By Brandon Geebrandon.gee@lawyersweekly.com

Thomas O. Moriarty had a problem. The con-struction defect case he was handling, filedagainst developers on behalf of a condominiumassociation, was nearing trial after six years oflitigation.The Braintree lawyer believed he could prove

damages of $40 million if the case were tried.But there was an acceptable, if not preferable, fixto the problems at the condominium building inquestion that would cost just $11 million. Set-tlement, it seemed, was a no-brainer. “Ninety-five percent, if not more, either get

settled before litigation or as soon as we file

suit,” Henry A. Goodman said of constructiondefect lawsuits filed by condo boards. Good-man’s Dedham firm — Goodman, Shapiro &Lombardi — represents more than 800 condo-minium associations in Massachusetts andRhode Island. “Usually, you either do or do not have evi-

dence of something wrong. It’s glaring, like wa-ter through the roof. It’s there; you see it,” hesays.But Moriarty’s case was not like most. For

one, his client was the association board of di-rectors for One Charles, a 550,000-square-foot,231-unit luxury high-rise near Boston Com-mon created by one of the city’s most prominentdevelopers, Millennium Partners.Further, the building’s alleged issues were not

as glaring as “water through the roof.” The con-do association claimed that the building’s HVACsystem was defective and resulted in less visibleproblems such as high humidity, the migrationof smoke and cooking odors throughout the

building, and “negative pressurization,” a condi-tion in which the amount of air exhausted froma building exceeds the supply of treated re-placement air, causing untreated outside air torush into the building whenever doors and win-dows are opened.The defendants in the case were Millennium

affiliate MDA Park LLC and a host of contrac-tors and subcontractors, including architecturaland engineering firms. As the project’s “declar-ant,” MDA Park faced the most risk and liabili-ty in the suit. Moriarty believed the reason he was having

trouble getting the parties to settle was becausethe HVAC design engineer, Cosentini Associ-ates, was relying heavily on the well-heeled de-veloper not only to coordinate and lead the de-fense, but also to cover any potential damages

that would result from the case. Moriarty put himself in the shoes of MDA

Park and came to the conclusion that Cosentini’sassumption was wrong; the developer would as-sert claims against its contractors and subcon-tractors to satisfy any potential judgmentagainst it. But with both parties believing, cor-rectly or incorrectly, that their exposure waslimited, they had little motivation to settle.“It was a very interesting process because we

had a number of attempts at settlement,” saidMDA Park’s lawyer, Richard J. Shea of Hamel,Marcin, Dunn, Reardon & Shea in Boston. “Itwas the classic case where the defendantscouldn’t fairly allocate fault and responsibilityamong themselves. When it came down to adesign-based claim, we were relying on thepeople MDA retained to step up and take re-sponsibility. We didn’t consider ourselves tobe the legally responsible defendant in thecase.”

MASSACHUSETTS www.masslawyersweekly.com

January 20, 2014

JOHN MECKLENBURG

One Charles high-rise in downtown Boston

Chess match nets $12.25M inconstruction defect suit

“We felt if we could take their principallawyers out of the game shortly beforetrial, that was going to be strategicallyadvantageous to us.”

Thomas O. Moriarty

2 • Massachusetts Lawyers Weekly

The moveTo clear the logjam, Moriarty de-

cided to take a chance. “If we went to trial, even if we got

a significant judgment, MDA wouldbe expected to pass that through tothe engineers,” the Marcus, Errico,Emmer & Brooks lawyer said.“MDA wasn’t going to give us a

lot of money. [We decided] we’vegot to shake it up somehow, and thebest way to shake it up would be toget MDA out of the case so that thedesign engineers wouldn’t even havethe expectation that they were goingto cover it,” he said. So Moriarty took what he con-

sidered “a discount” from MDA toflush the defendant from the suit.With MDA out of the picture, theHVAC designer would have to ac-cept the fact that, in order to get outas well, it had to return to the settle-ment table and think more serious-ly about its liability, he said.The move also allowed Moriarty

to kill two birds with one stone.“MDA Park were the champions,

and their lead defense counsel washighly skilled and doing an excellentjob of defending the case,” Moriartysaid. “We felt if we could take theirprincipal lawyers out of the gameshortly before trial, that was going to be strate-gically advantageous to us.”The decision paid off, and Cosentini also

eventually settled. The total value of the settle-ments with all defendants was $12.25 million,but confidentiality provisions prevent Moriartyfrom revealing who paid what. (Cosentini’slawyers from Donovan Hatem in Boston didnot respond to an interview request.)The tack Moriarty took in the case is not lost

on opponent Shea.“Ordinarily, these cases are all or nothing.

