AAMA Participates in Construction Defect Case

The American Architectural Manufacturers Association is looking to its members to help fund an amicus brief the association intends to file to support its position in a construction defect lawsuit. The Western Region AAMA board sent a memo to all association members last week asking for matching funds from individual companies in an effort to vocalize its position with the California Supreme Court, and perhaps keep the case from having nationwide ripple effects.

“This case is important because the Court rarely sets a precedent,” says Ray Bjerrum of Merzon Industries, AAMA treasurer and past president of the Western Region board, in the memo to AAMA members. “It appears the Supreme Court has taken this case to provide guidance in the assignment of comparative fault in construction defect cases.”

The total cost of preparing the amicus brief will be about $20,000, according to the memo, and the AAMA contribution is capped at $10,000.

THE BACKGROUND OF THE BRIEF
A California trade organization representing specialty contractors approached the Western AAMA group at its September meeting to request a legal letter of support for a state Supreme Court case involving window maker Weather Shield Manufacturing. The California Professional Association of Specialty Contractors, or CALPASC, is turning to associations representing various building products and construction trades to issue “friend of the court” letters, or amicus briefs, to the state Supreme Court, said Jason Weintraub, a lawyer who serves on CALPASC’s legal action committee. “It’s a very important California case regarding the defense obligations of subcontractors and manufacturers,” he explained at the fall session.

The background, according to Weintraub: Weather Shield Manufacturing was deemed not negligent during a trial examining faulty construction for its products’ craftsmanship in a particular project. Nevertheless, the state Court of Appeal found that a subcontractor or manufacturer can be compelled to pay for the defense fees of a builder or general contractor in a construction defect lawsuit, regardless of the subcontractor or manufacturer’s lack of negligence. In non-legal terms, this means that Weather Shield got stuck with the bill, even though they committed no wrongdoing in the eyes of the court, Weintraub explained.

Further, it’s not only residential manufacturers and subcontractors that face this challenge, he noted. “This type of indemnity agreement is just as prevalent in commercial work as residential contracts,” he said.

So both CALPASC and Weather Shield itself have hired strong law firms to file briefs to the California Supreme Court, which has agreed to review the appellate ruling (it could take as long as two years to actually make it to the courtroom, Weintraub pointed out). The good news is that the nod by the Supreme Court to hear the case immediately curtails the appellate indemnification ruling from being cited as a precedent in other cases. The even better news, Weintraub said, is that building product manufacturers and subcontractors will have the right to represent its interests before an important legal body in a ruling that could potentially lay the groundwork for cases everywhere. “It’s just not that often that we get the chance to air our concerns,” Weintraub noted. “We don’t get a chance to talk to the California Supreme Court very often so we’re going to say all that we need to say.”

Representing CALPASC and its efforts, Weintraub asked the members of AAMA to consider hiring a firm to file an amicus brief for the case. “This organization can bring a unique perspective and address issues to the California Supreme Court that no one else to date has agreed to bring up,” he said.

WHAT THIS COULD MEAN
The memo issued by the Western Region board to the membership points out that resolving this issue in the courts can benefit of window manufacturers in more ways than being off the hook for legal costs. “The largest benefit of a favorable decision is that insurance companies may be able to return to the market because they will be able to quantify the risk to their intended insured and not the arbitrary risk to an indemnified third party,” Bjerrum noted in the memo. “Reduced premium rates would be a further bonus.”

Manufacturers or other interested parties that want to get involved with the amicus brief effort can click here for the pledge form on AAMA's Web site. Money is due to AAMA within 30 days of the pledge, and a $250 minimum contribution is recommended. Staffers will collect all pledge forms by November 22. For more information, call AAMA at 847/303-5664.