On a cold Spring day, we were brought in by the developer of a newly constructed condominium to meet with the recently installed board of managers. The purpose of this meeting was to discuss the possibility of hiring our firm to deal with problems with the buildings. Having represented what seems like countless newly constructed buildings, I do not ever remember a building’s developer hiring and recommending to the board a law firm that potentially may be sued by any law firm that is hired to put the building in the condition promised in the offering plan. 

During the interview, we quickly pointed out the potential conflict of interest—only for it to be swiftly dismissed. Unsurprisingly, this issue reared its ugly head in court.

The problems facing this Lower Manhattan condominium included structural deformation and building movement caused by an adjacent developer’s failure to comply with the New York City Building Code (“Building Code“). These regulations require specific safeguards for the building during demolition and excavation in order to protect neighboring structures. Additionally, there were several minor issues. The Board of the condominium engaged Adam Leitman Bailey, P.C. to pursue all remedies against the next-door neighboring builder and the developer for the cost of the repair and restoration of the building.

Using her wealth of experience in construction litigation and party wall law, Joanna C. Peck, Esq. engaged a team of professionals, including structural engineers, geotechnical engineers and architects to inspect the building’s movement. The goal was to understand exactly how the building had moved during excavation and construction at the adjacent site.  In conjunction with these inspections of the building, Ms. Peck and the professionals meticulously reviewed and analyzed the developer’s plans for the project to determine the causality of the building movement and damage to the building. Special attention was given to protective measures the developer used to protect the shared party wall due to an adjacent owner’s obligation to safeguard the party wall and not to interfere with an adjacent owner’s use and enjoyment of a party wall during excavation and construction.

Working side-by-side with the team of professionals, Adam Leitman Bailey P.C. reviewed the detailed plans for demolition, excavation, and construction, as well as the special inspection reports and the daily log reports, which contained images of the excavation work at the adjacent site.

The special inspection reports and images revealed that the developer had clearly over-excavated the construction site, violating the Building Code, which resulted in the movement of, and damage to, the Cooperative building.

The reports and images indicated that the developer had excavated against and under the footings of the building, which caused the soil under the Condominium building to become loose. This resulted in the building movement. In addition, the engineer for the developers had repeatedly protested this negligent work, calling out the developer’s workers for over-excavating the construction site. Nevertheless, the developer and its workers ignored these objections and continued to perform the work, endangering the stability of the building.

Based on these findings, Adam Leitman Bailey, P.C. realized that the condominium had a textbook case for strict liability against the developers for negligent excavation work. Specifically, under New York Law, a developer and the party that performs the excavation work can be held strictly liable for performing such excavation work.

In addition, the analysis of the structural plans revealed that the developer had clearly failed to safeguard the party wall during demolition by failing to install tiebacks to ensure that the structural integrity of the shared party wall was maintained during demolition. Party wall tiebacks are a structural support system that stabilizes an existing party wall when one party using the party wall abandons its use of the wall by demolishing its building.

Due to the developer’s failure to install tiebacks prior to the demolition of its building, the party wall became compromised, which further contributed to the movement and damage to the Cooperative building.

Using these “smoking guns,” Adam Leitman Bailey, P.C. was able to avoid the costs of a lengthy trial and sought settlement before discovery. The stakes were high for the developers, as facing a jury under strict liability, combined with summary judgment on the failure to safeguard the party wall, would be dangerous.

Settlement negotiations began during a court conference, but they failed. However, we had a really good judge who could smell a settlement and refused to give up as he could see that both sides wanted to settle—we wanted to save our clients’ legal fees and the developer had a lot of money to lose. Nine attorneys, ranging from insurance companies to developer’s counsel, represented the defendants. Two Adam Leitman Bailey, P.C. attorneys went back and forth trading places with the defendant’s baseball-sized team. Our numbers were far apart, but after a few hours, the judge felt he could bridge the gap on another date. On the second afternoon of negotiations, State Supreme Court Justice Shlomo Hagler’s energy and hope saved the day, and one of the defendant’s insurers significantly increased their offer, which almost sealed the deal. We left the courtroom close to a settlement but without a final resolution. We made passionate phone calls with the adversary, who we had known for many years, and did the deed. The case was settled for a very good number—a number that surprised our clients.

Adam Leitman Bailey, Esq. and Joanna C. Peck, Esq. represented the Board of Managers in court and as counsel to the building.