Facts: Insured, architect, was retained to design a new sanctuary, social hall, office space and community gathering area for a Synagogue project. The Congregation claimed that the building did not meet the objectives and functionality of the Congregation, the applicable building codes were not followed and there were ADA concerns. The building received numerous design awards. The total construction cost was about $12M.
Claim against the insured: The Congregation’s main claim against the architect  involved the graduating risers in the sanctuary, which allegedly violated building code and created an unsafe condition. Another issue related to a central skylight, which allegedly produced so much sun that several rows of seating could not be used for 2 months out of the year. The Congregation claimed that they needed to reconstruct the stairs and seating area in the sanctuary and alleged damages of $1,154,000 for relocation costs, cost of repair, and attorneys fees.
Defenses: Our expert opined that architect met the standard of care. They interpreted the code in a way that permitted them to the design the Sanctuary in a specific fashion, they obtained the client’s approval, as well as the permission of the jurisdiction having authority over the construction (building department signed off on the design).
Settlement considerations: Very technical issue, involving code interpretation. While architect’s design is defensible, there was considerable risk, in light of the cost of defense, and of the cost of reconfiguring both the lower and upper sections of the Sanctuary, about $700,000 according to the estimates we received. Mediator recommended settlement in the range of $400,000 to $600,000 after visiting the Synagogue and seeing the staircase. Synagogue made a demand for $599,000.
Policy Limit: $2,000,000 per claim, $15,000 deductible.
Resolution: Matter settled for $437,500, defense costs $134,000.