Expansion of Architect Liability to Remote Purchasers

Expansion of Architect Liability to Remote Purchasers

A case from the highest authority on the left coast has many architects and engineers scrambling to find coverage for potentially calamitous professional liability claims never before anticipated.

The California Supreme Court recently found that a principal architect owes a duty of care to subsequent condominium purchasers in Beacon Residential Community Association v. Skidmore, Owings & Merrill LLP (2014) DJDAR 8787. The Court specifically found that:

[A]n architect owes a duty of care to future homeowners where the architect is a principal architect on the project – that is, the architect, in providing professional design services, is not subordinate to any other design professional – even if the architect does not actually build the project or exercise control over construction decisions.

In Beacon the homeowners alleged that Skidmore, Owings & Merrill LLP (“SOM”), as the architect on the project, approved the use of defective windows and designed a defective ventilation system making the units uninhabitable for extended periods. The Court found the facts presented were sufficient to impose a duty of care on the architect based on SOM’s role as a principal design professional and its awareness that future homeowners would rely on their specialized expertise. It’s important to note that this finding of a professional duty in California does not depend on noneconomic losses, privity of contract nor any misrepresentations.

Conversely, Pennsylvania courts generally require privity of contract for professional negligence claims resulting in economic losses, or misrepresentations on the part of the design professional (i.e., a Bilt-Rite Claim). Negligence claims for economic losses against design professionals not in privity are often disposed of in Pennsylvania under the Gist of the Action or Economic Loss Doctrines, without specifically analyzing whether the design professionals owed a duty of care to the injured party.

In reaching its decision in Beacon Residential, the Court applied the California Right to Repair Act, Civ. Code § 895 et seq., which permits recovery of damages for construction defects resulting in only economic losses, essentially abrogating the Economic Loss Doctrine. The Beacon Residential decision also relied heavily on the causal link between the defendant’s negligence and the plaintiff’s injury in finding that defendants owed a duty of care to the plaintiffs.  In reaching this decision, the Beacon Residential Court analyzed the following factors set forth in Biakanja: “the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, and the policy of preventing future harm.” Biakanja v. Irving, 49 Cal.2d 647, 650 (1958).

Though decided in a jurisdiction known for its liberal views on access to justice, Beacon gives academic insight on where a Pennsylvania court may stand if faced with facts compelling enough to continue the trend in Bilt-Rite of ignoring a professional’s contractual duties and finding liability in tort for economic losses.

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