The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A leading New Providence real estate development is appealing a US court’s rejection of its $12 million damages claim against two overseas manufacturers, after alleging they supplied it with “defective” window systems that were not hurricane-resistant.

The $30 million Bayside Executive Park, home to some of the Bahamas’ most prestigious international banks and law firms, and its controlling entities had sued two US-based firms, Viracon Inc and EFCO Corporation, on grounds that included breach of contract, fraud and negligence.

However, Minnesota District Judge, Ann Montgomery, dismissed the claims by Bayside’s owners on the grounds that the lawsuit was not filed quickly enough, thus making it “time barred”.

The April 26, 2012, ruling is now being appealed to the US Eighth Circuit Court of Appeals, Tribune Business can reveal, the case also having embroiled Bahamian contractor, Nassau Glass Company, which was hired to install the glass and systems provided by the US companies.

The three companies that own Bayside Executive Park, Bayside Holdings, Bayside House and Bayside Pictet, had sought a collective $12 million in damages against the two US firms, after Nassau Glass “assigned the benefit of all contracts and warranties” with the latter over to them on September 23, 2011. There is nothing to suggest Nassau Glass did anything wring in relation to the installation or the dispute.

In their original lawsuit, the three entities that own Bayside Executive Park, which sits at the West Bay Street/Blake Road junction near Lynden Pindling International Airport (LPIA), alleged that the property”has suffered, and continues to suffer, damages in the principal amount of not less than $3 million plus interest”.

They had asserted four different claims, each worth $3 million, against EFCO and Viracon, with Lawrence Glinton, president of Bayside Pictet, alleging in an affidavit that the development had been forced to replace 135 panes of glass between its construction completion in 2000 and mid-2008. More pane replacements were set to follow.

The lawsuit’s rejection is a blow, initially at least, for Bayside’s shareholders. They include Pictet Bank & Trust and Teekay Shipping, plus the former Oceanic Bank & Trust. Apart from Pictet, other tenants at Bayside include the leading commercial law firm, Lennox Paton.

Recalling the origins of the dispute in her judgment, Judge Montgomery noted that Cavalier Construction was the main contractor on the 69,000 square foot property, with Nassau Glass hired as a sub-contractor to install the window systems.

Nassau Glass then entered into a commercial contract with EFCO to supply the window systems, with Viracon supplying the glass that would be used.

“Of particular concern for the development was the use of hurricane-resistant windows and glass,” the judge noted. “In August 2000, the commercial development was substantially completed. In May 2002, Bayside noticed cracks, each approximately three to five inches long, in three panels of glass at the development. Nassau Glass replaced the panels, and upon inspection discovered the glass itself was not cracked but the interlayers were. A fourth panel was replaced shortly after the discovery of the cracking..”

The judge added:”In April 2003, Bayside reported to Nassau Glass problems with water infiltration in 30 windows in the development. Nassau Glass relayed Bayside’s concerns to EFCO. Nassau Glass then sent EFCO a piece of glass for analysis.

“At that time, nine more windows had cracked interlayers and were awaiting replacement. Also in April 2003, representatives of Bayside, Nassau Glass, EFCO, and Viracon met at the development.

“EFCO and Viracon both represented that they did not know the cause of the problems and would investigate further. Around this time, Nassau Glass informed Bayside that the cause of the problems was the use of incompatible cleaning compounds in washing the windows, and not a defect in the manufacturing of the glass or windows.”

Bayside then sent a December 16, 2003, letter to Nassau Glass detailing further problems with the windows.

“In particular, Bayside noted that EFCO windows would leak during routine washing or rain, EFCO windows showed cracks and delamination, and EFCO curtain windows showed varying degrees of delamination.,” the judgment stated.

“Bayside was sceptical that the problems were due to cleaning chemicals. Specifically, Bayside noted that it had followed the directions on Viracon’s website to use only mild detergents, and delamination had occurred even on windows that had never been washed.

“In September 2004, EFCO sent Nassau Glass a letter stating: ‘It is our opinion that the defects in both the window and curtain wall glass are one and the same, caused by a defect in the manufacture of the glass . . . .’ Nassau Glass never relayed this information from EFCO to Bayside.”

Viracon and EFCO had provided five-year warranties for their products, but the latter declined, in a June 6, 2006, letter to Nassau Glass to provide replacement glass for Bayside on the grounds these had expired.

In response, Nassau Glass disputed EFCO’s liability for damages arising from its defective products. An August 7, 2009, consultants report confirmed to Bayside that “the glass used in the development would not be able to perform as intended during hurricane conditions due to the delamination and cracking interlayers”.

Nassau Glass ultimately assigned its claims to Bayside, and the western New Providence commercial real estate project alleged in its October 18, 2011, lawsuit that “the cracking and delamination were due to thermal expansion or chemical contamination either at EFCO’s factory or in shipping crates used by Viracon”.

However, Judge Montgomery found in favour of EFCO’s motion for summary judgment and Viracon’s motion to dismiss, throwing out all Bayside’s claims.

She ruled: “Bayside’s claims are time-barred because it should have known of its injury, or could have discovered its injury with reasonable diligence, prior to October 18, 2009.

“To begin, some nuance regarding Bayside’s claims must be addressed. The complaint, on its face, is unclear as to which claims Bayside is asserting directly, which claims Bayside is asserting as assignee of Nassau Glass, and which claims are asserted on both bases.

“To the extent Bayside is asserting any claims as assignee of Nassau Glass, the claims are time-barred. Any claims Bayside asserts on behalf of Nassau Glass, therefore, must be analysed as if Nassau Glass were the plaintiff.

“Nassau Glass discovered, or should have discovered, its injury at the latest in September 2004. In September 2004, EFCO sent Nassau Glass a letter stating: ‘It is our opinion that the defects in both the window and curtain wall glass are one and the same, caused by a defect in the manufacture of the glass . . . .’

“Due diligence on the part of Nassau Glass would have revealed an actionable injury in September 2004, and Viracon and EFCO are entitled to summary judgment on any of Nassau Glass’s claims.”

Judge Montgomery also ruled that claims asserted by Bayside directly were time-barred.

She found: “As early as 2002, Bayside noticed delamination and cracking in the windows at its development.

“By April 2003, some 30 windows were leaking and nearly a dozen had been replaced. Bayside argues that its injury is the lack of hurricane-resistance of the windows, not the cracking, leaking and delamination. However, the statute of limitations does not accrue when the full and precise extent of the injury is known, but rather when an actionable injury is known or should be known through due diligence.

“By April 2003, widespread delamination, leaking, and cracking was evident, and Bayside should have known it had some actionable injury, regardless of whether the full extent of that injury, the lack of hurricane-resistance, was known.

“Furthermore, had Bayside exercised due diligence at the time, such as by hiring Glazing Consultants or a similar company then, rather than in 2009, it likely would have discovered the full extent of its injuries.”

Judge Montgomery also described the claims against Viracon and EFCO’s warranties as ‘time barred’ , and said there was no evidence to show they existed or their terms.

“Had Bayside exercised due diligence it would have discovered the defects in the window or glass manufacturing,” the judge ruled.

“If EFCO’s representations that the problems were caused by cleaning chemicals were false, and made intentionally to conceal Bayside’s causes of action, such concealment could have been discovered through reasonable diligence.

“By December 2003, it is undisputed Bayside was sceptical of the cleaning compound theory because it used only mild detergent, and windows that had never been washed were exhibiting symptoms.

“No explanation is offered as to why Bayside then waited more than five years to consult a neutral party about the problems. Bayside has not demonstrated reasonable diligence.”