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Inside This Issue:
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A/E Potentially Liable to Contractor for Allegedly
Defective Design Documents
A general
contractor sued a project architect, alleging that the architect
prepared erroneous design documents knowing that the project owner would
supply them to the successful bidder who would be injured if they were
inadequate. An appellate court held the allegations were sufficient to
establish a special relationship between the parties, thus permitting
the suit to go forward despite the lack of a direct contract between the
design professional and the contractor.
The trial
court had dismissed the contractor’s complaint, and concluded that the
architect did not owe a duty to prevent economic injury to the
contractor since there was no contract directly between the parties. The
complaint alleged that the contractor suffered economic losses from
defects, omissions, and lack of specificity in the design documents. It
also alleged that the architect knew the project owner (School District
of Palm Beach) would supply the design documents to the successful
bidder who would be injured if they were inadequate.
In dismissing
the complaint, the trial court did two things that the appellate court
found to be reversible error. First, the trial court found that the
contracts that each entity had with the school district did not create
privity of contract or any special relationship between the contractor
and architect. Second, it found that based on the contract between the
architect and the school district, the architect was not a supervisory
architect on the project, and consequently owed no duty to prevent
purely economic injury to the contractor. Florida recognizes a common
law cause of action against professionals based on their acts of
negligence despite the lack of a direct contract. The court states that
the economic loss rule does not bar actions for purely economic losses
where a special relationship exists between the professional and the
third party who is affected by the professional’s negligent acts. For
these reasons, the court reversed the trial court’s decision. The
contractor will be able to pursue its claim in a trail court. Hewett-Kier
Construction, Inc. v. Lemuel Ramos and Associates, Inc. 775 So.2d
373 (Fla. App. 2000).
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Architects Not Liable Under Americans with
Disabilities Act
By: Gilson S. Riecken, AIA, Esq.
Hanson, Bridgett, Marcus, Vlahos & Rudy LLP
Where two
plaintiffs sued a theater owner and its architect for a new facility in
which the plaintiffs claimed the seating and restroom facilities were
designed and built out of compliance with the ADA, the United States
Court of Appeals for the Ninth Circuit weighed-in on the side of
designers regarding liability under the Americans with Disabilities Act
(ADA). It held that designers are not liable under the ADA if they are
not also the owner, lessor/lessee, or operator of a non-complying
facility. Designers’ exposure to ADA liability is an unsettled area of
law, with courts in different jurisdictions arriving at opposite results
on essentially similar facts. Thus the question of whether a designer
could be directly sued for ADA discrimination has depended on where the
lawsuit occurred.
While courts
have ruled both ways on the question of designer liability under the
ADA, until August 6, 2001, no case had reached the Court of Appeals
level in the Ninth Circuit. That silence came to an end in Lonberg v.
Sanborn Theaters, Inc., when the Court of Appeals held that
designers are not within the class of persons who can be sued
under the ADA. Until the Supreme Court addresses this issue, designers
in the western states are not subject to lawsuits under the ADA based on
their decisions.
Unsettled
Question of Designer Liability Under the ADA. Designers’ exposure
to ADA liability is an unsettled area of law, with courts in different
jurisdictions arriving at opposite results on essentially similar facts.
Thus the question of whether a designer could be directly sued for ADA
discrimination has depended on where the lawsuit occurred. In Minnesota
and Florida, a person could hold an architect accountable under the ADA
for discrimination if the design did not provide equal accommodation to
persons with disabilities. (United States v. Ellerbe Becket, Inc,
976 F.Supp. 1262 (D.Minn.1997) and Johanson v. Huizenga Holdings, Inc.
963 F. Supp. 1175 (S.D.Fla. 1977)). These courts held that the architect’s
"significant degree of control over the design and
construction" of the facilities justified liability under Section
12183(1) of the ADA. But in the District of Columbia the federal courts
have held that the ADA does not impose liability on designers because
they are neither the owners nor operators of the facilities. Paralyzed
Veterans of America v. Ellerbe Bekect, 945 F.Supp. 1 (D.D.C. 1996).
