Editor’s Comments

Welcome to the inaugural issue of the State Bar of Wisconsin Construction and Public Law Section e-newsletter!

The Gratis Apprentice Experience

Several Marquette University Law School students have expressed an interest in gratis clerkships. These individuals are looking for an opportunity to augment their resumes and gain some hands-on legal experience on a full-time, part-time, or even project basis. If you have an opportunity for one of these individuals, please contact Luke Chiarelli at (414) 224-0600.

Future Articles

If you have any suggestions for, or are interested in researching or writing future articles for this quarterly newsletter, please contact Luke J. Chiarelli at (414) 224-0600.

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Sustainability Resources: Getting Beyond the Learning Curve

Sustainability has quickly become a permanent part of today’s building vernacular.  That’s because everyone involved with the building industry is not only focused on achieving financial results but also minimizing their impact on the environment and being responsible corporate citizens.  These three issues – profit, planet and people, known as the triple bottom line – are forcing decision-makers at all levels to look at sustainability as a way to create “long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.”

To quickly come up to speed on the concept of sustainability as it relates to buildings, there is no better resource than the Alliance for Sustainable Built Environments.  This non-profit organization, based in Wisconsin, provides case studies and white papers that help novices and experts alike understand the far-reaching implications of high performance green buildings while its member organizations show how their products generate triple-bottom-line benefits.  Other resources for understanding sustainability include the Center of Excellence for Sustainable Development , Dow Jones Sustainability Index and the Rocky Mountain Institute.

A number of organizations are available to help you understand how high performance green buildings can contribute to an organization’s overall sustainability efforts.  For general green industry news and updates, try GreenBiz and Building Green.  The current “gold standard” for green building rating systems is LEED® from the U.S. Green Building Council.  Other sources for general green building information include the World Green Building Council and Green Globes.  Some industries have their own green building resources, such as Higher Education Associations Sustainability Consortium, Green Guide for Healthcare and Green Hotels Association.  Professional associations are also focusing on green and sustainability, with groups like the International Facility Managers Association, American Society for Healthcare Engineering, National Association of Home Builders, National Association of College and University Business Officers, American Society of Heat, Refrigeration and Air-Conditioning Engineers and the American Institute of Architects.

As natural resources become scarce and costs increase, governmental agencies are setting the pace for adopting sustainability as a successful business approach.  The U.S. Environmental Protection Agency’s WaterSense program identifies ways to reduce water usage while its ENERGYSTAR program provides product certification to ensure the things you buy use less energy than others within its category.  Non-governmental green product certification programs include Green Seal and Green Guard for cleaning products and procedures, respectively, while the Leonardo Academy’s Cleaner and Greener program recognizes companies and individuals for their general sustainability efforts. The USGBC certifies building with the LEED rating system for New Construction, Existing Buildings and Commercial Interiors in the commercial and residential markets.

For most companies, marketing their products is nothing new.  However, corporate sustainability initiatives that are implemented simply for the purposes of making environmental claims have created a phenomenon dubbed “green washing.”  Knowing how to properly implement sustainability programs and communicate them to the marketplace without adding to the green wash is a challenge for many companies that some marketing and communications firms can help to overcome.

Sustainability has quickly become a marketplace buzzword.  However, unlike many other buzzword movements, sustainability is grounded in making sound business decisions. Businesses focused on achieving financial results while minimizing the impact they have on the environment and the surrounding community are destined for long-term success while those that chose to ignore these opportunities will struggle to compete.  The links provided here will give you the background and resources necessary to stay ahead of your competition.

This article provided by Braun & Zurawski, Inc., a Milwaukee-based, full-service marketing and communications agency that focuses on green marketing solutions.

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Make Sense of Sustainability and Gain a Competitive Advantage

It could very well be called the tipping point. That is, the place we find ourselves in relation to sustainability and business today. Unless you’ve been avoiding trade publications, newspapers, television and the Internet, you’ve been seeing a steady rise in companies and organizations touting their commitment to sustainability and how you, too, should embrace the sustainability movement.

Being sustainable means a company conducts business in a way that will ensure it will be around for a long time. It means the CEO and other corporate leaders consider all of the company’s stakeholders when they are making decisions related to not one bottom line, but a triple bottom line which includes economic, environmental and social factors. Stakeholders are not just the stockholders. Stakeholders are people, places and things. “A positive triple bottom line reflects an increase in the company’s value, including its profitability and shareholder value, and its social, human, and environmental capital.”

Across the globe, a fundamental movement towards sustainability is changing the way businesses, organizations, and governments operate. Sustainability is becoming the buzzword associated with an organization’s achievement of superior financial results while minimizing the impact on the environment and providing for the greater needs of society. Whether achieved through market demand or regulatory pressures, sustainability’s growing track record of creating superior value and growth assures its widespread acceptance for future generations to come.

Organizations are facing a variety of complex issues directly impacting the way in which business is being conducted, issues such as skyrocketing energy costs and stakeholder pressure for more environmental and social responsibility. The convergence of these issues – the economic impact on profits and losses, the environmental impact on air, water, land and global climate and the social impact on employees and the surrounding community – have smart business leaders relying on sustainability as a framework to simultaneously address this “triple bottom line.”

Take, for example, a company that replaces the lighting fixtures in its corporate headquarters building with brighter, more energy-efficient ones. Because the new fixtures use less energy, the company saves money. In addition, as a result of the company’s actions, the local electric utility company generates less electricity and therefore emits less air pollution, an environmental benefit. The brighter lighting fixtures create safer, more comfortable working conditions for employees, a social benefit. That’s the triple bottom line at work.

