ESG should data erosion, erasure and)or alteration of these electronic files occur. 7. Issuance of this information in no way relieves lhe Client of any contractual requirements of independent shop drawing preparation and submittal 8. 1bis release in no way construes an agreement to allow distribution of this data to any mn. other individual,. agency or entity, either for this project or at any future date. The Client is expressly forbidden to distribute this data without lhe express written consent of ESG. ,sw~--- Client `` Stgned: ~ Stgned:.._-+t+="·-r--~-~..- - - . - - - - - Printed Name: Paul Mittendorff. AIA Printed Name: f i?i:Oqu. Title: Vice President Date:l!l/2005 Title: ~"5; MA ~ Date: ft ~[:?o/o.:s- SCANNED R:\ZOS30Z\Docs\Ekctronk Aelease fomJ Oient.doc SEP 22 2007 ESG001476 EXHIBIT.D" Elness Swenson Graham Architects Inc. ELECTRONIC MEDIA RELEASE - CONTRACTOR This release for electronic media is dated as of the __ day of between _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _("Contractor") and Elness Swenson Graham Architects, Inc. (ESG). It is understood that the Contractor has requested FSG to supply the Contractor with electronic media (disks, tapes, optical disk, etc.) containing information on the Courtyard Hotel by Marriott in Austin, Texas ("Project") for use by the Contractor as the Contractor deems appropriate. FSG desires to accommodate Contractor's request, therefore, in consideration of the release of the materials, Contractor and ESG agree as follows: 1. FSG will release the electronic files to the Contractor upon payment of $,200 to FSG. 2. The electronic files provided to Contractor by EiSG for the Project are limited to floor plans and reflected ceiling plans only. 3. The electronic files may be used by Contractor solely for use on the Project. 4. If the Contractor chooses to use or alter in any way, in whole or in part, the electronic files provided for the Project, the Contractor agrees to indemnify ESG and hold ESG harml~ from all claims, injuries, Losses, damages, costs and .expenses (including without limitation, attorneys' fees) arising out of such alteration or use. 5. Because information and data provided electronically may be altered, whether inadvertently or otherwise, ESG reserves the right to retain copies of the electronic file(s) ·and to remove from the electronic files provided to Contractor, all identification (such as ·togo, surveyor's seal, engineer's certifications, etc.) reflecting the involvement of FSG in the preparation of the electronic files. 6. The electronic files are provided solely as a convenience to Contractor by ESG and shall NOT be considered uDrawings of Record," "Contract Documents" or "Construction Documents" as defined in the Agreement. All documents considered "Drawings of Record," "Contract Documents" or "Construction Documents" shall be hard copies and shall be accompanied by the Design Professional's stamp and signature. The hard copy shall be referred to as the "Contract Documents" and shall govern in the event of any inConsistency between the hard copy and the electronic files. 7. The Contractor is advised to check all electronic media for computer viruses before loading the files. The Contractor is fuUy responsible for intercepting and disabling viruses, if any, that may be inadvertently transmitted with the electronic files. The Contractor hereby agrees to indemnify and hold FSG, and its Consultants, harmless from and against all claims of any type or nature asserted by Con~l:!'A1\J~1:: D 1500 washington avenue south • suite 1080 • minneapolis, mn 55415 • p: 612.339.5508 • f: 612.339.5382 • ~.RJak~Rlcts.com I ESG001709 Electronic Media Release - Contractor Page 2 of 2 party as a result of viruses inadvertently transmitted with the electronic media. 8. Files distributed electronically are subject to data erosion, erasure and/or alteration, and computer systems and software become obsolete in time. By accepting these electronic files, Contractor acknowledges these risks and agrees to waive all claims against ESG should data erosion, erasure and/or alteration of these electronic files occur. 9. Issuance of this information in no way relieves the Contractor of any contractual requirements of independent shop drawing preparation and submittal 10. This release and associated fee payment in no way construes an agreement to allow distribution of this data to any other individual, agency or entity, either for this project or at any future date. The Contractor is expressly forbidden to distribute this data m=.~:fK
JM) r-©~C~o~p~yn~·g~h~t'-19~1~1-,1~9~1~5.~1~97 18~,•1~92~5~.~1~93~7~,7 19~5~1-,"19~5~8-,1~00~1,~1~9``~.•1~96~6~,7 1~96~7~,7 19~7~0-,~19~7~6.~1~9~8~7.~1~9~97~by AIADOCUMENTA201-1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written pennission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan Institute of Architects pennission of the AlA and can be reproduced in accordance with'your license without violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washington, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 3 3.7.1, 3.10, 5.2, 6.1, 11.1.3, 11.4.6, 11.5.1 Performing the Work Contract Documents, The 3.3.2, 3.18, 4.2.3, 4.3.8, 5.3.1, 6.1.3, 6.2, 1.1, 1.2 6.3, 9.5.1, 10 Contract Documents, Copies Furnished and Use Contractor's Review of Contract Documents of 1.5.2, 3.2, 3.7.3 . 1.6, 2.2.5, 5.3 Contractor's Right to Stop the Work Contract Documents, Definition of 9.7 1.1.1 Contractor's Right to Terminate the Contract Contract Sum 4.3.10, 14.1 3.8, 4.3.4, 4.3.5, 4.4.5, 5.2.3, 7.2, 7.3, 7.4, Contractor's Submittals 9.1, 9.4.2, 9.5.1.4, 9.6.7, 9.7, 10.3.2, 3.10, 3.11, 3.12, 4.2.7, 5.2.1, 5.2.3, 7.3.6, 11.4.1, 14.2.4, 14.3.2 9.2, 9.3, 9.8.2, 9.8.3, 9.9.1, 9.10.2, 9.10.3, Contract Sum, Definition of 11.1.3, 11.5.2 THIS DOCUMENT HAS IMPORTANT 9.1 Contractor's Superintendent LEGAL CONSEQUENCES. Contract Time 3.9, 10.2.6 CONSULTATION WITH AN 4.3.4, 4.3.7, 4.4.5, 5.2.3, 7.2.1.3, 7.3, 7.4, Contractor's Supervision and Construction ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR 8.1.1, 8.2, 8.3.1, 9.5.1, 9.7, 10.3.2, 12.1.1, Procedures MODIFICATION. AUTHENTICATION 14.3.2 1.2.2, 3.3, 3.4, 3.12.10, 4.2.2, 4.2.7, 4.3.3, OF THIS ELECTRON/CALLY Contract Time, Definition of 6.1.3, 6.2.4, 7.1.3, 7.3.4, 7.3.6, 8.2, 10, 12, DRAFTED AlA DOCUMENT MAY BE 8.1.1 14 MADE BY USING AlA DOCUMENT D401. CONTRACTOR Redacted 3 11.1.1.8, 11.2, 11.3 This document has been approved and Contractor, Definition of Coordination and Correlation endorsed by The Associated General 3.1, 6.1.2 1.2, 1.5.2, 3.3.1, 3.10, 3.12.6, 6.1.3, 6.2.1 Contractors of America. Contractor's Construction Schedules Copies Furnished of Drawings and 1.4.1.2, 3.10, 3.12.1, 3.12.2, 4.3.7.2, 6.1.3 Specifications Contractor's Employees 1.6, 2.2.5, 3.11 3.3.2, 3.4.3, 3.8.1, 3.9, 3.18.2, 4.2.3, 4.2.6, Copyrights 10.2, 10.3, 11.1.1, 11.4.7, 14.1, 14.2.1.1, 1.6, 3.17 Redacted Correction of Work 11.1 2.3, 2.4, 3.7.4, 4.2.1; 9.4.2, 9.8.2, 9.8.3, Contractor's Relationship with Separate 9.9.1, 12.1.2, 12.2, 13.7.1.3 Contractors and Owner's Forces Correlation and Intent of the Contract 3.12.5, 3.14.2, 4.2.4, 6, 11.4.7, 12.1.2, Documents 12.2.4 1.2 Contractor's Relationship with Subcontractors Cost, Definition of 1.2.2, 3.3.2, 3.18.1, 3.18.2, 5, 9.6.2, 9.6.7, 7.3.6 9.10.2, 11.4.1.2, 11.4.7, 11.4.8 Costs Contractor's Relationship with the Architect 2.4, 3.2.3, 3.7.4, 3.8.2, 3.15.2, 4.3, 5.4.2, 1.1.2, 1.6, 3.1.3, 3.2.1, 3.2.2, 3.2.3, 3.3.1, 6.1.1, 6.2.3, 7.3.3.3, 7.3.6, 7.3.7, 7.3.8, 3.4.2, 3.5.1, 3.7.3, 3.10, 3.11, 3.12, 3.16, 9.10.2, 10.3.2, 10.5, 11.3, 11.4, 12.1, 3.18, 4.1.2, 4.1.3, 4.2, 4.3.4, 4.4.1, 4.4.7, 12.2.1, 12.2.4, 13.5, 14 5.2, 6.2.2, 7, 8.3.1, 9.2, 9.3, 9.4, 9.5, 9.7, Cutting and Patching 9.8, 9.9, 10.2.6, 10.3, 11.3, 11.4.7, 12, 6.2.5, 3.14 13.4.2, 13.5 Damage to Construction of Owner or Separate Contractor's Representations Contractors 1.5.2, 3.5.1, 3.12.6, 6.2.2, 8.2.1, 9.3.3, 3.14.2, 6.2.4, 9.2.1.5, 10.2.1.2, 10.2.5, 10.6, 9.8.2 11.1, 11.4, 12.2.4 Contractor's Responsibility for Those Damage to the Work -,::-.,---,....,..,.-=":-:-~c::-""""""',...-,==""'="',.....,.'='=,.....,..,.,..,.-..,.,,...,..,.-,..----,-.,.,.,-...,.,..,,..,-..,.,..,,..,.-.,.,.-=-.,...,..,.~ @1997 AIM; ©Copyright 1911, 1915,1918,1925,1937, 1951,1958, 1961,1963, 1966,1967,1970, 1976, 1987,1997 by AlA DOCUMENT A201·1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan Institute of Archttects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 4 3.14.2, 9.9.1, 10.2.1.2, 10.2.5, 10.6, 11.4, Employees, Contractor's 12.2.4 3.3.2, 3.4.3, 3.8.1, 3.9, 3.18.2, 4.2.3, 4.2.6, Damages, Claims for 10.2, 10.3, 11.1.1, 11.4.7, 14.1, 14.2.1.1 3.2.3, 3.18, 4.3.10, 6.1.1, 8.3.3, 9.5.1, Equipment, Labor, Materials and 9.6.7, 10.3.3, 11.1.1, 11.4.5, 11.4.7, 14.1.3, 1.1.3, 1.1.6, 3.4, 3.5.1, 3.8.2, 3.8.3, 3.12, 14.2.4 3.13, 3.15.1, 4.2.6, 4.2.7, 5.2.1, 6.2.1, 7.3.6, Damages for Delay 9.3.2, 9.3.3, 9.5.1.3, 9.10.2, 10.2.1, 10.2.4, 6.1.1, 8.3.3, 9.5.1.6, 9.7, 10.3.2 14.2.1.2 Date of Commencement of the Work, Execution and Progress of the Work Definition of 1.1.3, 1.2.1, 1.2.2, 2.2.3, 2.2.5, 3.1, 3.3, 3.4, 8.1.2 3.5, 3.7, 3.10, 3.12, 3.14, 4.2.2, 4.2.3, 4.3.3, Date of Substantial Completion, Definition of 6.2.2, 7.1.3, 7.3.4, 8.2, 9.5, 9.9.1, 10.2, 8.1.3 10.3, 12.2, 14.2, 14.3 THIS DOCUMENT HAS IMPORTANT Day, Defmition of Extensions of Time LEGAL CONSEQUENCES. 8.1.4 3.2.3, 4.3.1, 4.3.4, 4.3.7, 4.4.5, 5.2.3, 7.2.1, CONSULTATION WITH AN Decisions of the Architect 7.3, 7.4.1, 9.5.1, 9.7.1, 10.3.2, 10.6.1, ATTORNEY IS ENCOURAGED WITH 4.2.6, 4.2.7, 4.2.11, 4.2.12, 4.2.13, 4.3.4, RESPECT TO ITS COMPLETION OR 14.3.2 MOD/FICA TION. AUTHENTICATION 4.4.1, 4.4.5, 4.4.6, 4.5, 6.3, 7.3.6, 7.3.8, Failure of Payment OF THIS ELECTRONICALLY 8.1.3, 8.3.1, 9.2, 9.4, 9.5.1, 9.8.4, 9.9.1, 4.3.6, 9.5.1.3, 9.7, 9.10.2, 14.1.1.3, DRAFTED AlA DOCUMENT MAY BE 13.5.2, 14.2.2, 14.2.4 14.2.1.2, 13.6 MADE BY USING AlA DOCUMENT Decisions to Withhold Certification D401. Faulty Work 9.4.1, 9.5, 9.7, 14.1.1.3 (See Defective or Nonconforming Work) This document has been approved and Defective or Nonconforming Work, Final Completion and Final Payment endorsed by The Associated General Acceptance, Rejection and Correction of 4.2.1, 4.2.9, 4.3.2, 9.8.2, 9.10, 11.1.2, Contractors of America. 2.3, 2.4, 3.5.1, 4.2.6, 6.2.5, 9.5.1, 9.5.2, 11.1.3, 11.4.1, 11.4.5, 12.3.1, 13.7, 14.2.4, 9.6.6, 9.8.2, 9.9.3, 9.10.4, 12.2.1, 13.7.1.3 14.4.3 Defective Work, Definition of Financial Arrangements, Owner's 3.5.1 2.2.1, 13.2.2, 14.1.1.5 Definitions Redacted 1.1, 2.1.1, 3.1, 3.5.1, 3.12.1, 3.12.2, 3.12.3, 11.4 4.1.1, 4.3.1, 5.1, 6.1.2, 7.2.1, 7.3.1, 7.3.6, GENERAL PROVISIONS 8.1, 9.1, 9.8.1 1 Delays and Extensions of Time Governing Law 3.2.3, 4.3.1, 4.3.4, 4.3.7, 4.4.5, 5.2.3, 7.2.1, 13.1 7.3.1, 7.4.1, 7.5.1, 8.3, 9.5.1, 9.7.1, 10.3.2, Guarantees (See Warranty) 10.6.1, 14.3.2 Hazardous Materials Disputes 10.2.4, 10.3, 10.5 4.1.4, 4.3, 4.4, 4.5, 4.6, 6.3, 7.3.8 Identification of Contract Documents Documents and Samples at the Site 1.5.1 3.11 Identification of Subcontractors and Suppliers Drawings, Definition of 5.2.1 1.1.5 Indemnification Drawings and Specifications, Use and 3.17, 3.18, 9.10.2, 10.3.3, 10.5, 11.4.1.2, Ownership of 11.4.7 1.1.1, 1.3, 2.2.5, 3.11, 5.3 Information and Services Required of the Redacted Owner 8.2.2, 11.1.2 2.1.2, 2.2, 3.2.1, 3.12.4, 3.12.10, 4.2.7, Emergencies 4.3.3, 6.1.3, 6.1.4, 6.2.5, 9.3.2, 9.6.1, 9.6.4, 4.3.5, 10.6, 14.1.1.2 9.9.2, 9.10.3, 10.3.3, 11.2, 11.4, 13.5.1, @1997 AIMJJ -;;;©;-;C;:-.o::p::-:yr::;:ig:;:h7t "'19;;-;1;:;-1-,1:;-;9;-:;1"5,-:1;;;9~18;;-,-:;1;;:;9;::;;25;:-,-:;1-;;:93;;:7;-,'1;::;;95=:;1-,"'19;;-;5:;::8-,"'19~6::;-1,-:1;-;:9;;::63;;-,-::1;;:;96;::;;6::-,-..1;::;;96;;:7;-,719:::::7;:::0:-,:;-;19::::7::::6,:-1;-;:9;;::8-::;7,-:1;;;99-;;:7::;-;-by AJA DOCUMENT A201 " 1997 The American Institute of Architects. Rfteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan Institute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006·5292 This document is not an original AJA® Contract Document, but a reproduction produced by AJA® Contract Documents software for administrative purposes only and is not for other use or resale. 5 13.5.2, 14.1.1.4, 14.1.4 4.6.6 Injury or Damage to Person or Property Labor and Materials, Equipment 4.3.8, 10.2, 10.6 1.1.3, 1.1.6, 3.4, 3.5.1, 3.8.2, 3.8.3, 3.12, Inspections 3.13, 3.15.1, 42.6, 4.2.7, 5.2.1, 6.2.1, 7.3.6, 3.1.3, 3.3.3, 3.7.1, 4.2.2, 4.2.6, 4.2.9, 9.4.2, 9.3.2, 9.3.3, 9.5.1.3, 9.10.2, 10.2.1, 10.2.4, 9.8.2, 9.8.3, 9.9.2, 9.10.1, 12.2.1, 13.5 14.2.1.2 Instructions to Bidders Labor Disputes 1.1.1 8.3.1 Instructions to the Contractor Laws and Regulations 3.2.3, 3.3.1, 3.8.1, 4.2.8, 5.2.1, 7, 12, 8.2.2, 1.6, 3.2.2, 3.6, 3.7, 3.12.10, 3.13, 4.1.1, 13.5.2 4.4.8, 4.6, 9.6.4, 9.9.1, 10.2.2, 11.1, 11.4, Redacted 13.1, 13.4, 13.5.1, 13.5.2, 13.6, 14 3.18.1, 6.1.1, 7.3.6, 8.2.1, 9.3.2, 9.8.4, liens THIS DOCUMENT HAS IMPORTANT 9.9.1, 9.10.2, 9.10.5, 11 2.1.2, 4.4.8: 8.2.2, 9.3.3, 9.10 LEGAL CONSEQUENCES. Redacted limitation on Consolidation or Joinder CONSULTATION WITH AN 11.4.2 4.6.4 ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR Redacted Limitations, Statutes of MODIFICATION. AUTHENTICATION 11.1 4.6.3, 12.2.6, 13.7 OF THIS ELECTRON/CALLY Redacted limitations of liability DRAFTED AlA DOCUMENT MAY BE 8 .2.2, 11.1.2 2.3, 3.2.1, 3.5.1, 3.7.3, 3.12.8, 3.12.10, MADE BY USING AlA DOCUMENT D401. I Redacted 3.17, 3.18, 4.2.6, 4.2.7, 4.2.12, 6.2.2, 9.4.2, 11.4.3 9.6.4, 9.6.7, 9.10.4, 10.3.3, 10.2.5, 11.1.2, This document has been approved and Redacted 11.2.1, 11.4.7, 12.2.5, 13.4.2 endorsed by The Associated General 11.2 Limitations of Time Contractors of America Redacted Redacted 2.1.2, 2.2, 2.4, 3.2.1, 3.7.3, 3.10, 3.11, Redacted 3.12.5, 3.15.1, 4.2.7, 4.3, 4.4, 4.5, 4.6, 5.2, 11.3 5.3, 5.4, 6.2.4, 7.3, 7.4, 8.2, 9.2, 9.3.1, Redacted 9.3.3, 9.4.1, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10, 10.2.5, 11.4 11.1.3, 11.4.1.5, 11.4.6, 11.4.10, 12.2, 13.5, Redacted 13.7, 14 9.3.2, 11.4.1.4 Redacted Redacted 11.4.3 11 Material Suppliers Redacted 1.6, 3.12.1, 4.2.4, 4.2.6, 5.2.1, 9.3, 9.4.2, Redacted 9.6, 9.10.5 9.9.1, 11.4.1.5 Materials, Hazardous Redacted 10.2.4, 10.3, 10.5 11.4.10 Materials, Labor, Equipment and Intent of the Contract Documents 1.1.3, 1.1.6, 1.6.1, 3.4, 3.5.1, 3.8.2, 3.8.23, 1.2.1, 4.2.7, 4.2.12, 4.2.13, 7.4 3.12, 3.13, 3.15.1, 4.2.6, 4.2.7, 5.2.1, 6.2.1, Interest 7.3.6, 9.3.2, 9.3.3, 9.5.1.3, 9.10.2, 10.2.1, 13.6 10.2.4, 14.2.1.2 Interpretation Means, Methods, Techrriques, Sequences and 1.2.3, 1.4, 4.1.1, 4.3.1, 5.1, 6.1.2, 8.1.4 Procedures of Construction Interpretations, Written 3.3.1, 3.12.10, 4.2.2, 4.2.7, 9.4.2 4.2.11, 4.2.12, 4.3.6 Mechanic's Lien Joinder and Consolidation of Claims Required 4.4.8 4.6.4 Mediation Judgment on Final Award 4.4.1, 4.4.5, 4.4.6, 4.4.8, 4.5, 4.6.1, 4.6.2, C1997 AINJ& r.