Reportedly, no architect was sued for a color of a paint yet, even in the litigious American work environment. Unlike the less tangible functions of buildings, the protective function of building enclosures makes them a subject of many emotionally charged disputes, due to their widespread poor design and construction. Therefore, building enclosure science consultants are deeply involved in legal aspects of construction disputes. In a constant pursuit to find and clarify topics unfamiliar to most architects, we found that the average architect is generally unfamiliar with law; therefore we devoted this section to the division of responsibility as opposed to the building physics and facade technology.
“If a builder has built a house for a man, and has not made his work sound, and the house he built has fallen, and caused the death of its owner, that builder shall be put to death. If it is the owner’s son that is killed, the builder’s son shall be put to death.”
Almost four thousand years after Hammurabi, we might have lessened the applicable (un)civil penalties, yet there are still many owners and architects who would undoubtedly convict the builder without regard to the complexities of the design and construction process. Who was the wrongdoer? Has the builder built the house according to the plans and specifications supplied by an architect? Was the builder aware of the errors and omissions relevant to the collapse? Was the engineering of some components of the house was delegated to the contractor? Were the delegated and designed components coordinated? Has the material fabricated off-site been wrongfully certified by its fabricator as meeting the specifications? Who was responsible for surveying the site condition and subsurface soil before the erection? Has the owner coordinated two or more prime contractors?
Answering these and other questions may require a tedious research and may lead to surprising conclusions. The author is not a lawyer: this reading material is provided for educational purposes only. Use at your own risk.
A house under construction collapsed shortly before completion on a quiet morning in San Antonio, TX. The building was built strictly in accordance with the architectural drawings and specifications, under the direction of the architect, whose decisions were final and conclusive on all points. Mr. Lonergan, the head of the company erecting the house, refused to rebuild the house at his expense ($1M in today’s dollars), leaving the unhappy owner with the pile of dusty rubble. It was eventually accepted the house fell by reason of its weakness arising out of the defects in the specifications and without any fault of the builder. However, the house owner sued the contractor, as opposed to the architect. The court found the contractor responsible for the damages, claiming that absent any language of the contract between the owner and the contractor indicating the responsibility for the quality of the architectural documentation, the contractor was in the better position to ascertain whether the plans and specifications were constructible. The Texas Supreme Court’s decision in the 1907 case set a precedence for many similar law cases. In a similar Massachusetts case, the court stated, “It is the duty of one who proposes to enter into a building contract to examine the contract, plans and specifications, and to determine whether it is possible to do the work before entering into the engagement.
Another story. An owner of a dock was obviously unhappy after its sewer backed up and flooded the site. Therefore, he asked the contractor to come back and fix it at the contractor’s expense. Mr. Spearin the contractor refused because he made the sewer exactly to the design supplied by the owner. In response, the owner (which happened to be the United States Government) cancelled his contract and hired another contractor to rebuild the sewer. The sewer was re-engineered because it was accepted the sewer failure resulted from the defects in its design and without any fault of the original contractor, who was not made aware of the out-of-site conditions which affected the sewer’s performance. However, the owner sued the contractor, who initially lost in the court of law but appealed. The difference was approximately $64k, which is approximately $1M adjusted for the inflation today. This may explain his persistence against such a potent plaintiff, who could afford to drag the case indefinitely, with the best lawyers the money can buy. They ended up in the U.S. Supreme Court, which ruled in favor of Spearin, maintaining that a contractor should not be liable to an owner for loss or damage which results solely from insufficiencies or defects in construction documents. Hence, the Spearin Doctrine, thanks to one persistent contractor who refused to be bullied by the public administration. The U.S. Supreme Court’s decision in the 1918 case remains one of the landmark construction law cases.
Privity of Contract and Economic Loss Rule
In both cases the fault of the designer was essentially undisputed. However, the first instinct of an owner seems to be to sue or withhold a payment of a contractor as opposed to an architect.
What seems particularly unjust in the Texas case, is that the contractor has been penalized for the architect’s fault, without any possible recourse against the actual wrongdoer. Typically, a victimized contractor or a building occupant cannot sue a design professional directly for his/her economic damages arising from defects in plans and specifications when there is no privity of contract. It’s called an “economic loss rule.” If the owner warranted the sufficiency of the architectural documentation, which it had provided to the contractor, for their intended purpose, the owner would then turn around and sue the architect to recoup the money. There is no contractual relationship between a contractor and an architect in the traditional design-bid-build project delivery mode; therefore, absent a tort, contractors can only sue a party with which they contracted, such as an owner or developer. (Several rare exceptions apply, including the negligent misrepresentation.)