Corporate Sustainability, according to the Dow Jones Sustainability Indexes (DJSI), is “a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.” One very visible way in which many companies are adopting sustainability is by making improvements to their buildings and addressing their land use policy.

Green buildings are designed, built, renovated, operated or reused in ways that not only save energy, money and natural resources, but also provide safer, healthier workplaces that improve morale and productivity while reducing absenteeism. The construction of green buildings is expected to exceed $12 billion in 2007. In fact, 55 cities and 22 states are currently implementing green building initiatives while more than 6,800 commercal projects are registered for third-party green building certification by the U.S. Green Building Council. That doesn’t even include the tens of thousands of other organizations greening their buildings yet opting not to certify. All these trends are on the rise.

Julie Gorte is the vice president and chief social investment strategist at Calvert Group, one of the nation’s largest socially responsible mutual fund firms with more than $13 billion in assets under management. Gorte claims, “[Companies] are seeing that their governance and the quality of management is reflected not just in their financial statements but in the way that they manage all the places that they interact in their world—the workers, the communities, the planet—and more and more investors are starting to look at the way companies manage those interactions and take that as an indicator of the quality of management.”

In short, sustainability in general and green buildings in particular is beyond critical mass. They have moved past the tipping point of acceptance and are becoming mainstream practices implemented across all industries. Those choosing to ignore this trend will be unable to provide the specific knowledge and unique services needed to remain competitive.

Several sources are available to those looking for more about sustainability and high performance green buildings. Information from the Alliance for Sustainable Built Environments can be accessed at www.greenerfacilities.org or by calling 866.913.9473. For green marketing solutions, you can call Braun & Zurawski, Inc., at (414) 332.1500.

Green building best practices will soon become standard practices. If this transformation is not driven by market pressure, then it will certainly be driven by governmental initiatives. But rest assured, green buildings with their triple bottom-line-benefits are here to stay.

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The Evolution of the Sustainability Report

Mick Gall

A recent decision of the Wisconsin Court of Appeals has broadened potential applicability of the Home Improvement Practices Act, allowing homeowners who are victims of deceptive contractors to impose personal liability and obtain double damages.

Although the State Supreme Court has not yet weighed in, the Court of Appeals’ decision strengthens the Home Improvement Practices Act (Wis. Admin. Code ch. ATCP 110), according to Roy Wagner, an attorney at Von Briesen & Roper, S.C.  Wagner recently represented the plaintiffs in the case at hand, Stuart v. Weisflog, 2006 WI App. 109. 

After the Stuart decision, the HIA “gives consumers an incredible amount of leverage,” Wagner said.  The decision does four things: allows consumers to recover damages for all losses that occur because of a misrepresentation; says such misrepresentations can be covered by the contractor’s insurance; imposes personal damages; and allows recovery of double damages.

In Stuart, the plaintiffs contracted with Weisflog’s Showroom Gallery for the addition of a room to the back of their house for a hot tub. Weisflog presented the Stuarts a “remodeling architectural contract” and charged them a “remodeling architectural fee.”  However, no one working with the defendants had an architect’s license, and it appears no architect ever reviewed the plans developed by Weisflog.  The addition to the house was poorly ventilated, leaked, and the wood immediately began to rot.  The Stuarts filed suit to recover the costs of demolition and rebuilding. Wagner felt the HIA was the appropriate avenue for the Stuarts to recover damages. Passed in the 1970s, the HIA is a “private Attorney General” statute.  Wagner said the policy behind the law was “If you do the people’s work, we’ll give you double damages, and since you fund it, we’ll have the wrongdoer reimburse your attorney’s fees.” As written, “the Home Improvement Practices Act does not cover poor work,” Wagner concedes.  “The Act is about good business practices.”

Wagner goes on to say, however, that a homeowner can attack the poor craftsmanship if the homeowner’s decision to work with the contractor was based on a misrepresentation.  In this case, Weisflog represented that there would be an architect involved in the project, when in fact there was not.  Therefore, the court concluded, “the damages flowed from the initial misrepresentation.”

Many contractors have few assets in their businesses; it’s not uncommon to see a contractor’s business that has only a truck and a few tools. In this case, however, the court applied a “piercing the corporate veil”-type analysis, and imposed personal liability on the contractor.

While personal liability is clearly “very daunting to contractors” according to Wagner, what’s more shocking is that few contractors seem to know of this possibility or its repercussions.

Additionally in Stuart, the court of appeals went even further, holding that the misrepresentation was covered by insurance.  Typically, insurance does not cover acts of fraud or intentional misrepresentations.  The insurance company argued that the contractor made an intentional misrepresentation, and therefore the contractor’s actions should not be covered by insurance.  In reviewing the text of the act, however, the court said “knowledge or intent with respect to the falsity or misleading nature of a communication is not an element of liability” under the act.  The misrepresentation therefore falls under the insurance coverage.

“This,” Wagner said, “is a clever way to get insurance coverage.”

The decision has been appealed to the Wisconsin Supreme Court, and oral arguments are expected this fall.  Parties are lining up on all sides and submitting amicus briefs, so the final decision, whichever way it goes, will send ripple effects through the insurance and construction industries.

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Construction & Public Contract Law News is published by the State Bar of Wisconsin, 5302 Eastpark Blvd., Madison, WI, 53718-2101, www.wisbar.org/sections/cnst, (800) 728-7788.

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