The principal
distinction between the two lines of cases lies in how the Courts apply
the language regarding "design and construct" that appears in
Section 12183(a), and its relationship to the preceding section. That
section (Section 12182) provides the "general rule" for places
of public accommodation. The general rules prohibits discrimination in
places of public accommodation, and limits liability for discrimination
in such places to those persons who own, lease (or lease to another), or
operate the place of public accommodation. The section does not define
discrimination, but subsequent sections fulfill that function. But the
next section (12813) states: "As applied to public accommodations
and commercial facilities, discrimination for the purposes of Section
12182(a) of this title includes (1) a failure to design and construct
facilities for first occupancy … that are readily accessible to and
usable by individuals with disabilities…."
The divergence
between the competing views in the Courts is the result of different
views over whether inclusion of "commercial facilities" in
Section 12183 establish "design and construct" activities as a
separate basis for liability. Section 12812 refers only to places of
public accommodation, and makes no mention of commercial facilities. The
courts imposing liability on designers interpret liability for the
design of commercial facilities as distinct from that for places of
public accommodation. In their view, liability for discrimination in the
design and construction of any commercial facility in not limited
to owners, lessors/lessees, and operators of a public accommodation or
of a commercial facility.
In contrast,
courts that do not hold designers liable have interpreted Section 12183’s
"design and construct" language as only referring to the
definition of what constitutes discrimination – not who may be held
liable. In the view of those courts, the failure to design and construct
in accordance with the ADA results in liability similar to that under
the "general rule" of Section 12182(a), and thus applies only
to owners, lessors/lessees, and operators of a public accommodation or
of a commercial facility.
New Law of
the Ninth Circuit. In Lonberg v. Sanborn Theaters, Inc., two
plaintiffs sued a theater owner and its architect for a new facility in
which the plaintiffs claimed the seating and restroom facilities were
designed and built out of compliance with the ADA. The only claim
against the architect was for an injunction to compel it to design in
compliance with the ADA. The district court refused to grant the
architect summary judgment on its claim that it could not be held liable
because it was not the owner, lessor/lessee, or operator of the
facility; holding that an architect can be liable based on its having a
significant control over the design and construction.
But the Ninth
Circuit rejected the argument that Section 12183 imposed liability on a
broader class of persons regarding commercial facilities that Section
12182 holds liable regarding public accommodations. In reaching its
conclusion, the Court examined the legislative history in an attempt to
determine whether congress intended broader liability for commercial
facilities. While the evidence it found was inconclusive, on the balance
the Court decided against the broader liability. Originally both
Sections 12182 and 12183 were in a single section, making the types of
prohibited discrimination uniform for both places of public
accommodation and commercial facilities. The legislative history
indicated that Congress split the provision into two sections because it
intended to make the ADA provisions apply less broadly to commercial
facilities than to places of public accommodation. In addition, the
Court noted, Congress gave no indication that it intended to include any
different parties as potentially liable for the two categories of
projects.
On the other
hand, the Court noted that the language regarding who could be held
liable for ADA discrimination was added only after the two sections were
divided. Some commentators have read Congress’ decision to specify
liability for owners, lessors/lessees, and operators for only one of the
two categories as an indication that it intended something different for
the other category. (See James P. Colgate, Note, If you Build It, Can
They Sue? Architects’ Liability Under Title III of the ADA, 68
Fordham L.Rev. 137,158-159 (1999). Courts following that reasoning had
developed the "significant degree of control" test to hold
designers liable.
The Ninth
Circuit found the significant degree of control test unsupported by any
language either in the ADA or in the legislative history. In the Court’s
view, the two sections call for a parallel interpretation, which is
consistent with the other two parts of the ADA (prohibiting employment
discrimination and discrimination by public entities). The "design
and construct" language specifies one of the activities that may
constitute discrimination if not conducted in compliance with the ADA.
But it does not expand the class of persons who can be held liable. Thus
designers are not liable under the ADA if they are not also the owner,
lessor/lessee, or operator of a non-complying facility.
One Caveat …
While
designers are not directly liable under lawsuits for the failure to
design or construct in accordance with the ADA, this does not mean that
the designer will escape all liability for designs that do not comply
with the Act’s requirements. It is very likely that any owner or
operator sued for a project designed out of compliance will probably
assert a negligence claim against the designer. But such a claim will
concern standard of care issues, rather than civil rights claims
involved in an ADA suit.
** For more information, contact Mr. Riecken at Hanson, Bridgett,
et.al., a nationally recognized law firm whose practice emphasizes
construction law, representing design professionals and others on
construction projects.
