The Slavin Doctrine (Florida) – Recent Developments

By on February 18, 2015
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In 1958 the Slavin doctrine was first articulated by the Florida Supreme Court. Slavin v. Kay, 108 So.2d 462 (Fla. 1958). That doctrine is that “a contractor is relieved of liability caused by a patent defect after control of the completed premises has been turned over to the owner.” Easterday v. Masiello, 518 So. 2d 260 (Fla. 1988)(Court expanded the Slavin doctrine to apply to architects and engineers). Two recent cases in Florida relied upon the Slavin doctrine precluding liability against design professionals.

In Transp. Eng’g, Inc. v. Cruz the trial court, relying upon the Slavin doctrine granted summary judgment in favor of the contractor and denied the same relief to the design professional. The court affirmed summary judgment in favor of the contractor and vacated the trial court’s order denying summary judgment to the engineer, finding, “it was undisputed . . .  that DOT accepted the project with bare (uncushioned) guardrail ends within the clear zone, and that this was an open and obvious condition. Therefore, even if TEI violated its standard of care . . . summary judgment should have been granted in TEI’s favor based upon Slavin and Easterday. Transp.” Eng’g, Inc. (TEI) v. Cruz, 2014 Fla. App. LEXIS 18273, 39 Fla. L. Weekly D 2333 (Fla. Dist. Ct. App. 5th Dist. Nov. 7, 2014)(case involved changes to state’s standard design for guardrails by Florida DOT which were followed by design engineer; thereafter, a third party was killed hitting the unprotected guardrail).

In McIntosh v. Progressive Design & Eng’g the district court, relying upon the Slavin doctrine affirmed the lower court where the jury determined that the design professional was negligent in its design of a traffic signal (the legal cause of a traffic fatality); however, “the negligent design was accepted and discoverable by FDOT with the exercise of reasonable care.” McIntosh v. Progressive Design & Eng’g (In re Estate of McIntosh), 2015 Fla. App. LEXIS 163, *7, 40 Fla. L. Weekly D 160 (Fla. 4th DCA Jan. 7, 2015). The result in McIntosh is factually distinguishable from other cases that have relied upon the Slavin doctrine. In McIntosh, the ultimate owner of the traffic signal was not FDOT, but rather was Broward County, Florida; which entity would not give its final acceptance of the project work until the final phase of the project was completed (the burn-in period). The fatal accident occurred prior to control of the traffic signal being turned over to the county. The district court rejected this argument; instead finding, that “responsibility for a patent defect rests with the entity in control [when the design was approved and accepted] and with the ability to correct it.” Id. at *12. In McIntosh, the entity in control was the FDOT. Only time will tell whether other district courts will follow the approach taken in McIntosh.

Filed under Architects, Design Professionals, Engineers, Liability, Patent Defect

Post Beacon California Appellate Case Finds No Duty for Designer

By on January 13, 2015
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In State Ready Mix Concrete v Moffatt and Nichols, 2d Civil No. B253421, the California Court of Appeals found that an engineer did not owe a supplier a duty of care and therefore dismissed the supplier’s cross-complaint.  The course followed the lead of Beacon[1] by applying the Biakanja [2] factors to determine whether a duty existed.

Certainly, the ruling would seem to provide protection to engineers from direct actions brought by contractors and suppliers.  However, as with Beacon itself, the application of the Biakanja factors make it difficult to develop hard fast rules.  While designers would like to argue that they do not owe contractors a duty of care when producing their design, this case will not be particularly helpful.

In State Ready Mix, Moffatt & Nichols did not develop the concrete mix design but only reviewed it for the benefit of the project manager.  More importantly, State Ready Mix produced a non-conforming concrete and failed to test the concrete to make sure it met the specification.  These two factors weighed heavily in the courts analysis.  This decision will be of little value in an instance where the contractor attempts to sue a design professional alleging that the designer’s work caused the contractor increased costs.  The application of Beacon to this scenario and other common situations will be looked at in depth during a panel discussion at West Coast Casualty’s Construction Defect Seminar in Anaheim, California, May 14 & 15, 2015.