Not surprisingly, the Spearin Doctrine is more popular than the the opposite doctrines. It says an owner, by passing a set of plans from an architect to a contractor, makes an implied warranty to the builder that the plans are adequate for their intended purpose. A contractor is bound to build according to plans and specifications prepared by the owner, and will not be responsible for the consequences of defects in the plans and specifications. This responsibility of the owner is not overcome by the usual clauses requiring contractors to visit the site, to check the plans, and to inform themselves of the requirements of the work, and a contractor should be relieved, if he was misled by erroneous statements in the specifications.
Many other cases followed, refined, and clarified the Spearin doctrine. The construction documents need to be reasonably accurate adequate for the purpose for which they were intended, and a contractor has a right to expect that. The contractor is under no legal or contractual obligation to inspect the documentation to determine its adequacy for construction prior to a contract award. If a faulty documentation prevents or delays completion of a contract, the contractor is entitled to recover damages from the defendant’s breach of implied warranty.
The first implied warranty is that the plans and specifications are accurate, and the second warranty is that they are suitable for their intended use. An owner breaches the first warranty when the actual condition of the site is different. An example might be a fabrication of custom components called by the architectural specification which are found unfit for their purpose or size allocated for them in an existing structure, and need to be disposed of, redesigned, and reordered at a loss.
An owner breaches the second warranty when a contractor accurately follows the plans and specifications, but the resulting performance fails to satisfy the owner or occupant. An example might be a contractor who builds a fenestration in strict accord with the specifications and plans provided which then, when finished, sweats with condensation causing damage to interior moisture sensitive materials.
Other warranties may be implied from the construction contract. The implied warranty of habitability is a good example in the residential sector.
Risk Management And Avoidance
Establishment of the above-listed doctrines and clarification of implied warranties were not left without a response. Many parties became using risk management and avoidance techniques, starting from the lengthy disclaimers and broad indemnifications. The observant reader of a construction documentation probably would notice how the area allocated for those disclaimers and indemnifications has expanded at the expense of the space devoted to the the subject itself. The author of this text is not without a fault, having used miscellaneous disclaimers to remind readers of his contractual limitations.
Architectural sureties and legal counsels go to great extents to educate architects in risk management. Many changes occurred in standard families of contracts produced by industry associations to protect design professionals. Some architects became defensive to the point of their services becoming useless. The example is a rehab design not based on any certified survey to avoid the potential liability tied to the existing conditions. Also, some architect would refuse to ask the owner and define building performance requirements criteria in order to avoid being held to them later. Another technique advised by architectural legal counsels is separating the risk by setting up sacrificial corporations devoted to e.g. multifamily residential design and construction administration.
A contractor may hold the owner liable for the added expense required to complete the project due to the inadequate plans and specifications. The contractor, however, must still show good faith. He does have a duty to report any design errors or omissions which he discovers during his review of plans in order to preserve his course of action. There must be an established connection between the alleged errors and omissions and the damages. However, the standard of care associated with such a review by a contractor is not equivalent to that expected of a design professional. A simple comparison of education would allow to identify the party with the superior knowledge: a design professional spent from four to six years at a university, while a contractor spent several days taking a pre-licensing course. Contractual provisions placing the burden of such a review on the contractor are insufficient to shift the responsibility for the deficiency, if it would not have been apparent to a reasonable contractor acting diligently in conducting such reviews.
As a result, contractors apply their own risk management mechanisms. Some contractors became defensive to the point of their services becoming useless. They avoid reviewing the documentation in a way which may leave a paper trail, making them potentially responsible for the noticed errors and omissions. They flatly refuse to review and approve subcontractors’ submittals. They flood construction administrators with irrelevant or generic submittals to gain liquidated damages for delays, etc.
A bid is won not by a quality, but by the lowest price. Consequently, parties which set quality as their goal are often penalized. One would think that contractors who employ third party-documentation reviewers, and architects submitting to the commissioning process (which establishes the owner’s performance requirements and assure they are met) should be in a high demand, as opposed to those who disclaim all responsibility. However, unless these requirements are verbalized in a RFP, the quality would be penalized.
Meeting of Minds
Obviously, architects and engineers are the parties ultimately responsible for design errors, but all parties play a role in identifying and minimizing the effect of such errors through prompt notification. Many courts refused to follow the Spearin doctrine, often precisely for the reason why this article is written: the widespread ambiguity and misunderstanding of the involved parties, causing a reasonable doubt whether there was an actual “meeting of the minds” with respect to the owner’s implied warranty.
