ACADEMIA Letters

Litigation and insurance limitation within sustainable

construction in the U.S
Amer Hamad Issa Abukhalaf, Florida Institute for Built Environment Resilience,
M.E. Rinker, Sr. School of Construction Management, College of Design
Construction and Planning, University of Florida

Abstract
Over the past two centuries, various human activities have significantly impacted the global
environment. As a result, the laws and regulations in many industries have changed in order to
ride the new wave of the global green movement. Consequently, various measures in the con-
struction industry are becoming the new norm, such as controlling dust levels and vibration,
noise limitations, restrictions on waste disposal, to mention a few. However, the new laws and
regulations are leading to a great deal of ambiguity and confusion among the different parties
involved in the single construction site, while everyone is trying to answer one main question
‘Who is legally responsible for this?’.

Significance
This paper sheds light on an area that was not well-researched before, contributing to an in-
creased and better understanding of the complexity of the emerging legal disputes in green
construction. This paper explores the common legal issues that happen on green construction
sites due to the new environmental laws, and offers practical insights that help avoid conflicts
within green construction projects.

Academia Letters, August 2021 ©2021 by the author — Open Access — Distributed under CC BY 4.0

Corresponding Author: Amer Hamad Issa Abukhalaf, eng.amer_hamad@live.com

Citation: Abukhalaf, A.H.I. (2021). Litigation and insurance limitation within sustainable construction in the
U.S. Academia Letters, Article 3194. https://doi.org/10.20935/AL3194.

1
1. Introduction
The recent public awareness of the environmental challenges was a major factor in the popu-
larization of sustainable construction (Abukhalaf, 2021b). However, with the various benefits
that sustainable construction offers, there are new liability risks and more possible litiga-
tions (Lavers & Shiers, 2000). As a result of the heavily advertised sustainable construction,
owners and end-users tend to develop much higher expectations for performance, return on
investment, healthy work environment, quality of indoor air, and improvements in staff pro-
ductivity (Wisconsin Law Journal, 2008). Due to the high expectations coupled with the lack
of knowledge among some of the stakeholders, many disputes have been arising between the
different parties in the construction industry.
In one of the lawsuits in the U.S, the owner of an office building, which has a LEED-Silver
certificate, filed a claim against the architect because the tenants of the building demanded
lower rent as the building was falsely advertised. The architect promised healthier quality
of indoor air, an increase in employees’ productivity, and effective indoor lighting; however,
the employees’ sick days increased, and many employees complained from eye strain (Shaw
Development, 2020). This case remains unsolved.
Another lawsuit included a luxury condominium housing complex in New York, where
the owner took developers to court as he filed a claim for $1.5 million for breach of contract
and fraud, claiming that the buildings were not as green as were advertised (Wisconsin Law
Journal, 2008), knowing that this case remains unsolved. In another lawsuit, the owner pro-
moted his building as LEED-Gold certified building to attract tenants, based on the promise
of the architect. As a result of money and schedule constraints, the building did not satisfy the
requirements of LEED-Gold, and so the owner sued the architect (Shaw Development, 2020).
This case also remains unsolved.
Despite the accelerated growth in the number of green projects, most disputes regarding
defective green products that make it to court remain unsolved (Viator, 2020). The whole
idea of economically and sustainably conscious design and construction is relatively new,
and the available information is most of the time inadequate to prove that the green projects
reached their sustainable goals. Most of the states in the U.S do not require any reporting on
environmental footprint for newly-built projects (Konkes, 2017), but when more information
and energy-saving requirements become available, many of the outstanding lawsuits in U.S
courts are expected to be resolved once and for all.

Academia Letters, August 2021 ©2021 by the author — Open Access — Distributed under CC BY 4.0

Corresponding Author: Amer Hamad Issa Abukhalaf, eng.amer_hamad@live.com

Citation: Abukhalaf, A.H.I. (2021). Litigation and insurance limitation within sustainable construction in the
U.S. Academia Letters, Article 3194. https://doi.org/10.20935/AL3194.

2
2. Important statistics about green construction disputes in the U.S
More than 85% of construction companies in the U.S are involved in sustainable construc-
tion projects, of which, 48% have experienced major disputes with regards to green aspects
(Shrestha, 2012). Various issues are frequently reported in green projects; 31% of the issues
reported are performance issues, 24% are construction-related issues, 26% are certification-
related issues, 22% are design-related issues, 9% are cost-related issues, 9% are incentives-
related issues, 6% are contractual issues, 6% are energy-related issues, and 6% are materials-
related issues (Shrestha, 2012).
When it comes to projects delivery methods, 39% of the green projects with disputes were
found using the Design/Bid/Build method, compared to 32% who are using the Design/Build
method (Shrestha, 2012). Among the parties involved in green construction, the available
data shows that architects/designers have the highest awareness level of legal issues, while the
suppliers have the lowest. At the same time, contractors are most often found to be responsible
for all the additional expenses incurred in the green construction project (Maus et al., 2012).
On the other hand, when it comes to the contract type among green projects with dis-
putes, GMP (Guaranteed Maximum Price) is the most common with a rate of 32%, followed
by lump-sum with a rate of 26%, followed by unit-price and cost-plus, with rates of 21% and
19% respectively (Shrestha, 2012). Moreover, 42% of green projects with disputes face com-
plications during the construction phase, followed by 30% for the design and startup phases,
compared to 13% for the maintenance, knowing that the last percentage is expected to increase
in the future as the age of green projects increases (Shrestha, 2012).