©~Co~p~y~rig~hTt"-19~1~1-,~19~1~5.~1~9~18~.~1~9~25~,~1~93~7~.~19~5~1-,.. 19~5~8~,1~9~67 1,-1~9~63~,~1~9~66~,~1~96~7~,7 19~7~0~,~19~7~6-,1~9~8=7,-1~9~97~by ~ADOCUMENTA201·1997 The American Institute of Architects. Rfteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and will subject the violator io legal prosecution. This document was electronically produced with The Amencan lnst1tute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. . Washmgton, D.C. 20006-5292 This document is not an original ~A® Contract Document, but a reproduction produced by ~A® Contract Documents software for administrative purposes only and Is not for other use or resale. 6 8.3.1, 10.5 9.9.2, 9.10.3, 10.3.3, 11.2, 11.4, 13.5.1, Minor Changes in the Work 13.5.2, 14.1.1.4, 14.1.4 l.l.l, 3.12.8, 4.2.8, 4.3.6, 7.1, 7.4 Owner's Authority MISCELLANEOUS PROVISIONS 1.6, 2.1.1, 2.3, 2.4, 3.4.2, 3.8.1, 3.12.10, 13 3.14.2, 4.1.2, 4.1.3, 4.2.4, 4.2.9, 4.3.6, Modifications, Definition of 4.4.7, 5.2.1, 5.2.4, 5.4.1, 6.1, 6.3, 7.2.1, l.l.l 7.3.1, 8.2.2, 8.3.1, 9.3.1, 9.3.2, 9.5.1, 9.9.1, Modifications to the Contract 9.10.2, 10.3.2, 11.1.3, 11.;3.1, 11.4.3, 1.1.1, 1.1.2, 3.7.3, 3.ll, 4.1.2, 4.2.1, 5.2.3, 11.4.10, 12.2.2, 12.3.1, 13.2.2, 14.3, 14.4 7, 8.3.1, 9.7, 10.3.2, 11.4.1 Owner's Financial Capability Mutual Responsibility 2.2.1, 13.2.2, 14.1.1.5 6.2 Redacted Nonconforming Work, Acceptance of 11.2 THIS DOCUMENT HAS IMPORTANT 9.6.6, 9.9.3, 12.3 Redacted LEGAL CONSEQUENCES. Nonconforming Work, Rejection and 11.4.3 CONSULTATION WITH AN Correction of Owner's Relationship with Subcontractors ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR 2.3, 2.4, 3.5.1, 4.2.6, 6.2.5, 9.5.1, 9.8.2, 1.1.2, 5.2, 5.3, 5.4, 9.6.4, 9.10.2, 14.2.2 MODIFICATION. AUTHENTICATION 9.9.3, 9.10.4, 12.2.1, 13.7.1.3 Owner's Right to Carry Out the Work OF THIS ELECTRONICALLY Notice 2.4, 12.2.4. 14.2.2.2 DRAFTED AlA DOCUMENT MAY BE 2.2.1, 2.3, 2.4, 3.2.3, 3.3.1, 3.7.2, 3.7.4, Owner's Right to Clean Up MADE BY USING AlA DOCUMENT 0401. 3.12.9, 4.3, 4.4.8, 4.6.5, 5.2.1, 8.2.2, 9.7, 6.3 9.10, 10.2.2, 11.1.3, 11.4.6, 12.2.2, 12.2.4, Owner's Right to Perform Construction and to This document has been approved and 13.3, 13.5.1, 13.5.2, 14.1, 14.2 Award Separate Contracts endorsed by The Associated General Notice, Written 6.1 Contractors of America. 2.3, 2.4, 3.3.1, 3.9, 3.12.9, 3.12.10, 4.3, Owner's Right to Stop the Work 4.4.8, 4.6.5, 5.2.1, 8.2.2, 9.7, 9.10, 10.2.2, 2.3 10.3, 11.1.3, 11.4.6, 12.2.2, 12.2.4, 13.3, Owner's Right to Suspend the Work 14 14.3 Notice of Testing and Inspections Owner's Right to Terminate the Contract 13.5.1, 13.5.2 14.2 Notice to Proceed Ownership and Use of Drawings, Specifications 8.2.2 and Other Instruments of Service Notices, Permits, Fees and 1.1.1, 1.6, 2.2.5, 3.2.1, 3.11.1, 3.17.1, 2.2.2, 3.7, 3.13, 7.3.6.4, 10.2.2 4.2.12, 5.3 Observations, Contractor's Partial Occupancy or Use 1.5.2, 3.2, 3.7.3, 4.3.4 9.6.6, 9.9, 11.4.1.5 Occupancy Patching, Cutting and 2.2.2, 9.6.6, 9.8, 11.4.1.5 3.14, 6.2.5 Orders, Written Patents 1.1.1, 2.3, 3.9, 4.3.6, 7, 8.2.2, 11.4.9, 12.1, 3.17 12.2, 13.5.2, 14.3.1 Payment, Applications for OWNER 4.2.5, 7.3.8, 9.2, 9.3, 9.4, 9.5.1, 9.6.3, 2 9.7.1, 9.8.5, 9.10.1, 9.10.3, 9.10.5, 11.1.3, - ,~. Owner, Definition of 14.2.4, 14.4.3 2.1 Payment, Certificates for ~J& Owner, Information and Services Required of 4.2.5, 4.2.9, 9.3.3, 9.4, 9.5, 9.6.1, 9.6.6, the 2.1.2, 2.2, 3.2.1, 3.12.4, 3.12.10, 4.2.7, 9.7.1, 9.10.1, 9.10.3, 13.7, 14.1.1.3, 14.2.4 Payment, Failure of ..... ·- ..... •oiiiiiP ... 111111111111111 4.3.3, 6.1.3, 6.1.4, 62.5, 9.3.2, 9.6.1, 9.6.4, 4.3.6, 9.5.1.3, 9.7, 9.10.2, 14.1.1.3, ©1997 AlA® ~©~C~o=p=y7 rig~h~t7 19~1~5.~1u9~1~8.~1~9~25~.~1~93n-77,'1~95~1~,7 19~1~1-,.. 19~6~1.~1u9``~.~1~9~66~,~1~96~77,'1n-97~0~,7 19~5~8~,.. 19~7~6-,1~9~8~7.~1~9~97~by AIADOCUMENTA201·1997 The American Institute of Architects. Rfteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . : . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan lnst1tute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and Is not for other use or resale. 7 14.2.1.2, 13.6 Regulations and Laws Payment, Final 1.6, 3.2.2, 3.6, 3.7, 3.12,Jq, l~· 4.1.1, 4.4.8, 4.6, 9.6.4, 9.9.1, HM:.~· .1)11,4, 4.2.1, 4.2.9, 4.3.2, 9.8.2, 9.10, 11.1.2, 11.1.3, 11.4.1, 11.4.5, 12.3.1, 13.7, 14.2.4, 14.4.3 13.1, 13.4, 13.5.1, 13.5~1 Rejection of Work u: ,f!· ' 4 11.4, Redacted 3.5.1, 4.2.6, 12.2.1 7.3.6.4, 9.6.7, 9.10.3, 11.4.9, 11.5 Releases and Waivers of Li~fl§ Payments, Progress 9.10.2 4.3.3, 9.3, 9.6, 9.8.5, 9.10.3, 13.6, 14.2.3 Representations PAYMENTS AND COMPLETION 1.5.2, 3.5.1, 3.12.6, 6.2.~18&+ 3.3.3, 9 9.4.2, 9.5.1, 9.8.2, 9.10.1 • .3.3, Payments to Subcontractors Representatives 5.4.2, 9.5.1.3, 9.6.2, 9.6.3, 9.6.4, 9.6.7, tf..:H· 2.1.1, 3.1.1, 3.9, 4.1.1, s.u, *·~·w· THIS DOCUMENT HAS IMPORTANT 11.4.8, 14.2.1.2 5.1.2, 13.2.1 , ·--10, 5.1.1, CONSEQUENCES. PCB Resolution of Claims and ~§Pll:t~ WITH AN 10.3.1 4.4, 4.5, 4.6 Redacted Responsibility for Those PerffifmiR!W,e Work 7.3.6.4, 9.6.7, 9.10.3,11.4.9, 11.5 3.3.2, 3.18, 4.2.3, 4.3.8. ~.~}. 9 . .~:g!SI)c Permits, Fees and Notices 6.3, 9.5.1, 10 ' .::s.t,. 0 ...3.' 6 :2, 2.2.2, 3.7, 3.13, 7.3.6.4, 10.2.2 Retainage PERSONS AND PROPERTY, 9.3.1, 9.6.2, 9.8.5, 9.9.t 1 ~:tB·~:_g.w.3 PROTECTION OF Review of Contract Docunumt~ ~WcrJ;'f~M>.3 11 10 Conditions by Contractor Ie[q Polychlorinated Biphenyl t.5.2, a.2, 3.7.3, 3.12.11 tH:~ 10.3.1 Review of Contractor's Subrmtffil~ RY Owner Product Data, Definition of and Architect Y Ovvn~r 3.12.2 3.10.1, 3.10.2, 3.11, 3.1~, ~:!· ~q. 6.1.3, Product Data and Samples, Shop Drawings 9.2, 9.8.2 '~L., 6.1.3, 3.11, 3.12, 4.2.7 Review of Shop Drawings, Fffl!ffig{ B!!-ta and Progress and Completion Samples by Contractor 1- a Project, Definition of the 7:3,J' 4.5, 4.6, 5.3, 5.4, 6.1, 6.~, ;..,,.,,:$,1, 1.1.4 9.7, 10.2.5, 10.3, 12.2.~ IB·~· &.4;~4. Redacted Royalties, Patents and Copyri§Rff ' 3.4, 14 Redacted 3.17 11.3 Ru1es and Notices for Arbitr{ifJBR Project Manual, Detmition of the 4.6.2 1.1.7 Safety of Persons and Propeftf Project Manuals 10.2, 10.6 2.2.5 Safety Precautions and Pro`` Project Representatives 3.3.1, 4.2.2, 4.2.7, 5.3.1,18:~· f8·2· 10.6 4.2.10 Samples, Definition of ' .2, 1Cl.6 Redacted 3.12.3 10.2.5, 11.4 Samples, Shop Drawings, Pr§t!Hef B~t~ and PROTECTION OF PERSONS AND 3.11, 3.12, 4.2.7 at.i and PROPERTY Samples at the Site, Document~ lm-H 10 3.11 . Schedule of Values 4.2.9, 8.1.1, 8.1.3, 8.2.3, 9.4.2, 9.8, 9.9.1, 9.2, 9.3.1 9.10.3, 9.10.4.2, 12.2, 13.7 Schedules, Construction Substantial Completion, Definition of 1.4.1.2, 3.10, 3.12.1, 3.12.2, 4.3.7.2, 6.1.3 9.8.1 Separate Contracts and Contractors Substitution of Subcontractors 1.1.4, 3.12.5, 3.14.2, 4.2.4, 4.2.7, 4.6.4, 6, 5.2.3, 5.2.4 8.3.1, 11.4.7, 12.1.2, 12.2.5 Substitution of Architect Shop Drawings, Definition of 4.1.3 3.12.1 Substitutions of Materials Shop Drawings, Product Data and Samples 3.4.2, 3.5.1, 7.3.7 3.11, 3.12, 4.2.7 Sub-subcontractor, Definition of Site, Use of 5.1.2 3.13, 6.1.1, 6.2.1 Subsurface Conditions THIS DOCUMENT HAS IMPORTANT Site Inspections 4.3.4 LEGAL CONSEQUENCES. 1.2.2, 3.2.1, 3.3.3, 3.7.1, 4.2, 4.3.4, 9.4.2, Successors and Assigns CONSULTATION WITH AN 9.10.1, 13.5 13.2 ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR Site Visits, Architect's Superintendent MODIFICATION. AUTHENTICATION 4.2.2, 4.2.9, 4.3.4, 9.4.2, 9.5.1, 9.9.2, 3.9, 10.2.6 OF THIS ELECTRON/CALLY 9.10.1, 13.5 Supervision and Construction Procedures DRAFTED AlA DOCUMENT MAY BE Special Inspections and Testing 1.2.2, 3.3, 3.4, 3.12.10, 4.2.2, 4.2.7, 4.3.3, MADE BY USING AlA DOCUMENT D401. 4.2.6, 12.2.1, 13.5 6.1.3, 6.2.4, 7.1.3, 7.3.6, 8.2, 8.3.1, 9.4.2, Specifications, Definition of the 10, 12, 14 This document has been approved and 1.1.6 Redacte endorsed by The Associated General Specifications, The " 4.4.7, 5.4.1.2, 9.8.5, 9.10.2, 9.10.3, 14.2.2 Contractors of America. 1.1.1, 1.1.6, 1.1.7, 1.2.2, 1.6, 3.ll, Redacted 3.12.10, 3.17 9.10.2, 9.10.3 Statute of Limitations Surveys 4.6.3, 12.2.6, 13.7 2.2.3 Stopping the Work Suspension by the Owner for Convenience 2.3, 4.3.6, 9.7, 10.3, 14.1 14.4 Stored Materials Suspension of the Work 6.2.1, 9.3.2, 10.2.1.2, 10.2.4, 11.4.1.4 5.4.2, 14.3 Subcontractor, Definition of Suspension or Termination of the Contract 5.1.1 4.3.6, 5.4.1.1, 11.4.9; 14 SUBCONTRACTORS Taxes 5 3.6, 3.8.2.1, 7.3.6.4 Subcontractors, Work by Termination by the Contractor 1.2.2, 3.3.2, 3.12.1, 4.2.3, 5.2.3, 5.3, 5.4, 4.3.10, 14.1 9.3.1.2, 9.6.7 Termination by the Owner for Cause Subcontractual Relations 4.3.10, 5.4.1.1, 14.2 5.3, 5.4, 9.3.1.2, 9.6, 9.10 10.2.1, 11.4.7, Termination of the Architect 11.4.8, 14.1, 14.2.1, 14.3.2 4.1.3 Submittals Termination of the Contractor 1.6, 3.10, 3.11, 3.12, 4.2.7, 5.2.1, 5.2.3, 14.2.2 7.3.6, 9.2, 9.3, 9.8, 9.9.1, 9.10.2, 9.10.3, TERMINATION OR SUSPENSION OF 11.1.3 THE CONTRACT Redacted 14 6.1.1, 11.4.5, 11.4.7 Tests and Inspections Substantial Completion 3.1.3, 3.3.3, 4.2.2, 4.2.6, 4.2.9, 9.4.2, 9.8.3, @1997 AlA® '-©~Co=:p:-:-y::;rig= J/>0 '-©::-Co=p::-:y:;-rig:;:h7t 719:::-:1:-:::1-,-:;-:19::-:;1-;::5~.1;-;:9:::-1:::-8,-::1;-;;9:;:,25;:-,-::1~9;:;:37",~1:::-95;::-::1:--,719;::-;5:-:::8:-,"196=1.~1;-;:9:-::63:::-,-:1;-;;96:;:,6;:-,-:1':::'96:::7:;-,~1;:;:97:;-;0:-,719"'7:::6-,"19::;:8:::;7,~1;-;:9:-:::9:::-7.,.-by AlA DOCUMENT A201 • 1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its. provisions without written permission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan Institute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date .of 1735 ~ew York Avenue, N.W. expiration as noted below. Washington, D.C. 20006-5292 This document Is not an original PJA® Contract Document, but a reproduction produced by PJA® Contract Documents software for administrative purposes only and is not for other use or resale. 47 ... , ,.. repeated procedures and compensation for the Architect's services and expenses shall be at the Contractor's expense. 13.5.4 Required certificates of testing, inspection or approval shall, unless otherwise required by the Contract Documents, be secured by the Contractor and promptly delivered to the Architect. 13.5.5 If the Architect is to observe tests, inspections or approvals required by the Contract Documents, the Architect will do so promptly and, where practicable, at the normal place of testing. 13.5.6 Tests or inspections conducted pursuant to the Contract Documents shall be made promptly to avoid unreasonable delay in the Work. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. 13.6 INTEREST CONSULTATION WITH AN 13.6.1 Payments due and unpaid under the Contract Documents shall bear interest from the ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR date payment is due at such rate as the parties may agree upon in writing or, in the absence MODIFICATION. AUTHENTICATION thereof, at the legal rate prevailing from time to time at the place where the Project is located. OF THIS ELECTRONICALLY DRAFTED AlA DOCUMENT MAY BE 13.7 COMMENCEMENT OF STATUTORY LIMITATION PERIOD MADE BY USING AlA DOCUMENT 0401. 13.7.1 As between the Owner and Contractor: .1 Before Substantial Completion. As to acts or failures to act occurring prior This document has been approved and to the relevant date of Substantial Completion, any applicable statute of endorsed by The Associated General limitations shall commence to run and any alleged cause of action shall be Contractors of America. deemed to have accrued in any and all events not later than such date of Substantial Completion; .2 Between Substantial Completion and Final Certificate for Payment. As to acts or failures to act occurring subsequent to the relevant date: of Substantial Completion and prior to issuance of the fina1 Certificate for Payment, any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than the date of issuance of the fmal Certificate for Payment; and .3 Arter Final Certificate for Payment. As to acts or failures to act occurring after the relevant date of issuance of the final Certificate for Payment, any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than the date of any act or failure to act by the Contractor pursuant to any Warranty provided under Paragraph 3.5, the date of any correction of the Work or failure to correct the Work by the Contractor under Paragraph 12.2, or the date of actual commission of any other act or failure to perform any duty or obligation by the Contractor or Owner, whichever occurs last. ARTICLE 14 TERMINATION OR SUSPENSION OF THE CONTRACT 14.1 TERMINATION BY THE CONTRACTOR 14.1.1 The Contractor may terminate the Contract if the Work is stopped for a period of 30 consecutive days through no act or fault of the Contractor or a Subcontractor, Sub- subcontractor or their agents or employees or any other persons or entities performing ~r-1~r: portions of the Work under direct or indirect contract with the Contractor, for any of the following reasons: ©1997 All>® ~©~Co~p-``·g~h7 t7.19~1~1-,1~9~1~5.