Beacon case opens California architects and engineers to broader liability

A California homeowner who discovers a design defect after purchasing a property may hold design professionals directly liable following a recent case.

A buyer of a residence with a property defect, such as a faulty vapor barrier, generally can sue the builder for negligence. Design professionals often only become involved in construction lawsuits if the builder adds the design agency to the suit based on a contract.

In a recent California Supreme Court case, a homeowners association in San Francisco, on behalf of its condominium owners, sued a developer and two architectural and engineering firms over design defects.

The association alleged extensive water infiltration, structural cracks and insufficient fire separations between units. In addition, the residences were uninhabitable during hot weather due to "solar heat gain." Two cited examples were the use of substandard windows and fewer ventilation ducts than recommended.

Third-party liability and duty of care

Several elements come into play in all negligence cases. "Actionable negligence involves a legal duty to use due care, a breach of such legal duty and the breach as the proximate of legal cause of the resulting injury."

The design professionals asked the court to remove them from the lawsuit arguing that they did not owe a duty of care to the condominium owners. The trial court agreed finding that the design firms only made recommendations to the developer who made final decisions.

The California Court of Appeals reversed using a multi-part test (the Biakanja factors named for a 1958 case) to conclude that the design professionals owed the association and unit owners a duty of care. The California Supreme Court agreed holding that professionals owe a duty of care to third party purchasers even if those owners did not hire or have contact with the professional.

Here is a summary of the factors relied upon by the court:

  • The work was intended to benefit homeowners living in the units that the design firms designed and helped construct
  • Future purchasers were a limited foreseeable class of persons harmed by negligently designed units
  • The owners suffered injury when design defects made their homes unsafe and uninhabitable for parts of the year
  • A close connection existed between the injury and the conduct of the design firms
  • The design firms were well compensated (paid five million dollars) and future homeowners could rely on their specialized knowledge in designing safe homes
  • "The policy of preventing future harm to homeowners reliant on architects' specialized skills supports recognition of a duty of care."

The design firms did not just provide plans to a developer, who then made substitutions. In this case, the design firms did weekly inspections to monitor progress and compliance with plans, altered design requirements when issues arose and advised when to reject nonconforming work.

A typical homebuyer also places reliance on the skill of an architect and builder to erect a habitable structure. The homebuyer may not have the means or access to professionals to spot structural defects.

Implications of the case

Architectural and engineering firms will have broader exposure in construction claims where a design defect is at issue. For homeowners impacted by defects related to design or engineering negligence, it solidifies the right to seek direct recovery from architects and engineers. While this case dealt with a residential project, it could be extended to commercial and other types of building projects.

Consult an experienced real estate attorney as soon as possible after discovering a construction defect after purchasing a property to learn what remedies exist. Liability and timing issues are common in these types of claims.

Keywords: Construction disputes, architect and engineer liability, structural defects