Architects Subject to Suit by Homeowners Despite Lack of Contractual Relationship

Architects in California may believe they are immune from a direct lawsuit by homeowners where their only contract is with the builder, and certainly where their contract with the builder disclaims any third party beneficiary rights.  Not so says the California Supreme Court.  In Beacon Residential Community Ass’n v. Skidmore, Owings & Merrill LLP (2014) 59 Cal.4^th 568, the Court held that the prime architect on a condominium project owes a duty of care to future homeowners with whom it has no contractual relationship, even if the architect does not make final decisions regarding construction.  Pursuant to a contract with the owner and developer, the defendants/architects in Beacon provided architectural and design services for a 595 unit condominium building in San Francisco, knowing the finished construction would be sold as condominiums.  The homeowners association later sued the architects and others for various defects, including “solar heat gain” allegedly caused by the use of less expensive, substandard windows and an overall design that caused inadequate ventilation.  The architects challenged the complaint on the grounds they owed no duty of care to the Association or its members.

The Supreme Court relied on a 1958 decision, Biakanja v. Irving (1958) 49 Cal.2d 647, in analyzing whether the architects owed a duty of care despite a lack of contract between them and the plaintiffs.  The Court concluded that (1) the architects’ work was intended to benefit the homeowners living in the units, (2) the homeowners were among the class of persons who would foreseeably be harmed by negligently designed units, (3) the homeowners suffered injury due to the design defects, (4) given the nature of the architects’ role as the sole architects on the project, there was a close connection between their conduct and the injury suffered, (5) there was significant moral blame attached to the architects’ conduct, (6) and the policy of preventing future harm supported a finding of duty of care.  In their defense, the defendants argued that the plaintiff could sue the developer who could in turn sue the architects or the developer could seek an assignment of the developer’s rights against the defendants.   The Court noted that “the chief interest of prospective homeowners is to avoid purchasing a defective home, not only to have adequate redress after the fact” and found that holding the architects directly accountable would best vindicate this interest. 

It remains to be seen how the Beacon decision will impact construction litigation going forward or, for example, how it will impact architects when they are not the sole project architect being paid $5 million for their services.  But certainly the class of potential claimants has been expanded.  Architects must be prepared to deal not just with developer’s cross-claims, but with plaintiff’s direct claims as well.

For additional information, contact Darren Johnson in our Los Angeles office at djohnson@foleymansfield.com.