Litigation Defense

Gagliano & Company was engaged by an insurance company to defend an engineer being sued under his Errors and Omissions policy.

A group of investors was considering the purchase of a small office complex. The engineer was hired to inspect the buildings and to report his findings.

The engineer failed to note that one building had a mold growing under the floorboards. The investors closed on the property and later discovered the problem. The investors sued the engineer for the cost of clean up and renovation and for hundreds of thousands of dollars in lost rents. An expert witness engineer was hired by the insurance company to address reasonableness of the cost and length of the time actual repairs made, who determined that the time the repairs took was several months longer than necessary.

Through statistical analysis Gagliano & Company was able to demonstrate that:

  • The asking rental rates in the property were well above market for four years after the purchase;
  • As a result, no other available space in the complex had been leased in the four years under analysis;
  • Market data indicated that the average time to lease was 12 months, which allowed more than adequate time to complete the repairs, and would not have resulted in lost rents;
  • That there was other space in the complex available for lease while the contaminated building was being repaired.

The  case resolved with a settlement that included the cost of the repairs and a de minimis amount for lost rents.