Next Monday, a judge for the Second Judicial District Court in Minnesota’s Ramsey County is scheduled to preside over a hearing for a lawsuit filed by the Builders Association of the Twin Cities against Minnesota GreenStar, a green-building certification program. In its complaint, filed on December 9, BATC alleges that it owns intellectual property key to GreenStar’s program, including a checklist for certification of new homes contained in its green-home construction guidelines.

The suit also alleges breach of contract and nonpayment of loans.

The conflict is a curious one. BATC was a founding member of GreenStar, which was formed in 2007 when Minneapolis-based Green Institute received a $40,000 grant to develop a green-building certification program. The institute, a nonprofit environmental group, collaborated on the project with a number of industry experts, and also received help from BATC and the National Association of the Remodeling Industry’s Minnesota chapter. The program’s four employees worked out of BATC’s headquarters and the homebuilder association struck a $306,418 loan agreement with the fledgling certification group, which had adopted the name MN GreenStar. BATC also invested $50,000 to help develop the program guidelines.

Divergent strategies

BATC and GreenStar parted ways in October after GreenStar rejected BATC’s offer to assume financial and operational control over the program. The split apparently was precipitated by BATC’s desire to steer GreenStar in a more user-friendly direction and away from its current, whole-house approach to construction and conservation. Some builders complained that GreenStar was difficult to use – a complaint GreenStar has acknowledged and said it is addressing – but GreenStar officials were concerned that BATC’s approach would undermine the rigorousness of the program. So BATC announced it would establish a program that it said would be easier for builders to follow and attract a bigger share of the homebuilding market. The association also asked GreenStar to start making payments on the loan, whose first payment, GreenStar’s attorney, Patrick Burns, has said, is due this month.

“We continue to be strong in green building,” BATC’s executive director, David Siegel, told media source Finance & Commerce in early November. “… We just have a different vision of how to get where we want to go.”

At a December 13 hearing, Finance & Commerce noted, Judge Gregg Johnson granted a temporary order restraining GreenStar from “selling, licensing, destroying or altering the new homes checklist” pending the next hearing on the suit, scheduled for January 24. Although BATC has declined to comment on the litigation (we also weren’t able to find mention of the complaint on the BATC website), GreenStar attorney Burns pointed out that the restraining order doesn’t actually prevent GreenStar from operating.

“The judge,” he said, “is allowing MN GreenStar to still use both the new and remodeling checklists to certify new and ongoing projects while the dispute is litigated.”

Probing possible motives

A couple of observers – former attorney and current LEED AP and construction consultant Chris Cheatham and Michael Anschel, owner of Otogawa-Anschel Design-Build in Minneapolis and a GreenStar developer and current board member – have been speculating about what is behind BATC’s action.

For example, in a recent guest post on Construction Law Musings, a blog site run by Virginia-based construction lawyer Christopher Hill, Anschel points out that the new-homes program is based on a remodeling program that was built with a combination of state funds and about “$1 million of in-kind volunteer time from builders, remodelers, architects, designers, manufacturers, suppliers, utilities, the University of Minnesota, and (Minnesota’s) Office of Energy Security. In short, the design, algorithm, look, feel, shape, scoring, values; the expression of the idea, were all created outside of BATC’s narrow scope of work and small $50K investment. The two programs differ by fewer than 60 lines of text, and the remodeling program clearly precedes the new homes program from inception to launch. A thin platform on which to rest one’s case.”

Anschel also notes that BATC in 2007 signed a memorandum of understanding with the Green Institute and the National Association of the Remodeling Industry to help with the legal work necessary to make GreenStar a fully operational nonprofit, securing intellectual-property releases from the remodeling and new-home programs’ authors and establishing copyrights for the programs and the GreenStar name and logo. But he adds that beyond the memorandum of understanding, intellectual property rights aren’t addressed in any of GreenStar’s bylaws.

Abandoning the whole-house approach

Perhaps more critical to the lawsuit’s potential effect on construction standards is what, Anschel says, is likely behind BATC’s attempt to put GreenStar out of business. He writes in his blog post that, shortly before BATC and GreenStar parted ways, he had discussed BATC’s certification preferences at a meeting with a number of BATC officials, including David Siegel, BATC’s board president, Gary Aulik, and the association’s public policy director, James Vagle.

The BATC team, Anschel writes, said association officials made it clear they intended to develop a BATC certification program that, at its lower levels, would allow self-certification and, at higher levels, “decouple” core components of the GreenStar program so that builders could pursue certification separately for components of their choice – water conservation, say, and community impact – rather than meet GreenStar’s whole-house requirement, which addresses energy efficiency, resource efficiency, water conservation, indoor environmental quality, site impact, and community impact.

Siegel told Finance & Commerce in early November, however, that BATC is committed to third-party verification and, during negotiations intended to give BATC operational control of GreenStar, had no intention of undermining the program.

GreenStar attorney Burns told Finance & Commerce he hopes the suit can be settled before Monday’s hearing. Anschel writes that he expects BATC, which during the December 13 hearing was required to post a $150,000 bond or have the entire restraining order revoked, will in fact make a move before the hearing, but he doesn’t sound hopeful it will be a positive one for GreenStar.