“Remember the Architect!” While it may not be as catchy as “Remember the Alamo!” at the Battle of San Jacinto, the phrase about design professionals is probably more relevant to your day-to-day business.

Back in December 2016, we discussed potential subcontractor liability to architects for copyright infringement relating to “instruments of service.”

This month, we are discussing the inverse – potential architect liability to contractors.

Contractor claims against architects on commercial projects, primarily grounded in tort theories such as negligence, negligent misrepresentation and negligent supervision, appear to be on the rise nowadays.

To understand these claims, we take a close look at three recent cases involving a wharf in Washington, D.C., a science museum in Miami and a high school in Kentucky.

The Wharf

In early March 2018, Clark Construction Group, LLC (“Clark”), the design-build contractor for a $2.5 billion, mixed-use development known as “The Wharf” in Washington, D.C., commenced an action in federal court against Perkins Eastman DC, PLLC (“Perkins”), the project architect, seeking damages in excess of $5 million.

Clark alleged that Perkins breached the parties’ written agreement and committed professional negligence and negligent misrepresentation by producing design documents with substantial errors and omissions. Apparently these design errors and omissions did not become apparent until well into the construction phase.

The complaint filed by Clark cited no fewer than 13 different errors and/or omissions by Perkins relating to their design and “coordination of the design disciplines.”

These errors and/or omissions affected the structural columns, exterior retail doors, concrete beams, built-up slab, structural beams, terrace doors, storm water cisterns, structural rebar, pier embeds, foundation piles, stairs and loading docks, windows and curtain walls and acoustical design of the theater and concert hall.

As of this writing, Clark v. Perkins is pending and no judicial decision has been made on the merits.

The Science Museum

In 2009, the general contractor and subcontractor on the Museum of Science project in Miami, brought an action for negligence against the owner’s professionals (i.e., the project architect and its engineering subconsultants).

The museum had a contract with the architect and the architect had contracts with its subconsultants. The museum also had a separate contract with a general contractor, Suffolk Construction (“Suffolk”), who in turn had a subcontract with Baker Concrete Construction (“Baker”).

Toward the end of the project, the museum terminated Suffolk for convenience and retained Baker directly to perform the concrete work.

As a result of increased costs and delays, Suffolk and Baker brought a lawsuit against the project architect and its subconsultants seeking damages for negligence. Among other things, Suffolk and Baker claimed that errors and omissions in the design documents caused delays and increased costs on the project.

Notably, neither the architect nor its subconsultants had a contract with Suffolk or Baker. The professional subconsultants moved to dismiss the action against them, arguing that they owed no duty to Suffolk or Baker.

In denying the motion, the U.S. District Court for the Southern District of Florida found that under certain circumstances, the professional subconsultants – who had no contractual relationship with the construction contractors (i.e., no contractual privity) – could be liable in negligence to the contractors:

"[I]n the absence of privity, an architect must have some control over a contractor or a project for a duty to be imposed. A determination of control will be based on the facts of the case. Control may be established … where the architect or engineer has a supervisory role. However control may also be established … where the architect or engineer acts with the knowledge that the plaintiff [contractor] will rely on its designs or plans … By exerting control over a contractor or a project, either by virtue of its supervisory role or its knowledge that the contractor will rely on its plans, the architect or engineer places the contractor within the forseeable zone of risk such that a duty may be imposed."

Suffolk Constr. Co. v. Rodriguez & Quiroga Architects Chartered, No. 16-CV-23851, 2018 WL 1335185, at *4 (S.D. Fla. March 15, 2018) (citations omitted).

In this case, the District Court found that the Suffolk and Baker alleged in their complaint that each of the defendants exerted control over them by virtue of their supervisory roles and/or the preparation of plans on which Suffolk and Baker relied. At this stage of the proceedings, such allegations (without more) are sufficient to survive a motion to dismiss.

The High School

In 2005, the KBNA architecture firm entered into an agreement with the Oldham County Board of Education (“Board”) to serve as project architect in connection with the construction and renovation of the North Oldham High School.

