Forbes Bender & Paolino P.C.

By Leigh Cesanek

California’s Supreme Court decided unanimously that architects involved in designing condominiums may correctly be sued by a homeowners association for design defects. The case entitled Beacon Residential Community Association v. Skidmore, Owings & Merrill LLP was decided on July 3, 2014. The architects were sued for defects that included water infiltration, structural cracks, and “solar heat gain,” which made the condominium units uninhabitable and unsafe during certain periods because of high temperatures.  These defects were alleged to represent safety hazards.  The homeowners association sued a condominium developer and various other parties over construction design defects that allegedly made the homes unsafe and uninhabitable for significant portions of the year.

The architects in defense of these claims maintained that their contractual relationship was not directly with the eventual owners of the condominiums, and so they only owed a duty of care to the developer. The Supreme Court ruled that the architects did in fact owe a duty of care to the condominium owners. The Court stated that an architect who makes recommendations but not final decisions on construction owes a duty of care to future condominium owners with whom it has no contractual relationship. Alexander DiSanti, Esq., an attorney at Forbes Bender Paolino & DiSanti, P.C., in Media, PA, provided some additional insight into this case. “This case is significant because the California Supreme Court ruled that architects could be sued by a condominium association, even though the association was not a party to a contract with the architects. The architects argued, preliminarily, that without the condominium association demonstrating privity of contract, there could be no viable cause of action asserted against the architects. The case illustrates an erosion of the privity of contract requirement,” DiSanti said.

“The Court’s decision relied heavily on these factors: first, the closeness of the connection between the architects’ conduct and the homeowners association’s damages and, second, the choice of hiring the architects being out of the hands of control of the condominium owners,” DiSanti said. “The Court emphasized that when an architect is the principal architect on a project, it owes a duty of care to future homeowners in connection with design services even if it was not given control over all decisions. That is to say that an architect may still be liable to a homeowner even when the developer retains control over all final decisions, including those relating to recommendations made by the architect.

This case highlights the possibility of extended liability exposure that architects may come to realize as a result of the Court’s focus on protecting homeowners. The principal architects were paid a fee of $5 million and were involved in the project to the extent that they performed weekly inspections, ensured compliance with design plans by the contractor, and changed design requirements whenever an issue arose. DiSanti explained that these factors were critical to the Court’s final decision. The architects were aware that the condominiums would be utilized in a residential manner, with these owners rightly assuming that their units were constructed properly and reasonably fit for habitation.

“The Court concluded that a liability rule that places the onus on homeowners to employ their own architects to fully investigate the structure and design of each home they might be interested in purchasing does not seem more efficient than a rule that makes all architects who design homes directly responsible to homeowners for construction deficiencies,” DiSanti said. He underscored that there was no privity of contract between the architects and the association. “There was precedent in the California court system for the proposition that, without a direct contractual relationship between an architect and a purchaser of a home, there was no duty of care owed by the architect to a homeowner,” DiSanti said. It is important to recognize that the developer in charge of the project ultimately made the decision whether to proceed in accordance with the recommendations of the architects.

A provision existed in the contract between the architects and the developer that stated that there would be no third party beneficiaries of the work done by the architects, in an effort to weaken the architects’ relationship to the homeowners association. “The Court focused on this provision as proof that the architects knew that others would be affected by the work that they performed,” DiSanti said.

He further noted that, among other factors, if architects could demonstrate that they did not act as the principal architects on a project, they may be relieved of responsibility for construction defects.

“It is to be expected that the architects will file a dispositive motion, such as a motion for summary judgment, before the matter proceeds to trial, in an effort to be removed from the case at a later time,” DiSanti said. He posited that any later motion filed by the architects would also be unsuccessful, unless there is a material change in the evidence. This intriguing case, while only binding precedent in the State of California, may have ripple effects in other jurisdictions. It is beyond speculation that this case will be cited by other parties in other states in an effort to expand the liability exposure of design professionals elsewhere.

Alexander D. DiSanti, Esq., is an officer of Forbes Bender Paolino & DiSanti, P.C.  Forbes Bender Paolino & DiSanti, P.C., is a full service law firm with offices located in Delaware County (Media) and Chester County (West Chester), Pennsylvania.  Alex has been representing condominium and homeowner associations for over 25 years.  He has the highest lawyer rating given by Martindale-Hubbell of AV Preeminent.  Alex was selected for inclusion in Legal Leaders Presents Philadelphia’s Top Rated Lawyers of 2014 and Pennsylvania’s Legal Leaders Presenting Top Rated Lawyers for year 2013.  At the request of the National Business Institute, he has served as a faculty member and instructor of Legal Aspects of Condominium Development and Homeowners’ Associations, a legal education seminar for lawyers.  Alex can be reached at (610) 627-1700 or adisanti@fbpdlaw.com.  Visit his website at www.fbpdlaw.com.