Damages were awarded by a court to an architect despite the fact that the architect performed design services for a condominium project being developed by his friend, a lawyer, without having a signed contract, and despite the fact that some of the services were performed before the architect was licensed in the particular state.   This is the second time that this case was tried, and then appealed by the losing lawyer/developer.  According to the final appellate decision, the architect had agreed to be lead architect for the condo project in exchange for twenty-five percent of the profits. Based on oral conversations between the friends, the architect undertook performance with the anticipation of being a partner in the company and that he would eventually have a written contract outlining the profit sharing arrangement.

In reliance on sharing profits, the architect incurred out-of-pocket costs without seeking reimbursement and it also did not keep track of time as it would have done if charging a normal fee for services.  Subsequently, the lawyer misrepresented Idaho law by telling the architect he could not legally be an owner of the company because he was not a fifty percent contributor.  No written agreement was ever reached for any other form of payment.  Ultimately, the architect was terminated for default, on what the court apparently concluded were spurious grounds.  The project was then completed by a contractor using the architect’s uncompleted designs.

The lawyer sold the condominium project for a profit of over $2 million and attempted to share no profits with the architect, or pay any fee, or even reimburse him his out-of-pocket costs.

It is clear from the various decisions in this case, that the courts were not pleased with the mistreatment of the architect.  The final decision held that for all services performed after the architect finally obtained its state license, he could recover on a quantum meruit basis.  Although the architect worked on its plans before having its state license it did not provide the plans to his friend until one day after his license was issued by the state.  No fee was awarded to the architect for services performed before obtaining the license, but the court did allow the architect to recover on the basis of “unjust enrichment” his out-of-pocket expenses that were incurred prior to having the license.  Attorneys fees were also awarded to the architect as the prevailing party for both the trial court and appellate court proceedings.  Farrell v. Whiteman, 268 P.3d 458 (Idaho 2012).

Comment:  This case reiterates a couple points to remember, including (1) Choose your friends and clients wisely;  (2) Get a written contract before starting work; (3) Make sure you are licensed in the state before starting services; (4)  Beware of working for friends; and (5) Get legal counsel to assist you when entering into a deal with a lawyer.

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. 14, No. 8 (Aug 2012).

Copyright 2012, ConstructionRisk.com, LLC