Defending design professionals: is contract language an adequate shield?

• Author: Snodgrass, Gary E.

IN LIABILITY cases against design professionals, one strategy repeatedly used by claimants to achieve a recovery is to avoid, ignore, reinterpret or otherwise attempt to negate contract defenses. While the duties of the design professional frequently are spelled out in no uncertain terms by the contract documents, claimants will use expert testimony to establish evidence of a deviation from the standard of care, even though the expert's criticism assumes duties and obligations on the part of the defending design professional that are specifically excluded by or otherwise conflict with the contract documents. In some instances, the expert will testify about an alleged error or departure from the standard of care when contract provisions are ambiguous or silent with respect to various assumed duties.

In this constant theoretical and practical interface between contract and tort law, there are several issues that must be addressed with respect to the imposition of extracontractual duties on design professionals and the source of those alleged duties.

CONTRACT DOCUMENTS

Parties to construction litigation typically have a contract binding them to some other party involved in the construction project at issue. Called "contract documents," these often are composed of several different component parts, including the plans, specifications, "General Conditions" and other agreements, which set out in detail the duties and responsibilities of each party. Interpretation or application of these diverse documents can lead to litigation among owners, contractors, design professionals, subcontractors and others. However, the contents of the documents also bear on the liability of design professionals to unrelated third parties. Therefore, an analysis of their terms is essential.

The traditional model of the relationship of owner, design professional and contractor is a triangular one, with the owner contracting separately with the design professional and the contractor. A design professional often contracts solely with the owner, requiring third parties to seek alternatives in the event of a breach that allegedly causes injury. Since the design professional and the contractor typically do not contract with each other, the duties, if any, owed between them arise from an interpretation of their contracts with the owner.

Misconceptions of the design professional's role in modem construction projects have resulted in strained interpretations of their contractual obligations or the imposition of common law liability that did not exist before. No longer the "master builders" of antiquity, modem design professionals have relinquished day-to-day control to general contractors and subcontractors, the purported "experts." Increasingly complex and expansive projects, new technology, skills and building materials, and the retention of numerous specialists and subcontractors have reduced the modern design professionals' input into the over-all construction project.

Despite this waning control, design professionals face a proliferation of claims against them for failing to exercise enough control. Two commentators have stated: "Building in accordance with plans and specifications involves interpretation and judgment [by the contractor], no matter how much detail is spelled out in the design documents, and is therefore subject to divergent conclusions drawn from the same information."(1) It is in the interest of the contractor to find ambiguities, efforts or omissions in the contract documents and impute liability to the design professional on that basis.

Various parties also will resort to expert testimony to generate favorable interpretations of the contract's terms. More and more, design professionals face expert testimony that attempts to enlarge or modify their contractual duties, ultimately resulting in liability exposure and an expansion of the "standard of care." While liability should be based on contract provisions that bind the design professional, courts have increasingly disregarded clear contract language and imposed extracontractual duties not originally contemplated by the parties.

How does one handle the situation faced by design professionals when an expert witness testifies as to the duties owed by them despite the contractual relationship and contract provisions? How effective is the concept of privity? What are the origins of design professionals' duties? And what is a potential solution to the expanding concept of extracontractual duties?

PRIVITY OF CONTRACT

Unlike other professionals, such as attorneys and accountants, design professionals for many years enjoyed relative immunity from suit based on the doctrine of privity of contract. Since they contracted exclusively with owners, non-contracting third parties were precluded from recovery. The basic policies behind this principle were to prevent exposure to excessive and unlimited liability to an unlimited class of potential claimants and to maintain the parties' control over their contracts.

Starting with United States v. Rogers & Rogers, many jurisdictions began to abolish the privity doctrine. The federal district court in Rogers noted:

Considerations of reason and policy impel the conclusion that the position and authority of a supervising architect are such that he ought to labor under a duty to the prime contractor to supervise the project with due care under the circumstances, even though his sole contractual relationship is with the owner.(2)

While the concept of privity is being replaced with a common law duty of due care in many jurisdictions, some states still cling to the doctrine of privity in analyzing claims against design professionals. In Bernard Johnson Inc. v. Continental Contractors Inc.,(3) the contractor argued that the contractual relationship between the owner-design professional and the owner-contractor created common law duties on the part of the design professional in favor of the contractor. The power to "supervise" carried with it power over the contractor, it was contended, and thus a common law duty was created.

The Texas Court of Appeals disagreed, however, and held any duty or power assigned to the architect in the owner-architect contract was for the sole benefit of the owner who employed the architect. After analyzing the architect's contractual duties, the court held there was no power over the contractor sufficient to impose a common law duty.

The court concluded that a general rule that architects owe a duty of care to contractors for exercising control over them stood on too indefinite and ambiguous a base to support itself, stating:

Any such rule of general application, based upon an assumed general control of the architect over the contractor, must invariably result in an injustice in a particular case when the contract assigns no control to the architect with respect to a particular aspect of the contractor's work wherein the injury occurs, but the architect is, nevertheless, held to a general duty said to be founded upon and justified by the existence of his power over the contractor.(4)

Prompted by the abolition of privity as a defense, and faced with the possibility of ever expanding liability, design professionals amended their form contracts to limit their duties to the owner. The major revision came in 1961 with the eighth edition of the American Institute of Architects General Conditions of the Contract for Construction, in which "supervisory authority" was removed from the contract documents by amendment of Section 3.3. 1. The seventh edition (1958) of the AIA General Conditions had authorized architects to "supervise" construction.

The current AIA General Conditions now make clear that the general contractor has control over the means and methods of construction. Nevertheless, many courts continue to impose liability on design professionals because of a strained interpretation of the contract documents and a misunderstanding that the design professional does, or should, "supervise" construction projects.(5)

DUTY TO "SUPERVISE"

The supervision issue is one frequently faced by design professionals. Most jurisdictions follow the general rule that requires express contractual terms necessary to impose a duty to "supervise." Despite the rule, litigants urge courts to impose a duty to supervise, and thus liability, on the design professional in the absence of, or even contrary to, their contractual terms.

In Brown v. Gamble Construction Co.,(6) the plaintiff s decedent fell through a ventilation duct and was fatally injured. The plaintiff claimed that the architect owed a duty by virtue of his position as a design professional to supervise the construction and ensure that safety precautions were taken. The Missouri Court of Appeals stated the general rule that an architect is under no duty to supervise construction unless the duty was expressly agreed on in the contract documents. Examination of the contract documents revealed the that general contractor, not the architect, was charged with the duty of supervision, project safety and responsibility for the means, methods and procedures of the work.(7)

In Mayor and City Council of Columbus, Mississippi v. Clark-Dietz & Associates -- Engineers, Inc.,' the contract between the engineer and the city required the engineer to exercise general control over the work, to determine whether the contractor's work complied with the plans and specifications, and to reject work that did not comply. The construction was delayed by severe flood damage, and the city brought suit against the engineer and the contractor for its additional expense and for delay damages.

In its claim against the engineer, the city alleged breach of contract and negligent design. The contractor cross-claimed against the engineer, charging negligent design and negligent supervision. Several experts testified that the design constituted "imprudent engineering," failed to consider feasible...