When Specialty Designs Cause Building Disasters: Responsibility for Shared Architectural and Engineering Services

• Publication year: 2021

84 Nebraska L. Rev. 162. When Specialty Designs Cause Building Disasters: Responsibility for Shared Architectural and Engineering Services

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Carl J. Circo*

When Specialty Designs Cause Building Disasters: Responsibility for Shared Architectural and Engineering Services

TABLE OF CONTENTS

I. Introduction ...................................................... 164
II. Allocating Design Responsibility--The Established
Contract Patterns ................................................ 168
A. Design-Bid-Build .............................................. 168
B. Alternative Project Delivery Systems .......................... 170
C. Analyzing Design Liability in a Shared Design
Context ....................................................... 172
III. Theories of Design Liability .................................... 173
A. Design Liability Based in Contract ........................... 173
1. Defective Design Constituting Breach of
Contract .................................................. 174
2. Implied Contractual Obligations ........................... 175
B. Duty and the Implied Warranty of Reasonable
Care--The Transition to Tort Theory .......................... 177
C. Design Liability Based in Tort ............................... 179
1. Elements of a Design Malpractice Claim .................... 179
2. Design Professional's Duty of Care ........................ 180
3. Beyond Malpractice--Negligent
Misrepresentation and Strict Liability .................... 182
a. Negligent Misrepresentation ............................ 182
b. Strict Liability ....................................... 182

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4. Design Professional's Responsibility for Acts and
Omissions of Others ....................................... 183
5. Liability to Third Parties ................................ 185
a. From Privity to Duty ................................... 185
b. Personal Injury Cases .................................. 187
c. Property Damage and Pecuniary Interest
Claims ................................................. 189
d. The Economic Loss Rule ................................. 190
D. Bargained-For Limits on Design Liability--A
Return to Contract Principles ................................ 192
E. Contractual Reallocation of Design Responsibility ............ 193
1. Delegation of Design Duties under Contract
Law ....................................................... 194
2. Delegation of Design Duties under Tort Law ................ 194
3. Delegation of Design Duties under Professional
Licensing Law ............................................. 195
4. The Implications of the Non-Delegable Design
Duty ...................................................... 197
F. Shared Design Services--Blurring the Lines of
Responsibility ............................................... 198
G. The Shop Drawing Cases--Prelude to Specialty
Design-Build ................................................. 200
IV. Shared and Delegated Design--The New Design-Build
World ............................................................ 206
A. Evolution of Specialty Design-Build .......................... 206
B. Industry Perspectives on Specialty Design .................... 212
C. A Legal Perspective on Shared Design--Delegating
Duties and Allocating Risks .................................. 215
D. Legislative and Regulatory Controls Affecting
Specialty Design-Build ....................................... 216
1. Indirect Authority for Specialty Design-Build--
Massachusetts and Missouri ................................ 217
a. Massachusetts .......................................... 217
b. Missouri ............................................... 218
2. Direct Authority for Delegating Design
Responsibility--Florida and New York ...................... 219
a. Florida ................................................ 219
b. New York ............................................... 222
E. The New Design-Build World ................................... 225
V. A New Perspective for the New Design-Build World .................. 225
A. Rethinking Responsibility for Specialty Design ............... 225
B. Licensing and Regulatory Concerns ............................ 227
1. Adapting Existing Public Safety and
Professional Conduct Regulations .......................... 227
2. Direct Regulation of Specialty Design-Build ............... 229

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C. Contract Remedies--Sanctity of Contract and Third-
Party Beneficiary Analysis ................................... 232
1. An Informed Approach to Contract
Interpretation ............................................ 232
2. The Third-Party Beneficiary Problem ....................... 235
3. The Transition to Tort Theory Redux ....................... 237
D. The Reach of Tort Law ........................................ 238
1. The Owner's Remedies for Specialty
Design Defects ................................................... 238
2. Professional Malpractice Claims by Those Other
than the Owner ............................................ 242
3. The Economic Loss Rule Applied to Specialty
Design Defects ............................................ 244
4. Contractual Limits on Liability in the New Design-Build World ........................................ 246
VI. Conclusion ....................................................... 246

I. INTRODUCTION

One hundred fourteen people died when skywalks over a crowded hotel lobby collapsed.(fn1) A steel fabricator--not the project's structural engineers--designed the skywalks' fatal connections. Stricter regulation of the design process might have prevented these deaths. Unfortunately, the primary legacy of the 1981 Kansas City Hyatt Regency Hotel catastrophe is not more aggressive legal controls over specialty design practices; it is, instead, contracting practices that more aggressively insulate project design professionals from specialty design errors.(fn2) There is growing evidence that specialty design practices since 1981 portend increasingly troublesome questions of contractual responsibility and legal liability.

Consider the design arrangements for an upscale office building damaged by the 1994 Northridge earthquake. The u-shaped building itself was unharmed, but the framework for the unique central atrium

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skylight failed. The building contractor, the manufacturer of the frame system, the atrium ceiling subcontractor, and an engineering consultant all participated in the design process, although the reported case does not disclose whether design for the entire building was centralized under a project architect or engineer.(fn3) Who should be responsible to the owner for over ten million dollars in lost rent and repair costs? Does the building contractor's warranty of quality work extend to the skylight's design furnished by a supplier who manufactured the framework for the subcontractor? Should tort law in such a case trump private contracts by imposing an expanded duty on all those involved with the specialty design? If so, should courts curb the economic loss rule to allow recovery of pecuniary loss caused by a specialty design firm to another participant in the construction process who had no contract with the specialty designer?

These notable cases dramatize the prominent role of shared, delegated, and specialty design practices in the history of construction industry calamities. They also serve as reminders that the risk of devastating personal injury, extreme property damage, and catastrophic economic loss permeates the building design and construction process.(fn4)

Over the last fifty years, advances in construction techniques, together with increasing project complexity, have caused project design to become more technically demanding and specialized--a fact grotesquely underscored by the threat of terrorist attacks that now place previously unimaginable demands on building security and safety.(fn5) At the same time, developments in professional liability law and the dramatic growth in damage claims throughout the construction industry have radically increased the liability risk for those who participate

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in design activities.(fn6) All of these factors have led to a subtle shift in the responsibility of design professionals. Project design is increasingly a collaborative process involving several design professionals and trade specialists.(fn7) While this trend reflects the realities of modern design and construction, it also blurs the traditional lines of professional responsibility and legal liability for design.

One might expect design specialization to create clear and exclusive lines of design responsibility for distinct specialty components of a construction project. Industry perspectives seem to hope for this result.(fn8) More often than not, however, these shared design practices confound the liability analysis by sprinkling duties relating to specialty design among several participants having independent contractual relationships with different members of the project design and construction team.

The scholarly literature and trade publications have focused on the now popular design-build contracting practice, which places all design and construction responsibility on a single party.(fn9) Modern shared design practices, however, mark an entirely distinct development--the emergence of a new design-build world in which design responsibility is diffused rather than centralized.

This Article examines the development, current legal status, and long-range legal implications of shared design. Of special interest is the practice of assigning significant responsibility for specialty design to those who have no direct contractual relationship with the owner of the project or the owner's primary design professional. This Article

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refers to that form of shared design as "specialty design-build" because it uses...