415-995-5062; griecken@hansonbridgett.com;
Hanson Bridgett
333 Market Street
Suite 2300
San Francisco CA 94105
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State Board Improperly Penalized Engineer that
Performed Services Overlapping Those of Architects
An engineer
was incorrectly penalized by the Kansas State Board of Technical
Professions when it restricted him from performing professional services
that architects asserted were limited to their own profession. The Board
determined that certain drawings constituted the practice of
architecture and that the engineer in question was unlicensed to
practice architecture. What the Board failed to consider, however, was
that the engineer had been trained in civil engineering "with an
architectural engineering option." That program involved courses in
architectural design, architectural development, architectural
construction, and courses involving construction methods. He also took
courses relating to electrical and mechanical systems. Testimony
demonstrated that the engineer was trained and technically qualified to
provide the services he provided. Testimony also attested to the good
quality of the services performed.
The Board’s
adverse decision against the engineer was affirmed by the district court
which held that the state statute did not authorize design or
construction of buildings by an engineer. On appeal, the appellate court
reversed the Board and the district court. As explained by the court,
the state statute appears on the one hand to restrict a licensee to only
the service to which he is licensed, but then in another section of the
same regulation, permits the licensee to accept assignments to perform
"those phases of the project in which the licensee is
qualified." As understood by the court, the regulations
specifically provide for licensees to draft outside their specialty if
qualified by education and experience, but the regulations do not
require the licensee to obtain multiple specialty licenses.
The court
considered cases from other states holding a licensed professional
engineer must also have an architectural license when performing
services that might be legally performed by an architect, "but only
when the functions he or she has performed are outside the scope of his
or her engineering license." Other jurisdictions hold that a
licensed professional performing services that could properly be
regarded as within both the architectural and engineering governing
statutes, is considered to perform under the statute under which he or
she was licensed and is not affected by the fact that the services fall
incidentally within the purview of the other (architectural or
engineering) licensing statute . In this case, the court held that by
failing to determine whether the engineer was qualified to prepare the
plans as an engineer, the Board prevented the practice of another
legally recognized profession – engineering. "A licensing statute
should not be applied in a manner that would prevent the practice of any
other legally recognized profession," says the court. Schmidt v.
Kansas State Board of Technical Professions, 21 P.3d 542 (Kans.
2001).
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================================================
Mold Problems Increase: Is Coverage
Available?
By: Anne Simmons and David J. Dybdahl
The presence
of mold in buildings and the resulting health effects are increasingly
becoming a public concern. Office buildings have been evacuated,
homeowners are fleeing their homes, renters are being relocated, and
schools have been closed all due to what some think will be the next
"asbestos".
Mold is a
microscopic fungi and is present in almost any home, school and
commercial building. It thrives where moisture, oxygen, and a food
source (wood, paper, or other organic material) are present, implying
conditions for mold growth are ubiquitous. Mold reproduces through
spores, which are very buoyant and are able to travel through the air.
Spores reproduce quickly, often multiplying by millions in a few days.
The products
and techniques used today in construction increase the likelihood of
mold. The use of paper and wood products in construction materials such
as drywall, wallpaper, and ceiling tiles give mold a food source and a
rich breeding ground. Airtight buildings trap mold indoors and HVAC
systems spread it through buildings. Add moisture to this environment
via plumbing, flooding, leaks, high humidity or any other water related
problem, and mold will proliferate sometimes unknowingly to the owner
until health or structural problems arise.
A number of
health problems have been reported as a result of touching, ingesting or
inhaling mold. These include; asthma, allergies, nosebleeds, headaches,
eye irritation, fatigue, coughing and in extreme situations, immune
deficiency, brain damage and even death. Although, evidence suggests
children and the elderly are most susceptible to potential health risks
associated with molds, the scientific community is not in agreement
regarding the cause-effect relationship between mold and health.
Along with
adverse health effects, mold also causes structural damage to buildings.
Mold infested ceiling tiles, carpets or floorboards must be replaced. In
some homes and office buildings, mold remediation can reach astronomical
costs and look like asbestos removal projects. In the worst scenario,
the building has to be demolished.
