Werner Sabo is a partner at the construction law firm of Sabo & Zahn in Chicago. He is also a licensed architect, having practiced architecture for a number of years prior to establishing his law practice in 1981. He is a member of the AIA and CSI, has been an officer and director of the Chicago Chapter AIA, President of the Chicago Chapter, Construction Specifications Institute, and writes a monthly construction law column for The Construction Specifier. He is also a founding member of the Society of Illinois Construction Attorneys. In 1997, the AIA elected him to the College of Fellows. His book, Legal Guide to AIA Documents, published by Aspen Publishing, is in its fourth edition. Mr. Sabo is also a construction arbitrator and mediator for the American Arbitration Association and is admitted to the federal trial bar.
James K. Zahn is a licensed architect and attorney in the State of Illinois. He is a partner in the law firm of Sabo & Zahn, concentrating in construction law and representing owners, contractors, architects, developers, engineers and other parties in the construction process. He received a Bachelor of Architecture from the University of Illinois and his JD from Chicago-Kent College of Law. Mr. Zahn is a member of the American, Illinois and Chicago bar associations, American Institute of Architects, Association of Licensed Architects, Construction Specifications Institute and has NCARB Certification. He was a past president of the Illinois Council of the American Institute of Architects and is a Fellow of both the American Institute of Architects and the Association of Licensed Architects. He is currently a resource member of the AIA National Documents Committee.
Shawn E. Goodman is a partner with Sabo & Zahn. He concentrates in litigation of all types. A graduate of the Northwestern University School of Law, he was admitted to the bar 1993. Since that time, he has practiced before local and outlying circuit courts, U.S. District Court, and various administrative tribunals. He has acted on behalf of a variety of clients including small to mid-sized businesses and individuals. He has handled all facets of litigation from pleading to motion practice to discovery to trial. The cases with which he has been involved are varied and wide-ranging and include personal injury, breach of contract, criminal defense, commercial disputes, and consumer fraud. He has represented both plaintiffs and defendants and has practiced before juries as well as judges. Mr. Goodman has also worked on appeals and has assisted in the drafting of appellate briefs.
Finality in the Initial Decision under the 2007 A201
One of the new provisions of the 2007 AIA Documents is the establishment of an Initial Decision Maker. See Section 15.2 of AIA Document A201. In the past, this role was fulfilled by the architect, but there were often problems with this setup. Many contractors, justifiably or not, believed this to be a conflict of interest for the architect. This new provision, if implemented by the parties (the owner and contractor), calls for a third-party neutral to be named in advance and to make preliminary decisions concerning disputes between the owner and contractor. If no one is named, then the architect undertakes this role by default.
Buried within the various paragraphs that discuss how this will work, is an opportunity for owners to limit future litigation if done properly. Here is the relevant paragraph:
ยง 15.2.6.1 Either party may, within 30 days from the date of an initial decision, demand in writing that the other party file for mediation within 60 days of the initial decision. If such a demand is made and the party receiving the demand fails to file for mediation within the time required, then both parties waive their rights to mediate or pursue binding dispute resolution proceedings with respect to the initial decision.
What this contemplates is that an initial decision will be made by the Initial Decision Maker (either the architect or a third party) concerning a dispute between the owner and contractor. Most of these disputes will likely revolve around changes or extras to the contract. Often, the contractor will make a claim for additional money that will be the subject of such an initial decision. Once that initial decision is made, under most circumstances, nothing else will happen until the conclusion of the project, when the unhappy party (most likely the contractor) will aggregate all of these decisions and begin the final claims process consisting of mediation first, followed by either arbitration, if selected, or litigation (the default). The more of these unsuccessful claims there are, the more likely it is that the contractor will pursue litigation to obtain relief after the conclusion of the project.
However, if the owner is aware of Section 15.2.6.1, he can, effectively, cut off such future litigation by making a 30 day demand. Under this procedure, within 30 days of the date of an initial decision, the party in whose favor the decision is made can file a written demand with the other party to commence mediation within 60 days after the date of the initial decision. The failure to commence mediation (this would be done by filing a written demand for mediation with the American Arbitration Association) within this time period cuts off that particular claim and waives it for all future purposes.
Of course, this theoretically works the other way, with a decision in favor of the contractor by the Initial Decision Maker, followed by a 30 day written demand by the contractor served on the owner to commence mediation. If the owner fails to commence mediation within 60 days, the initial decision is final and, presumably, a change order to reflect that would be processed by the architect. In most cases, it can be assumed, this will not work in favor of the contractor, since most claims are by the contractor against the owner, not the other way around.
The parties, and their attorneys, should be aware of this powerful tool. While this is similar to Section 4.4.6 of the 1997 version of A201, this does not require any special language in the initial decision itself. The burden is on the parties to invoke this for their own benefit.
