Source: http://www.jdsupra.com, July 7, 2014
By: Mark D. Hudak
In a unanimous decision, California’s Supreme Court has ruled that the principal architects for a condominium project may be sued directly by a condominium homeowners association for design defects. The case, decided July 3, 2014, is Beacon Residential Community Association v. Skidmore, Owings & Merrill, LLP, S208173.
Skidmore, Owings & Merrill and HKS, Inc. (collectively, “the architects”) were the principal architects for a 595 unit condominium project built near AT&T Park in San Francisco. The units allegedly developed several defects including water infiltration, structural cracks, and overheating that made units virtually uninhabitable at times. The homeowners association sued the architects, alleging that these defects were caused by negligent design.
The architects defended on the grounds that they were not in a direct contractual relationship (privity) with the eventual buyers and owed a duty only to the developer who had retained their services. The trial court dismissed the complaint.
The Supreme Court reinstated the suit, holding that the architects did owe a duty to the eventual unit owners. The Court noted that the importance of contractual privity has diminished over time and liability to foreseeable third parties has been extended in many circumstances.
In deciding that the architects owed a duty of care to the ultimate owners, the Court highlighted three factors: (1) the closeness of the connection between the architects’ conduct and the plaintiffs’ injuries, (2) the limited and predictable class of potential plaintiffs, and the absence of options for the owners in obtaining design services on their own. In the end, the owners are forced to rely on the skill of the developer’s architects. The Court concluded that, under these circumstances: “… an architect owes a duty of care to future homeowners where the architect is the principal architect on the project – that is, the architect, in providing design services, is not subordinate to any other design professional – even if the architect does not actually build the project or exercise ultimate control over construction decisions.” (emphasis in original)
Even though, on most projects, the developer has the final say on design choices, the architect who makes recommendations on the design cannot escape liability to the end user. This decision is sure to give homeowners associations another target in defect cases. Architecture firms should immediately consult their professional liability carriers to determine whether these direct claims will be covered.