Eugene Peterson | Advise & Consult, Inc. | September 8, 2015
Attorneys T. Darren Barker (Michelman & Robinson, LLP); Melissa Dewey Brumback (Ragsdale Liggett) and Forensic Architect Dean J. Vlahos (Dean J. Vlahos FAIA & Associates), during the 1st annual Intermountain Construction Defects and Dispute Conference (CDDC) held May 15, 2015 in Salt Lake City, Utah cited and discussed a case that brings liability to architects and design professionals as new sources of revenue for plaintiffs to fund defect litigation cases.
The case cited and discussed was Beacon Residential Community Association v Skidmore, Owings and Merrill, LLP, 327 P. 3rd 850 (2014). The lawsuit alleged negligent design and noticeable defects. This case was tried, reversed by the appeal court and upheld by the California Supreme Court finding a duty and liability in common law for architect and design professionals.
The impact of Beacon on architectural business is increased litigation exposure which will add additional insurance expenses and operational costs not to mention the need for defensive business practice ultimately resulting in an increase in fees.
The panel suggested that there are several ways to protect architects and design professionals against the increased liability. They include various codes of ethics/standards of care, the business structure type, and a risk management plan that would include:
- the creation of a standardized comprehensive filing system
- the development of a document retention policy and procedure
- and at the completion of each phase, a review of the work for compliance with contract/RFP, with appropriate projects sign off
- the development of a project checklist of “watch it” stuff
- development and utilization of typical details and general notes
- the utilization of written correspondence’s, save and preserve, when issues arise that negatively affect the project or create liability – to give your counsel ammunition to fight the claim
- utilization of a technical QAQC review by a separate team
They further pointed out that the AIA contract doesn’t address the exposure created by Beacon v SOM. Each contract should be negotiated as a unique legal instrument where the scope of the work is defined in light of the “Beacon factors”. The risk should be transferred through specific indemnity and defense language to the owner contract and the sub- consultant contracts, and should include the additional insured obligations that run in your favor.