~1~9~18~,~1~9``~.~1~93~7~,~19~5~1-,7.19~5~8-,1~00~1,~1~9``~.~1~96~6~,~19~6~7~,7.19~7~0-,7.19~7~6,~1~9~8~7,~1~9~97~by AIADOCUMENTA201-1~7 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written pennission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright: . . . laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan Institute of Architects pennission of the AlA and can be reproduced in accordance with your license without violation until the date of .1735 ~ew York Avenue, N.W. expiration as noted below. .Washmgton, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA'!» ' Contract Documents software for administrative purposes only and is not for other use or resale. 48 'I 0 I .1 issuance of an order of a court or other public authority having jurisdiction which requires all Work to be stopped; .2 an act of government, such as a declaration of national emergency which requires all Work to be stopped; .3 because the Architect has not issued a Certificate for Payment and has not notified the Contractor of the reason for withholding certification as provided in Subparagraph 9.4.1, or because the Owner has not made payment on a Certificate for Payment within the time stated in the Contract Documents; or .4 the Owner has failed · to furnish to the Contractor promptly, upon the Contractor's request, reasonable evidence as required by Subparagraph 2.2.1. 14.1.2 The Contractor may terminate the Contract if, through no act or fault of the Contractor or a Subcontractor, Sub-subcontractor or their agents or employees or any other THIS DOCUMENT HAS IMPORTANT persons or entities performing portions of the Work under direct or indirect contract with the LEGAL CONSEQUENCES. Contractor, repeated suspensions, delays or interruptions of the entire Work by the Owner as CONSULTATION WITH AN ATTORNEY IS ENCOURAGED WITH described in Paragraph 14.3 constitute in the aggregate more than 100 percent of the total RESPECT TO ITS COMPLETION OR number of days scheduled for completion, or 120 days in any 365-day period, whichever is MODIFICATION. AUTHENTICATION less. OF THIS ELECTRON/CALLY DRAFTED AlA DOCUMENT MAY BE 14.1.3 If one of the reasons described in Subparagraph 14.1.1 or 14.1.2 exists, the MADE BY USING AlA DOCUMENT D4()1. Contractor may, upon. seven days' written notice to the Owner and Architect, terminate the Contract and recover from the Owner payment for Work executed and for proven loss with This document has been approved and respect to materials, equipment, tools, and construction equipment and machinery, including endorsed by The Associated General reasonable overhead, profit and damages. Contractors of America. 14.1.4 If the Work is stopped for a period of 60 consecutive days through no act or fault of the Contractor or a Subcontractor or their agents or employees or any other persons performing portions of the Work under contract with the Contractor because the Owner has persistently failed to fulfill the Owner's obligations under the Contract Documents with respect to matters important to the progress of the Work, the Contractor may, upon seven additional days' written notice to the Owner and the Architect, terminate the Contract and recover from the Owner as provided in Subparagraph 14.1.3. 14.2 TERMINATION BY THE OWNER FOR CAUSE 14.2.1 The Owner may terminate the Contract if the Contractor: .1 persistently or repeatedly refuses or fails to supply enough properly skilled workers or proper materials; .2 fails to make payment to Subcontractors for materials or labor in accordance with the respective agreements between the Contractor and the Subcontractors; .3 persistently disregards laws, ordinances, or rules, regulations or orders of a public authority having jurisdiction; or .4 otherwise is guilty of substantial breach of a provision of the Contract Documents. 14.2.2 When any of the above reasons exist, the Owner, upon certification by the Architect that sufficient cause exists to justify such action, may without prejudice to any other rights or remedies of the Owner and after giving the Contractor and the Contractor'g' IS "©<-C:::-o-p-yn..,..·g-:-h-:-t-:-19::-.1,-:-1-,1-:-:9:-:1-=5,-1'"9...,.18"'",...,1"'9""25=-,-:1""93"7=-,...,.19"'5::-:1-,-:-19"5"8-,1"'"'9'"'5..,..1,-1'"9_,.63.,...,....,1,..,.96"6=-,....,1"96=7=-,...,.19"7=-=o-,..,..19"7"'6-,1'"9...,.8=7,-1'"'"9...,97,....,--by AlA DOCUMENT A201 • 1997 The American Institute of Architects. Fifteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written permission of the AlA violates the copyright laws of the United Stales CONTRACT FOR CONSTRUCTION and will subject the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . · laws and will subject the violator to legal prosecution. This document was electronically produced with The Amencan Institute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 ~ew York Avenue, N.W. expiration as noted below. Washmgton, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AJA® Contract Documents software tor administrative purposes only and is not for other use or resale. 50 ., :A .). l-. THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. CONSUL TAT/ON WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION OF THIS ELECTRON/CALLY DRAFTED AlA DOCUMENT MAY BE MADE BY USING AlA DOCUMENT D401. This document has been approved and endorsed by The Associated General Contractors of America 1:>1997 Alii® -;;©~Co=p::-:y:;-rig::;:h-::-1719;:;:1~1-,7.19:;-::1~5-,1:;;9:-::-1~8,-:1;-;:9::::25;::-,-:1;-;:9-::::37::-,-::1~95=:1',-::19"5::::8:-,"19"'6'"'1-,"'"'19;,6:::-3,-1:-::9c::-66::-,-:1-=9-==67=-,...,1"'97::-:0:-,-:-1"97"6,...,"'"198==7,..,1.,..,9'"9=7-:-b-y AlA DOCUMENT A201 • 1997 The American Institute of Architects. Rfteenth Edition. Reproduction of the material herein or substantial GENERAL CONDITIONS OF THE quotation of its provisions without written pennission of the AlA violates the copyright laws of the United States CONTRACT FOR CONSTRUCTION and will subj_ect the violate to legal prosecution. WARNING: Unlicensed photocopying violates U.S. copyright . . . laws and Will subject the violator to legal prosecution. This document was electronically produced with The Amencan Institute of Architects permission of the AlA and can be reproduced in accordance with your license without violation until the date of 1735 New York Avenue, N.W. expiration as noted below. Washington, D.C. 20006-5292 This document is not an original AlA® Contract Document, but a reproduction produced by AlA® Contract Documents software for administrative purposes only and is not for other use or resale. 51 APPENDIX H Filed 12 October 1 P4:20 Amalia Rodriguez-Mendoza District Clerk Travis District D-1-GN-1 0-002325 CAUSE NO. D-1-GN-10-002325 RLJ 11-C AUSTIN AIR, LP; RLJ 11-C § IN THE DISTRICT COURT OF AUSTIN AIR LESSEE, LP; AND RLJ § LODGING FUND II ACQUISITIONS, § LLC, § § Plaintiffs/Counter-Defendants, § § ~ § TRAVIS COUNTY, TEXAS § EBCO GENERAL CONTRACTOR, § LTD; EBCO ADVANCED BUILDING § SYSTEM, LTD; EBCO/WARRIOR § MANAGEMENT LLC; ELNESS, § SWENSON, GRAHAM ARCHITECTS, § INC.; MARK G. SWENSON, § INDIVIDUALLY, TERRACON § CONSULTANTS, INC.; TODD E. § SWOBODA, P.E., INDIVIDUALLY; § MBA STRUCTURAL ENGINEERS AND § ANDREW T. MARLIN, P.E. § INDIVIDUALLY, § § Defendants/Counter-Claimants. § 200 TH JUDICIAL DISTRICT ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT TO THE HONORABLE COURT: CoME NOW, Defendants and Counter-Claimants Elness, Swenson, Graham Architects, Inc. ("ESG") and Mark G. Swenson ("Swenson" and, together with ESG, collectively, "Defendants" or "Counter-Claimants") and file and serve this Second Amended Answer and Original Counterclaim for Declaratory Judgment in response to Plaintiffs' Sixth Amended Original Petition and, in support thereof, would respectfully show the Court as follows: ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 1 599603.1 4021122 46 I. SECOND AMENDED ANSWER A. GENERAL DENIAL Pursuant to Rule 92 of the Texas Rules of Civil Procedure, Defendants generally deny each and every, all and singular, the assertions alleged in Plaintiffs' Sixth Amended Original Petition and any amendments thereto and request that Plaintiffs be required to prove the charges and allegations against these Defendants by a preponderance of the evidence and/or by clear and convincing evidence, as required by the Constitution and the Laws of the State of Texas. B. SPECIFIC DENIAL Pursuant to Rule 54 of the Texas Rules of Civil Procedure, Defendants specifically deny that all conditions precedent to the Plaintiffs' right to recover have been performed, have occurred, or have been waived or excused. In particular, Defendants specifically deny that Plaintiffs have presented their claims for payment to Defendants or Defendants' duly authorized agents as required by Section 38.002(2) of the Texas Civil Practice & Remedies Code. C. VERIFIED DENIALS Pursuant to Rule 93 of the Texas Rules of Civil Procedure, Defendants make the following verified denials: 1. Defendants deny the assignment of the contract upon which Plaintiffs' claims against Defendants are founded. Specifically, Defendants deny that Defendants or Defendants' authorized representative(s) provided consent to assign the contract at issue to Plaintiffs. Therefore, any alleged assignment violates the anti-assignment clause of the contract and is null and void. ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 2 599603.1 4021122 47 2. Defendants deny that Plaintiffs are entitled to recover in the capacity in which they sue. Defendants did not provide consent to assign the contract upon which Plaintiffs' claims are founded, and any such assignment is, therefore, made in violation of the anti- assignment. As such, Plaintiffs are not parties to the contract and lack standing to bring contract claims against Defendants. 3. Defendants deny that Swenson is liable in the capacity in which he has been sued. In particular, Swenson is not a signatory or a party to the contract upon which Plaintiffs' claims against Defendants are founded. 4. Defendants incorporate by reference herein the sworn verification of Paul Mittendorf£, a Principal and Vice President of Elness, Swenson, Graham Architects, Inc., which is attached to Defendants' First Amended Answer and Original Counterclaim for Declaratory Judgment filed with the Court on or about December 30, 2011. D. AFFIRMATIVE DEFENSES Pleading in the affirmative, if such IS necessary, Defendants would further show as follows: 1. Plaintiffs' alleged injuries and damages, if any, resulted, if at all, from conditions unrelated to any act, omission or conduct of Defendants. 2. Plaintiffs' alleged injuries and damages, if any, were caused, if at all, in whole or m part by the acts or omissions of others for whose conduct Defendants are not legally responsible. 3. At all times material to Plaintiffs' allegations, Defendants' conduct conformed to the applicable standard of care. 4. Plaintiffs' tort claims are barred in whole or in part, by the economic loss rule. ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 3 599603.1 4021122 48 5. Alternatively, if the economic loss rule does not completely bar all of Plaintiffs' tort claims, then, pursuant to Chapter 33 of the Texas Civil Practice and Remedies Code, Defendants are entitled to a credit for any settlement Plaintiffs receive from any other person or entity. If Plaintiffs settle with any other person or entity, then Defendants reserve the right to make a written election of credit for settlement under §33.014 of the Texas Civil Practice and Remedies Code. 6. Alternatively, if the economic loss rule does not completely bar all of Plaintiffs' tort claims, then, Plaintiffs' alleged injuries and damages, if any, were caused, if at all, in whole or in part, by Plaintiffs' own negligence. Plaintiffs are wholly barred from recovery to the extent the finder-of-fact determines Plaintiffs' comparative responsibility is 50% or greater, and, if Plaintiffs' comparative responsibility is less than 50%, any recovery must be reduced by Plaintiffs' percentage of responsibility determined by the finder-of-fact, in accordance with Chapter 33 of the Texas Civil Practice & Remedies Code. 7. Plaintiffs cannot recover for any amount that could have been avoided by their exercise of reasonable care. 8. Plaintiffs' claims are barred, in whole or in part, by Plaintiffs' failure to mitigate any alleged damages. 9. Plaintiffs' alleged injuries and damages, if any, resulted, if at all, from independent, unforeseeable, intervening and/or superseding causes. Any alleged action or omission on the part of Defendants was not the proximate cause, producing cause, or cause-in- fact ofPlaintiffs' alleged injuries or damages, if any. ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 4 599603.1 4021122 49 10. Defendants assert any and all defenses and seek any and all relief to which Defendants may be entitled in accordance with and pursuant to Chapter 150 of the Texas Civil Practice and Remedies Code. 11. Plaintiffs lack standing to sue on and are not parties to the contract on which Plaintiffs' claims against Defendants are founded. Assignment of the contract to Plaintiffs was made without consent ofDefendants, in violation of the anti-assignment clause of the contract. 12. Plaintiffs' non-contract claims are barred by the appropriate statute oflimitations. 13. Plaintiffs' non-contract claims, including claims for equitable subrogation, are barred by the economic loss doctrine. 14. Plaintiffs' recovery, if any, is limited to direct contract damages, if any, pursuant to the waiver of consequential damages clause in the contract upon which Plaintiffs' claims against Defendants are founded. More specifically, Plaintiffs' claims for current and future lost revenue, profits and diminution in value are barred by the consequential damages clause of the contract. 15. Plaintiffs' claims are barred against Defendants because Plaintiffs purchased the building in question "as is." 16. Defendants reserve the right to amend or supplement with any additional affirmative defenses or pleas of avoidance to which Defendants may be entitled. II. COUNTERCLAIM FOR DECLARATORY JUDGMENT A. INTRODUCTION 1. Now as Counter-Claimants, ESG and Swenson bring this action pursuant to TEX. Crv. PRAc. & REM. CoDE§ 37.001, et. seq., the Uniform Declaratory Judgments Act, and seek a ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 5 599603.1 4021122 50 declaration from the Court that RLJ 11-C Austin Air, LP; RLJ 11-C Austin Air Lessee, LP; and RLJ Lodging Fund II Acquisitions, LLC (collectively, "Counter-Defendants") may not recover contract damages under the contract at issue in this case. 2. As provided for by Chapter 37 of the Texas Civil Practice and Remedies Code, Counter-Claimants seek the following declarations from the Court: a. That the "Anti-Assignment" clause of the contract IS valid, enforceable and applies to Counter-Plaintiffs, making any ostensible assignment of the contract, in violation of the Anti-Assignment clause, null and void and of no effect; b. That the "Statute of Limitations Accrual" clause of the contract is valid and enforceable and, to the effect that a party could enforce the contract against Counter-Claimants, such Statute of Limitations Accrual clause establishes the date upon which any cause of action against Counter-Claimants accrues, i.e., the date that Counter-Claimants' services were substantially completed, which such date time-bars all of Counter-Defendants' causes of action with a two-year limitations period; c. That the "Waiver of Consequential Damages" clause of the Contract is valid and enforceable and, to the effect that a party could enforce the contract against Counter-Claimants, such Waiver of Consequential Damages clause bars Counter- Defendants from recovering any consequential damages from Counter-Claimants; and d. That Swenson was not a signatory or a party to the contract at issue here and, as such, cannot be liable to the Counter-Defendants under the contract. ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 6 599603.1 4021122 51 B. DISCOVERY CONTROL PLAN Discovery in this action is intended to be conducted under a Level 3 Discovery Control Order pursuant to Texas Rule of Civil Procedure 190.3. C. PARTIES 1. ESG is a Minnesota corporation that is authorized to do business in Texas. ESG has made an appearance in this matter. 2. Swenson is an individual who is a citizen of Minnesota and who has already appeared in this lawsuit. 3. RLJ 11-C Austin Air, LP ("RLJ 11-C Austin Air") is a Delaware Limited Liability Company that is authorized to do business in Texas. RLJ 11-C Austin Air has already appeared in this matter. 4. RLJ 11-C Austin Air Lessee, LP ("RLJ 11-C Austin Air Lessee") is a Delaware Limited Partnership that is authorized to do business in Texas. RLJ 11-C Austin Air Lessee has already made an appearance in this matter. 5. RLJ Lodging Fund II Acquisitions, LLC ("RLJ Lodging") is a Delaware Limited Liability Company that is, upon information and belief, authorized to do business in Texas. RLJ Lodging has already appeared in this matter. D. JURISDICTION AND VENUE 1. The subject matter of this declaratory judgment action is within the jurisdiction of this Court and is authorized pursuant to TEX. Crv. PRAc. & REM. CoDE§ 37.003. 2. Pursuant to section 15.062(a) of the Texas Civil Practice and Remedies Code, venue is proper in Travis County, Texas. ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 7 599603.1 4021122 52 E. FACTUALBACKGROUND 1. On or about January 1, 2005, White Lodging Services Corporation, Inc. ("White Lodging") and ESG entered into an agreement for architect services, as set forth in the following contracts: (i) AlA Document B141- 1997 Part 1: Standard Form of Agreement Between Owner and Architect with Standard Form of Architect's Services (the "Contract - 1997 Part 1"), attached hereto as Exhibit "1;" and (ii) AlA Document B141 - 1997 Part 2: Standard Form of Architect's Services: Design and Contract Administration (the "Contract - 1997 Part 2"), attached hereto as Exhibit "2." 2. The Contract - 1997 Part 1 and the Contract - 1997 Part 2 (collectively, the "Contract") were both executed on March 30, 2005. The Contract was not signed by Swenson in either his individual or representative capacity. 3. Section 1.3.7.9 of the Contract contains an Anti-Assignment clause, wherein "[n]either [White Lodging] nor [ESG] shall assign this Agreement without the written consent of the other, except that [White Lodging] may assign this Agreement to an institutional lender providing financing on the Project." 4. Section 1.3.6 of the Contract contains a Waiver of Consequential Damages clause, under which both ESG and White Lodging "waive consequential damages for claims, disputes, or other matters in question arising out of or relating to this [Contract]." 5. Section 1.3.7.3 of the Contract contains a clause commonly known as a "Statute of Limitations Accrual" clause, which provides the method to determine when a cause of action accrues for the purpose of starting the statute of limitations. Specifically, section 1.3.7.3 reads as follows: ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 8 599603.1 4021122 53 Causes of action between the parties to this Agreement pertaining to acts or failures to act shall be deemed to have accrued and the applicable statute of limitations shall commence to run not later than either the date of Substantial Completion for acts or failures to act occurring prior to Substantial Completion or the date of issuance of the final Certificate for Payment for acts or failures to act occurring after Substantial Completion. In no event shall such statute of limitations commence to run any later than the date when the Architect's services are substantially completed. (Emphasis added). 6. On or about March 16, 2006 White Lodging, et al. and Counter-Defendants entered into an agreement entitled New Hotels Purchase and Sale Agreement by and between Whiteco Industries, Inc. and RLJ Lodging Fund II Acquisitions, LLC, (the "New Hotels Purchase and Sale Agreement"), through which Counter-Defendants claim that the Contract was assigned to them. 7. ESG did not consent to an assignment of the Contract from White Lodging to Counter-Defendants, allegedly effectuated through the New Hotels Purchase and Sale Agreement. 8. ESG's services were substantially complete before the date the Certificate of Occupancy was issued for the Project, which was on October 12, 2006. Therefore, any causes of action against Counter-Claimants accrued, if at all, no later than October 12, 2006. 9. Counter-Defendants initiated this lawsuit and filed Plaintiffs' Original Petition and Request for Disclosure on July 7, 2010. Therefore, the negligence, negligent misrepresentation and equitable subrogation causes of action asserted by Counter-Defendants, each of which are governed by a two-year limitations period, are time-barred by the statute of limitations. ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 9 599603.1 4021122 54 10. Counter-Defendants seek recovery from Counter-Claimants for, among other things, diminution in the Project's value, lost revenue and other consequential damages, which such recovery is barred by the Waiver of Consequential Damages clause in the Contract. F. CAUSE OF ACTION: APPLICATION FOR DECLARATORY RELIEF. 1. Counter-Claimants incorporate by reference paragraphs II.A.1 through and including II.E.1 0 above as if fully set forth verbatim herein. 2. There exists an actual and justiciable controversy between Counter-Claimants and Counter-Defendants herein, within the jurisdiction of this Court, and involving rights, duties, legal obligations and relations of the parties under the Contract at issue. 3. Counter-Claimants petition this Court, pursuant to Chapter 37 of the Texas Civil Practice and Remedies Code, to declare that: a. the Anti-Assignment clause of the Contract is valid, enforceable and applies to Counter-Plaintiffs, making the assignment of the Contract, which was in violation of the Anti-Assignment clause, null and void and of no effect; b. the Statute of Limitations Accrual clause of the Contract is valid and enforceable and establishes the date upon which any cause of action against ESG accrued was on or before October 12, 2006, which is the latest date by which ESGs' services were substantially completed; c. that all of Counter-Defendants' causes of action against ESG with a two-year limitations period are time-barred; ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 10 599603.1 4021122 55 d. the Waiver of Consequential Damages clause of the Contract is valid and enforceable and bars Counter-Defendants from recovering any consequential damages from Counter-Claimants; and e. Swenson was not a signatory or a party to the Contract and cannot be liable to the Counter-Defendants under such Contract. G. COSTS AND ATTORNEYS' FEES Counter-Claimants have retained the undersigned law firm to represent them in this action and have agreed to pay the firm all costs and reasonable and necessary attorneys' fees incurred in this matter. An award of costs and reasonable and necessary attorney's fees to Counter-Claimants is equitable and just and, therefore, authorized by Chapter 37 of the Texas Civil Practice and Remedies Code. III. PRAYER WHEREFORE, PREMISES CONSIDERED, Defendants and Counter-Claimants Elness, Swenson, Graham Architects, Inc. and Mark G. Swenson respectfully request that Plaintiffs and Counter-Defendants RLJ 11-C Austin Air, LP; RLJ 11-C Austin Air Lessee, LP; and RLJ Lodging Fund II Acquisitions, LLC be cited to appear and answer herein and that, on final hearing, the Court enter an Order as follows: a. That Plaintiffs and Counter-Defendants take nothing by their claims; b. A declaration that the assignment of the Contract to Plaintiffs and Counter- Defendants was made in violation of the Anti-Assignment clause, is null and void ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 11 599603.1 4021122 56 and of no effect, and Defendants and Counter-Claimants are not liable to Plaintiffs and Counter-Defendants under such Contract; c. A declaration that Plaintiffs and Counter-Defendants' claims against ESG are time-barred, pursuant to the Statute of Limitations Accrual clause of the Contract; d. A declaration that Swenson was not a signatory or party to the Contract and cannot be liable to Plaintiffs and Counter-Defendants under the Contract; e. That Counter-Claimants be awarded their costs and all reasonable and necessary attorneys' fees; and f. All such other and further relief, both general and special, at law or in equity, to which Defendants and Counter-Claimants have shown themselves to be justly entitled. ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 12 599603.1 4021122 57 Respectfully submitted, MACDONALD DEVIN, P.C. By: Gregory N. Ziegler State BarNo. 00791985 gziegler@macdonalddevin.com Russell E. Clinage State Bar No. 00790473 rclinage@macdonal ddevin. com 3800 Renaissance Tower 1201 Elm Street Dallas, Texas 75270-2130 (214) 744-3300 Telephone (214) 747-0942 Facsimile ATTORNEYSFORDEFENDANTSAND COUNTER-CLAIMANTS ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing document has been served upon all counsel of record in accordance with the Texas Rules of Civil Procedure, on this 1st day of October 2012. Gregory N. Ziegler ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 13 599603.1 4021122 58 (S.; I .AlA Document B141m -1997 Part 1 $11ndard Form of Agreement Between Owner and Architect wilh·Standarrl Form ofArohitect's Services TABLE OF ARTICLES 1~ INmnALINF``llON RE$PQNSIBJ!#.li=S OF THE PARTIES ADDmOHS AND DELETIONS; lba IIUihor at thll document hu ~ !.fio:CONDlJIONS .. .. . . addDd !nlcnnatlen noeclod ferIa ccmplllllon. Thtt aulllelt may also SCOPE(),fiS!ftvtCeSAND OTHER SPECIAL TERMS AND CONDmONS have nMaad 1M !lilt ollhe . r .;·" Q'fg!nal AlA atandallllonn. An 1.5. c'O~ENSAT~df.i-. Alltllon~IU!d o.letloM R.ptJtt . . -``· lhal nctas adcted lnlcnnatlon a Aoiet.mNT ~do u·~(tftc Pliat doy or Jaouary ia tim year Two Thousaod Five. waD DIIRMiions ID lhe alll1dan:t (In JNrdJ, lndlctJtll dar...monrll lllld ye11r) lcrm Ialit II avallablit fl1lm 1M aulhcr lll1d ai1CIIIId bo lll'lfewm. BETWEEN the Architecc'r.cllel)t idcatifled 1111 the Owner: A VltlllcaJ In& In lhe l&lllllllrflt of (NiiiM, tJddrrtn Dlld ot#itsr.}liformlllion) 1? "'? /:~ {. IIIIo docl.mont lndlcatn Mloro ' f\ (!_'I j::. 0 c;... 