I’LL RESPECT YOU IN THE MORNING

“Toto, I don’t think we’re in Kansas anymore!” What was once an established basis for measuring the performance of a contractor has become whisked up, blown around and relocated to a distant land that has different rules for the evaluation of a contractors’ performance in construction defect claims. The term: “Industry Standard” no longer has a uniform definition or an understood reference. Many judges and arbitrators as well as many in the construction industry have been bulldozed into believing that anything a “Testifying Expert” calls an “Industry Standard” must, in fact, be a widely held belief. The fact is: The standards for contractors are only defined in writing.

This issue of “standardization” is not unique to the construction industry; we deal with “standards” every day of our lives and we have come to rely on the accuracy of measured commodities that we purchase. We expect that the pumps at the service stations are actually giving us a true gallon of gas, that the supermarkets are selling us a pound of pastrami and that a yard of fabric is, in fact, 36 inches long. The test and validation of all of these measurements is the actual comparison to a recognized and established international standard verified by the International Organization for Standardization, also known as the ISO. Every state in the country has a Bureau of Weights and Measures which certifies the accuracy of scales and measuring devices for volume, weight, length and time. They do this, for example, by maintaining a weight that is the standard for one pound, a measure for one yard, one gallon, etc. The bureau also conducts evaluations on new commercial weighing and measuring devices as part of a national certification program. This is how we know, as consumers, that we got exactly what we paid for.

In construction, it is a little different. We do not have physical standards; our “bureau of weights and measures” is actually a collection of written product specifications and laws that are known as the “Building Codes.” In California it is Title 24 of the California Code of Regulations that incorporates all of the various codes and standards that are enforced by the numerous agencies. Similar to the physical standard for a gallon or a pound, the building standards are in the form of written codes and the standards that are incorporated by reference within the codes. That’s it; plain and simple. All standards within the construction industry are written; they are the rules that contractors must follow. Most importantly, there are no unwritten “standards.”

Although some construction defect complaints also deal legitimately with the contractual issues, many of the claims of defective workmanship are alleged to have violated some undefined and unpublished standard of care. Clearly claims for breach of contract represent a failure on the part of the contractor to perform in accordance with the terms and conditions of the written agreement and all of the documents that are incorporated by reference into that agreement. Resolution of contract issues are left to the evaluation of a trier of fact, judge or arbitrator to interpret, but regardless, the language in any given contract is not considered an industry standard.

It is this arena of “Industry Standards” where the terrain has become rocky and uncharted. Consider the various allegations that have historically been included in construction defect complaints seeking damages for alleged deviations from industry standards which are asserted as a measure of a contractor’s performance:

To adequately evaluate the merits of the various allegations involving a contractor’s performance in a construction defect case, consider the legal effect of the alleged industry standards at issue:

1. REGULATORY LAWS: This standard for compliance is based upon the building codes that have been adopted by the state and the ordinances that have been created by local communities. When any state adopts a body of codes to regulate building activities, methods, and materials, it can only be superseded by local communities that create more restrictive provisions than the state adopted codes. In California, the body of law that comprises the building codes is known as Title 24 of the California Code of Regulations. Although acknowledged as the minimum requirements for construction performance, it is a collection of formidable requirements that must be complied with and are the only enforceable standards that contractors must adhere to. The operative word is “enforceable.”

2. LOCAL CUSTOMS AND PRACTICE: Many experts and attorneys have attempted to make this concept stand up as a recognized “standard.” Customs and practices are similar to when an employer will allow its workers to come to work on Fridays in casual clothes. For that company, “Casual Fridays” has become a local custom and practice. If a worker did not want to dress down on Friday, there is no adverse consequence; it is unenforceable. The concept that in certain communities all of the contractors have universally established informal practices that then become enforceable within their locality is simply a fabrication of wishful thinkers. There are no practical examples of when this ever takes place. If local conditions require regional variations, special action or attention, the governing authority incorporates the requirement into a local ordinance…a law, and that becomes the enforceable standard. Local customs and practices are not standards.

