The Supreme Court of California issued its ruling in Beacon Residential Community Assn. v. Skidmore, Owings & Merrill LLP on July 3.  Gordon & Rees’s Greg Hanson discussed the Supreme Court hearing on this case in his June 5 blog post.  Greg’s prediction as to the court’s decision turned out to be true.  Certain architects can be sued by a homeowner for defects in a residence.

The court focused on the Biakanja factors in determining that a “principal architect” can be sued in negligence by a homeowner despite the absence of privity.  Interestingly, the court preserved the ruling in the Weselohmatter, which held that a retaining wall designer retained by a second-tier subcontractor could not be sued by the homeowner for a collapse of a retaining wall.

In his blog post, Greg observed that the court suggested it was foreseeable that a defective design would affect eventual purchasers of units; that the Beacon architects were intimately involved with the project; and that the payment of $5 million to the Beacon architects in comparison to the $2,000 payment to the designers in theWeseloh case was significant.  In its ruling, the court used these factors as a major part of its analysis in finding that the Biakanja factors support a finding that the Beacon architects could be sued by the homeowners association in negligence without a contractual relationship.

The following is the court’s summary of its analysis of the Biakanja factors:

  1. The defendants’ work was intended to benefit the homeowners living in the residential units that the defendants designed and helped construct.
  2. It was foreseeable that these homeowners would be among the limited class of persons harmed by the negligently designed units.
  3. The plaintiff‘s members suffered injury; the design defects made their homes unsafe and uninhabitable during certain periods.
  4. In light of the nature and extent of the defendants’ role as the sole architects on the project, there is a close connection between the defendants’ conduct and the injury suffered.
  5. Because of the defendants’ unique and well-compensated role in the project as well as their awareness that future homeowners would rely on their specialized expertise in designing safe and habitable homes, significant moral blame attaches to the defendants’ conduct.
  6. The policy of preventing future harm to homeowners reliant on architects’ specialized skills supports recognition of a duty of care. Options for private ordering often are unrealistic for typical homeowners, and no reason appears to favor homeowners as opposed to architects as efficient distributors of loss resulting from negligent design.

While the ruling itself is not surprising to most observers, an in-depth reading of the opinion creates an open question as to when a designer’s connection to the project is enough to create liability in negligence.  Where does the line ultimately get drawn between the architects in Beacon and the designers in Weseloh?

It should also be noted that we can expect to hear more from the appellate court regarding Beacon as the court is presently deciding whether the HOA has standing to bring a class action on behalf of the unit owners.

For a more detailed discussion of the case, click here.