't 0 S tile av111ot has adclcd noconiiY Whlta Lodglug Setvicei qHponulon, r.c. lnfOI'IIIA!Ian llld wllere lhe llllhor I 1000 But 80tb Place. Spl.~ SOO North Merril9ille, IN 46410.S666 , 'P .1 !>... 0,... ~ 't- c:;, 1 1 F~ "" has addad to Of delaCtd from 118 origlml AlA llxt. 0-,z:.lcc Co~r. 2../,/o.rrno«xvner~tva~ legal consequences. llld the Arcbire.ct: • ~'{ 1!.../o ,.[ .\. ~IL Comuaalon Mlh lUI at=rnoy (Nunw, tZddnu lllld Olh.~r hrfonntiflon) II OI\CIDUiaOIId wftiiiOtJIOCI Ill ~Alt..~ bA-T6.Ja lb ~ 01 madlfcatlon. Blaeu SweJUOQ Osabam ~ltects, lilc. 500 WuhlllgLOn Awooe SQUib MiDncopoUs.MN S54l5 Z/'2.~/o~ :Slot lo-s: .3/z,r / os For the followJag Ptojecc· · (Include dd41led dqcrll!f!,.'f§}'[.r,_'('jt!cr) . ~ ~ ........ r .. Dcsiln; 4o«:u~on a!il~ conllaCt admlilhtradoa for 1he COIIStnlclion of a l Court)'d.llyltfardott iu Auscia. Tex83. Tho Owner IU!d Arehltcc:t agree as followa: 1 SCA'f\ff\JED SFP 2 2 2007 EXHIBIT ESG001454 I 59 ARTICLE 1.1 INITIAL INFORMATION .§ 1.1~1 Thi.1 Agreemeat 11 based on the foltowillg mronnadon lllld a.sawnplfona. (Nor. ih#dLrposldonjor lila following /~1111 b)' ln#rtllls the nquutd bifonnatfon or a stotemSII such as •not -apPJlctll!lir," "un.b!own til time of exc~:utlrm" or "ro bet.t.rmlnr4 ~tar by mutual agrei!IJIDIL ") § 1.1.2 PROJECT PARAMETERS § 1.1.2.1 The objecdve or usc is: (ltrlftti/'J or ducribfl, if approprillle, proposed 1114 or goals.) A COIDiyard by Mmfou • a limited-service, ptototyplcal hotel § 1.1.2.2 The physical p~ten are: (ltknlih o;. ducrlbe. Ifqp1't1prilzle. `` location, dllllfiiiSlons, or otbr pt~rllnent ltifomr.allDn, .ruch as gfiDtuhnl&tll rtporU about 1htt site:) § 1.1.2.3 The Owaet'a Program Is: (ldlntt.fy docummtmion or &tllltl ths 1NJ11Mr in whit:h the progi'U1fl wiU btl diVtlloped.) The hotel program calls .for a five-stoty building. The project will conlaia 148 guestrooms and die olher prototypical Courtyard Hci~l ~oas - a lobby/lounge, cliDiug..ldtcllea, a recepdon desk witb saadriea display uea and ofliul. meeting space. s'llrimmins pool and whirlpool, exeltise room, bsct-of-bo``~e storap,lauucky, mecbaulcill and electrical spaces IIDd a guestlauadry &or. Futthcc dcfiDitiou or the ProiCGt Program is COI:IIaincd In Elaess Sweascm ~An:blrects' PmposalleaerdaredNovember 12.2004, nMaedJauuy 21,2004 altiiCbed u "Bxhibit A" with further clarifitatioD colllaiacd In BIDess Sweosoa Graham An:hilectl' schematic dedp documears dalecl111111111'Y 28, 200S. wbicb ire attached by refen~oce as -sxbiblt B.• § 1.1.2.4 The legal piiJ!IlDlCiei'S are: (ld6111ifJ pert/Milt lt!Bal information, incbulins. ifoppropriQu, lluul SU¥WyS and lt~gal duaiptiotu and rutrlctlotu ofthe sile.) L:pJ Dc:lcripdon ofPEopeny: Lot 5-D, Block C. RBSUBDIVJ8JON OFLOl'S 4 AND S, BLOCK C. METRO CBNTRB SEC110N S,11 subdivision Jn Austin, Travis Coouty, Texas, accordiDg to the map or plat ``=n:or n:c:cmkd as Docummt t999002GS in lhe Plats Rc:c:ords of'l'111vfs County, Tens. § 1.1.2.5 Tbc'liDancial paliiJDI:(I:tll ~n u roUows . •1 .AmoUnt of ~.Owner's ovetaU budget for the Project, includiai the Mhifcc:t'a compeiiSatiou. b: $48,000 oil' per room or S/,000,000, r'1 .2 Amcunt of the pwiicrs budget for !he Cou or lhe Wod:, acludillg de Archftect's compeosalion, b: \~ unbowil-at time-of execuliqn or Ibis Agrccmcut ~ "\ § 1.1.2.6 The lime panur=tcn ~= (Irlmlib. if appropriaie, milestone datu, duralions orfan rmclc scheduling.} ,, The following MjJestoac Dares ~ lhe same as !hose listed illl!htess Swt:``son GraMm Aldllrects' Proposalleucr daled November 12. 2004, revised January 21, 2004 attached as "Bxbbbit A. • and herein rcpiOduccd: Jamwy 28, 200S 3K Design Documents Chcclc Set March 11, 2~ • 7596 Design Documents Check Set Aprii2S, 20QS 9~ Contract Docu1111111ts; FoWtdalioa Buildillg Permit §1.1.2.7Tbe proposed procureme``tordelivay melhod for the Project is: (ldmlif:y mnlwrl such tU ct)mpedtive bltl. negozlatlll COIIlTrZCt. or ct)IUinU:tlcln IIIIIMB611111111.) 2 SEP 22 2007 ESGDD1455 60 Negotlaled Connct. §1.1.2.8 Otbu parameters are: (IJlen.tifyqet:ial dulnu:tulslic8 or ntw ofthe PttJj«t sud! tU Drl1'fiY, Dl'llronnutnt41 or lrmorir: p~ei'WIIitm ·nipzinm&Ml.r.J § 1.1.3 PROJECT TEAM S1.1.3..1 The Owner's Dcaigaalcd Rep.reaealallvc is: (lbl1111nw, mldren t11rd oilier illfomwum.) Trezat Bubcr Whi1D Lodglas Scrvk:cG CorpomioD, IDe. 1000 But 80th Plaee, Suite .500 Nonh Menilrillc. IN 46410..56~ § j.U.2 The pecsoJIS or cntllies, in addltioAIO tho Owacr's Dclianalcd ~ who are required 10 nwicw theAtchlrect'ssubiniuals.lcl the Owner ue: (lilt-. a&Jrus and oilier ill/rlmuJtitm.J Marriou International MarriCIU Dme WasblllfOn, D.C. 20058 § 1.1.3.31bc Owner's olhcr consultanla and conlniCIOn an:: (lbr discipline and, ({known, ldrnrify thmt by nam• and addnu.) CMLENGINEBR: Griffin Engineering Group, IDe. 11711 North Lamar Boulevard Aasdn, TX781.53 § 1.1.3.4 The Archllcct'a Dcaignatcd Ri:p.lesentativc is: (Un nan", addnu arid othtn" itifomtJJtlon.) Mark Swensan, AlA Paul M!Ueudorff, AlA JlllllCI Timm, AlA J!.hless Swenson Grabam.Archlrecu, Inc, 500 Washiog!o'n Avenue ~9Uih Milinompolls, MN SS41S' i 1.1.3.5 Tba CODIU~.~Ia retained at the An:hitecl's OXpCDIO 11n1: (Ust dl.Jclpllne Gnd. if known, ldmtifl th4m by name and addrer~.) STRUcrtJRAL BNOINEERlNG: Kollh Owcm, P.B. l4irli~ .Brilfgea !f. Assoc:ialel, Inc. '31520'Bigbtll AVeliuc South, Suire 1J0 Blnnfngham, AL 3!1222 SEP 22 2007 ESG001456 61 MECHANICAL, ELECTRICAL ENOINEEIUNO: Laaylllldsoy, P.B. Lill Id. H.B. 88 was compiled as Art. 2212a, Vernon’s Ann. Rev. Civ. Stat.
Id. [NOTE: Forthe complete legislative history, see CAPITOL R ESEARCH, The Legislative History of H.B. 88, 63rd Leg., R.S. (1973).] Legislative History of Page 1 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 Prior History: 1973 - 2003 1985 – Codification of the Civil Practice and Remedies Code During its Regular Session, the 69th Texas Legislature enacted S.B. 797, “An Act relating to the adoption of a nonsubstantive revision of the statutes relating to civil procedure and civil remedies and liabilities; making conforming amendments and repeals; providing penalties.” Civil Practice and Remedies Code, 69th Leg., R.S., ch. 959, 1985 Tex. Gen. Laws, 3242. [Exhibit 2.] This bill was passed as a part of the Texas Statutory Revision Program which was created by a constitutional amendment passed in 1963. Sec. 43. REVISION OF LAWS. The first session of the Legislature under this Constitution shall provide for revising, digesting and publishing the laws, civil and criminal; and a like revision, digest and publication may be made every ten years thereafter; provided, that in the adoption of and giving effect to any such digest or revision, the legislature shall not be limited by section 35 and 36 of this Article. TEXAS CONSTITUTION, Art. III, § 43. The enabling legislation for the statutory revision program is § 323.007, Government Code.
Id. The billcontained a statement of legislative intent: SECTION 10. LEGISLATIVE INTENT. This Act is enacted pursuant to Article III, Section 43, of the Texas Constitution. This Act is intended as a recodification only, and no substantive change in the law is intended by this Act. Civil Practice and Remedies Code, 69th Leg., R.S., ch. 959, 1995 Tex. Gen. Laws, 3242, 3322. [Exhibit 2.] Article 2212a, V.A.C.S., was repealed, redrafted, and transferred to Chapter 33, Civil Practice and Remedies Code, during this revision. Civil Practice and Remedies Code, 69th Leg., R.S., ch. 959, 1995 Tex. Gen. Laws, 3242, 3270-3271. [Exhibit 2.] Subsection (b) of Art. 2212a was revised and numbered as § 33.012, Civil Practice and Remedies Code. Sec. 33.012. DAMAGES IN PROPORTION. If there is more than one defendant and the claimant’s negligence does not exceed the total negligence of all defendants, contribution must be in proportion to the percentage of negligence attributable to each defendant.
Id. [NOTE: Duringthe public hearings and floor debates for bills such as this that are nonsubstantive revisions drafted by Texas Legislative Council, the sponsors and expert witnesses only discuss the measures taken to ensure that only non-substantive changes were made. There is no discussion regarding the substance of the provisions of the bill.] Legislative History of Page 2 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 Prior History: 1973 - 2003 1987 — S.B. 5 Sec. 33.012, Civil Practice and Remedies Code, was amended in 1987 during the First Called Session by S.B. 5, “An Act relating to revising the Civil Practice and Remedies Code to reform procedures and remedies in civil actions for personal injury, property damage, or death and civil actions based on tortious conduct, including revisions and additions to laws governing the determination of and limitations on liability and damages.” Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, 1987 Tex. Gen. Laws, 37. [Exhibit 3.] Section 2.08 of S.B. 5 deleted § 33.012 and substituted the following: Sec. 33.012. AMOUNT OF RECOVERY. (a) If the claimant is not barred from recovery under Section 33.001, the court shall reduce the amount of damages to be recovered by the claimant with respect to a cause of action by a percentage equal to the claimant's percentage of responsibility. (b) If the claimant has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by a credit equal to one of the following, as elected in accordance with Section 33.014: (1) the sum of the dollar amounts of all settlements; or (2) a dollar amount equal to the sum of the following percentages of damages found by the trier of fact: (A) 5 percent of those damages up to $200,000; (B) 10 percent of those damages from $200,001 to $400,000; (C) 15 percent of those damages from $400,001 to $500,000; and (D) 20 percent of those damages greater than $500,000. (c) The amount of damages recoverable by the claimant may only be reduced once by the credit provided for in Subsection (b).
Id. [Underlining indicatesadded text.] 1995 — S.B. 28 The 74th Legislature amended § 33.012 with the passage of S.B. 28, “An Act relating to responsibility for, and recover of, damages in certain civil actions.” Act of May 8, 1995, 74th Leg., R.S., ch. 136, 1995 Tex. Gen. Laws, 971. [Exhibit 4.] S.B. 28 amended Sec. 33.012 by adding a new subsection (d). Legislative History of Page 3 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 Prior History: 1973 - 2003 Sec. 33.012. AMOUNT OF RECOVERY. (a) If the claimant is not barred from recovery under Section 33.001, the court shall reduce the amount of damages to be recovered by the claimant with respect to a cause of action by a percentage equal to the claimant's percentage of responsibility. (b) If the claimant has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by a credit equal to one of the following, as elected in accordance with Section 33.014: (1) the sum of the dollar amounts of all settlements; or (2) a dollar amount equal to the sum of the following percentages of damages found by the trier of fact: (A) 5 percent of those damages up to $200,000; (B) 10 percent of those damages from $200,001 to $400,000; (C) 15 percent of those damages from $400,001 to $500,000; and (D) 20 percent of those damages greater than $500,000. (c) The amount of damages recoverable by the claimant may only be reduced once by the credit provided for in Subsection (b). (d) This section shall not apply to benefits paid by or on behalf of an employer to an employee pursuant to workers’ compensation insurance coverage, as defined in Section 401.011(44), Labor Code, in effect at the time of the act, event, or occurrence made the basis of claimant's suit.
Id. [Underlining indicatesadded text.] [NOTE: For the complete legislative history, see CAPITOL R ESEARCH, The Legislative History of S.B. 28, 74th Leg., R.S. (1995).] 2003 – H.B. 4 The 78th Legislature amended § 33.012 with the passage of H.B. 4, “An Act relating to reform of certain procedures and remedies in civil actions.” Act of June 2, 2003, 78th Leg., R.S., ch. 204, 2003 Tex. Gen. Laws, 847. [Exhibit 5.] Section 4.06 of H.B. 4 amended § 33.012, Civil Practice and Remedies Code by amending Subsection (b) and adding Subsections (c) and (d). (b) If the claimant has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of Legislative History of Page 4 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 Prior History: 1973 - 2003 action by a percentage equal to each settling person's percentage of responsibility [credit equal to one of the following, as elected in accordance with Section 33.014: [(1) the sum of the dollar amounts of all settlements; or [(2) a dollar amount equal to the sum of the following percentages of damages found by the trier of fact: [(A) 5 percent of those damages up to $200,000; [(B) 10 percent of those damages from $200,001 to $400,000; [(C) 15 percent of those damages from $400,001 to $500,000; and [(D) 20 percent of those damages greater than $500,000]. (c) Notwithstanding Subsection (b), if the claimant in a health care liability claim filed under Chapter 74 has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by an amount equal to one of the following, as elected by the defendant: (1) the sum of the dollar amounts of all settlements; or (2) a percentage equal to each settling person's percentage of responsibility as found by the trier of fact. (d) An election made under Subsection (c) shall be made by any defendant filing a written election before the issues of the action are submitted to the trier of fact and when made, shall be binding on all defendants. If no defendant makes this election or if conflicting elections are made, all defendants are considered to have elected Subsection (c)(1).
