It’s My Party (Wall) And I’ll (Sue) If I Want To

Victor Metsch | Smith Gambrell & Russell | May 20, 2019

Party walls shared by adjoining townhouse are ubiquitous in Manhattan and, as recent case illustrates, are an invitation to litigation– especially where a sale at an astronomical price is followed by a massive top-to-bottom renovation.

Kai and Doris Chang own a townhouse on East 92nd Street. A limited liability company (LLC) owns the townhouse next door. The party wall is 40 feet high and was originally one foot thick.

The LLC hired Trident Restoration to do extensive renovations on its property, including relocating the bathrooms and kitchen and altering the building’s plumbing.

The Changs discovered a hole in the third-floor bedroom of the their townhouse; pipework anchored brackets installed on their side of the party wall, running the full height of the building; and another hole on the second floor, directly under the third-floor breach.

The Changs’ professional engineer found that substantial portions of the party wall had been removed; the renovation failed to conform with the plans and drawings filed with the Department of Building; and compromised the fire separation rating of the party wall in violation of City building codes.

The Changs sued for trespass damages, and injunction and restoration of the party wall.

The LLC hired an engineer. The two engineering firms inspected the work and prepared reports regarding the fireproofing and integrity of the party wall. The Changs’ engineer found areas of missing brick within the property line of the Changs’ townhouse that should be replaced. The LLC engineer’s responsive report stated that “[w]hile the wall structural integrity has not been compromised, the contractor will repair all locations where openings [in the brick] were noted.”

The Changs reported additional damage: six new holes in a third-floor room. The LLC and Trident conceded that the holes were drilled in error and offered to repair the holes at their cost.

The Changs alleged that the LLC and Trident had built an additional wall (which they refer to as a “concrete masonry unit” wall) on top of the party wall on the roof; the additional wall encroached onto their side of the party wall by two inches; and the encroachment existed along 55 feet of the party wall. They also alleged that a new cable box rested on their side of the party wall.

The Changs later discovered new damage to the fourth floor of their townhouse—the attachment of a cable to the new cable box, and the fastening of the cable to their rooftop gutter. The Changs claimed that the cable prevented them from properly cleaning the gutter, causing the gutter to overflow and cause water damage on their side.

The Court could not determine whether that work had been completed. And the LLC and Trident did not establish that the party wall in its current form matched the drawings filed with the DOB.

The LLC and Trident asserted that the reports exchanged between the engineers demonstrated that the party wall was not load-bearing and that its structural integrity remained intact. The Court was unpersuaded.

The Court found that some of the LLC and Trident’s’ alleged conduct, in drilling through the party wall and installing pipework, was an encroachments/ trespass or private nuisance.

The Real Property Actions and Proceedings Law provides that “[a]n action may be maintained by the owner of any legal estate in land for an injunction directing the removal of a structure encroaching on such land.” So the Court found that the Changs could seek injunctive relief to abate a private nuisance.

Avoiding the Death Penalty in Performance-Based Design: The Evolution of Performance-Based Codes

Christopher (Kit) S. Houston | Taft Stettinius & Hollister LLP | January 30, 2019

There was a time and place where a violation of the local building code could result in the execution of the contractor. The time was the 18th century B.C., and the place was Babylon. Hammurabi created the world’s first known building code, and it was a performance-based code. A performance-based code is one that leaves discretion to the builder in regard to means. Compliance is judged on a set of performance criteria such as a specific load capacity for a load bearing structure.

Hammurabi’s Code dictated the performance standard that the final product of a builder shall not fall. Hammurabi’s Code, § 229. As simple as this concept may now seem, it captures the essence of performance-based design. As low as Hammurabi’s threshold may have been, failure to achieve compliance came at a great price. If the structure failed and caused death, the contractor would pay the ultimate price. Id.

Modern building codes have dropped the death penalty, thankfully, and have also trended towards prescriptive requirements. Prescriptive codes judge compliance by requiring certain materials and designs in order to achieve a standard deemed safe for construction. They tell the designer how to achieve the result, in contrast to the performance standard, which requires the designer to achieve a particular result but allows some freedom as to how to achieve it. Evaluating compliance with a prescriptive code is clear because the code itself dictates an easily measurable standard. For example, a building code may require joist spacing at certain prescribed distances.

