Inlet Point HOA v. Intercoastal Diving, Inc. et al
It's been estimated that only 8 to 10 percent of civil cases filed in state court actually go to trial. In the federal courts in 2002, it was as low as 1.8 percent. Although there are a variety of theories for why the instance of civil trials is declining, it would suffice to say that it takes a special conflict to end up at a jury trial. The sides have to be so polarized that they see the same facts and draw two entirely different conclusions. I’ll never forget Dan Bryson’s comment before our first trial together: “I always say before a jury trial that somebody’s attitude is about to be adjusted. It may be ours, but I don’t think so.” As a trial lawyer, inevitably, your day will come to have your attitude adjusted by a jury. What you can do – what you have to do – is work harder than you think possible to stay at the very top of your game all day, every day for as long as the trial lasts. And that’s where we’ve been for the last month.
So, let me tell you about our bulkhead case.
First, in case you're asking: what's a bulkhead? A bulkhead is a wall built to protect the shore from eroding. Otherwise, the water slowly eats away at the shoreline over time.
The Inlet Point HOA had an old wooden bulkhead protecting the 3,000 foot shoreline of their inlet that had started to break down and they decided to replace it. They hired an engineer to design it, Gary Greene, and a contractor to build it, Intercoastal Diving, Inc. (IDI). The HOA also got a bond from Liberty Mutual Insurance Company, which is sort of like insurance that guarantees the contractor will build what they’re supposed to build. The “bond amount” is usually the same as the cost of the project and this case was no different, with the project cost/bond amount at $1,905,000.00 – a big investment for an HOA by any standards.
During construction, IDI made a number of fundamental changes to the design of the bulkhead without saying a word to Gary Greene. What IDI ended up building was not what Gary Greene designed. And that had devastating consequences.
The new bulkhead had two major blowouts in its first two years of service. Below is a picture of one of the blowouts:
Letters went back and forth. The HOA demanded IDI correct the changes they’d made. IDI refused, claiming the problems were the result of an inherent design flaw. The HOA turned to Liberty Mutual to correct IDI’s work. But Liberty Mutual fell in line with IDI. The HOA had no choice but to file suit to get their bulkhead fixed. That was February 17, 2010.
Over two years later, on May 14, 2012, we found ourselves in a courtroom in New Hanover County ready for trial. IDI’s case was focused 100% on blaming Gary Greene’s design. So, Dan made the kind of savvy, aggressive move we’ve come to expect from him. As our first witness we called: Gary Greene. Um, yeah, that’s right - the same Gary Greene we sued. Allow me to explain.
After 2 ½ years of having experts analyze the bulkhead, it became clear to us that IDI’s construction, not Greene’s design, was the cause of the problems with the bulkhead. IDI had continued to blame Greene’s design alone but, frankly, we thought they were wrong. And we decided to meet them head on. It was put up or shut up time for IDI. Either prove your defense with a scathing cross examination of Greene right out of the chutes or risk a very steep hill to climb over the rest of the trial.
Greene took the stand and used his 30 years and 300 bulkheads of experience to educate the jury for two days. He then held his own for about as long during IDI’s cross examination. When the smoke cleared, IDI had made little ground on Greene and were left staring up from the bottom of that steep hill as the second week of trial began.
Although so much more happened over the next two weeks of trial, including IDI’s main expert telling me during my cross examination that I “didn’t understand engineering” and winning no friends in the courtroom, the arc of Gary Greene’s testimony was the trial in a nutshell. Since IDI had made changes to the design, the onus was on them to show that their changes were inconsequential because the design was so flawed. It goes back to how the law treats a contractor who's given a design to construct, which starts with the Spearin Doctrine (turn of the century law construction litigators know by heart). The Spearin Doctrine says that a contractor who follows a design given to him can’t be liable when problems arise.
North Carolina case law goes a step further and sets out what happens when the design is not followed, stating in essence: if a contractor doesn’t follow the design, he’s bought the project if problems arise. You can’t change a design and then blame the very same design without some pretty compelling evidence. Normally, the plaintiff has the burden of proof in a lawsuit. But when a contractor makes changes, the burden of proof shifts to him to show the problems would have happened anyway even if the design was strictly followed.
This was an extremely heavy burden to carry in this case and one IDI could never bear. After a grueling three week trial, the jury agreed with us and placed the blame solely on IDI’s construction, awarding the full cost of repair requested by the HOA down to the penny: $2,547,948.00.
At the end of the day, I came back to Raleigh after a month in Wilmington with some pretty good war stories; all of us at WBM got another great win; and the Inlet Point homeowners association got justice for their members.
Now, did I miss any calls last month?