Id. See alsoTEXAS CIVIL PRACTICE & REMEDIES CODE, § 33.012 (Vernon 1997 & Supp. 2004-2005). [Exhibit 21.] [The subsection (d) that was added by the 1995 act was not amended by the 2003 act, therefore § 33.012 had two subsection (d)’s from 2003 to 2005. This was rectified by the passage of H.B. 2018 in 2005 which corrected the lettering (see below).] [NOTE: For the complete legislative history, see CAPITOL R ESEARCH, The Legislative History of H.B. 4, 78th Leg., R.S. (2003).] Legislative History of Page 5 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 2004: Interim Report 2004 – Interim Report During the interim between the Regular Sessions of the 78th and 79th Texas Legislatures, the House Civil Practices Committee completed an interim study and published its recommendations. HOUSE COMMITTEE ON CIVIL PRACTICES, “Report to the 79th Texas Legislature” (November, 2004). [Exhibit 6.] The Civil Practices Committee was charged by the Speaker of the House with monitoring the implementation of H.B. 4 (2003). Charge Two Monitor the legislation passed by the 78th Legislature, with a particular emphasis on the implementation of and rulemaking for H.B. 4.
Id. 7. TheInterim Report recommended Settlement Credit The settlement credit change in H.B. 4 has created a major problem in multi-defendant lawsuits that do not involved medical liability. H.B. 4 rightly abolished the old sliding scale settlement credit, but it also eliminated the dollar-for-dollar credit that has been an integral part of Texas law for many, many years. H.B. 4 retained the dollar-for-dollar credit in medical liability cases, but not for other tort actions. This change in the law has put non-settling defendants at a serious disadvantage and in many cases will allow claimants to recover more than 100 percent of their damages. It also creates substantial conflicts between defendants, encourages collusive settlements, and makes it much more difficult to coordinate the defense of mass actions, especially in the toxic tort arena. The Committee recommends restoring the optional dollar-for-dollar credit and allowing the non-settling defendant to elect the appropriate credit after verdict. This solution would both preserve the claimant’s recovery and allow defendants the full benefit of a settlement before trial.
Id. 7. 2005—S.B. 890 S.B. 890 Filed During the Regular Session of the 79th Texas Legislature, Sen. Williams filed S.B. 890, “An Act relating to the amount of recovery in a civil action.” Tex. S.B. 890, As Introduced, 79th Leg., R.S. (2005). [Exhibit 8.] Legislative History of Page 6 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: S.B. 890 Filed Section 1 of S.B. 890, As Introduced, amended § 33.012, Texas Civil Practice and Remedies Code. Sec. 33.012. AMOUNT OF RECOVERY. (a) If the claimant is not barred from recovery under Section 33.001, the court shall reduce the amount of damages to be recovered by the claimant with respect to a cause of action by a percentage equal to the claimant’s percentage of responsibility. (b) If the claimant has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by [a percentage equal to each settling person’s percentage of responsibility. [(c) Notwithstanding Subsection (b), if the claimant in a health care liability claim filed under Chapter 74 has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by] an amount equal to one of the following, as elected by the defendant: (1) the sum of the dollar amounts of all settlements; or (2) a percentage equal to each settling person’s percentage of responsibility as found by the trier of fact. (c) [(d)] An election made under Subsection (b) [(c)] shall be made by any defendant filing a written election before the issues of the action are submitted to the trier of fact and when made, shall be binding on all defendants. If no defendant makes this election or if conflicting elections are made, all defendants are considered to have elected Subsection (b) [(c)](1). (d) This section shall not apply to benefits paid by or on behalf of an employer to an employee pursuant to workers’ compensation insurance coverage, as defined in Section 401.011(44), Labor Code, in effect at the time of the act, event, or occurrence made the basis of claimant’s suit.
Id. [Underlining indicatesadded text. Strikeouts indicate deleted text.] [NOTE: § 33.012, Civil Practice and Remedies Code, contains two Subsection (d)’s due to a drafting error. One was passed in 1995 (S.B. 28) and the other in 2003 (H.B. 4). Section 2 provided for the application of S.B. 890. SECTION 2. (a) This Act applies to all actions: (1) commenced on or after the effective date of this Act; or (2) pending on the effective date of this Act and in which the trial, or any new trial or retrial following motion, appeal, or otherwise, begins on or after that effective date. (b) For an action commenced before the effective date of this Act, a trial, new trial, or retrial that is in progress on the effective date is governed by the law applicable to the trial, new trial, or retrial immediately before that date, and that law is continued in effect for that purpose.
Id. Legislative Historyof Page 7 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: S.B. 890 Filed Section 3 provided for the effective date of S.B. 890. SECTION 3. This Act takes effect September 1, 2005.
Id. Senate CommitteeHearings on S.B. 890 Public Hearing: March 31 S.B. 890 was referred to the Senate Committee on State Affairs, which held a public hearing for the bill on March 31. CAPITOL RESEARCH SERVICES, Hearings on S.B. 890 Before the Senate Committee on State Affairs, 79th Leg. R.S. (March 31, 2005). [Exhibit 13.] Sen. Williams offered a committee substitute for S.B. 890.
Id. [NOTE: Asubstitute is an amendment which replaces the text of the whole bill.] Sen. Williams explained S.B. 890 to the committee. SEN. TOMMY WILLIAMS : The Committee Substitute to Senate Bill 890 – since the 1930’s, Texas has recognized that an injured party’s entitled to recover only once for an injury. Subsequent to 1987, Chapter 33 allowed the non-settling defendant to elect either a dollar-for-dollar credit for all settlements with the plaintiff, or a credit based on the percentage of liability assigned to parties by a trier of fact, or statutory sliding scale. House Bill 4, the Tort Reform Act of 2003, radically changed this scheme, and it eliminated the dollar-for-dollar sliding scale of credit, except for those sued for health care liability. Instead non-settling defendants now receive credit only for that percentage of fault that a trier of fact assigns to the settling person. Thus, if the jury finds no liability for a settling person, the court may not credit any prior settlements against the non-settling defendant’s liability. House Bill 4 created an anomaly in Texas law by retaining the dollar-for-dollar credit in medical liability cases, but eliminating it for all others. There’s not a policy rationale for this distinction, and the law as it stands now creates a privileged class of defendants. Senate Bill 890 solves the problem by restoring the election of the dollar-for-dollar credit, just as in medical liability cases. The committee substitute language is – has being agreed to by the Texas Association of Defense Council and the Texas Civil Justice League, and the Texas Trial Lawyer Association, and it removes the election provision and allows the percentage equal to each settling person’s percentage responsibility as found by the trier of fact that was in the original bill as filed. Mr. Chairman, I think there are witnesses here that would probably be very valuable in trying to answer any questions that you or any of the other committee members might have. Legislative History of Page 8 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: Senate Committee Hearings on S.B. 890
Id. Chairman Duncancongratulated Sen. Williams for the agreement embodied in S.B. 890. CHAIR : I want to congratulate you on pulling together the coalition – in what I think what seems to be a kind of a monumental agreement on something that’s always been an issue in civil jurisprudence.
Id. David Chamberlain,representing the Texas Association of Defense Counsel, testified in favor of S.B. 890. DAVID E. CHAMBERLAIN : I’m David Chamberlain, and I’m president of the Texas Association of Defense Council, which has over 2100 civil defense lawyers practicing in the state every day handling cases of the nature that this bill will affect. We’re the largest state association of defense lawyers in the country. I am here to testify in favor of this bill. As Sen. Williams pointed out, we have an anomaly in the system right now. We have basically two different systems, one for healthcare liability cases, one for general liability cases, or a different one for general liability cases. In the general liability cases, currently you can only take a percentage reduction for the negligence in the comparative fault of a settling co-defendant. On the other hand, in a medical malpractice lawsuit, you get a choice, and that choice is either that percentage reduction or a dollar credit. Our experience has been, since September of 2003, from the defense perspective, that it creates and encourages the discord and litigation among co- defendants, who were faced with the tasks of actually having to prove the negligence of what was a friendly – former friendly co-defendant, who has now settled out. And if you want to take – you can’t take advantage of whatever they paid the plaintiff to reduce the overall judgment. You actually – actually have to prove the only negligent, you know, what was once your friend. That creates all sorts of situations and opportunities for malpractice, for conflicts of interest, particularly in toxic tort cases and multiple party cases. And I can – if the committee is interested, I could certainly give examples of that later on. We feel like that Senator – that Senate Bill 890, the substitute, will solve all of these problems. It’ll switch everything over to a very simple dollar credit only reduction. It’ll bring uniformity and symmetry to all the cases – civil cases. It’ll quiet the discord and litigation among co-defendants. It’ll reduce litigation expense considerably. It will take out the gamesmanship, the guessing about what’s going to happen when you have to make an election in the health care liability field. Everybody’ll know what the deal is going in. We think it’ll greatly facilitate settlements. It’ll reduce the opportunity for – for malpractice, which, again, reduces subsequent or satellite litigation. And we think quite clearly, that this comes as close as humanly possible to achieving the Bradshaw Rule, which we’ve been trying so hard to achieve over the past few decades, and that is only one satisfaction for one injury. And I want to thank the committee for that opportunity to speak today. CHAIR : Does that mean if we pass this bill, that we won’t have to endure any more seminar lectures on settlement credit? Legislative History of Page 9 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: Senate Committee Hearings on S.B. 890 CHAMBERLAIN : Yes, sir. Kirk Watson will be out of business. No more lawyers trying to do math, which is – sounds funny, Senator, but lawyers trying to do math is a very ugly thing. CHAIR : It’s usually lawyers are lawyers because they can’t do math, as opposed to doctors, or engineers.
Id. Guy Choate,representing the Texas Association of Trial Lawyers, testified in favor of S.B. 890. GUY CHOATE : I’m Guy Choate, with Texas Trial Lawyers Association, and I don’t believe I can say it any better than David said it. This – this change will provide certainty in the law. It’s fairness. Certainly there is the opportunity under the laws that exist today for plaintiffs to make essentially a double recovery, if they choose right. It encourages the plaintiff a lot of times to settle with the principal defendant, and sometimes just roll the dice on one that really don’t have that much exposure, because they don’t have that downside risk. This is a fair way to handle this problem. It enhances the opportunity and ability of plaintiffs and defendants to settle their litigation without the potential for either the plaintiff or the defendant being second-guessed or creating malpractice themselves by their conduct. We think this is a good law. We think that certainly momentum ought to develop around it, given the fact that the people who actually have to do this on a day-by-day basis all feel that this is the best way to handle it, and we appreciate the opportunity that the Senator has given us to work with him on this bill, because we think that this is a good response to this problem. CHAIR : I note in your card that you filed the position in opposition to the bill as filed, but I think what you’ve told me now is that you would need to change that. CHOATE : Yes, on the committee substitute, we’re absolutely in favor, and I’m sorry. I wasn’t clear how to do that.
Id. Mike Slack,representing the Texas Association of Trial Lawyers, testified in favor of S.B. 890. MIKE SLACK : Mr. Chairman, Sen. Williams. I’m Mike Slack. I’m a past president of TTLA, and regrettably, over the last 20 years, have had far too much time invested in dealing with Chapter 33 settlement credit issues, where Texas has migrated through some awfully unfortunate waters, resulting in a lot of gamesmanship, and resulting in a lot of what I call judicial experimentation gone bad. I think I can think of few moments where we have altered our laws that have been more positive than the bill, the substitute bill you have in front of you today. This is a very significant thing. CHAIR : Feel the love. [Laughter.] SLACK : Let me tell you, there’s practicing lawyers out there, Senator, that have cases they would like to settle that have not been settled, because of the existing Chapter 33 impediments. And in talking to David, lawyers have been in Legislative History of Page 10 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: Senate Committee Hearings on S.B. 890 a real quandary since House Bill 4 particularly, and litigants have suffered the consequences, because settlements have not been occurring. And cases – people are taking cases into trial, that ordinarily, those litigants should be free to leave the litigation. And as we were talking early in our discussions, it’s not a long bill, and there’s very few words you’re actually changing in Chapter 33, but it will be a tremendous benefit for predictability, uniformity, and efficient resolution of disputes. And I really – I want to commend the committee for taking this, and also, Mr. Chamberlain, in his group for their work and insight into historical problems we’ve had with settlement credits.
Id. Mike Hull,representing the Texas Alliance for Patient Access, testified against the Committee Substitute for S.B. 890. Chairman Duncan and Mr. Hull discussed settlement credit examples. MIKE HULL : My name is Mike Hull. I’m an attorney in private practice here in Austin, appearing on behalf of the Texas Alliance for Patient Access. I filed a card supporting Senate Bill 890 as filed. We, however, strongly oppose the committee substitute. There’s two reasons for this. One, the election, the ability to elect is something that’s very, very important to our clients. It’s really a dollar issue for us in healthcare liability claims. We – we are not opposed to the notion that everyone should get the election. We are only supportive of the notion that at least that we should. In the context of House Bill 4, there were – there are several provisions in House Bill 4 relating to, that have an impact on settlement credits that we were not entirely comfortable with during the process. And, in fact, the provision that this bill addresses was not in the engrossed version on the House side of the House Bill 4 at all. We in particular, would not have supported the third party practice, and the questions that raises about limitations. And we only ultimately supported of that part of the bill when the exception for healthcare and liability claims was inserted into House Bill 4 very late in the process in Chairman Nixon’s office when a whole bunch of us were there. So, we don’t oppose everyone having the election, we only want to attempt to make sure that we keep it. CHAIR : Why, anecdotally, explain why the election is important in a healthcare claim? HULL : Any case where we estimate that the sum of the settling defendant’s percentage of responsibility, times the jury verdict, will be greater than the dollar-for-dollar credit paid by the settling defendant, it is to our advantage to take that percent. In any case, conversely, where the dollar-for-dollar credit we think will work to our advantage, then we would want to take that. And, so it becomes very much a dollar issue for us. HULL : Under – under proportionate responsibility, as enacted in House Bill 4 – HULL : Yes. CHAIR : Don’t you still get to reduce the liability by the sum of the total of the responsible individuals until you get the – unless you’re, well, I mean you get – you still get to reduce the reliability under those percentages of responsibility, don’t you? Even if they settle? Legislative History of Page 11 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: Senate Committee Hearings on S.B. 890 HULL : We would get the – we would get the – under the House Bill 4 scenario, we would get the percent, if that’s what we elected, or the dollar-for-dollar credit. The two examples I’ve sketched out where it makes a difference for us, is that if you assume the two defendants case, where the to-the-jury defendant got 40%, the settling defendant got 60%, and the verdict was $700,000 and there’s a $500,000 settlement. Then it works to the advantage of the defendant that’s tried to elect the dollar – to – to elect the percent credit. But, if on the other hand you think that the dollar-for-dollar credit is going to be less than the percent. And in particular, it’s a problem for us because there is so many low limit positions. So still, if you have a $200,000 defendant, who settles out, who is going to get a much greater share, then we end up potentially picking that up depending on where our percent of the responsibility falls. CHAIR : You may have just answered it. But, why would the healthcare claims be different than any other multiple defendant case? HULL : I don’t know that it is, and that’s why I say, we were not really in favor of making it one way or the other exclusively, ever, because we think, I mean, I have other than health care clients, myself, and it can be a problem in those cases too. So – CHAIR : Do you agree that, from time to time that the possibility of the option or the election causes an impediment to settlement of parties to the case? HULL : It probably does. I can’t tell you that it never does. I really think any way you go. I mean we went – There was testimony about this last time. We all have our experience of it. There is an advantage to one party or the other depending on the case, under any of these circumstances. If you’re a dollar-for-dollar person, and you’re on the plaintiff’s side, you might think it works to your advantage to hold out because you can’t get enough. So – there are advantages to one party or the other under any scenario that we have been thus far, able to come up with. We would just, and if we’re going to re-visit this issue then, there is revisiting the issue of joining responsible third parties, which is a looming terrible problem for us. Once you can name a defendant against whom limitations has already expired, it raises substantial problems. So, unless there is further questions, I’m done.
