Traditionally, the obligations and duties of a design professional in a construction project are defined by the contracts that run between and among the design professional, the owner, and, on occasion, the contractors. However, a case in California, Lake Merritt Plaza v. Helmuth Obata & Cassebaum, suggests that, under certain circumstances, a design professional may have duties that extend beyond the express terms of a contract.
In this case, the owner of a project contended that the project architect failed to properly monitor and supervise the work of a curtain wall designer and contractor. Analyzing the owner's claim, a California court concluded that standard language used in AIA contract documents created a "fiduciary" relationship between the architect and the owner. This relationship creates additional affirmative obligations on the part of the architect to alert the owner to risks that might exist in the design of a project.
At issue, specifically, was the question of whether the owner needed to retain a waterproofing consultant to examine the effectiveness of a substantial curtain wall installation. The curtain wall experienced substantial leaking and consequential water damage. The owner opted not to retain a waterproofing consultant early in the project because the architect led the owner to believe that an earlier "mock-up" test of the curtain wall's effectiveness had been successful. In fact, the mock-up test failed. The owner subsequently contended that, if it had been properly informed of the mock-up test failure, it would have retained a consultant much earlier than it ultimately did. The owner contended that the architect should be responsible for the damages that ensued as a result of the delay in identifying and remediating the water leaks.
The California court agreed and awarded the owner over $8,000,000 in damages. Determining that a fiduciary relationship exists between an owner and an architect could have far-reaching implications for design professionals. The existence of this relationship creates a whole range of potential claims for owners in circumstances where a design professional misrepresents or fails to alert an owner of risks or issues in a project. It creates a heightened level of responsibility for design professionals that extend beyond the standard of care to which the parties agreed in their contract. The existence of a fiduciary duty also acts to excuse an owner's inaction in circumstances, where otherwise, the owner would be charged with failure to act to mitigate its losses.
It remains to be seen whether other courts will follow the California court's lead or, alternatively, if this decision will remain an exception to the traditional rule that limits design professionals' obligations to contract language.