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that it may have rusted from the inside out and hence without any visible problems. Seven years after it was installed a person leaned against this railing and feil. The court held at that time that the cause of action as such did not accrue until the actual fall occurred, irrespective of the intervening time between the actual installation of the railing, which was done without the services of an architect or engineer, and that hence the action could be brought against the iron works company which had installed the railing.

Mr. ABERNETHY. No architect was involved here, but could have been?

Mr. SCHNABEL. Could have been, yes.

Mr. ABERNETHY. The ruling was against the company that manufactured the railing, purchased it or installed it?

Mr. SCHNABEL. That fabricated it and installed it, yes.

Mr. Winn. Are there any organizations that are against this fouryear limitation?

Mr. FAULKNER. Not that I know of.

Could I read a list of the other organizations who are present today who will file statements, who are interested in this?

Mr. ABERNETHY. Are they filing statements in support?
Mr. FAULKNER. Yes, sir.
Mr. ABERNETHY. All right, you may read.

Mr. FAULKNER. The Potomac Valley Chapter of the American Institute of Architects.

The Associated Builders and Contractors, Metropolitan Washington Chapter

The Consulting Engineers Council of the United States.
The D.C. Society of Professional Engineers.
The Washington Building Congress.
The National Society of Professional Engineers.
Mr. ABERNETHY. How about the Bar Association?

Mr. SCHNABEL. They have been consulted. They referred it to their Committee on Negligence and that committee did not like the idea of the bill on the theory that it was a special-purpose situation.

Mr. ABERNETHY. The committee didn't like the bill?

Mr. SCHNABEL. They didn't like it because it was a special situation. Of course, they wouldn't like it because it would limit their business.

Mr. ABERNETHY. I don't know that that would be exactly accurate I am somewhat of a lawyer myself. I personally feel there should be a statute of limitations applicable in some form to all matters. I am really a little bit surprised that the District of Columbia Bar Association would be reluctant to file a statement on this. I am just now informed they were notified of this hearing, were invited to testify, and they are having a meeting this week. Perhaps we will hear from them. I can't imagine their wanting to hold a matter of this kind open forever. I don't think they should.

Mr. WINN. Offhand, without knowing too much about your organization, I notice the absence of two large organizations, one, the Association of General Contractors--don't they have a large organization in the District?

Mr. SCHNABEL. Mr. Winn, they are represented here through the Master Builders Association. This is their local chapter: the Master Builders is a member of the Associated General Contractors.

Mr. WINN. How about the American Homebuilders Association? It has a national headquarters and about ten branch offices?

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Mr. FAULKNER. I don't know why they are not represented.
Mr. SCHNABEL. Nor do I.
Mr. Winn. Do you know if they are opposed to it?
Mr. FAULKNER. No, I haven't heard of that.
Mr. SCHNABEL. I haven't heard of it.

Mr. Winn. Have they been advised that this legislation is being considered?

Mr. SCHNABEL. We have tried to spread this as far and wide as we could.

Mr. Winn. It is certainly a matter for the home construction industry in the District.

Mr. FRASER. I am sorry I missed the first part of your statement but I have tried to read it.

Suppose a case was brought by an injured party against the owner of property after four years, alleging failure to maintain the premises, and an effort wa made to include the contractor or architect on the grounds that they were negligent in the installation or the design of whatever was involved? Would the statute bar the effort on the part of the owner to include the supplier, contractor, or architect?

Mr. SCHNABEL. Yes, it would, unless there was a contract warranty. It would bar impleading after the four-year period. Unless there was a contractual agreement for warranty, which would extend beyond the four-year period In other words, this would take care of the owner's rights in complicated structure. He would have his right to have a warranty in the case of a complicated structure. Unless there is such a warranty, the bill would cover the impleading after the four-year period.

Mr. FRASER. In other words, what you are saying is, after four Fears, if the supplier or designer is to be brought in, it has to be on some contractual undertaking rather than on common law negligence or however you would describe it? Mr. ScHnABEL. Yes. Mr Fraser. Isn't four years a short time? Mr. SCHNABEL. Well, this is a matter which is more or less uncertain.

