By Bruce Jervis
Design professionals have long sought to control their liability exposure. The argument has been that their potential liability is disproportionate to the compensation they receive and the role they play on a construction project. They have received a sympathetic hearing in some quarters. In particular, the engineering disciplines have gained increasing acceptance of contractual limitations of liability. However, a recent ruling in California will have to be viewed as a setback.
The California Supreme Court ruled that an architect can be held liable to future homeowners, with whom it had no contract, for the negligent design of residential property. The ruling applies to architects who provide comprehensive design services directly to developers. The court reasoned that future homeowners are necessarily reliant on those architects. The court distinguished a case in which a geotechnical engineer furnished services to a site preparation subcontractor. The third-party commercial property owner was in a position to obtain independent technical input.
The architects argued that this potential downstream obligation to third parties who were strangers to the original project would create long-lasting liability exposure of unknown dimensions. The court brushed off this argument, saying the liability comes with the territory in an era where homes are mass produced and essentially sold as consumer items.
To keep this ruling in perspective, it applies only to residential development in California. And, it applies only to “principal architects” who provide comprehensive design services to residential developers. But, the ruling is unsettling, particularly the court’s cavalier lack of concern for contingent downstream liability exposure. This is a cost that cannot be controlled effectively through contract, as it arises from a duty of care owed to prospective individuals who are strangers to the project. What is your opinion? I welcome your comments.
