Don’t Get Out-Smarted

New building technologies continue to advance within the building environment, from smart and advanced structural components; to energy and water management; to data-collecting building and HVAC controls; to security and facility-management systems; to advanced sensor use and smartphone/multi-media interfaces; to autonomous robot facility managers and 3D building component printing. 

To see the future of these technologies in construction, we can look to our European counterparts; in particular, Amsterdam, where The Edge is the greenest building in the world, according to British rating agency BREEAM. The Edge has also been called the smartest building in the world. It uses 28,000 sensors for light, motion, temperature, and humidity controls; as well as infrared sensors allowing wireless flat screens throughout the building to be synced to users’ smartphones; robot security patrol; and smart technology in bathrooms. These technologies offer advancements useful in building marketability, energy savings, and building longevity.

According to a 2015 Bloomberg feature on The Edge, “It knows where you live. It knows what car you drive. It knows who you’re meeting with today and how much sugar you take in your coffee…. A day at [T]he Edge in Amsterdam starts with a smartphone app developed with the building’s main tenant, consulting firm Deloitte. From the minute you wake up, you’re connected. The app checks your schedule, and the building recognizes your car when you arrive and directs you to a parking spot. Then the app finds you a desk. Because at [T]he Edge, you don’t have one. No one does. Workspaces are based on your schedule: sitting desk, standing desk, work booth, meeting room, balcony seat, or ‘concentration room.’ Wherever you go, the app knows your preferences for light and temperature, and it tweaks the environment accordingly.”

To a lesser degree, PNC Plaza, in Pittsburgh, includes numerous sustainable attributes such as an operable double-skin facade, an onsite greywater reuse system, and heating and cooling systems designed to operate in a “net-zero-energy state” for up to 30 percent of the year.

Foreseeable Issues

After the initial development and construction, facility management, tenants, and end-users are tasked with operating and maintaining these technology-filled smart buildings. Turnover of the building will require further IT integration of the operations and maintenance processes, requiring advanced technological skills and knowledge beyond the abilities of many traditional facility-management staffs. Continuing education on software updates and planned system maintenance is a must—and an obstacle when you consider how many older buildings exist right now with fire alarm or HVAC warnings that go unanalyzed.

As technologies multiply, malfunctions leading to personal injury or property damage multiply as well, and are more likely to occur. Malfunctions may involve attacks from bad actors; prescribed building materials not meeting planned performance; building-material manufacturers going out of business, leading to the inability to replace damaged components; and personal security becoming compromised from non-working smart lights, sensors, motion sensors, elevators, and escalators—a problem that can be exacerbated by the lack of real-life human security or trained administration personnel. 

Examples of common issues are temperature sensor failures—which can causing freeze events resulting in water damage—and gate sensors causing injury. 

Security and privacy hacks can also compromise patient data at hospitals and information about students at universities. Software and sensor failures can disable the use of spaces, creating downtime for businesses. Water-intrusion system failures, and failures of multiple systems that cooperate with each other, can also cause property damage, personal injury, and invasion of privacy.
    
Tackling the Issues

Once a failure does occur, claims professionals must identify what went wrong, the cause, and damages flowing from the failure. This series of tasks requires a team approach. Understanding the roles and relationships between the different parties—building owners, facility-management groups (71 percent of total building lifespan costs are associated with operations), end users, tenants, manufacturers, suppliers, general and specialty contractors and installers, programmers, and software designers—is critical.

Expert retention may need to include those with software design and networking expertise. Experts will need to be able to communicate clearly to a jury, helping them understand how the smart device in question is meant to work, what went wrong, and how it might have gone differently. Finding these experts may be a challenge—will they be available and current in the market? 

When claims involving smart building technologies are made, techniques to properly collect, preserve, analyze, and report digital evidence must be in place. Understanding these principles will assist the claims professional in ethically analyzing and evaluating claims.

Preservation Notices—When faced with a claim involving a smart building where critical evidence may be altered or destroyed, a timely preservation notice should be sent to all parties in control of the evidence. The letter should be simple, direct, and to the point. The recipient should be placed on notice that the electronic data and evidence should be preserved, and the notice should inform the recipient that if the data is not preserved, she may face a claim of spoliation.

To be successful when dealing with securing information through technology—and to avoid spoliation of valuable evidence—claims professionals must understand that:

• Actions taken to secure and collect evidence should not change the evidence.
• Activity relating to collection, examination, storage, or transfer of electronic evidence should be fully documented, preserved, and available for review.
• The chain of custody must be maintained.   

