In a victory for owners of facilities covered by the Americans with Disabilities Act (ADA), the U.S. Court of Appeals for the Ninth Circuit has upheld a property owner’s right to seek contribution from third parties who fail to perform their obligations to the owner to design or build a facility that complies with the ADA. Many property owners rely on architects, designers, builders, and even ADA compliance experts to help them ensure that their facilities comply with the ADA. This decision restores the power of owners to enforce their agreements with those third parties.
Under very similar facts in Equal Rights Center v. Niles Bolton Associates, 602 F.3d 597 (4th Cir. 2010), the Fourth Circuit held that an owner’s state law claim for indemnity against an architect for alleged ADA violations in the design of multifamily apartment buildings was preempted by the ADA, which holds owners and operators liable for ADA violations and prevents them from escaping liability by contracting with third parties. The reasoning behind this holding was that permitting indemnity rights would undermine owners’ incentives to comply with the ADA because they could easily transfer the onus of liability to third parties.
The Ninth Circuit’s Decision
While technically distinguishing the Niles Bolton decision, the Ninth Circuit held that owners could seek contribution from third parties who failed to meet their contractual obligations and that doing so would enhance—not discourage—compliance. After all, owners necessarily rely on the expertise and skills of architects, designers, and contractors to design and build ADA-compliant facilities. The Ninth Circuit noted that the owner in Niles Bolton had sought indemnity for all of its liability to plaintiff, while the owner in the Ninth Circuit case had sought recovery only for its contractors’ failure to comply with their contractual obligations. It is unclear just how meaningful this distinction was to the Ninth Circuit’s decision. (The fact that the court weighed the preemptive effect of Title II of the ADA and the Rehabilitation Act has no apparent impact on how the court would have decided the same question under Title III of the ADA, which is applicable to private businesses open to the public.)
The Ninth Circuit’s decision represents a significant victory for owners and operators of facilities subject to the ADA and a loss for architects, designers, and contractors who may have lost the silver bullet against derivative liability that Niles Bolton had arguably provided.
The decision provides lessons for all of the parties. Owners will want to include provisions in their contracts with architects, designers, and contractors requiring compliance with the ADA and providing remedies for any failure to do so. In addition, when seeking to enforce those provisions, owners might want to consider limiting themselves to recovering the direct damages resulting from a failure to comply and forego seeking recovery of the damages and attorneys’ fees they paid to the plaintiff who sued them for a failure to comply with the ADA.
Architects and builders would do well to carefully negotiate the compliance provisions in their contracts and work to limit the consequences of instances where indemnity or contribution would be available.
Finally, while the Ninth Circuit has attempted to downplay the conflict with the Fourth Circuit’s decision in Niles Bolton, there remains a possibility that the Supreme Court of the United States will be asked to resolve this arguable circuit conflict.
Stay tuned while additional courts wade into this important debate.