Id. George ScottChristian, representing the Texas Civil justice League, testified in favor of the Committee Substitute for S.B. 890. GEORGE CHRISTIAN : Thank you, Mr. Chairman. My name is George Christian, and I’m an attorney representing the Texas Civil Justice League. We are in support of the Committee Substitute for Senate Bill 890 for many of the reasons that you’ve already heard. We think that it’s the best overall solution to this problem that we’ve really been dealing with since 1987. As you know, Sen. Duncan, we’ve had these settlement credits issues repeatedly in the last almost 20 years. And we believe that the committee substitute is fair to everyone. I think the dollar-for-dollar credit in the vast majority of cases, if not all cases, always squares up the parties, and the plaintiff will get as close to one satisfaction rule as possible to do. Everybody gets full credit for the dollars that have already been settled. There’s really no gamesmanship involved. I agree with a lot of what Mike Hull said, about you know the benefits of an election. Legislative History of Page 12 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: Senate Committee Hearings on S.B. 890 Clearly, there is some benefits in certain cases where you do have a low limits situation. That is probably true. And – but, nevertheless, we believe that the law ought to be the same for all defendants, and for all plaintiffs. We think that this treats everybody equally. We think it squares the parties in the end of the day, which is what you want to do. And we do think the current system of bifurcated settlement credit is not justifiable from a policy standpoint and deters settlements. And that is a serious problem. And we would like to see if we can’t get that addressed. And we appreciate you and Sen. Williams dealing with this.
Id. Chairman Duncanread the names of persons in support of S.B. 890 who did not wish to testify.
Id. S.B. 890was left pending.
Id. Public Hearing:April 4 The Senate Committee on State Affairs held another public hearing for S.B. 890 on April 4. CAPITOL RESEARCH SERVICES, Hearings on S.B. 890 Before the Senate Committee on State Affairs, 79th Leg. R.S. (April 4, 2005). [Exhibit 14.] Chairman Duncan reminded the committee of S.B. 890 and Sen. Williams briefly explained the bill. CHAIR : Members, the Chair pulls up Senate Bill 890, which is the settlement credits bill that we heard last week. This is the bill that has an agreement between Texas Civil Justice League and the Texas Trial Lawyers Association, which moves it to a dollar-for-dollar credit. Sen. Williams, you’re recognized to explain the bill. SEN. TOMMY WILLIAMS : Thank you, Mr. Chairman. As you’ve already stated, this committee substitute would remove the election provision that allows for percentage credit equal to each settling person’s percentage of responsibility as found by the trier of fact. The substitute language has been agreed to – to the Texas Association of Defense Counsel, the Texas Civil Justice League, and the Texas Trial Lawyers Association. And Mr. Chairman, I would move adoption – I move passage of the Committee Substitute to Senate Bill 890.
Id. The committeefavorably reported the Committee Substitute for S.B. 890 on a vote of 6 ayes and no nays.
Id. Senate CommitteeReport for S.B. 890 The committee produced a report for S.B. 890 which contained the text of the bill, the public hearing witness list, and the fiscal note prepared by the Legislative Budget Board. Tex. S.B. 890, Senate Committee Report, 79th Tex. Leg., R.S. (2005). [Exhibit 9.] Legislative History of Page 13 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: Senate Committee Hearings on S.B. 890 Section 1 of the Senate Committee Substitute for S.B. 890, As Introduced, further amended § 33.012, Texas Civil Practice and Remedies Code. Sec. 33.012. AMOUNT OF RECOVERY. (a) If the claimant is not barred from recovery under Section 33.001, the court shall reduce the amount of damages to be recovered by the claimant with respect to a cause of action by a percentage equal to the claimant’s percentage of responsibility. (b) If the claimant has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by [a percentage equal to each settling person’s percentage of responsibility. [(c) Notwithstanding Subsection (b), if the claimant in a health care liability claim filed under Chapter 74 has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by] an amount equal to [one of the following, as elected by the defendant: [(1)] the sum of the dollar amounts of all settlements[; or [(2) a percentage equal to each settling person’s percentage of responsibility as found by the trier of fact]. (c) [(d) An election made under Subsection (c) shall be made by any defendant filing a written election before the issues of the action are submitted to the trier of fact and when made, shall be binding on all defendants. If no defendant makes this election or if conflicting elections are made, all defendants are considered to have elected Subsection (c)(1). [(d)] This section shall not apply to benefits paid by or on behalf of an employer to an employee pursuant to workers’ compensation insurance coverage, as defined in Section 401.011(44), Labor Code, in effect at the time of the act, event, or occurrence made the basis of claimant’s suit.
Id. Section 2provided for the application of S.B. 890. SECTION 2. (a) This Act applies to all actions: (1) commenced on or after the effective date of this Act; or (2) pending on the effective date of this Act and in which the trial, or any new trial or retrial following motion, appeal, or otherwise, begins on or after that effective date. (b) For an action commenced before the effective date of this Act, a trial, new trial, or retrial that is in progress on the effective date is governed by the law applicable to the trial, new trial, or retrial immediately before that date, and that law is continued in effect for that purpose.
Id. Section 3provided for conflict of laws. Legislative History of Page 14 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: Senate Committee Hearings on S.B. 890 SECTION 3. To the extent of any conflict, this Act prevails over another Act of the 79th Legislature, Regular Session, 2005, relating to nonsubstantive additions to and corrections in enacted codes.
Id. Section 4provided for the effective date. It was modified to allow immediate effect of the bill. SECTION 4. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2005.
Id. Bill AnalysisThe Senate Committee Report contained a bill analysis prepared by the Senate Research Center.
Id. [SENATE RESEARCHCENTER, Bill Analysis for S.B. 890 – Committee Report (Substituted) (April 5, 2005)] The bill analysis reviewed the background and purpose of the bill. AUTHOR’S/SPONSOR’S STATEMENT OF INTENT Since the 1930s, Texas has recognized that an injured party is entitled to recover only once for an injury. (Bradshaw v. Baylor,
126 Tex. 99, 101;
84 S.W.2d 703, 704 (1935)). The “one-satisfaction” rule was codified by the Legislature in Chapter 33, Civil Practice and Remedies Code, in 1987. Subsequent to the 1987 amendments, Chapter 33 allowed a non-settling defendant to elect either a dollar-for-dollar credit for all settlements with the plaintiff, a credit based on the percentage of liability assigned to the parties by the trier of fact, or a statutory sliding scale. H.B. 4, the tort reform measure enacted by the 78th Legislature, Regular Session, 2003, radically changed this scheme. It eliminated the election of the dollar-for-dollar or sliding scale credit, except for those sued for health care liability. Instead, non-settling defendants now receive credit only for that percentage of fault that a trier of fact assigns to a settling person. Thus, if a jury finds no liability for a settling person, the court may not credit any prior settlements against the non-settling defendant’s liability. The settlement credit scheme created by H.B. 4 eliminates the one-satisfaction rule that has been part of Texas law for more than 70 years, except in medical liability cases. This creates the potential for unjust windfalls for plaintiffs, who can now recover far in excess of their total damages. This problem is acute in lawsuits involving multiple defendants. For example, if a plaintiff sues ten defendants for $1 million in damages, and nine defendants settle for $100,000 each, the plaintiff collects $900,000 in settlements. If a jury then finds little or no liability for the settling defendants, the tenth defendant is liable for the full $1 million. The plaintiff thus recovers $1.9 million, despite being awarded only $1 million in damages. This unjustly enriches the plaintiff and penalizes the defendant who went to trial. Legislative History of Page 15 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: Senate Committee Hearings on S.B. 890 Eliminating the dollar-for-dollar credit also creates the potential for collusive settlements. For example, a defendant could agree to settle a claim at trial for less by agreeing with the plaintiff to wait to settle until after all sides have rested their cases. It would then be far too late for non-settling defendants to introduce evidence of the settling defendant’s proportionate responsibility. Such collusion not only undermines the purpose of Texas’ proportionate responsibility law, which is designed to ensure that parties only pay for their proportionate share of the plaintiff’s harm, but it discourages defendants who believe they have little or no liability from trying the lawsuit to a jury. Current law thus undermines the jury system and will vastly increase the cost of litigation, especially in the mass tort arena. Finally, H.B. 4 created an anomaly in Texas law by retaining the dollar-for-dollar credit in medical liability cases but eliminating it in all others. There is no policy rationale for this distinction. The law as it now stands creates a privileged class of defendants. C.S.S.B. 890 restores the election of the dollar-for-dollar credit, just as in medical liability cases.
Id. The analysisreviewed the rulemaking authority delegated by the bill.
Id. The analysisalso summarized each section of the bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 33.012, Civil Practice and Remedies Code, as amended by Chapter 136, Acts of the 74th Legislature, Regular Session, 1995, and Chapter 204, Acts of the 78th Legislature, Regular Session, 2003, to delete existing text requiring the court to further reduce the amount of damages to be recovered by a claimant who has settled with one or more persons. Deletes text of existing Subsection (d) relating to a binding election made under Subsection (c). Makes conforming changes. SECTION 2. Makes application of this Act prospective. SECTION 3. Provides that, to the extent of any conflict, this Act prevails over another Act of the 79th Legislature, Regular Session, 2005, relating to nonsubstantive additions to and corrections in enacted codes. SECTION 4. Effective date: upon passage or September 1, 2005.
Id. Legislative Historyof Page 16 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: Senate Floor Debates on S.B. 890 Senate Floor Debate on S.B. 890 Second Reading: April 13 On April 13, S.B. 890 was considered on the Senate floor. CAPITOL RESEARCH SERVICES, Debate on S.B. 890 On the Floor of the Senate (Second and Third Readings), 79th Leg. R.S. (April 13, 2005). [Exhibit 15.] Sen. Williams briefly explained the bill to the Senate. SEN. TOMMY WILLIAMS : Thank you, Mr. President. I move to suspend the Senate’s regular order of business and take up and consider the Committee Substitute to Senate Bill 890. At this time, Members, this is the settlement credits bill that I have been discussing with Members on the floor today. Mr. President, I – I move to suspend the regular order of business.
Id. The normalprocedure for bringing up a bill on the Senate floor on second reading is for the sponsor to briefly explain the bill and then move to suspend the regular order of business. Sen. Williams moved to suspend . The motion to suspend prevailed.
Id. S.B. 890passed on second reading without further discussion.
Id. Third Reading:April 13 Normally the Senate hears bills on second and third readings on the same day. Since Art. III, § 32 of the Texas Constitution requires readings of bills on three separate days, the Constitution must be suspended. Sen. Williams moved that the constitutional three-day rule be suspended. The motion prevailed on a record vote. CAPITOL RESEARCH SERVICES, Debate on S.B. 890 On the Floor of the Senate (Second and Third Readings), 79th Leg. R.S. (April 13, 2005). [Exhibit 15.] S.B. 890 passed on third reading.
Id. See alsoS.J. of Tex., 79th Leg., R.S. 972-973 (2005). [Exhibit 19.] House Committee Hearings on S.B. 890 Formal Meeting: May 13 S.B. 890 crossed over to the House where it was referred to the House Civil Practices Committee. The committee did not hold a public hearing for S.B. 890. A formal meeting was held instead. Tex. S.B. 890, 79th Leg., R.S., Master Bill History Report (2005). [Exhibit 7.] [NOTE: No testimony is taken at formal meetings and they are not tape recorded.] Legislative History of Page 17 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: House Committee Hearings on S.B. 890 The committee favorably reported a committee substitute for S.B. 890.
Id. [NOTE: Asubstitute is an amendment which replaces the entire bill.] House Committee Report The committee prepared a report which included the text of the committee substitute, the committee’s bill analysis, and the fiscal notes. Tex. S.B. 890, House Committee Report, 79th Leg., R.S. (2005). [Exhibit 10.] Section 1 of the House Committee Substitute made further changes to § 33.012, Civil Practice and Remedies Code. Only Subsection (b) was amended. SECTION 1. Subsection (b), Section 33.012, Civil Practice and Remedies Code, is amended to read as follows: (b) If the claimant has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by the sum of the dollar amounts of all settlements [a percentage equal to each settling person’s percentage of responsibility.
Id. Section 2provided for the application of S.B. 890. SECTION 2. (a) This Act applies to all actions: (1) commenced on or after the effective date of this Act; or (2) pending on the effective date of this Act and in which the trial, or any new trial or retrial following motion, appeal, or otherwise, begins on or after that effective date. (b) For an action commenced before the effective date of this Act, a trial, new trial, or retrial that is in progress on the effective date is governed by the law applicable to the trial, new trial, or retrial immediately before that date, and that law is continued in effect for that purpose.
Id. There wasno section providing for conflict of laws.
Id. Section 3provided for the effective date. It allowed immediate effect of the bill. SECTION 4. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2005.
Id. Legislative Historyof Page 18 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: House Committee Hearings on S.B. 890 Bill Analysis The House committee prepared a bill analysis which reviewed the background and purpose of the bill. BACKGROUND AND PURPOSE H.B. 4, the tort reform measure enacted by the 78th Legislature, Regular Session, changed the settlement credit scheme used for decades in the state. It eliminated the election of the dollar-for-dollar or sliding scale credit, except for those sued for health care liability. Instead, non-settling defendants now receive credit only for that percentage of fault that a trier of fact assigns to a settling person. Thus, if a jury finds no liability for a settling person, the court may not credit any prior settlements against the non-settling defendant's liability. CSSB 890 restores the dollar-for-dollar settlement credit in civil actions, while maintaining current law for health care liability claims.
Id. Bill Analysis. The analysis reviewed the rulemaking authority granted by S.B. 890.
Id. The analysissummarized each section of the bill and noted the effective date. ANALYSIS CSSB 890 amends Section 33.012(b), Civil Practice and Remedies Code, by adding "the sum of the dollar amounts of all settlements" and striking "a percentage equal to each settling person's percentage of responsibility". EFFECTIVE DATE Upon passage, or, if it the Act does not receive the necessary vote, the Act takes effect September 1, 2005.
Id. The analysisalso compared the “original” (S.B. 890 as filed) to the committee substitute. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 890 differs from the original by restoring the current election of credit in health care liability cases. The substitute continues current law for health care liability claims, while restoring the dollar-for-dollar settlement credit in other civil actions.
Id. Lastly, theanalysis explained the actions of the committee.