Understanding the myriad issues in the fast-moving world of technologies is key to success. No investigation should begin with a preconceived conclusion about the evidence. The strength of factual, evidentiary basis for each expert opinion is just as crucial as the opinion itself. Experts must understand the importance of properly obtaining and securing any evidence, including digital versions.  

Restraining Orders—If you learn that data is about to be destroyed, and that data is critical to the case, a motion seeking a restraining order should be filed. The motion should be done via an emergency basis and the opposing party should be given notice.

A preservation notice should also be served, as it has the added benefit of court’s oversight. However, timely access to the court can be an issue of which claims professionals need to be wary.

Discovery Complaint—Pre-suit or pre-complaint discovery is available in some jurisdictions. Pre-complaint discovery for the purpose of perpetuation of testimony is generally permitted in most jurisdictions in both state and federal courts. Pre-complaint discovery, however, may also be a tool for fleshing out facts and witnesses prior to filing a formal complaint. Federal Rules of Civil Procedure Rule 27,  Depositions to Perpetuate Testimony states:

(a) BEFORE AN ACTION IS FILED.

(1)    Petition. A person who wants to perpetuate testimony about any matter cogniza-ble in a United States court may file a verified petition in the district court for the district where any expected adverse party resides. The petition must ask for an order authorizing the petitioner to depose the named persons in order to perpetuate their testimony. The petition must be titled in the petitioner’s name and must show:

(A)    that the petitioner expects to be a party to an action cognizable in a United States court but cannot presently bring it or cause it to be brought;
(B)    the subject matter of the expected action and the petitioner’s interest;
(C) the facts that the petitioner wants to establish by the proposed testimony and the reasons to perpetuate it;
(D)    the names or a description of the persons whom the petitioner expects to be ad-verse parties and their addresses, so far as known; and
(E)    the name, address, and expected substance of the testimony of each deponent.

Rule 27 has limited applicability, but it is still a helpful tool to obtain information of critical information without filing a complaint on the merits of the claim.

Spoliation of Evidence—The most critical aspect of any successful investigation is the preservation of evidence for use at trial. In Landry v. Charlotte Motors Cars, LLC, District Court of Appeal of Florida, Second District (2017), the court reiterated the severe sanctions for spoliation of evidence:

“Generally speaking, sanctions may be appropriate when a party has spoliated, lost, or misplaced evidence. League of Women Voters of Fla. v. Detzner, 172 So. 3d 363, 391 (Fla. 2015). Spoliation is defined as ‘[t]he destruction, or significant and meaningful alteration of [evidence],’ Vega v. CSCS Int’l, N.V., 795 So. 2d 164, 167 n.2 (Fla. 3d DCA 2001) [quoting Black’s Law Dictionary 728 (5th ed. 1983)]; or ‘the failure to preserve property for another’s use as evidence in pending’ or reasonably foreseeable litigation, id. …Evidence is deemed ‘lost’ when it is ‘beyond the possession and custody of its owner and not locatable by diligent search’….”

To guard against spoliation, ensure that experts carefully observe legal protocols concerning the preservation of evidence and data when removing evidence for the scene and during subsequent storage and testing. Written agreements should be obtained among all potentially interested parties, whenever feasible, prior to alteration of evidence (including removal from scene).

Obtain a court protective order when agreement cannot be reached. Consult with legal counsel and your experts early on about this crucial issue. The credibility of your expert testimony can be weakened or destroyed by the mishandling of evidence.

Be Prepared

Even in untested smart building failure claims, tested sound legal practice still applies. Claims professionals can best protect themselves by adhering to the following practical pointers:

• Put together the right team upon the notice of a claim.
• Consider retaining experts early on to guide investigation, weigh in on discovery, and assist in the development of a theme.
• Be thorough in your investigation and document retention practices.
• Be thorough in obtaining security and system data held by others—your experts will need them.
• Be sure to provide your expert with all relevant data to protect her on cross examination.
• Communicate early and often to avoid spoliation.
• Make sure that all portions of the piece of evidence to be shown to the jury have proper foundations.

With the advent of smart building technology-driven failures, claims professionals will be faced with novel issues while also having to: decipher complex inter-relationships of potential responsible parties, assemble a qualified team of professionals that specializes in the specific technology, and preserve evidence for future analysis. Assembling the right team, securing the proper material/evidence, and drafting a clear plan will enable professionals to build a solid case that will last until the claim is resolved. Even though the issues my be novel, the methodology for investigation failures remains the same.