Frankly, it turns out that almost all of the litigation in this area does occur within the four-year period. Of course, not all of it does. It is this balance that we think of where the maintenance of the building each year becomes a greater factor and the original design becomes a lesser factor, we think that the four years is a reasonable time.

Mr. FRASER. Suppose a school building is constructed with a brick Wall. Five years after the building is up the wall falls away from the building and injures some children. Do you think if that situation developed the four-year statute would be reasonable?

Mr. Schnabel. It depends. In other words, you have a School Board or a School District which is responsible to some extent also for the design and, of course, this statute would not apply to them at all because they would be the owner-occupant of the building.

Mr. FRASER. In other words, I suppose they would enjoy go: ernmental immunity of some kind.

That is an accident which happens infrequently, but it happens that brick walls fall over. There is no way to determine that from the point of view of the layman.

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Mr. Winx. If I am correct in my assumption, you have to live with a very stringent code.

Mr. SCHNABEL. Building code?
Mr. Winn. Building code.
Mr. SCHNABEL. Yes.
Mr. WINN. And also you have an inspection system by the city.
Mr. SCHNABEL. That is right.

Mr. Winn. So you would have two methods of inspecting the way the brick wall went up, plus the reliability of the contractor, the architect?

Mr. SCHNABEL. Plus the owner's inspection as the work progresses.

Mr. FRASER. The owner's inspection is usually carried out by the clerk of the works, or whatever they call him.

Mr. FAULKNER. Mr. Fraser, there are very often owners' inspectors who are likely to be professional engineers or builders.

Mr. FRASER. His liability is cut off, too, then, by this statute? If he is negligent in the inspection, if the contractor is negligent in construction, they are barred by the statute, and if the Building Code inspector does not happen to be on the job at the right time?

Mr. FaulkNER. As I said just a minute ago, in filing plans for buildings we and our structural engineers go through a very rigorous period of inspection with the District, and so on, before we can get a permit. These things are gone over with a fine-tooth comb. Building walls just don't fall over of their own accord.

Mr. Fraser. No, sir; which is the reason it happens so rarely.
Mr. FAULKNER. Exactly.
Mr. FRASER. When it happens it means somebody goofed.

Mr. FAULKNER. The only case I know of here is where there has been some sort of alteration to an old building, where there are no records of calculations, or anything of that sort.

Mr. Fraser. Let me just say I am sympathetic to the idea of trying to put some limitation on the liability, but I come from a State where the general statute is six years, and in the case of liability of the kind you are talking about our State has passed a ten-year limitation. So to go to an absolute bar in four years strikes me as a little short.

Mr. FAULKNER. It also depends on when that statute begins because, although they do vary from State to State, they also vary as to when it begins. For instance, after architectural services, after completion of construction, after occupation by the owner. So those things have to be taken into consideration when measuring the actual statutory limit.

Mr. FRASER. I am looking at your testimony, and it says ten years, so that is all I know. I didn't know they passed a special statute on the limitation.

Thank you, Mr. Chairman.
Mr. ABERNETHY. Thank you.

Gentlemen, do you care to add anything further to your testimony? If not, thank you very much.

Mr. FAULKNER. Thank you very much.
Mr. ABERNETHY. Mr. Howard Keller.

STATEMENT OF HOWARD L. KELLER, PRESIDENT, CONSULTING

ENGINEERS COUNCIL OF METROPOLITAN WASHINGTON; ACCOMPANIED BY MILTON F. LUNCH, GENERAL COUNSEL, NATIONAL SOCIETY OF PROFESSIONAL ENGINEERS

Mr. KELLER. Mr. Chairman, my name is Howard Keller. I am President of the Consulting Engineers Council of Metropolitan Washington. I have with me Mr. Milton Lunch, our counsel.

The Consulting Engineers Council of Metropolitan Washington consists of 50 member firms that employ nearly 500 engineers and technicians and nearly 100 office and clerical employees.

We strongly endorse H.R. 6527 and similar bills for the following reasons:

1. A balance of responsibilities and liabilities between the consulting engineer, the builder, the owner of an improvement and injured third parties must be maintained. In all fairness, the design professional and the contractor cannot be expected to be able to defend themselves forever in suits by injured parties allegedly due to defects in design or construction. The only limitation under current law is the Statute of Limitations that applies to torts which starts to run only after the injury occurred or was discovered. There is no limit to how much time may elapse after the work is done and before injury occurs.

