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A material factual dispute existed regarding whether an architect met the requisite standard of care in reviewing an engineering report prior to its client’s purchase of property and prior to the architect proceeding with plans for renovation of the building.  Contractual language stating that the architect could rely on independent reports prepared for the owner by other firms did not relieve the architect of its responsibility to exercise reasonable care to review the engineering report and request additional inspection if it deemed it necessary for conducting its services.

A purchaser, Kerry, retained an architect, Angus-Young, to study potential sites for a business facility.  The architect noted that the “structural stability of the ‘over the river’ building was unknown at this time,” and consequently recommended that Kerry obtain further inspection by a structural engineer.  Kerry obtained such an inspection by Rust Environment & Infrastructure, which later became Earth Tech Environment & Infrastructure.

Based upon visual inspection, Rust found the building to be in good structural condition.  Its report concluded that “at this time, the piers and caissons are not considered a significant safety concern.  Kerry went forward with the purchase of the building and a retained Angus-Young to do the architectural services for renovating the building.  As work began, the flooring was removed and it was discovered that one corner of the building was three and three-quarters inches lower than the rest of the floor.

Further engineering by another firm determined that the reason for the problem was that the building rested on timber piles below the water line instead of on concrete piles and caisson as had been thought.  Much time and expense were involved in repairing the foundation before renovation could begin, and Kerry sought to recover that cost from Angus-Young and from Rust Environment because it asserts it wouldn’t have purchased the property and incurred the additional cost if the true condition had been reported beforehand.

Kerry’s theory against the Architect was that it breached its contract, committed negligence and made negligent misrepresentations by failing to properly review the Rust report and failing to properly determine the renovation project requirements and costs.  Rust also filed a cross-claim against Angus-Young, for contribution and indemnification in the event it lost to Kerry.   The trial judge ruled that Angus-Young was contractually entitled to rely on the Rust report which had been independently obtained by Kerry and furnished to Angus-Young, and it therefore granted summary judgment to the architect.

This was reversed on appeal, with the appellate court finding that the contract language did not absolve Angus-Young “from its duty to exercise ‘due architectural care’ in performing services for Kerry—that the duty pre-existed the parties’ contract and attached itself to all of the activities Angus-Young performed in fulfilling its contract with Kerry relating to the renovation project.”

The architect contended the scope of its services was limited and that evaluation of the adequacy of the Rust report was not within its scope of services.  It also argued that the list of “optional additional services” that Kerry did not opt for must be considered in limiting the scope.  Included in these optional services that Angus-Young was not required to perform were “providing planning surveys, site evaluations or comparative studies of prospective sites,” “providing services to investigate existing conditions or facilities,” “providing services to verify the accuracy of drawings or other information furnished by the Owner,” and “providing services in connection with the work of … separate consultants retained by the Owner.”

The contract also specifically required Kerry, and not Angus-Young, to furnish “surveys describing physical characteristics…”  And, finally, the contract provided that as to “services, information, surveys and reports” furnished by Kerry, Angus-Young was “entitled to rely upon the accuracy and completeness thereof.”

Based on the above-quoted provisions of the contract, Angus-Young argued it had no responsibility to perform its own investigation and that it accept the Rust report as furnished to it by Kerry without further inquiry or investigation.  The court rejected this argument.  It found that Kerry wasn’t arguing that  Angus-Young was required to do its own structural inspection but rather that Angus-Young was required to exercise due care so as to recognize the inadequacy of the Rust report to serve as a basis for its preparation of architectural plans for the renovation of the building.  In particular, Kerry argued that because the Rust report didn’t say anything about the foundation below the water line and was also silent as to whether underwater features had been inspected, Angus-Young was required by the standard of care to call for a more detailed inspection before beginning to perform its own services.

The court particularly keyed in on language in the contract that permitted Angus-Young to retain consultants to assist it in performing its duties.  It further focused on language of the contract that obligated Kerry to “furnish the services of other consultants when such services are reasonably required by the scope of the Project and are requested by the Architect.”   The fact that Angus-Young did not request additional services here was deemed important by the court.

For these reasons, the court reversed the summary judgment and remanded the case to the trial court for trial on the merits of the complaint.   Kerry Inc. v. Angus-Young Associates, Inc., 694 N.W.2d. 407 ( Wis. App., 2005)

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 7, No. 4 (Jul/Aug 2005).

Copyright 2005, ConstructionRIsk.com, LLC