A Video Explaining Considerations for Early Settlement of Construction Defect Claims

Early Settlement of Construction Defect Claims are in the Best Interest of all Parties

See the full video at https://youtu.be/3VftWnmb1Fc

It is an axiom followed by almost every attorney that the sooner a suit is settled the less it will cost the defendants. Invariably as suits drag on, as discovery is received and analyzed, the positions of the parties become less amenable to compromise. If defendants and their counsel believe that liability against the defendant is reasonably clear, they should work to bring the parties together to attempt an early settlement. Some of the reasons for the early settlement are discussed below.

Adverse Publicity

The reputation of a builder, developer, engineer, or architect can be destroyed by adverse publicity. Wide dissemination of a single charge of negligent construction can cause the person charged to lose business. Early settlement, if appropriate, can eliminate the concern for the damages caused by adverse publicity. Preferably, settlement should be reached before suit is filed and appropriate language in the settlement agreement should make the settlement confidential. The confidentiality agreement should include an agreement to pay liquidated damages (a damage amount set in the settlement agreement) to the other party if breached.

Bad Facts and Serious Injuries

Some lawsuits are based on clear liability; bad facts and serious injuries make the case one to settle as quickly as possible. Such a case is likely to be expensive to defend. If the attorney’s reaction to the fact pattern is disbelief or horror, and the first impulse is to trade the suit to another attorney or law firm, it is a case that must be settled quickly. For example, the collapse of a terminal at the Charles de Gaulle airport in France only one year after it was built, crushing to death several passengers, is the type of case that, if it occurred in the United States, would be preferable to settle as soon as possible and before any suit was filed.

If the plaintiff makes a demand equal to or less than what the defendant knows to be the value of the case, the demand should be immediately accepted without negotiation. It will shock the plaintiff’s lawyer but once the settlement is made the case is done and a great deal of expense will be avoided.

Multiple Claims & Legal Issues

If the case is not settled, bad law may potentially be established. Bad case law has almost always resulted from cases that should have been settled but were not because someone was stubborn or unthinking.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as a

n insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

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