Everybody globally resolves or they don’t. Fromthat perspective, [Moriarty] strategically made agood decision to let MDA out along with themechanical contractors,” Shea said.With sizeable settlements in the condo con-

struction arena generally running in the $1 mil-lion to $2 million range, the amount of Moriar-ty’s award is noteworthy, Goodman said, addingthat dismissing a defendant from such a casecan be a risky move, prompting remaining de-fendants to assert an empty-chair defense. But Donna M. Turley, a Boston litigator who

represents condo trustees and unit owners, said itmust have been pretty clear that the HVAC engi-neer was responsible for the problems at issue.“Absolutely, it’s usually the declarant who has

the most risk and liability,” Turley said. “This is avery curious case that the declarant would be re-moved from this. [Liability] must have beenheavily weighted toward the subcontractor.”Moriarty is the first to admit that it was “an

intimidating step to take,” but he does not be-lieve he would have achieved a favorable settle-ment otherwise.“It’s somewhat daunting to say, ‘I’m going to

let them out for what I would consider signifi-cantly less than what you would expect the de-veloper to pay if there had been a global settle-ment,’” Moriarty said. “You never know in thesecases. You have to make the best decision basedon the information you have. But in hindsight,I think it was one of the two pivotal moves thatbrought the case to resolution.”If the case holds a practical lesson for oth-

er lawyers, Shea said it is if you choose not toengage in a global settlement, you run the risk

of increasing your exposure whenyou go it alone.“The initial settling defendants

got out for a very reasonable sum,”he said. “We settled not on the eve oftrial, and the remaining defendantwas faced with the threat of trial andended up resolving the case in afashion markedly different.”

Experts strickenMoriarty said the second pivotal

development in the case was theevisceration of Cosentini’s experts.After the plaintiff settled with MDAPark, the HVAC engineer defendantscrambled to shore up its defense.“Virtually all of the experts that

we were relying upon with the ex-ception of the two we had desig-nated were now taken away fromus,” Cosentini’s lawyer, Eric A.Howard, said at a hearing beforeJudge Thomas P. Billings in theBusiness Litigation Session. “Wecan’t even contact them by virtue ofthe terms of the settlement betweenthe plaintiff and settling defen-dants.”The hearing concluded with

Billings granting the plaintiff ’s mo-tion to strike supplemental expertdisclosures that Cosentini submit-

ted after MDA Park settled and exited the case.Perhaps more damning, though, was whatBillings had to say not only about the supple-ments, but Cosentini’s expert disclosures ingeneral.“It’s not a disclosure of the opinions and the

bases therefore,” Billings said at the Aug. 20hearing. “You’ve identified a subject matter butthere’s nothing about what his opinion would beor what the bases therefore would be.”That commentary loomed large when, a

month later and 12 days before the trial wasscheduled to begin, Moriarty filed a motion inlimine to preclude Cosentini from calling anyexpert witnesses at trial on the basis that the dis-closures were “so incomplete and vague that thePlaintiff could not be expected to prepare a re-sponse to the proposed testimony of any ofCosentini’s expert witnesses.”At a subsequent mediation, Moriarty said, the

opposition didn’t make much of an argument tothe contrary, and the case settled just beforeChristmas. MLW

January 20, 2014

Reprinted with permission from The Dolan Co., 10 Milk Street, Boston, MA 02108. (800) 444-5297 © 2014 #01900vw

The $12 million-plus settlement fig-ure was not the only reason a suit in-volving the One Charles CondominiumAssociation was gratifying to plaintiff ’slawyer Thomas O. Moriarty. At the summary judgment stage last

July, the case became one of the first toapply the Appeals Court’s December2012 ruling in Wyman, et al. v. AyerProperties LLC. In Wyman, which was won by the

Braintree attorney on behalf of anothercondominium association, the AppealsCourt ruled that the economic loss doc-trine does not bar a condominium asso-ciation’s negligent construction claimagainst a developer for defects in com-mon areas. The decision was appealedand is now pending before the SupremeJudicial Court.In an attempt to force litigants to re-

cover under the provisions of their con-tracts with one another, the economicloss doctrine bars tort damages stem-ming from defective products absent ashowing of personal injury or damage toother property. The doctrine was prob-lematic for condominium associationstrying to sue over construction defects,since associations don’t come into being

until after a project is finished.“Condominium associations really

own nothing. They never bought any-thing,” said Dedham lawyer Henry A.Goodman, who authored an amicusbrief for the pending SJC case on behalfof the Community Associations Insti-tute. “They are given authority oversomething purchased by others. Ifsomething breaks or is wrong, they areleft without remedy, in theory. In myopinion, it is a contrived rule that seemsto be sort of ridiculous.”In the One Charles case, Business

Litigation Session Judge Mitchell H. Ka-plan cited the Appeals Court’s decisionin Wyman to deny a defendant’s motionfor summary judgment.“I’m glad that the court has recog-

nized what the Appeals Court assertedin the Wyman case, which is that youcan make a claim of negligence against adeveloper,” Boston litigator Donna M.Turley said. “It’s important because howelse are condo associations able to asserttheir losses if there has been some sortof negligence on behalf of the develop-er? Trustees don’t take shape until de-veloper has left the scene.”

— BRANDON GEE

Economic loss doctrine rejected in condo case