Many
homeowners faced with testing and remediation expenses, relocation
costs, and mortgage payments on houses that are uninhabitable are
turning to their homeowner policies for relief. In Texas alone, in the
aftermath of tropical storm Allison, Farmers Insurance Group saw an
increase of mold claims from nonexistent four years ago to 1000 in the
first six months of 2001. State Farm states that mold claims in Texas
have increased 650% this year. Estimates indicate homeowners could see a
30 – 40% increase in homeowner premiums as a result of mold claims.
Insurers do not believe that these types of claims were included in
their premium structure and have requested that the Texas state
insurance commissioner exclude mold coverage from homeowner’s
policies.
Lawsuits
abound! Some believe that mold litigation will outpace asbestos
litigation. This media driven craze is sending many who believe they are
mold victims to plaintiff’s attorneys in record numbers. Although, the
health effects of mold are still in question, plaintiffs are suing
contractors, landlords and insurance companies.
Based on
negligence, suits against contractors are most common. Design or
infrastructure errors can cause windows, roofs and sprinkler systems to
leak. Other errors can allow moisture to collect inside walls and under
floors due to improper drying periods during construction. In July of
this year, Santa Clara County, California settled a $12 million lawsuit
against 19 defendants alleging design and construction flaws in their
newly built courthouse. Soon after occupying the new building, leaks
sprang from the roof, windows and walls. Repeated attempts were made to
repair the leaks. After numerous health complaints from employees, toxic
molds were found and the courthouse was closed.
Claims against
landlords result from improper maintenance of common areas such as crawl
spaces and attics where mold can live and grow. A student at the
University of California at Berkeley is suing the university for an
undisclosed amount stating that the married housing apartment in which
he lives is contaminated with mold. The suit alleges that as a result,
the plaintiff’s young son suffers from coughs, congestion, runny nose,
eye irritation and breathing problems. The suit cites negligence and
nuisance and orders the university to remove the mold.
Liability
claims where exposure to mold is the proximate cause of the loss are
certain to create many untested coverage issues on commercial insurance
policies. Although mold is not specifically mentioned within standard
pollution exclusions in commercial general liability policies, expect
insurers to deny the claim based on the exclusion.
The absolute
pollution exclusion in the commercial general liability policy contains
the following language:
f.(1) "Bodily Injury" or "Property Damage"
arising out of the actual, alleged, or threatened discharge, dispersal,
release, or escape of pollutants, etc.
Pollutant
means any solid, liquid, gaseous, or thermal irritant or contaminant,
including smoke, vapor, soot, fumes, acids, alkalis, chemicals and
waste. Waste includes materials to be recycled, reconditioned, or
reclaimed.
Insurers could
argue that the plaintiff’s adverse health effects were a result of
exposure to mold which "released or escaped" and irritated the
plaintiff. In this case, the pollution exclusion would apply. There are
many counter arguments. For example, when the pollution exclusion was
filed with the insurance commissioners for approval there was no mention
of excluding mold claims. In this case, the exclusion should not apply.
There may be coverage in a general liability policy for a mold claim but
do not bet your career on it! Get the appropriate environmental
insurance coverage on the risk or at least recommend it to reduce the
risk of professional liability claims.
According to a
number of senior insurance executives at the recent Environmental
Insurance Forum in New York, they expect mold exclusions to find their
way onto standard GL and umbrella policies. In an environmental
insurance policy, the definition of a pollutant is broad enough to
include mold. However, some environmental insurers are now adding mold
exclusions to their policies.
If there is a
need to cover potential claims from mold, an environmental impairment
liability policy with coverage for on site pollution and no mold
exclusion would be the appropriate policy form. On contractors pollution
and professional liability policies, there should normally be coverage
in the standard policy form in the absence of a separate mold exclusion.
The authors
(Ms. Simmons and Mr. Dybdahl) are on the Board of Directors of the
Society of Environmental Insurance Professionals (SEIP), 4901 Pine Cone
Circle, Middleton, WI 53562. (877-735-0800). More information on the
organization and on liability arising out of mold can be found on the
SEiP web site at www.armr.net or by e-mail to
simmons@armr.net.
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ConstructionRisk.com, LLC, and the editor and writers, are not hereby
engaged in rendering legal services or the practice of law. Further, the
content and comments in this newsletter are provided for educational
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Copyright 2001, ConstructionRisk.com, LLC
Editor: J. Kent Holland, Jr., J.D.
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