3. TRADE ASSOCIATIONS PREFERRED SPECIFICATIONS: There are numerous professional construction associations that solicit contractor membership in order to establish a more elite group of practitioners. Typically, the trade associations will establish higher standards of performance for their members as a “value added” reason to hire a member contractor over another. The concept is similar to General Motors’ “Mr. Goodwrench.” And even though a contractor might be a member of a “roofers’ association” or a “plumbers’ association” that has preferred practices for its members, there is still no legal requirement for any member (or non-member) to adhere to that association’s standards. Consequently, private association practices are not industry standards.

4. STANDARD OF CARE: Standard of care claims have no application against contractors. Typically, these claims are based upon the legal doctrine of negligence and apply and refer to professionals performing design services for clients. Within the construction industry, a standard of care complaint is usually brought against the project engineer or architect. Violation of the standard of care is defined as negligent conduct required by law for the protection of persons or property from foreseeable risks of harm. Such claims might include failure to consider the bearing capacity of the soil for the intended structure or specifying a window system that did not meet the wind load conditions at the site. Architects and other design professionals are held to this standard by virtue of their education, knowledge, training, and experience. The problem for all that assert this claim (or even defense) is that the “standard” is often a subjective issue upon which reasonable people can disagree. The application of this standard to design professionals can only come from expert testimony since, as a custom and practice, it is not committed to writing.

   1. In light of the above definition, contractors are not considered “professionals” in the sense of registered architects and engineers and cannot be held to a standard of care. In many cases, contractors lack the education and certification to perform any service other than the mechanical process of construction. (Some states do not even require that contractors be licensed. California has no education requirement for license applicants and no continuing education requirements for licensees.) For the most part, every direction or instruction that a contractor needs to execute the specifications for a given project is provided in writing. Prior to bidding a job, contractors are given drawings, specifications, project manuals, schedules of fixtures, appliances, windows, and doors. They are even told what size nails to use and how they are to be spaced. Additionally, they are given a copy of the contract, general conditions of the contract, a sample of the invoice to be used and a list of insurance coverage to be provided. Contractors are even given instructions on the process of how to fill out the bidding forms. Nothing is left to the discretion of the contractor.
   2. During the course of the project other professionals including the architect, the building authority, public utility inspectors, lenders, manufacturers’ representatives, OSHA agents, and others inspect and verify that the written instructions are faithfully adhered to. In this environment, construction contractors are little more than mechanics of the process adhering to the only standards that apply – the adopted building codes and manufacturers’ specifications. It might be argued that a general contractor has the responsibility to manage the execution of the various trades contributing to the project. The only foreseeable consequence to the failure to properly manage the work is the nonconformance of the work with the plans, building codes, or manufacturers’ specifications. That takes the claim back to the written laws and rules. Consequently, the standard of care doctrine does not apply to contractors.

5. MANUFACTURERS’ PRECISE SPECIFICATIONS: The manufacturers of appliances, equipment, fixtures, and devices that are used in the construction of a building create specific installation instructions that guarantee compliance with the building codes or are requisites for a warranty. Prior to distribution of products, manufacturers must secure an International Code Commission Evaluation Service (ICC-ES) report and certification. ICC-ES is a nonprofit, public-benefit corporation that does technical evaluations of building products, components, methods, and materials. The evaluation process culminates with the issuance of technical reports that, because they directly address the issue of code compliance, are used by both regulatory agencies and building-product manufacturers. Consequently, the manufacturer’s specifications for use, installation, and configuration are incorporated within the codes as enforceable industry standards.

Bill Dexter is a 35 year veteran of the construction industry and the former Director of the California Center for Construction Education for the College of Architecture and Environmental Design at California Polytechnic State University, San Luis Obispo. As a nationally recognized risk management-consultant, his industry training company serves construction organizations nationwide in the areas of liability mitigation. Bill has participated as an industry spokesman before The American Institute of Architects, The Construction Specifications Institute, Pacific Coast Builders Conference, the California and Nevada Contractors State License Boards and the Association of General Contractors.

Mary S. Jones, Esq., has practiced law in California for over 25 years. Since 1994, she has devoted her practice principally to alternate dispute resolution. She is a full-time professional neutral, specializing in arbitrating and mediating all types of business and construction disputes. Mary has been on the Panel of Arbitrators for the American Arbitration Association since 1982 and over the past 10 years she has arbitrated and/or mediated more than 500 matters. Mary is a frequent presenter for the California and Nevada Contractors State License Boards on topics of Alternative Dispute Resolution and creating effective contracts for residential and light commercial projects.