3. Legal disputes and insurance policies in green construction.

The main sources of disputes in sustainable construction emerge from adaptation to climate
change, ensuring continuity of performance for energy efficiency, drafting contracts, (not)
meeting a required certification, and delays of governmental approvals (Wisconsin Law Jour-
nal, 2008). The disputes in green construction are divided into administrative and legal in
nature. The administrative disputes do not rely on legal procedures to be solved; instead, they
use other procedures, such as mediation, arbitration, contractual changes, or informal proce-
dures for resolution (Abukhalaf, 2021a; Shrestha, 2012). On the other hand, if these disputes
were not solved by any of the approaches mentioned before, they become legal disputes, where
parties decide to rely on litigation in order to resolve the dispute (Peña, 2014). Litigation is by
far the most expensive method for resolving disputes, but it can end at any point if the parties
reach a settlement (Peña, 2014).

Academia Letters, August 2021 ©2021 by the author — Open Access — Distributed under CC BY 4.0

Corresponding Author: Amer Hamad Issa Abukhalaf, eng.amer_hamad@live.com

Citation: Abukhalaf, A.H.I. (2021). Litigation and insurance limitation within sustainable construction in the
U.S. Academia Letters, Article 3194. https://doi.org/10.20935/AL3194.

3
 Litigation and insurance are interrelated, and since many green aspects of construction
projects are still not protected (Viator, 2020), there are not as many lawsuits brought on green
issues. Ensuring green projects raises issues that have not been seen in regular insurance
policies. Some of these issues can be seen in meeting particular benchmarks for effective
energy and water consumption (Konkes, 2017), which is hard to quantify, and so hard to be
included in the policy. Moreover, the effect of a faulty green construction is also hard to be
measured, so many insurers will less likely to take responsibility for an unknown amount of
risk.
Insurance policies are designed to protect against defects found in construction projects
(Konkes, 2017); nevertheless, these policies are not designed to protect against the losses
due to inefficiencies. Currently, a defect in sustainable construction is treated as in any other
construction project, under the general commercial liability policies (Viator, 2020). The more
green construction projects we have, the more variations in insurance policies will be offered.
In other words, with time, more sustainable insurance products will be available to respond
to the unique issues in green projects.

4. Recommendations
Paying attention to the different strategies of risk management is critical in order to minimize
disputes and conflicts associated with sustainable construction (Shrestha, 2012). It is essential
to analyze green construction projects in order to identify all the unique legal issues to such
buildings, including the design and construction processes, as well as the operation and long-
term maintenance of these projects.
Specialized attorneys understand all the different aspects of conventional construction
claims; however, few of them are as prepared to approach and tackle issues related specif-
ically to green construction (Viator, 2020). As the numbers of green projects continue to
grow, lawyers are expected to become more comfortable in tackling green construction cases.
And as the litigation demand for green construction grows, attorneys have to respond and start
self-educating on the complexity found in sustainable construction.
The Lack of high-quality testing for the new technologies and ideas associated with sus-
tainable construction (Konkes, 2017) might be a major factor in the increasing numbers of
novel claims and disputes in the industry. It is also crucial to set a solid platform that identifies
the fundamental areas of disputes (Maus et al., 2012), covering contract types and the differ-
ent types for project delivery methods used in such projects with disputes, which will help
in determining their impact on the project schedule and budget, and identifying the phases in
which the disputes happened and what kind of procedures were adopted to resolve the issues.

Academia Letters, August 2021 ©2021 by the author — Open Access — Distributed under CC BY 4.0

Corresponding Author: Amer Hamad Issa Abukhalaf, eng.amer_hamad@live.com

Citation: Abukhalaf, A.H.I. (2021). Litigation and insurance limitation within sustainable construction in the
U.S. Academia Letters, Article 3194. https://doi.org/10.20935/AL3194.

4
5. Declaration of interests
This paper received no specific grant from any funding agency in the public, commercial,
or not-for-profit sectors. The author also declare that he has no known competing financial
interests or personal relationships that could have appeared to influence the work reported in
this paper.

References
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Abukhalaf, A. H. I. (2021b). Legal disputes in Sustainable Construction. Research Gate.

doi:10.13140/RG.2.2.27526.50243

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Lavers, A. P., & Shiers, D. E. (2000). Construction law and environmental harm: The liability
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Maus, K. J., Parker, J. F., III, & Hamilton, M. (2012). Raising the roof: What’s hot in
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from https://search.datacite.org/works/10.34917/4332609

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Wisconsin Law Journal. (2008). Green Building Could Lead to Lawsuits. Lawyers spot
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Academia Letters, August 2021 ©2021 by the author — Open Access — Distributed under CC BY 4.0

Corresponding Author: Amer Hamad Issa Abukhalaf, eng.amer_hamad@live.com

Citation: Abukhalaf, A.H.I. (2021). Litigation and insurance limitation within sustainable construction in the
U.S. Academia Letters, Article 3194. https://doi.org/10.20935/AL3194.

5
Bio.
Amer Hamad Issa Abukhalaf is a researcher at the Florida Institute for Built Environment
Resilience (FIBER). Amer is a civil engineer and a structural designer by practice, and he got
his master’s degree in executive management from Ashland University in Ohio, and he double
majored in project management, and operation & logistics. Currently, Amer is pursuing a
Ph.D. degree from the Design, Construction, and Planning College at University of Florida.

Academia Letters, August 2021 ©2021 by the author — Open Access — Distributed under CC BY 4.0

Corresponding Author: Amer Hamad Issa Abukhalaf, eng.amer_hamad@live.com

Citation: Abukhalaf, A.H.I. (2021). Litigation and insurance limitation within sustainable construction in the
U.S. Academia Letters, Article 3194. https://doi.org/10.20935/AL3194.