The Ability To Disclaim Liability Resulting from Inspection Duties
Kenneth Slavens | May 1, 2003
A recent Illinois Court of Appeals case supports the argument that the risk the design professional assumes by inspection or observation can be limited by contract. If you are a design professional, you will want to be sure that the "disclaimer" language is in your contract. Do not agree to let the "disclaimer" language be stricken from the AIA family of documents or from any other "standard" contract document.
When a design professional takes on the responsibility of inspecting the work on a project, and an injury occurs allegedly as a result of a defect in the work, lawyers are drawn to the contractual duty to inspect or observe like bees to honey. Arguments are made that every defect, mistake, or other condition is now the responsibility of the design professional because he or she was inspecting or observing the work of the contractor and failed to catch the problem condition.
A recent Illinois Court of Appeals case offers some support to the design professional that this argument is not supported, either factually or legally, if the appropriate contract language exists. The case is Putman v. The Village of Bensenville, 786 NE2d 203 (Ill. App. 2d 2003).
Albert Putman was on the way to a VFW meeting when he tripped on a handicapped accessibility ramp placed in the public sidewalk. He tripped on the edge of the ramp where the ramp and the gutter meet. He fell, struck his head, and as a result, became paralyzed from the neck down. Mr. Putman filed suit against the City of Bensenville, the owner of the ramp and sidewalk; Eagle Concrete Contractors, Inc., the entity that constructed the ramp; and Benes & Associates, an engineer on the project that included the ramp.
The trial court for the Putman case found that as a matter of law, none of the defendants had any legal responsibility to Mr. Putman for his damages. The court of appeals reviewed the trial court's findings, and held that the Village and design professional have no liability, but that the trial court needed to consider further the liability of the contractor. We will look only at the court of appeals' holding in this case as it impacts the contractor and the design professional.
The Claim against Eagle Concrete Contractors
Mr. Putman alleged that Eagle had not constructed the ramp in accord with the plans and specifications, nor in compliance with industry standards. This court of appeals confirmed the long-established case law that, though a contractor can be held liable for its work under traditional negligence principles, the contractor owes no duty to "third persons" (those not in contractual privity with the contractor) to judge the plans, specifications, or instructions which the contractor has "merely contracted" to follow. If the contractor carefully carries out the design provided, the contractor is justified in relying on the adequacy of the design. The only caveat is, if the contractor does so when the design is so "obviously dangerous" that no competent contractor would follow it.
The court's holding reiterated that unless the design at issue is obviously dangerous, an independent contractor, like Eagle here, cannot be held liable for merely following the design. However, under the facts presented in this case, there was testimony from an expert for Mr. Putman that the ramp was constructed with a "lip in excess of one-quarter inch," and that this violated applicable construction standards. Contrary evidence was presented by Eagle that it had complied with the design in accordance with applicable industry standards. The court of appeals concluded that this "issue of fact" prevented a judgment being affirmed on behalf of Eagle and sent the case against Eagle back to the trial court for further handling.
Claims against Benes and Associates
Mr. Putman's allegations against Benes & Associates were founded on the contention that Benes & Associates owed him a duty, pursuant to Benes & Associates' contract, "to supervise and inspect the project." Though not completely clear from the information recited in the case, the implication is that Mr. Putman's argument was that, had Benes properly inspected, it would have discovered the defective construction by Eagle, this would have caused Eagle to correct the "defect," and that would have, in turn, prevented Mr. Putman's fall.
The trial court had reviewed Benes & Associates' contract on the project, and specifically the provision in the contract under which Benes agreed to provide inspection services. The clause in the contract on which the trial court relied reads as follows:
Notwithstanding anything to the contrary which may be contained in this Agreement or any other material incorporated herein by reference, or in any agreement between [Owner] and any other party concerning this project, the ENGINEER shall not have control or be in charge of and shall not be responsible for the means, methods, techniques, sequences or procedure or construction * * * nor shall ENGINEER be responsible for the acts or omissions of [Owner] provided that the ENGINEER has properly executed his duties. ENGINEER shall not be responsible for the failure of the [Owner], any architect, engineer, consultant, contractor or subcontractor to carry out their respective responsibilities in accordance with the project documents or any other agreement concerning the project. [Emphasis added.]
The language quoted from the Benes & Associate contract in the Putman case is substantially similar to the language found in the Standard Form of Agreement between Owner and Architect, AIA B141-1997, Article 2.6.2.1 and Article 2.6.2.2.
The court of appeals in Putman acknowledged that a design professional, like others, may be charged with negligence for failing to perform an act required by a contract. However, the court noted, the question of whether such a legal duty exists in such cases is determined by the terms of the contract. Even though the allegations sound in tort, the scope of the duty, if there is one, is defined by the contract.
Based on these principles, the court concluded that in the case of the claims by Mr. Putman, the contract language quoted above limits the design professional's liability for the failure of a "subcontractor to carry out their respective responsibilities in accordance with the project documents or any other agreement concerning the project."
Mr. Putman attempted to avoid the effect of the contractual language by arguing that Benes & Associates' liability is not based on the contractor's failure to follow the plans for the ramp but, rather, that Benes is liable because of the independent duty to "properly inspect the ramp" upon which Mr. Putnam fell.
The court was not persuaded by Mr. Putman's arguments. The court concluded that in interpreting the contract, the goal is to give effect to the intent of the parties. In addition, meaning and effect must be given to each portion of the contract since the parties presumably intended each portion of the contract to serve some purpose. Considered in this framework, the court concluded that if it were to limit Benes's disclaimer of responsibility as proposed by Mr. Putnam that would effectively write the disclaimer out of the contract.
The court held:
Virtually every error in construction by a subcontractor could be recast and advanced against Benes as a failure to supervise or inspect the project. We cannot find that the parties intended such a result. Accordingly, we hold that the disclaimer set forth above is effective to relieve Benes of liability on the present issue.
Conclusion
The Putman case is support for the argument that the risk the design professional assumes by inspection or observation can be limited by contract. If the design professional did not contract with its client to be responsible for the work of the contractors, there is no logical reason to expand the responsibility to strangers to the contract. The conclusions that can be reached are that the parties to the contract intended the risk to be allocated in the manner recited in the agreement, that the manner in which the risk is allocated is the basis on which fees are calculated and insurance coverages are procured, and that it places the responsibility for the risk with the party best able to manage it. All are sound reasons to not interfere with the various contracts among the parties.
Each case turns on its own facts, and each jurisdiction has different case law, but, if you are a design professional, you will want to be sure that the "disclaimer" language is in your contract. You will want to review in some detail the language from the Standard Form of Agreement between Owner and Architect, AIA B141-1997, and conduct yourself in accord with those obligations. Do not agree to let the "disclaimer" language be stricken from the AIA family of documents or from any other "standard" contract document. Maybe, with the help of this case, you will be able to convince a court that the risk you have assumed for injuries to third parties due to faulty work by a contractor really is only what the contract says—and nothing more.
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