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Joint defense and tolling agreements: Navigating common interests between defendants in construction cases 

4/23/24

By: Catherine A. Bednar

Many design and construction disputes involve multiple defendants, including architects, engineers, contractors, subcontractors, and consultants. Used in many types of cases, Joint Defense Agreements and Tolling Agreements can be especially effective in large, multi-party construction actions. These agreements can enable defendants to put aside their internal disputes and work together to their mutual benefit, for example by presenting a united front in attacking the plaintiff’s claims on issues of both liability and damages. 

Joint Defense Agreements

A Joint Defense Agreement (“JDA”) can eliminate or minimize the potential risks of engaging in joint defense communications. Joint defense communications are protected under the “common interest doctrine,” an exception to the waiver of the attorney-client privilege or work product doctrine which would otherwise occur when confidential information is shared with other parties or opposing counsel. While the terminology, scope and application of the common interest doctrine varies between jurisdictions, the doctrine generally applies where: (1) the communications are made in the course of a matter of common interest; (2) the communication is designed to further that effort; and (3) the privilege is not waived. 

Under the common interest doctrine, parties can exchange confidential information and consult together for their mutual benefit without waiving any privilege or protection afforded to the information. Typically, defendants can demonstrate a sufficient common interest to invoke the doctrine when they share a goal of developing a joint defense strategy to refute a plaintiff’s claims.  

JDAs can be particularly beneficial in multi-party construction defect litigation, where a plaintiff has sued multiple defendants, alleging an array of design errors and construction defects. Architects, engineers, contractors, and subcontractors may all benefit from the use of a JDA in order to protect their communications, allowing them to candidly discuss issues of causation, disputing damages and potential shared defenses to a plaintiff’s claims.  

A written JDA memorializes the parties’ agreement and governs how confidential information will be shared and protected. A written JDA can also ensure the joint defense communication will remain privileged and may not be used by the parties in subsequent actions against each other. A written JDA provides clarity for the parties by outlining the precise terms of the agreement, including the identity of the parties to the JDA, the duration of the JDA, ground rules for the exchange and use of information and materials disclosed pursuant to the Agreement, and mechanisms for a party’s termination of or withdrawal from the JDA. 

One potential disadvantage is that the JDA may be discoverable. For that reason, parties drafting a JDA should keep the language broad and generic as to the purpose of the Agreement (i.e., “to advance the parties’ common interests” or “to aid in the parties’ mutual defense”) and avoid indicating the specific nature of the information to be shared.  

Tolling Agreements

Tolling Agreements can work hand-in-hand with JDAs by allowing the parties to preserve their potential claims against each other, such as claims for contractual indemnification or contribution, and set them aside in the present action. This can avoid the typical flurry of cross-claims and third-party claims in construction actions, which serves to embolden the Plaintiff. By tolling any statutory or contractual limitations periods for their claims, the defendants can avoid expensive and distracting infighting. 

A Tolling Agreement may be a stand-alone document, or it may be included as a provision within the JDA. The Tolling Agreement should clearly state what types of claims or potential claims are tolled. The Tolling Agreement should also indicate its duration. A Tolling Agreement may also include provisions for its renewal or termination prior to its expiration. 

JDAs and Tolling Agreements can allow defendants in a construction action to avoid unnecessary time and expense and focus their efforts on defeating the plaintiff’s claims. In deciding whether to enter into a JDA and/or Tolling Agreement, a party must evaluate what is at stake in the action, consider their exposure relative to that of the other parties, and determine what they may gain from the agreement. Before entering any such agreement, one should always consult with an attorney familiar with the applicable laws in the governing jurisdiction and who can carefully craft an appropriate agreement. 

For more information, please contact Catherine Bednar at cbednar@fmglaw.com or your local FMG attorney.