Case History 1
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Liz: [00:00:00] Welcome to the GBA case history series brought to you by the GBA podcast. My name is Elizabeth Brown and I'm the principal geotechnical engineer at JLT Consultants.

Abi: And I'm Abi Corbett, a project consultant at SME.

Liz: So today we are gonna go way back to when the GBA case Histories first started, and we are gonna be discussing case history number one, which is a compelling story about a geotechnical engineering project that spiraled into a significant legal challenge. So Abi, let's set the stage and unpack this case history together.

Abi: Sounds good. So this case kicks off with a GBA member firm entering into a written lump sum contract with the client. The client's, a housing developer working on a small housing development. The firm's assignment was to perform a preliminary geotechnical engineering study. This involved excavating test pits to a depth of 10 feet observing soil [00:01:00] conditions, and then preparing a report with foundation design recommendations.

They're unlabeled as confirmation dependent, along with foundation cost estimates rather than the more cautious opinion of probable foundation construction costs.

Liz: Yeah, so that's an important distinction, like right off. Off the bat, the firm's report did flag the need for further borings, which was good, especially in areas where their field representative noticed like, Hey, there's some organic soils and some issues going on. So interestingly, the client site engineer who just happened to be a close friend of the member firm, CEO, they fully understood the study's limitations.

So it seemed like they have a good solid starting point. But as all things go right, the plot thickens a few years later.

Abi: Absolutely. So after the member firm completed its work, the original client ended up selling the land, including the [00:02:00] firm's preliminary report to a new owner, another housing developer. This new owner brought in a different geotechnical engineering firm to conduct the final study, and what they found was troubling.

Borings revealed organic soils extending beyond the areas outlined in the preliminary report and even below the 10 foot level of the original test pits. This discovery meant that piles were needed in certain areas, which drastically increases the anticipated construction costs.

Liz: Yeah. Oh. It's a game changer when you have to, make a change. Like that. So, which means the new owner was not happy and they filed a $650,000 negligence liability claim against the member firm alleging that the report misrepresented the site conditions. They made arguments that had they known the true extent of this organic soil.[00:03:00] 

They may have either like tried to negotiate and pay less for the land, or maybe they would've avoided buying the land altogether. So, this situation, it really put the member firm in a tough spot.

Abi: Definitely that hurts. And listen, the member firm, CEO was adamant that they had done nothing wrong and he refused to negotiate.

Instead, they pushed for litigation and a full jury trial. The process dragged on involving file reviews, interrogations, depositions, and even jury selection before the plaintiff and the owner finally offered to settle for $70,000, and that's where things get even more interesting.

Liz: Yes. So the member firm's professional liability insurer stepped in with an attorney and an expert to represent them. So the insurer strongly, strongly, strongly urged the CEO to accept the $70,000 settlement. They [00:04:00] highlighted a critical policy provision that stated if the insured rejects the insurer's settlement advice, the insurer's liability is limited to what they would have paid if the advice had been followed, so in this case, $20,000.

So that would've left the firm responsible for the $50,000 deductible. So with a potential jury award of up to $630,000 looming, which exceeds the firm's $500,000 policy limit, the CEO had little choice but to agree. So he did so reluctantly going on record, though he made sure to go on record to assert the firm's belief that it was not at fault.

And the insurer acknowledged the stance.

Abi: I mean, that's a tense turnaround. This case really offers a wealth of [00:05:00] lessons. Let's, talk about those six key takeaways. First preliminary studies can be a double-edged sword. geoprofessional firms need to be cautious, especially when they're working for friends. In these cases, a brief study can lead to misleading findings and recommendations, which enforces that mantra.

Do it right or don't do it at all.

Liz: Oh, absolutely. So the second lesson really is about clarity. geoprofessionals must explicitly outline a study's limitations in writing, even with longtime clients or even friends. So this is crucial because the rapport might be used by third parties, like in this. Should warn that preliminary findings might differ significantly from a final study.

So third party reliance. It really is a big deal and often addressed in GBA contracts and reports. I know for me, [00:06:00] I've seen this a lot where we go out and we do a geotechnical investigation on a site. And then say it gets sold, or maybe it's been three or four years and maybe it's been sold a couple times, and then that new party wants to use that original report and how important it is to be able to go back through and make sure that there's, you know, maybe some additional clarifying statements or maybe the scope has changed, to make sure that gets all t taken care of.

Abi: Yeah, absolutely. And the third lesson really ties into that recommendations and geotechnical reports, whether they're preliminary or not, should be labeled confirmation dependent. This means they shouldn't be relied on until the geotechnical engineer of record can observe the excavation and compare actual conditions to those presumed ones.

Adjustments are often necessary when those conditions differ.

Liz: Which is likely to happen. I mean, when you're [00:07:00] doing a geotechnical investigation, you're looking at such a small section of what those soil profile is actually on that site. Compared to when construction starts and you know, they're opening up a big section of the site at once, you can definitely find differences than what you thought was gonna be present on that site.

Abi: No doubt.

Liz: Fourth, we learned that project risk is inversely proportional to project size and complexity. So I mean, smaller projects like this, housing development, they sometimes can carry some higher risks. This can stem from a lack of professional satisfaction, dividend attention across multiple projects or budget constraints. When the scope unexpectedly grows and the client resists expanding it

Abi: Uh, it definitely feels hard to take on those smaller projects, and then [00:08:00] they end up blowing up on you

Liz: right.

Abi: Fifth. Cost estimates are a minefield. Geo professionals have faced liability for inaccuracies, so using opinion of probable costs and warning that accurate estimates require an experience cost estimator considering variables like material prices and global conditions.

It's just a smart move, recklessly, providing estimates based on preliminary data. It just can backfire.

Liz: Oh yeah. I mean the more data the better. So finally the sixth lesson is about claims management. With few exceptions, the goal should align with the insurers. So let's resolve claims quickly, inexpensively, and unemotionally. So the CEO's passionate, refusal to settle, driven by a sense of being wronged, ended up costing the firm far more than was necessary.[00:09:00] 

Abi: I feel like that kind of goes to honey is better for attracting flies or something to that effect, right?

Liz: Right, exactly.

Abi: So the member firm's representative offered some reflective comments. They admitted the firm didn't make technical errors, but did commit professional ones by failing to clearly communicate the reports limitations.

They emphasize that effective communication, sometimes called a soft skill is as vital as any technical expertise. Many technical professionals choose their field to kind of avoid those soft skills, which is a reason GBA exists. The representative noted that the money waste on this case, which is well over 50 grand, would've been better spent on soft skill education for their staff.

And honestly, that's a practice they now prioritize using GBA resources.

Liz: Well, that's such a powerful insight. GBA offers so many resources for [00:10:00] us to help our staff and to help, you know, on that, that business side of things. So, I mean, it's a really powerful. Insight here. I think it's also important to note that this case is based on the year 2017 dollars. So, inflation has happened since then.

This really underscores how clear communication, thorough studies, and strategic claim handling can prevent costly disputes. So Abi, thanks for breaking it down with me today and for our listeners.

Abi: It's my pleasure. Let's keep those geotechnical skills sharp and those limitations crystal clear. Until next time.

Liz: That concludes this episode of the Case History Series brought to you by the GBA podcast. I hope you're able to take away some useful information that will help you and others at your firm make good risk-based decisions in the future.