Final Courthouse Square construction defect claim settled

The decade-long legal battle over responsibility for the structural-defect plagued Courthouse Square office and bus terminal complex in Salem, Oregon, finally came to a close last month. In March, the complex's two owners, Marion County and Salem-Keizer Transit, resolved its last outstanding construction defect claim by agreeing to accept a $650,000 payout from Century West Engineering Corp., the complex's structural engineers.

The sprawling $34 million, 163,000 square foot, five-story office building and bus mall opened on time and on budget to great acclaim in the fall of 2000. Alas, the acclaim did not last. By 2002 distressing settling and structural problems with the building had become apparent. Years of blaming, failing to fix the building and working with the courts to resolve various construction disputes ensued. Finally, in the summer of 2010 engineers declared the building's concrete and other structural elements dangerously weak and ordered its complete evacuation. Roughly 350 employees of Marion County, Salem-Keizer Transit and the Courthouse Square restaurant and coffee shop who worked at the site were displaced.

Litigation against more than half-a-dozen contractors and other companies involved in the design and construction of Courthouse Square began as early as 2006. The settlement with Century West brings the total compensation recovered by Marion County and Salem-Keizer Transit to off-set the $23 million needed to repair the complex to approximately $12.5 million. This amount includes a $9.5 million payment from Affiliated FM Insurance Co. to settle a breach of contract claim regarding a $29 million insurance policy held by the complex's owners.

How did things go so wrong?

In 2011, the forensics engineering firm of Golder Associates was charged with the task of finding out why the Courthouse Square construction project went so wrong and who is to blame. In their report, Golder found serious problems with the building's structural design, writing that it was inadequate; lacked sufficient detail and clarity; and was never subjected to peer-review before or during construction. Design revisions made during construction were also cited in the report as worsening the building's already-flawed structural design.

The report also blamed management and supervision errors for the poor construction practices which led to the building's structural and other defects, specifically pointing out the January 1999 departure of Century West's engineer-of-record and the elimination of its full-time structural engineering department six months later. The lack of experience in managing and overseeing construction projects similar in size and scope to the Courthouse Square project among County and Transit officials, the architect and the primary contractor were also cited in the report as contributing to the flawed construction.

Finally, the forensic engineering report, citing data from concrete strength tests it conducted during its investigation, concluded that the building's concrete elements were too weak. Investigation into the precise reasons for the concrete's weakness was inconclusive, but a lab test conducted during a previous investigation identified the concrete's abnormally high water content as a possible cause. (Water intrusion, water leaks and water proofing are common subjects of construction disputes in Oregon.)

Courthouse Square not an isolated case

Defects in structural design and construction, like those identified by the forensics engineer's who inspected Courthouse Square are not uncommon. Design defects and construction disputes appear routinely in residential and commercial real estate developments and building projects throughout Oregon and nationwide. In the United States, real estate developers, governments, businesses and individual homebuilders collectively spend hundreds of millions of dollars each year to repair construction defects.

Types of construction defects

Construction defects typically fall into one of four categories: defects and errors in the design made by architects and engineers; defective, improperly installed or inferior materials; improperly managed or substandard construction; and subsurface or foundation defects. It only takes one construction defect to derail or doom an entire construction project. For example, an improperly poured foundation which cannot be repaired may render the multi-million dollar office building built on top of it totally unusable.

And, as the Courthouse Square saga in Marion County illustrates, it can take years to fully realize the scope and severity of defects involving structural integrity in concrete, masonry, framing and foundations - and even after the scope and severity of the structural defects are determined, it can take years and cost nearly as much as the initial construction to make the necessary repairs.

Legal representation

The stakes are high in construction disputes, and outcomes often hinge on technical details and expert testimony. Anyone engaged in a dispute involving any aspect of construction, whether residential or commercial, should speak to a lawyer. The immediate intervention from an attorney who knows how to negotiate effectively according to the facts and applicable law to resolve constructions disputes could mean the difference between successful negotiations or expensive, ongoing litigation.