Every day, design professionals face the prospect of being sued for the work they do on a project. Most of the time, these claims are brought by the client or another party directly involved in the project. However, that isn’t always the case.
In certain circumstances, claims can also be brought against a design professional by third parties, including businesses, organizations, private parties and members of the public.
The potential for a lawsuit brought by a third party can greatly expand the risk you face. To protect yourself, it’s important to understand how these claims can occur and what you can do to guard against them.
Here’s what to know about how duties to third parties affect risk.
Legal Basis for Third-Party Claims
Architects, engineers, contractors and other professionals in the design industry are used to the professional obligations that come with signing contracts and engaging in work for clients. However, it is also possible for you to have obligations to persons you’ve never met or signed a contract with.
As a member of a skilled profession, you have a duty to exercise the ordinary and reasonable technical skill, ability and competence expected of someone in your profession. In situations where you fail to do so and a foreseeable injury results, you may be held liable.1
Courts have held that the lack of a formal contractual relationship alone is not enough to protect you from liability to a third party if negligence can be shown to be a substantial factor in the harm that occurred.2
While there are good reasons not to hold design professionals liable to third parties — namely the potential for unlimited liability and overly burdensome contractual obligations — these factors don’t always apply, meaning third-party liability will typically be determined on a case-by-case basis.3
Factors that courts may consider when deciding whether a design professional has liability to a third party can include:
- The extent to which the project work was intended to affect the third party.
- The foreseeability of harm to the third party.
- The degree of certainty that the third party suffered injury.
- The closeness of the connection between the design professional’s actions and the injury suffered.
- The moral blame attached to the design professional’s actions.
- The policy of preventing future harm.4
Beyond this primary line of reasoning, there are additional legal bases for third-party liability for design professionals. Under a tort claim, you can be held liable by a third party for failure to exercise reasonable care to protect the third party’s person or things in certain circumstances, including where:
- Your failure to exercise reasonable care increases the risk of harm.
- You agreed to perform work which the client owed to the third party.
- The harm was suffered because of the client or third party’s reliance on your work.5
Courts in many jurisdictions have held that the absence of a contractual obligation isn’t a barrier to recovery of economic losses when reliance upon your skill and expertise as a design professional is reasonably foreseeable.6
In summary, professionals in the industry can face a broad range of third-party exposures. Liability can apply for those doing original design work, as well as those doing construction, making repairs, installing parts or supervising other architects, engineers or contractors.7
Notable Cases Brought Against Design Professionals
Legal decisions have played an important role in shaping the duty of care design professionals owe toward third parties. For a better understanding of the factors at play, a few notable cases are worth pointing out:
- After a tractor trailer struck a large hole on a Kansas turnpike bridge, resulting in a fatal wreck, the Kansas Supreme Court upheld a wrongful death verdict against a consulting engineer hired to conduct yearly bridge inspections. The court found the consulting engineer owed a legal duty to the traveling public when conducting inspections. The finding was made in spite of the consulting engineer having no control over regular operations, maintenance or repairs of the structure.8
- After a number of building quality and safety defects were discovered in a new condo project, the California Supreme Court reached a decision that expanded the number of parties who can assert claims against architects to include homeowners associations and individual homebuyers. According to the contract, the architects were hired to fill a number of roles on the project, including architecture, engineering and construction management. The court noted the key to its decision in the case was the foreseeability of the problems, even though the architects did not exercise ultimate control over the project.9
- After a sewer project’s improperly braced lateral trench collapsed, resulting in the death of a construction worker, the Superior Court of Pennsylvania upheld a wrongful death verdict against an engineering firm for failing to properly supervise the project, inspect the work and assist in safeguarding the owner against defects and deficiencies in the work. The court noted an employee of the engineering firm was present during the incident and that the trench violated both state and federal safety laws.10
- After a vacation home’s balcony collapsed, paralyzing a young woman visiting the home, the Court of Appeals of Texas ultimately reversed a previous court’s decision to find that the home’s architect owed no contractual or common law duty to a third party under the circumstances. The key to the decision was the architect’s carefully worded contract and their lack of supervision and control over the contractor, who deviated from the architect’s construction and safety design plans for the balcony.11
The outcome of third-party claims can be unpredictable, with courts and jurisdictions viewing issues of liability differently depending on a number of factors. However, any claim by a third party presents a great risk for a design professional.
Even if you ultimately win in court, a third-party claim can have a significant financial cost, as you will be forced to hire an attorney to defend yourself against the claim.
Risk Management for Architects and Engineers
The potential of being sued by a third party can greatly expand the risk you face. While you can always do your best to honor your duty of care to clients and any third parties, it may not be enough. Claims can be brought even when you’ve done everything right.
To protect yourself, it’s important to manage your risk. Be especially careful when crafting contracts with clients and always use precise language. Make sure to have a clear understanding of your professional legal obligations for each project. And ensure you obtain an appropriate level of professional liability insurance protection.
At Lockton Affinity, we understand the needs of design professionals like you. With coverage from Lockton Affinity Architect and Engineer, you’ll benefit from valuable risk management resources, including complimentary contract reviews, pre-claim assistance and more, that can help reduce your risk of a claim, along with competitive coverage and prices and best-in-class customer service.
Receive an indication of what our coverage will look like for your business today by visiting LocktonAffinityA-E.com or call (888) 425-7011.
- Chubb Group of Ins. Cos. v. C.F. Murphy & Associates, Inc., 656 S.W.2d 766 (Mo. Ct. App. 1983).
- A. E. Inv. Corp. v. Link Builders, Inc., 62 Wis. 2d 479 (Wis. 1974).
- Auto-Owners Ins. Co. v. Mid-America Piping, Inc., 2007 U.S. Dist. LEXIS 72177, 8-9 (E.D. Mo. Sept. 27, 2007).
- Colbert v. B.F. Carvin Constr. Co., 600 So. 2d 719 (La.App. 5 Cir. 1992).
- Restatement (Second) of Torts § 324A.
- Insurance Co. of N. Am. v. Town of Manchester, 17 F. Supp. 2d 81 (D. Conn. 1998).
- Council of Co-Owners Atlantis Condominium, Inc. v. Whiting-Turner Contracting Co., 308 Md. 18 (Md. 1986).
- Ingram v. Howard-Needles-Tammaen & Bergendoff, 672 P.2d 1083, 1086-88 (Kan. 1983).
- Beacon Residential Community Association v. Skidmore, Owings & Merrill LLP, 327 P.3d 850; 173 Cal.Rptr.3d 752 (2014).
- Heath v. Huth Engineers, Inc., 420 A.2d 758, 759 (Pa. Super. Ct. 1980).
- Black + Vernooy Architects v. Smith, 346 S.W. 3d 877 (TX 2011).