This prescriptive element is designed to alleviate the need to test for load capacity. Determining compliance with such a provision is easily verified.

Many portions of prescriptive codes, however, have a performance-based fallback provision. These provisions allow for alternate designs if adequate assurance is given as to the adequacy. This assurance usually comes in the form of a mathematical model or confirmation by analytical methods. This, however, can be costly to obtain.

The primary criticism of prescriptive codes is that they deter innovation in design. As one commentator noted, prescriptive codes hampered the implementation of base isolation systems in earthquake-prone areas. See Greg C. Foliente, Developments in Performance-Based Building Codes and Standards, Vol. 50, Issue 7/8, Greg C. Forest Products Journal (2000). Some feel that performance-based codes, which are generally thought to encourage innovation, would have fostered this technology more quickly. Id.

There is a growing contingent of design professionals advocating for more performance-based codes. They argue that prescriptive codes, in addition to inhibiting innovation, are outdated due to advancements in design. The disconnect between prescriptive codes and practice is felt most keenly in the construction of large complex buildings. This may be because building codes are many times written with smaller construction projects in mind. Also, the price of innovation, as a percentage of total project costs, is less and its benefits are multiplied when leveraged in the design of a larger, more complex structure.

Despite this, there is no indication that governing bodies are eager to abandon their prescriptive codes. They are easy to enforce. Instead, what we are seeing is an increase in regulators allowance of performance-based alternatives, especially for complex projects. See Alternative Design Procedure (Performance-Based Design) for Seismic Analysis and Design of Tall Buildings Utilizing Complex Structural Systems, Los Angeles Building Department, Ref. No. ASCE 7, Section 12.6, Doc. No. P/BC 2017-123, Effective Jan. 1, 2017 (setting forth alternative design procedure for seismic analysis of alternative design for tall buildings).

Regulatory bodies have also layered performance-based incentives on top of prescriptive regulations. One example is found in LEED certification. The various degrees of LEED certification are driven almost exclusively by performance of the construction as it pertains to energy efficiency. Many local governments give tax incentives for achieving various levels of energy efficiency, which is the essence of LEED certification. The construction, however, is still subject to any controlling prescriptive codes.

Regardless of the structure of the governing building code, performance-based design can serve a role in construction contracts. Because many codes have the flexibility to allow regulators to consider alternate designs, performance-based standards can be an integral part of a contractual agreement. For example, performance-based design is found more frequently in design projects in earthquake or hurricane zones. Contractual performance-based standards can make clear that the structure must be able to survive a certain earthquake magnitude or wind speed.

An owner may not, however, want to leave all design features to be based solely on performance criteria. Aesthetics are often important. When drafting a performance-based contract, or when inserting performance-based provisions into a contract, careful drafting is required to achieve certainty. Performance-based goals should be determined prior to engaging a design team. See Sandra Henry et al.Taking a Performance-Based Approach to Building Procurement (2017) (finding many performance goals were introduced too late into projects so that they could not be achieved).

Once identified, the owner must determine how to create a definite and measurable standard to govern contract performance. All parties to the contract will likely agree that certainty as to the standard for compliance is beneficial. One concern with performance-based design is that the failure to achieve the standard may not be discovered for years after completion. The typical one year correction period for defects is not adequate to address this risk. Contractors, however, will be hesitant to extend a warranty in perpetuity, so a negotiated agreement must be had. Moreover, an owner needs to be cognizant of the applicable statutes of repose and limitations.

The owner should require the design team and contractor to gain approval for any alternate designs (to prescriptive requirements). The owner may also want to control certain aesthetic features. However, an agreement can integrate specific design features demanded by the owner while leaving discretion to the design team on other features. Early and frequent communication with the design team is paramount to achieving success.

Performance-based design is enjoying a modern resurgence due to its capacity to foster innovation. Hammurabi would be pleased. Nonetheless, to avoid pitfalls, be sure to plan carefully before engaging the design team and prepare an agreement with the proper allocation of responsibilities and risks, negotiated warranties and a clear standard of compliance.