2. The necessity for legislation of this type has been created by recent court decisions that have held that the period for litigation under tort actions in building construction cases begins to run at the time of damage or discovery, and not at completion as do most warranties. We feel that the four-year period after substantial completion, which has been defined in the bill, allows adequate time for defects or negligent design or construction to come to light, and for appropriate action to be taken if such conditions occur.

3. The bill further assists injured parties in determining responsibility after an accident does occur, thus speeding up and simplifying necessary litigation.

We hope that this subcommittee will see fit to favorably report this legislation. We will gladly answer any questions that committee Members might have.

Mr. ABERNETHY. I am bothered by this indefinite term of "substantial completion”. I believe the gentleman who preceded you stated that that was defined in the bill. Where is the definition? What is substantial completion?

Mr. KELLER. Substantial completion, in my mind, on most of the jobs we work on, is the fact that the owner can occupy the building. There might be a few minor things like maybe a light switch is not hooked up, there might be some work awaiting a few light fixtures, but from a physical safety standpoint nobody can get hurt, this is my estimate of substantial completion. There might be a few inconveniences where it is not 100 percent complete but it is occupiable.

Mr. LUNCH. Mr. Chairman, if I may add to that, there is a fairly well recognized definition. I thought it was in the bill, myself. Apparently it was overlooked.

Thank you.

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Mr. ABERNETHY. There is a definition in the bill, but it does not hold too strong a line. It says when the building is first used or first available for use.

Mr. Lunch. The reason for using that frame of reference, Mr. Chairman, is that there are situations in which a building is virtually complete except, as Mr. Keller says, perhaps a light switch here and there, a piece of defective tiling in the ceiling, or that type of minor thing. The owner, for reasons best known to himself, may not wish to occupy the building right away. This is particularly true in commercial situations where the owner may have good reason for not wanting to occupy the building for six months or even a year. He does not want to transfer his operations, it is not convenient for him, or not economical for him. He is therefore willing to wait, desires to wait for reasons that he thinks are to his advantage.

Mr. ABERNETHY. Has the building already been turned over to him? Mr. Lunch. Yes, sir. At this point it is available to him.

Mr. ABERNETHY. It is available to him. Who actually has control of the building during that time? The contractor?

Mr. Lunch. There is a stipulated date in the contract between the owner and the architect or engineer, as the case may be, which determines when the control of the building passes to the owner. Whether he occupies it on that date is up to him, but he assumes control as of a specified date under the contract.

Mr. ABERNETHY. Your opinion of "substantial completion" is that there is, maybe, a few little electrical connections that have not been made and a few other simple things; but someone else's construction of that might be quite different. That is what bothers me. I realize the problem that you have in arriving at a specific beginning date or cut-off date. The words "substantial completion” on the surface appear to be a good beginning point, but the trouble with it is what one man would determine to be substantial completion another would not.

Mr. Lunch. Under the normal situation, Mr. Chairman, the owner, the architect and the engineer, or both as the case may be, and the contractor, jointly make an inspection of the building when the architect and the contractor say it is substantially complete. The owner participates in that decision.

Mr. ABERNETHY. That is the initial factor.

Mr. LUNCH. But they have to mutually agree. They go through the building and make what is called a punch list. A punch list consists of these defective items, such as light switching or defective tile, this type of illustration. If the owner agrees that the building is substantially complete, that is the date. If he does not agree, he has all of his rights and recourse to say "I will not accept it; it is not substantially complete." So it is not a unilateral determination. That is the point I am trying to make. All parties have a voice in the decision.

Mr. ABERNETHY. You are speaking of contracts where the contract makes reference to substantial completion?

Mr. Lunch. All of the standard forms do that, sir.
Mr. ABERNETHY. Suppose there is one that does not.

Mr. LUNCH. It will become an issue of fact if it had to go that far. I am not familiar with any case, certainly with experienced owners, where they would have a contract that did not have a provision for substantial completion.

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