Source:https://www.lexology.com, November 7, 2017
By: Sean M. Golden, Vandeventer Black
It is common on commercial construction projects for the owner to hire the architect to perform services during construction, in addition to designing the project. Among other things, the architect’s construction phase services will typically consist of periodic observations and evaluations of the progress of the construction work. An architect may be charged with observing the work to determine whether or not the building is being constructed in accordance with the contract documents, including the drawings the architect has prepared.
When there are defects in the construction, an owner may attempt to hold the architect liable (usually in addition to the contractor) for said defects, even if there are no errors or omissions in the architect’s design or specifications. The theory behind such an assertion is typically that, even if the defect was caused by the contractor, the architect was charged with observing the work and should have called out the contractor’s defect and seen that it was corrected.
In such a situation, can the architect be held liable for defects in the contractor’s work? The answer – as is so often the case – depends on the architect’s contract with the owner. While many owner/architect agreements contain provisions requiring the architect to make periodic inspections of the work, it is typical for the agreements to contain language limiting the architect’s responsibility, such as the language used in the AIA Document B101-2017 Standard Form of Agreement Between Owner and Architect:
“The Architect shall not have control over, charge of, or responsibility for the construction means, methods, techniques, sequences or procedures …, nor shall the Architect be responsible for the Contractor’s failure to perform the Work in accordance with the requirements of the Contract Documents.”
AIA B101-2017, at § 3.6.1.2.
An architect in this situation would likely argue that this provision is exculpatory in nature, i.e., that it relieves the architect from any liability for the contractor’s acts or omissions. The argument, according to the architect, is that the language “nor shall the Architect be responsible for the Contractor’s failure to perform the Work in accordance with the requirements of the Contract Documents” truly means that the architect cannot be responsible for the contractor’s failure to perform the work in accordance with the contract documents. Some courts have adopted this position, and have dismissed claims by owners suing architects for construction defects.
But the majority of courts have taken a more nuanced view of this often-used contract language. These courts have found that exculpatory language such as the quoted-language from the B101 doesn’t necessarily mean the architect is off the hook. The Supreme Court of Alabama explained this distinction in one such case:
While the agreement may have absolved the Architect of liability for any negligent acts or omissions of the contractor and subcontractors, it did not absolve the Architect of liability arising out of its own failure to inspect reasonably. Nor could the Architect close its eyes on the construction site and not engage in any inspection procedure, and then disclaim liability for construction defects that even the most perfunctory monitoring would have prevented, or fail to advise the owner of a known failure of the contractor to follow the plans and specifications.
Watson, Watson, Rutland/Architects, Inc. v. Montgomery Cty. Bd. of Educ., 559 So. 2d 168, 173 (Ala. 1990) (emphasis added). In other words, while the architect is not responsible for the contractor’s negligence, the architect is required to perform its construction observation services reasonably, as required under its contract. Further, when the architect actually observes deviations from the contract documents, it is required to report these to the owner.
There are several takeaways respecting such designer liability:
First, courts distinguish between full-time construction observation, and periodic evaluations of the work. Courts will hold the architect to a higher standard vis-à-vis construction defects in the latter situation. Architects should make sure that, unless they are truly being engaged to perform full-time observation, their contracts require observations of the work to occur only at periodic, reasonable intervals.
Second, the contract language matters. For example, an obligation to notify the owner of any defects in the work, whether or not observed by the architect, can be interpreted as something more akin to a guarantee of the contractor’s work; which is at odds with the exculpatory language, discussed above.
Lastly, performance matters. Whatever the contract language, all parties to the contract must perform as contracted, and if they do they have meet their obligations. Even the strongest exculpatory language will absolve an architect for failing to perform the construction administration services it agreed to perform. But performance as agreed shields that architect when performed as agreed.