Id. Legislative Historyof Page 19 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: House Committee Hearings on S.B. 890 House Research Organization Report The House Research Organization (HRO) also reviewed the bill. HRO is an agency of the Texas House which analyzes bills that come to the House floor for debate. HOUSE RESEARCH O RGANIZATION, S.B. 890 Bill Analysis (May 23, 2005). [Exhibit 20.] The HRO analysis noted the subject of S.B. 890. SUBJECT: Dollar-for-dollar credit against amount of recovery in most civil actions
Id. The HROanalysis reviewed the background of S.B. 890 and summarized its provisions. BACKGROUND: Civil Practice and Remedies Code, sec. 33.012, states that if a plaintiff settles with one or more defendants and goes to trial against any other defendant, then any amount the plaintiff is awarded against the defendant at trial must be reduced by a percentage equal to each settling party’s percentage of responsibility. Defendants in health care liability claims may choose to have the amount t hey owe to the plaintiff reduced by either a percentage equal to each settling party’s percentage of responsibility or by the total dollar sum of all settlements. DIGEST: SB 890 would amend sec. 33.012 to change the amount that an award against a defendant could be reduced from a percentage credit based on a party's responsibility to a dollar-for-dollar credit based on the sum of all settlements. Defendants in health care liability cases still could choose their reduction method. The bill would take immediate effect if finally passed by a two –thirds record vote of the membership of each house. Otherwise, it would take effect September 1, 2005. The bill would apply to all actions commenced on or after the effective date, or pending on the effective date and in which the trial or any new trial or retrial begins on or after the effective date. For actions commenced before the effective date, the former law would continue in effect for any trial, new trial, or retrial in progress on the effective date.
Id. The HROanalysis reviewed the arguments of the supporters and opponents of the bill. SUPPORTERS SAY: Requiring a dollar-for-dollar reduction of damage awards would be more fair. Plaintiffs are limited by law to only one full recovery, but under sec. 33.012 they are sometimes able to recover more than the amount authorized by the judge or jury. This could happen in a case where the plaintiff settled with defendant A and went to trial with defendant B, but the court found that defendant A was not responsible. The plaintiff would have collected from defendant A and would be entitled to a full Legislative History of Page 20 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: House Committee Hearings on S.B. 890 recovery against defendant B because defendant A’s responsibility was zero percent, so defendant B could not take a reduction. Requiring a dollar-for-dollar reduction would decrease the amount defendant B had to pay the plaintiff by the amount that defendant A already had paid. This could ensure that the plaintiff received only one recovery and no more. Requiring dollar-for-dollar credits also would reduce litigation between co-defendants seeking to avoid having to pay part of the recovery to the plaintiff because the dollar- for-dollar system is straightforward and not capable of being abused or manipulated by any co-defendant. OPPONENTS SAY: There is no reasonable basis for defendants in health care liability cases to have a choice between a dollar-for-dollar credit and a percentage credit. For the sake of fairness and consistency, all defendants should be subject to the dollar-for-dollar credit, with no type of defendant receiving special treatment.
Id. The HROanalysis also contained a notes section. NOTES: The Senate-passed version would have applied the dollar-for-dollar credit to all defendants, including defendants in health care liability cases.
Id. House FloorDebate on S.B. 890 Second Reading: May 24 S.B. 890 came before the House on May 24. CAPITOL RESEARCH SERVICES, Debate on S.B. 890 On the Floor of the House (Second Reading), 79th Leg. R.S. (May 24, 2005). [Exhibit 16.] Rep. Nixon briefly explained the bill. REP. JOE NIXON : Mr. Speaker, Members, this alters the settlement credits from a percentage of a defendant’s liability to a sum of the dollar amount of all settlements. Move passage.
Id. S.B. 890was passed on second reading.
Id. See alsoH.J. of Tex., 79th Leg., R.S. 4213 (2005). [Exhibit 21.] Legislative History of Page 21 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: House Floor Debate on S.B. 890 Third Reading: May 25 The next day S.B. 890 was laid out on third reading. CAPITOL RESEARCH SERVICES, Debate on S.B. 890 On the Floor of the House (Third Reading), 79th Leg. R.S. (May 25, 2005). [Exhibit 17.] Rep. Nixon reminded the members of the bill. REP. JOE NIXON : This is – this settlement credit bill we passed yesterday. Move passage.
Id. S.B. 890passed on third reading on a record vote of 142 ayes and no nays.
Id. See alsoH.J. of Tex., 79th Leg., R.S. 4476-4477 (2005). [Exhibit 21.] Senate Concurrence on S.B. 890: May 27 S.B. 890 returned to the Senate for approval of the amendments added by the House. On May 27, S.B. 890 with the House amendments came before the Senate. CAPITOL RESEARCH SERVICES, Debate on S.B. 890 On the Floor of the Senate (House Amendments), 79th Leg. R.S. (May 27, 2005). [Exhibit 18.] Sen. Williams explained the House amendments. SEN. TOMMY WILLIAMS : Thank you, Mr. President. I move that we concur in the House Amendments to Senate Bill 890. Members, the House made one small change to Senate Bill 890. It satisfied the concerns of the health care industry which were raised when the Senate Bill removed a provision they currently enjoy in medical liability cases. All this bill does is switch from a percentage equal to each settling person’s responsibility to a dollar-for-dollar settlement credit. I move that we concur on Senate Bill 890.
Id. The motionto concurred prevailed by a vote of 29 ayes to no nays.
Id. S.J. ofTex., 79th Leg., R.S. 4119-4120 (2005). [Exhibit 19.] S.B. 890 Signed by the Governor The bill was sent to Gov. James Richard (Rick) Perry, who signed the bill on June 9. Since the bill had been passed by both chambers by a two-thirds majority, the bill was effective immediately. Tex. S.B. 890, 79th Leg., R.S., Master Bill History (2005). [Exhibit 7.] [NOTE: Sec. 39 of Article 3 of the Texas Constitution governs the effective date of legislation. Section 39. Time of taking Effect of Laws; Emergencies; Entry on Journal. No law passed by the Legislature, except the general appropriations act, shall take effect or go into force until ninety days after the adjournment of the session at which it Legislative History of Page 22 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: S.B. 890 Signed by the Governor was enacted, unless the Legislature shall, by a vote of two-thirds of all the members elected to each House, otherwise direct; said vote to be taken by yeas and nays, and entered upon the journals. Texas Constitution, § 39, Art. 3. S.B. 890: Session Law The final version of S.B. 890 was published in the session laws. SECTION 1. Subsection (b), Section 33.012, Civil Practice and Remedies Code, is amended to read as follows: (b) If the claimant has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by the sum of the dollar amounts of all settlements [a percentage equal to each settling person’s percentage of responsibility]. SECTION 2. (a) This Act applies to all actions: (1) commenced on or after the effective date of this Act; or (2) pending on the effective date of this Act and in which the trial, or any new trial or retrial following motion, appeal, or otherwise, begins on or after that effective date. (b) For an action commenced before the effective date of this Act, a trial, new trial, or retrial that is in progress on the effective date is governed by the law applicable to the trial, new trial, or retrial immediately before that date, and that law is continued in effect for that purpose. SECTION 3. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2005. Act of May 27, 2005, 79th Leg., R.S., ch. 277, 2005 Tex. Gen. Laws, 770. [Exhibit 22.] S.B. 890: Enrolled Bill Analysis The Senate Research Center prepared a bill analysis for the final version of S.B. 890. SENATE RESEARCH CENTER, Bill Analysis for S.B. 890 – Enrolled (June 2, 2005). [Exhibit 12.] The bill analysis reviewed the background and purpose of the bill. AUTHOR’S/SPONSOR’S STATEMENT OF INTENT Legislative History of Page 23 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: H.B. 890 Signed by the Governor Since the 1930s, Texas has recognized that an injured party is entitled to recover only once for an injury. (Bradshaw v. Baylor,
126 Tex. 99, 101;
84 S.W.2d 703, 704 (1935)). The “one-satisfaction” rule was codified by the Legislature in Chapter 33, Civil Practice and Remedies Code, in 1987. Subsequent to the 1987 amendments, Chapter 33 allowed a non-settling defendant to elect either a dollar-for-dollar credit for all settlements with the plaintiff, a credit based on the percentage of liability assigned to the parties by the trier of fact, or a statutory sliding scale. H.B. 4, the tort reform measure enacted by the 78th Legislature, Regular Session, 2003, radically changed this scheme. It eliminated the election of the dollar-for-dollar or sliding scale credit, except for those sued for health care liability. Instead, non-settling defendants now receive credit only for that percentage of fault that a trier of fact assigns to a settling person. Thus, if a jury finds no liability for a settling person, the court may not credit any prior settlements against the non-settling defendant’s liability. The settlement credit scheme created by H.B. 4 eliminates the one-satisfaction rule that has been part of Texas law for more than 70 years, except in medical liability cases. This creates the potential for unjust windfalls for plaintiffs, who can now recover far in excess of their total damages. This problem is acute in lawsuits involving multiple defendants. For example, if a plaintiff sues ten defendants for $1 million in damages, and nine defendants settle for $100,000 each, the plaintiff collects $900,000 in settlements. If a jury then finds little or no liability for the settling defendants, the tenth defendant is liable for the full $1 million. The plaintiff thus recovers $1.9 million, despite being awarded only $1 million in damages. This unjustly enriches the plaintiff and penalizes the defendant who went to trial. Eliminating the dollar-for-dollar credit also creates the potential for collusive settlements. For example, a defendant could agree to settle a claim at trial for less by agreeing with the plaintiff to wait to settle until after all sides have rested their cases. It would then be far too late for non-settling defendants to introduce evidence of the settling defendant’s proportionate responsibility. Such collusion not only undermines the purpose of Texas’ proportionate responsibility law, which is designed to ensure that parties only pay for their proportionate share of the plaintiff’s harm, but it discourages defendants who believe they have little or no liability from trying the lawsuit to a jury. Current law thus undermines the jury system and will vastly increase the cost of litigation, especially in the mass tort arena. Finally, H.B. 4 created an anomaly in Texas law by retaining the dollar-for-dollar credit in medical liability cases but eliminating it in all others. There is no policy rationale for this distinction. The law as it now stands creates a privileged class of defendants. S.B. 890 restores the election of the dollar-for-dollar credit, just as in medical liability cases.
Id. The analysisreviewed the rulemaking authority delegated by the bill.
Id. The analysisalso summarized each section of the bill. SECTION BY SECTION ANALYSIS Legislative History of Page 24 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 205: H.B. 890 Signed by the Governor SECTION 1. Amends Section 33.012(b), Civil Practice and Remedies Code, to reduce the amount of damages to be recovered by a claimant who has settled with one or more persons. SECTION 2. Makes application of this Act prospective. SECTION 3. Effective date: upon passage or September 1, 2005.
Id. S.B. 890: Enrolled Summary Texas Legislature On-Line published a summary of the final version of S.B. 890. Legislative Session: 79(R) SENATE BILL 890 SENATE AUTHOR: Williams EFFECTIVE: 6-9-05 HOUSE SPONSOR: Nixon Senate Bill 890 amends the Civil Practice and Remedies Code to provide that if the claimant in a personal injury case has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant by the sum of the dollar amounts of all settlements. The bill also eliminates the option to reduce the amount of damages by a percentage equal to each settling person's percentage of responsibility. TEXAS LEGISLATURE ON-LINE, Tex. S.B. 890, Enrolled Summary, 79th Leg., R.S. (205) (Available at: http://www.capitol.state.tx.us/BillLookup/BillSummary.aspx?LegSess =79R&Bill=SB890). [Exhibit 23.] 2005 — H.B. 2018 Also in 205, the 79th Legislature enacted H.B. 2018, “An Act relating to relating to nonsubstantive additions to and corrections in enacted codes, to the nonsubstantive codification or disposition of various laws omitted from enacted codes, and to conforming codifications enacted by the 78th Legislature to other Acts of that legislature.” Act of May 24, 2005, 79th Leg., R.S., ch. 728, 2005 Tex. Gen. Laws, 2188. [Exhibit 24.] Section 23.001 of H.B. 2018 renumbered sections and subsections that had been incorrectly numbered and corrected the two Subsection (d)’s in § 33.012, Civil Practice and Remedies Code. SECTION 23.001. The following provisions of enacted codes are renumbered or relettered and appropriate cross-references are changed to eliminate duplicate citations or to relocate misplaced provisions: Legislative History of Page 25 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 2005: H.B. 2018 …. (6) Subsection (d), Section 33.012, Civil Practice and Remedies Code, as added by Chapter 136, Acts of the 74th Legislature, Regular Session, 1995, is relettered as Subsection (e), Section 33.012, Civil Practice and Remedies Code.
Id. § 23.001.Current Law (2007) Sec. 33.012, Civil Practice and Remedies Code currently states: § 33.012. Amount of Recovery (a) If the claimant is not barred from recovery under Section 33.001, the court shall reduce the amount of damages to be recovered by the claimant with respect to a cause of action by a percentage equal to the claimant's percentage of responsibility. (b) If the claimant has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by the sum of the dollar amounts of all settlements. (c) Notwithstanding Subsection (b), if the claimant in a health care liability claim filed under Chapter 74 has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by an amount equal to one of the following, as elected by the defendant: (1) the sum of the dollar amounts of all settlements; or (2) a percentage equal to each settling person's percentage of responsibility as found by the trier of fact. (d) An election made under Subsection (c) shall be made by any defendant filing a written election before the issues of the action are submitted to the trier of fact and when made, shall be binding on all defendants. If no defendant makes this election or if conflicting elections are made, all defendants are considered to have elected Subsection (c)(1). (e) This section shall not apply to benefits paid by or on behalf of an employer to an employee pursuant to workers' compensation insurance coverage, as defined in Section 401.011(44), Labor Code, in effect at the time of the act, event, or occurrence made the basis of claimant's suit. Texas Civil Practice and Remedies Code, § 33.012 (Vernon 1997 & Supp. 2007). [Exhibit 25.] Legislative History of Page 26 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440 Location of Documents LOCATION OF DOCUMENTS The original documents compiled in this report can be found in several locations at the Texas Capitol Complex. Legislative Reference Library (LRL) Texas Capitol Building, 2nd Floor, Austin, Texas 78701 (512) 462-1252 The LRL is the repository for the official file for bills that have been considered by the Legislature since 1973. (Bills from 1836 to 1972 are stored at the State Archives.) These files include the various versions of the bill, floor amendments, and bill analyses. In addition, the LRL maintains copies of House and Senate committee interim reports and other documents produced by the Texas Legislature and Texas state agencies. Texas House of Representatives Video/Audio Services Department John H. Reagan Bldg., Room 330 105 West 15th St., Austin, Texas 78701 (512) 463-0920 This office maintains the original copies of tape recordings of the proceedings of the Texas House and its committees from 1973 to the present. It also maintains copies of committee minutes. Texas Senate Staff Services Sam Houston Bldg., Room 175 201 East 14th St., Austin, Texas 78701 (512) 463-0430 This office maintains the original copies of tape recordings of the proceedings of the Texas Senate and its committees for the last three sessions. (The remaining Senate tapes are at the State Library.) It also maintains copies of committee minutes that are extant from 1973 to the present. This office maintains copies of transcripts for Senate proceedings which have been transcribed from 1973 to the present. Texas State Library and Archives Lorenzo De Zavala Library & Archives Bldg. 1201 Brazos St., Austin, Texas 78701 Reference Room: (512) 463-5455 Archives: (512) 463-5480 The State Archives (1st floor) is the repository for the official files for bills that have been considered by the Legislature from the First Congress in 1836 until the 62nd Legislature in 1971–72. (Bills enacted since 1973 are stored at the Legislative Reference Library.) The Reference Room (Room 300, 3rd floor) is the repository for original copies of tape recordings of proceedings of the Texas Senate and its committees since 1973, except the last three sessions (which are at the Senate Staff Services). Legislative History of Page 27 Capitol Research Services Tex. S.B. 890 Austin, Texas 79th Leg., R.S. (2005) (512)371-1440
Document Info
Docket Number： 03-14-00738-CV
Filed Date： 4/10/2015
Precedential Status： Precedential
Modified Date： 9/29/2016