 

[1] Beacon Residential Community Assn. v. Skidmore, Owings & Merrill (2014) 59 Cal.4th 568
[2] Biakanja v. Irving (1958) 49 Cal.2d 647

Filed under Architects, Beacon Residential Community Association, Contractor, Design Professionals, Duty of Care, Engineers, Liability, Supplier

Beacon Expanded Beyond Prime Architect to Geotechnical Engineer

By on October 30, 2014
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In a recent trial court decision (Flaherty v Dolan, Case No. CGC-12-522648), a San Francisco judge found as a matter of law that a geotechnical engineer responsible for providing geotechnical services, including ongoing services during construction, owed a duty to future purchasers of lots in a residential subdivision.

The court found the engineer, who was under direct contract with the developer, “had a key role in the development of the project.” In support of this conclusion, the court found significant fairly standard scoping language for geotechnical engineers and many design professionals. “The purpose of our services is to (1) work with the design team and contractor and (2) observe the construction/installation of the geotechnical related elements of the project to check they are constructed in accordance with the intent of our recommendation.”

The geotechnical engineer also had written to the developer outlining the risk of potential landslides that should be disclosed to future homeowners, which the court found implicated the engineer in the disclosure process.  Finally, the court pointed out that the geotechnical engineer had been paid several hundred thousand dollars in fees.

From this court’s interpretation of Beacon Res. Comm. Ass’n v Skidmore, Owings & Merrill LLP, (2014) S208173 it seems that where the design professional has a meaningful role during construction and is paid for the project what the court views as a sizeable fee, there is a significant risk of owing a direct duty to future residential purchasers.

Filed under Beacon Residential Community Association, Design Professionals, Geotechnical Engineer

Washington Appellate Opinion on “Attorney Judgment Rule” May Aid Design Professionals Trying to Satisfy Standard of Care

By and on August 14, 2014
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The Washington Court of Appeals recently adopted the “attorney judgment rule” to determine when a judgment decision violates an attorney’s duty of care.  In so ruling, the Court of Appeals relied upon a similar “error in judgment rule” applied in medical malpractice actions.  Although no similar case has addressed design professionals in Washington, the court’s ruling provides a solid foundation for design professionals to argue that decisions made within a range of “reasonable alternatives” satisfy the standard of care.

An attorney may be liable for legal malpractice for failing to properly evaluate a case for settlement and other pretrial strategic decisions.  On April 24, 2014, the Washington Court of Appeals, Division Two, issued the first Washington appellate opinion recognizing the “attorney judgment rule” — Clark County Fire District No. 5 v. Bullivant Houser Bailey PC, 2014 Wash. Ct. App. Div. II 42864-4 (April 24, 2014).  The attorney judgment rule “determines when an attorney’s error in professional judgment breaches his or her duty of care.”

Clark County Fire District No. 5 arose out of a legal malpractice action filed by a local fire district and its insurer against the fire district’s previous attorney for losing a $3.2 million sexual harassment lawsuit.  The attorney moved for summary judgment on most of the legal negligence claims asserted, including allegations of failure to properly evaluate the case for settlement purposes, mishandling various pretrial matters, and failure to preserve an issue for appeal.  The trial court granted the attorney’s motion and the trial court dismissed the claims, finding as a matter of law that the attorney could not be liable to his client for “judgment decisions.”

Upon review, the appellate court found all of the conduct at issue involved the exercise of the attorney’s professional judgment.  The appellate court established a two-prong test for determining whether the “attorney judgment rule” applied, noting that an attorney cannot be liable for making an erroneous decision involving honest, good-faith judgment, if:

(1)    the attorney’s “decision was within the range of reasonable alternatives from the perspective of a reasonable, careful and prudent Washington attorney;” and

(2)   the attorney “exercised reasonable care” in making that judgment decision.

Applying this test to the case at hand, the appellate court reviewed the record and found (1) factual disputes existed as to whether the attorney’s judgment decisions regarding settlement advice, pretrial handling of the case, and failure to preserve an issue for appeal were “within the range of reasonable alternatives from the perspective of a reasonable, careful, and prudent attorney in Washington”; and (2) the opinions of the fire district’s legal malpractice experts created questions of fact regarding most of the fire district’s allegations.

