Duty Of Care

The case of Beacon Residential Community Association v. Skidmore, Owings & Merrill LLP was decided in July of 2014. The issue this decision discusses is whether or not design professionals (architects, engineers, and other design professionals) owe a duty of care to home owners associations.

 

In this case, a developer came up with a multi-unit project to be a condo development. Upon completion of the project, the units were rented as apartments for about two years and then sold as condominiums. The homeowners association ("HOA") eventually filed a construction defect lawsuit against several parties involved in the construction of the condominiums for design defects and construction defects. The HOA contended that the defendants owed a duty of care towards the HOA and its members.

 

The principal project architect argued that its input consisted of recommendations only and it did not control the owner's decision on how to proceed with the construction of the project and further they should not be held liable to the third party homeowners for the alleged defects resulting from those decisions.

 

The trial court initially agreed with the defendants. However, the matter was appealed and the Court of Appeal reversed the trial court's decision stating that the Right to Repair Act expressed a legislative intent to impose on design professionals a duty of care to future homeowners.

 

The matter was appealed again and the Supreme Court of California heard the matter. The Supreme Court also reviewed the Right to Repair Act, which establishes a set of building standards for new residential construction and provides that builders and other entities shall be liable for violation of those standards. The Right to Repair Act states that builders and other entities are liable for the residential construction, design, specifications, surveying, planning, supervision, testing, or observation of construction of a dwelling unit. It further states that this applies to general contractors, subcontractors, material suppliers, product manufactures and design professionals to the extent that they caused a violation of any standard because of a negligent act or omission or breach of contract. Keep in mind that Civil Code section 937 clearly states that the definition for design professionals include architects and architecture firms. After reviewing the Right to Repair Act as well as other supporting cases, the Supreme Court affirmed the Court of Appeals decision. Design professionals do owe a duty of care to homeowner associations and its members (third party homeowners).

 

What does this mean for the construction industry? Design professionals may negotiate higher prices or tougher liability clauses in contracts in order to account for the risk that may be brought into a lawsuit involving third parties.