Based on our experience, many registered architects are unaware of the Spearin doctrine, and the name sounds so exotic to them, that they are not even afraid to admit their ignorance as soon as the name is mentioned. Some of the common misconceptions are so exotic that they are worth quoting: we met some registered architects who strongly believed that a building official reviewing documentation and issuing permits becomes responsible for the subsequently discovered non-compliance with building codes, others believed that contractors in a design-bid-build mode are responsible for setting (as opposed to achieving) the performance criteria and developing the design in order to meet them.
If construction professionals are unaware of the elementary divisions of responsibility, it should be no surprise that laymen, such as owners and developers don’t know any better, and it would be unconscionable to hold them to the contracts they manifestly never intended to enter. Any such obligation should preferably result from a specific contractual language.
The party penalized by the application of the Spearin doctrine are owners and developers, regardless whether they eventually recoup their losses from designers. Outsiders of the construction sector, as they are, owners and developers therefore also turn to risk-management techniques. The frequent example is a residential development company which dissolves quickly after a project is finished, using a “disappearance technique,” which created many interesting situations, such as allowing an occupant to sue a subcontractor directly in one recent court case.
Another, seemingly absurd, situation arose when a former owner of the dissolved development company successfully pursued the condo association for the construction defects in the common spaces (roofs) adjacent to his penthouse unit, for which his former company was apparently responsible.
An owner may prefer to get a design-builder or integrated project delivery, as opposed to design-bid-build, employing a contractor during design to ensure the completeness and correctness of the documents. However, these methods present their own challenges, beyond the scope of this article. Combinations of different project delivery modes making the owner responsible for the coordination of the work is the typical example of owner’s shooting their own feet in the process. Fast track projects seem to be particularly vulnerable because of the inherently reversed sequencing. Two or more prime contractors occupying the same construction site is another interesting example. However, one does not need to look that far. Owners are often surprised learning that their simple design-bid-build projects are tainted with the design-build mode by architects delegating design and engineering of components to respective subcontractors and introducing the reverse sequencing: the choice of the materials, systems, and engineering happens after the design stage is over, preventing coordination among different systems. If such a project is performed by a general contractor who contractually refused the review and coordination, the perfect storm was created, with the unsuspecting owner becoming responsible for the ensuing defects.
Owners and developers should be particularly interested in verifying the quality of the architectural documentation because regardless whether they warranty it or not, it would strongly affect their bottom line. It pays to have the end in mind while shopping for an architect, by elevating the relevant documentation quality requirements, and creating a level playground for bidders.
Majority of issues happen within building enclosures; therefore, this area often warrants a third-party review. In fact, we see the increasing tendency to hire 2 or more building enclosure reviewers due to the typical fragmentary character of their services. Also, the introduction of the design-build mode in the traditional design-bid-build project requires the design assistance at the construction stage reaching beyond a simple construction administration. Another minefield is the multifamily residential sector. The combination of these vulnerabilities (poor building envelopes in litigatious condos) caused the State of Washington to require the building enclosure review before a building permit can be issued for a condominium building. The interference of a public administration into this area may sound excessive, but it’s meant to protect the general public (homeowners) against unscrupulous design professionals.
In fact, the simple act of review may be insufficient, as recent examples demonstrated. A design review performed before the 100% CD milestone should be checked again against the documentation issued for construction because of the performance failures caused by disregard for reviewers’ comments in the final issue of documents.
On the other hand, reviewers’ competency should be independently verified because, in another recent example, mechanical commissioning agent’s comments on building envelope design contributed to design delays and increased design cost, without adding any value to the project. The agent subsequently admitted that, while he was an experienced HVAC engineer and reviewer, the modern glazing design on which he commented was outside his area of expertise. There is no licensing system for the building enclosure consultants, so it becomes one more caveat emptor for owners and developers.
“Architect And Engineer Liability: Claims Against Design Professionals” By Kevin R. Sido,
“Project Management In Construction” By Sidney M. Levy
As The Walls Came Tumbling Down: Architects’ Expanded Liability Under Design-Build/Construction Contracting; Block, Hal G., 17 J. Marshall L. Rev. 1 (1984)
“Construction Claims Deskbook: Management, Documentation, and Presentation of Claims” By Christopher Lerner, Esq, Robert S. Brams, Esq