Accordingly, the appellate court reversed the trial court’s grant of summary judgment in favor of the attorney on all of the fire district’s claims except two (the failure to object to the improper closing argument and the failure to file an appropriate motion in limine regarding the subject of the improper argument) and remanded the case to the trial court for further proceedings.

Filed under Design Professionals, Judgment Decisions, Standard of Care

After Beacon: Use of Indemnity Provision in Conjunction With Limitation of Liability Clause

By on July 11, 2014

Design professionals in California have often used limitation of liability clauses as an effective risk transfer technique.  Given that a third-party plaintiff’s recovery is not capped by the limitation clause in a contract between the design professional and the developer, we have made it a practice to recommend to our clients that, in addition to the limitation, they attempt to negotiate an indemnity provision in which the owner indemnifies the design professional for any judgment in excess of the limitation of liability.

Even where developers are willing to agree to a limitation of liability provision, they often resist also including indemnification for any judgment in excess of the limitation of liability.   However, the July 3 Supreme Court of California ruling in Beacon Residential Community Assn. v. Skidmore, Owings & Merrill LLP highlights the purpose of an indemnity provision.

For the limitation to be truly effective, the indemnification agreement is necessary.  In the residential context, the developer is strictly liable for design errors.  Therefore an indemnification agreement only confirms that the developer will be responsible for the design exposure above the limitation of liability.

Design professionals should use the Beacon case as an opportunity to explore the risk transfer inherent in a limitation of liability with their clients and hopefully convince them of the appropriateness of using an indemnity provision in conjunction with a limitation of liability.

Filed under Architects, Design Professionals, Duty of Care, Future Homeowners, Uncategorized

California Supreme Court to Address Design Professionals and Duty of Care to Third-Party Purchasers

By on June 5, 2014

On May 7, the California Supreme Court heard oral arguments in Beacon Residential Community Assn. v. Skidmore, Owings, & Merrill LLP, a case that will have a huge impact on design professional liability in California when third-party purchasers sue a designer alleging defective designs.

The Beacon is a mixed-use project consisting of 595 condominium units and some commercial and office space.  Plaintiff Beacon Residential Community Association (the HOA) sued the initial developer, a subsequent developer, the architects, the general contractor and subcontractors asserting SB 800 and common-law causes of action.  The architects demurred to the HOA’s Third Amended Complaint asserting they owed no duty of care to the HOA.

The trial court sustained the demurrer, reasoning that the architects had not asserted direct “control” over construction decisions, and thus, under the Biakanja ((1958) 49 Cal. 2nd647), Bily ((1992) 3 Cal. 4th 370) and Weseloh ((2004) 125 Cal. App. 4th, 152) line of decisions, ruled the architects owed no duty to the HOA.

The HOA appealed and in December 2012, the California Court of Appeal, First Appellate District, reversed the trial court ruling in Beacon (2012) 211 Cal.App.4th 1301. The Court of Appeal reasoned that in analyzing the various factors elucidated in Biakanja and Bily, and distinguishing those and the Weseloh facts from those in Beacon, design professionals do owe a duty of care to eventual third-party purchasers.  The architects appealed to the California Supreme Court asserting that the rulings in Weseloh and Beacon are inapposite.

During the Supreme Court oral arguments, the justices focused on: 1)  the foreseeability of harm to the plaintiff; 2) the closeness of connection between the defendant’s conduct and the injury suffered; and 3) the potential imposition of liability out of proportion to fault.  The court distinguished Beacon from the former line of cases in that: 1) it was imminently foreseeable that a defective design of residential units would affect eventual purchasers of the units; 2) the architects were directly responsible for the alleged design defects given their “intimate involvement” with construction value-engineering decisions and project observation (i.e., they did not simply draw plans, hand them over, then leave the project); and 3) unlike Weseloh, where the retaining-wall designers provided only $2,000 in services relative to a $6 million claim, Beacon architects provided $5 million worth of services in a $45 million claim.

The Supreme Court has 90 days from May 7 to issue an opinion.  Given the Supreme Court’s comments and analysis at oral argument, it looks like it may agree with the Court of Appeal and rule that in the context of residential-unit design, design professionals do owe a duty of care to eventual third-party purchasers regardless of lack of privity.

Filed under Design Professionals, Duty of Care, Homeowners Association (HOA), Privity, Third-Party Purchasers

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