After the plans were completed, the Board entered into a contract with D.W. Wilburn (“Wilburn”) to serve as general contractor for the project. Wilburn subsequently entered into a subcontract with Link Electric (“Link”) to perform the electrical work.

The project was delayed and Link sought compensation from Wilburn for general conditions that it incurred as a result of these delays. Link eventually sued Wilburn for damages and Wilburn, in turn, filed third-party complaints against the Board and KBNA for contribution and indemnification.

Among other things, Wilburn alleged that KNBA caused the delays by failing to properly prepare plans and specifications so that the project could be approved for a building permit without substantial delay. KNBA moved for summary judgment and the trial court granted the motion since there was no privity of contract between KNBA and Wilburn.

The Court of Appeals of Kentucky reversed, finding that the touchstone is duty, rather than privity, under modern tort law. D.W. Wilburn, Inc. v. K. Norman Berry Assocs. Architects, PLLC, No. 2015-CA-001254-MR, 2016 WL 7405774, at *3 (Ky. Ct. App. Dec. 22, 2016). The Court relied on Section 552 of the Restatement (Second) of Torts, an authoritative secondary source written by renowned legal scholars, which provides:

§ 552 Information Negligently Supplied for the Guidance of Others 

(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. 

(2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered 

(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and 

(b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction. 

(3) The liability of one who is under a public duty to give the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them.

Other courts around the country have applied Section 552 to architects. In Davidson & Jones, Inc. v. New Hanover Cty., 255 S.E.2d 580, 583-84 (N.C. Ct. App. 1979), the court explained the issue and its conclusion as follows: “The question before us is whether in the absence of privity of contract an architect may be held liable to a general contractor and his subcontractors for economic loss resulting from a breach of a common law duty of care. We answer, ‘Yes.’”  The court explained, “An architect, in the performance of his contract with his employer is required to exercise the ability, skill, and care customarily used by architect upon such projects … Where breach of such contract results in foreseeable injury, economic or otherwise, to persons so situated by their economic relations, and community of interests as to impose a duty of due care, we know of no reason why an architect cannot be held liable for such injury.” Davidson, 255 S.E.2d at 584 (citation omitted); see also Bilt-Rite Contractors, Inc. v. Architectural Studio, 866 A.2d 270, 287 (Pa. 2005); Eastern Steel Constructors, Inc. v. City of Salem, 549 S.E.2d 266, 275 (W. Va. 2001); Nota Constr. Corp. v. Keyes Assocs., Inc., 694 N.E.2d 401, 405-06 (Mass. App. Ct. 1998); Tommy L. Griffin Plumbing & Heating Co. v. Jordan, Jones & Goulding, Inc., 463 S.E.2d 85,89 (S.C. 1995).

Takeaways

When faced with increased costs, project delays, extended general conditions and other unanticipated expenses at a project – what we call “damages” in the legal profession – one needs to look at all prospective, culpable parties.

This includes the design professional and its professional subconsultants.

Contractors often dismiss the architect as a source of liability, thinking, “I do not have a contract with the architect, therefore he cannot be liable to me.” Not true.

As the Supreme Court of Appeals of West Virginia explained in Eastern Steel Constructors, 549 S.E.2d at 275, “[A] design professional (e.g., an architect or engineer) owes a duty of care to a contractor, who has been employed by the same project owner as the design professional and who has relied upon the design professional’s work product in carrying out his or her obligations to the owner, notwithstanding the absence of privity of contract between the contractor and the design professional, due to the special relationship that exists between the two.” 

Steven Nudelman is a partner at the law firm of Greenbaum, Rowe, Smith & Davis LLP in Woodbridge and Roseland, New Jersey. He is a member of the firm’s Litigation Department and its Construction, Community Association, Alternative Dispute Resolution and Alternative Energy & Sustainable Development Practice Groups. He may be reached at (732) 476-2428 or snudelman@greenbaumlaw.com.