Lawsuit Over Failed LEED Certification Settled

A recent lawsuit appears to be the first—but probably not the last—involving failed LEED certification. Shaw Development sued contractor Southern Builders for $1.3 million after the $7.5 million Captain’s Galley condominium building in Crisfield, Maryland, failed to achieve LEED Silver certification as required by the contract.

While the claims were settled out of court in 2008, legal observers have taken the Captain’s Galley as a cautionary tale. The standard AIA contract that was used, A101 Owner/Contractor Agreement, did not specify which party would be liable for failure to obtain LEED certification or tax credits. In public comments on the case, several real estate attorneys have noted the inadequacy of form documents for projects that involve green certifications or incentives and have warned contractors to be wary of taking on responsibility for matters, such as third-party certification, that are not entirely within their control.