The California Supreme Court has just made it harder for architects, engineers and other design professionals to avoid being brought into defective construction lawsuits.
In Beacon Residential Community Assn. v. Skidmore, Owings & Merrill, decided earlier this month, the Court ruled that architects that provide primary design services for residential construction projects owe a duty of care to future homeowners in those projects, regardless of whether they built the projects or directed their construction, and are not entitled to be summarily dismissed when those homeowners bring defective construction/design lawsuits. Previously, California courts had indicated that architects and similar service providers did not owe a duty of care to the ultimate house buyers—in other words, an architect’s conduct in the performance of its professional services would not be required to meet any reasonable standard of care with regard to the end purchasers, because the end purchasers were not among those classes of persons sufficiently connected to the architects’ services to be entitled to hold architects to any such standard.
In the Beacon case, however, the plaintiff’s lawsuit pleaded that the architects knew the units in the project would be sold to homebuyers as condominiums, were actively involved in coordinating the design and construction contractors and inspecting the progress of the project, and were paid $5 million for these services. Based on the claims pleaded, the Court concluded that the architect owed a duty of care to the future homebuyers because of, inter alia, the close connection between the architect’s conduct and the plaintiff’s injury, the limited size of the class of possible plaintiffs, and the substantial role of the architect in the construction of the project. The Court also noted that the work of the architect was clearly intended to benefit the future homeowners, and that it was foreseeable that the homeowners would be among the limited class of persons harmed by the negligent design and construction of the project. The case may be found at http://tinyurl.com/l2ykn9u
In view of the Court’s ruling in the Beacon case, architects and other design professionals may wish to consider expanding and strengthening the indemnity and liability limitation provisions contained in their professional service contracts. In this way, they can avail themselves of as much protection as possible against future lawsuits that they may not otherwise be able to escape due to Beacon. If you are an architect or other design professional and are considering taking such action, it would be worthwhile to have such provisions drafted and/or reviewed by experienced real estate counsel.
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