A Circus of Damages: Reining in Negligence Claims through the Economic Loss Doctrine. RLI Design Professionals DPLE 190 April 04, 2018

Transcription

1 A Circus of Damages: Reining in Negligence Claims through the Economic Loss Doctrine RLI Design Professionals DPLE 190 April 04, 2018

2 RLI Design Professionals is a Registered Provider with The American Institute of Architects Continuing Education Systems. Credit earned on completion of this program will be reported to CES Records for AIA members. Certificates of Completion for non-aia members are available on request. This program is registered with the AIA/CES for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing, or dealing in any material or product. Questions related to specific materials, methods, and services will be addressed at the conclusion of this presentation.

3 Copyright Materials This presentation is protected by US and International Copyright laws. Reproduction, distribution, display and use of the presentation without written permission of the speakers is prohibited. RLI Design Professionals

4 Course Description: When a construction project does not go as planned, affected parties start pointing fingers. A common target is design professionals. However, the Economic Loss Doctrine gives design professionals a way out by only allowing certain parties with certain claims to succeed. We will analyze how states have applied the Economic Loss Doctrine, and why it is such a critical defense.

5 Learning Objectives: Evaluate the Design Professional s duty to third parties Understand the Economic Loss Doctrine Differentiate how specific states apply the Economic Loss Doctrine Recognize specific applications of the Economic Loss Doctrine

6 Plans and Specifications Design Professional s Role Construction phase

7 Privity of Contract: Design Professional Specialty Subconsultant Owner General Contractor Contract 5: Privity Subcontractor Future Owners

8 Privity and Flow Down Provisions: Owner Design Professional Flow Down Specialty Subconsultant

9 Privity of Contract: Design Professional Specialty Subconsultant Owner General Contractor Contract 5: Privity Subcontractor Future Owners

10 Tort Law The Economic Loss Doctrine Contract Law physical injury to people or things Boundary economic expectations

11 BM8 ELD and Construction Do I have an independent duty to owners? Do I owe a duty to the contractor even though they do not have a contract with them? Does it matter whether I am designing a new building or just a remodel?

12 Slide 11 BM8 I am still workign on finalizing these questions- At the moment, I do not answer them fully in my slide. Batsheva Milikowsky, 3/20/2018

13 A Design Professional s Worst Nightmare Architects Professional takes on condominium project Condominium has water infiltration, structural cracks and can t be lived in when the temperature is too hot. Condominium association and contractor sues Architects Professional.

14 The Economic Loss Doctrine Someone s negligent act Without physical injury to person or other property damage (i.e., only economic loss) Absent an independent duty of care under tort law Injured party cannot recover tort damages Economic loss: damage to the property itself **Includes direct and consequential damages**

15 Ask: Does the law governing include the recognition of the Economic Loss Doctrine? If it does, your exposure to tort damages can be limited. If not, you have potential exposure to tort damages to your direct client and to any other party who is impacted. However, are there exceptions to applying ELD? Is your role exclusively designer?

16 ELD in the 50 States

17 ** This is not legal advice. Consult your local attorney.**

18 What happens if you are doing a project in. Arkansas ELD is not Recognized

19 What happens if you are doing a project in. Florida ELD is Recognized Only for Product Liability

20 What happens if you are doing a project in. Pennsylvania ELD is recognized in Construction Context but Independent Duty/ Business Guidance Exception

21 What happens if you are doing a project in. Arizona ELD is Recognized in Construction Context with Business Guidance Exception

22 What happens if you are doing a project in. New Jersey ELD is recognized in Construction Context but Independent Duty

23 What happens if you are doing a project in. California ELD is Recognized in Construction Context with Possible Exceptions

24 What happens if you are doing a project in. Maryland ELD is Recognized in Construction Context with Possible Exceptions

25 What happens if you are doing a project in. Michigan ELD is Recognized in Construction Context with Possible Exceptions

26 What happens if you are doing a project in. New York ELD is Recognized in Construction Context with Possible Exceptions

27 What happens if you are doing a project in. Texas ELD is Recognized in Construction Context with Possible Exceptions

28 What happens if you are doing a project in. Virginia ELD is Recognized in Construction Context with Possible Exceptions

29 What happens if you are doing a project in. Illinois ELD is Recognized under the Moorman Doctrine

30 Specific Areas of Difference

31 The Design Professional s Role: Contract for Products Economic Loss Doctrine will likely apply Contract for Services Economic Loss Doctrine does not apply

32 Property Damage v. Other Property Damage Ask: Finished home or a remodel?

33 Restatement (second) of Torts 552: Business Guidance Exception

34 Restatement (second) of Torts 552: Business Guidance Exception The design professional's negligent supply of false information to a foreseeable persons, known or unknown- like the contractor; A reasonable reliance of the false information; and Economic injury from the reliance

35 Negligent Misrepresentation in the Construction Context: Being hired only to provide information may make it more likely for ELD not to apply.

36 Choice of Law Provisions Owner-Architect Agreements B101 and B103 Revised This Agreement shall be governed by the law of the place where the Project is located, excluding that jurisdiction s choice of law rules Choice of Law other than place of project.

37 Successful Practices

38 Successful Practices Written Contract Clear Scope of Work Fair Indemnification Clause Understand your Liability in the State Construction Contract Administration Timely Observe Progress and Understand Responsibilities on Sight Inform Owner of any Concerns Document, Document, Document Adequate Insurance Coverage Professional Liability Insurance Commercial General Liability Insurance

39 This concludes The American Institute of Architects Continuing Education Systems Program Alayne McDonald, Professional Development Coordinator Batsheva Milikowsky

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