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Where a developer purchased property in reliance on an architect’s erroneous advice and incorrect plans that six new floors could be added to an existing building consistent with the applicable zoning laws, it could only recover damages actually incurred as a proximate result of the advice (that being the difference in what it paid for the building and what it could sell it for once it learned of the error) and it could not recover additional costs for holding onto the building and attempting to devise a different design and use for it.

In Assouline Ritz, LLC v. Edward I. Mills & Associates, Architects, 937 N.Y.S. 2d 11 (2012), the architect did not dispute that it made a mistake in giving its advice to its client, but it argued that the client failed to attempt to see the property after learning of the zoning problem, thereby failing to take reasonable steps to mitigate the loss.  The plaintiffs argued that they were entitled to recover all costs incurred in pursuing an alternative plan they chose for developing the building that would have involved tearing down the existing structure and constructing a new luxury building in its place.  The court concluded “The plaintiff’s decision to continue to hold the property and to pursue an alternative plan for redeveloping cannot be deemed an attempt to mitigate the damages…. Rather this course of action represents an attempt to realize the anticipated benefit of the original plan through other means.  The expense plaintiffs voluntarily incurred in continuing to pursue redevelopment after they learned of EIM’s error cannot be deemed to have been proximately caused by EIM’s negligence.”

For these reasons, the court held that the plaintiffs would be entitled to recover only the cost of purchasing and owning the building through the time they learned that the advice was erroneous “and thereafter until sufficient time had passed for them to sell the property to mitigate their damages, less the amount they would have realized in the sale.”

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