Review of Significant Cases Involving Design Professionals

Review of Significant Cases 

Involving Design Professionals 

RLI Design Professionals 

Design Professionals Learning Event 

DPLE 232 

October 3, 2012

An Interview with 

Sam Vulcano 

Sugarman Law Firm 

Conducted by 

Barbara Sable 

Director, Professional Enterprise Risk 

Solutions

RLI Design Professionals is a Registered Provider with The 

American Institute of Architects Continuing Education 

Systems. Credit earned on completion of this program will be 

reported to CES Records for AIA members. Certificates of 

Completion for non-AIA members are available on request. 

This program is registered with the AIA/CES for continuing 

professional education. As such, it does not include content 

that may be deemed or construed to be an approval or 

endorsement by the AIA of any material of construction or 

any method or manner of handling, using, distributing, or 

dealing in any material or product. Questions related to 

specific materials, methods, and services will be addressed 

at the conclusion of this presentation.

Copyright Materials 

This presentation is protected by US and International 

Copyright laws. Reproduction, distribution, display and 

use of the presentation without written permission of 

the speaker is prohibited. 

© RLI Design Professionals

Course Description 

This course reviews significant recent 

developments in the law relating to 

Design Professionals. It includes 

in-depth discussions of meaningful 

contract provisions and their impact on 

potential liability exposure and risk 

management.

Learning Objectives 

Participants in this course will be better informed to: 

‣Negotiate contractual protections like limitations of 

liability; 

‣Articulate a reasonable definition of the standard of 

care; 

‣Define more clearly construction observation 

duties; and 

‣Evaluate legal considerations such as statutes of 

limitations, and choices of applicable law, forum, 

and venue.

Significant recent developments in the law 

relating to Design Professionals including indepth 

discussions of meaningful contract 

provisions and their impact on risk management 

and potential liability exposure including, but 

not limited to, limitations of liability, contractual 

definitions of the standard of care, clauses 

defining construction observation duties, 

statutes of limitations, choice of applicable law, 

choice of forum and choice of venue.

Who Cares?

It’s hard to relate in a vacuum!

CONTRACTING TO AVOID TOTAL DISASTER!

Your “Constitutional Right” to a BAD DEAL 

I know that’s what 

the contract says, 

but…

Standard of Care

Common Law Standard of Care 

Advantage by default 

“Usual degree 

of skill” not 

Highest 

“Reasonable 

Skill” not 

Extraordinary

Standard of Care 

Baum v. Milau and Higgins (NY) 

Commercial tenants sued 

designer/installer of warehouse 

sprinkler system for damages arising 

out of massive burst in underground 

section of pipe connecting the 

sprinkler system to city water line. 

The break followed the occurrence of 

a phenomenon known as a “water 

hammer” which caused a crack to 

develop and spread at a weak point in 

the pipe allegedly created by the 

negligence of the designer/installer.



Although the proof established the existence of the 

defect in the pipe, the jury rendered a verdict in 

favor of the designer/installer. The jury found that 

the tenants failed to prove that the 

designer/installer was negligent. 

On appeal, the plaintiff tenants argued that the 

existence of a defect in the pipe constituted a 

sufficient basis for liability to be imposed on the 

designer/installer as the installer had impliedly 

warranted that the pipe would be free from defects.



“Those who hire experts for the predominant purpose of 

rendering services, relying on their special skills, cannot 

expect infallibility. Reasonable expectations, not perfect 

results in the face of any and all contingencies, will be ensured 

under a traditional negligence standard of conduct. In other 

words, unless the parties have contractually bound 

themselves to a higher standard of performance, reasonable 

care and competence owed generally by practitioners in the 

particular trade or profession defines the limits of an injured 

party's justifiable demands “ 

The parties to the contract underlying this action were 

perfectly free to adopt a higher standard of care to govern 

performance.



“…The fact that something 

went wrong less than six 

months after the service 

was performed does not 

change the underlying 

nature of the agreement 

governing its 

performance. 

We can find no reasonable basis in policy or in law for reading 

what would amount to a warranty of perfect results into the 

contractual relationships defined by the parties to this 

action. Judgment in favor 

of the defendants is affirmed.”


Chesapeake Paper v. Stone & Webster (Illinois) 

Chesapeake claimed S&W breached its contract by supplying engineering drawings 

for a paper mill expansion project containing errors and omissions that S&W 

corrected as the Project progressed. The errors and omissions resulted in delays and 

increased costs. 

S&W agreed that its engineering drawings contained inconsistencies but denied that 

those errors constituted a breach of contract, as it was undisputed that the Project 

had been a "fast track" job where design changes were made throughout the 

construction process. 

West Point, Virginia


Chesapeake Paper v. Stone & Webster (Illinois) 

Chesapeake based its claims on 

the preprinted terms and conditions 

on the back of the Purchase Order it 

had sent to S&W. 

S&W countered that the parties' 

contract consisted not of the P.O. 

terms, but of the terms of the 

unsigned "Engineering Contract" it had 

delivered to Chesapeake at the outset 

of the Project. 

The P.O. provided a high standard of care and included a warranty that "all 

the materials and articles covered by this order" will be "free from defects in 

material and/or workmanship" 

The Engineering Contract incorporated the usual standard of care requiring 

only that the "Engineer shall provide detail engineering services ... conforming 

with good engineering practice."


Chesapeake Paper v. Stone & Webster 

(Illinois) 

After a seven-day jury trial in which 

fourteen witnesses testified and the 

parties introduced more than 1,000 

exhibits the court instructed the jury to 

determine whether the original 

Engineering Contract or the P.O. 

governed the parties' agreement. 

The jury found that the parties contract" 

was the P.O. and that S&W had breached 

that contract. The jury awarded 

Chesapeake $4,665,642 in damages.


The “Double Whammy” 

1. Increase obligation to 

Owner, risk and 

likelihood of liability by 

agreeing to expanded 

standard of care (with no 

commensurate 

increased reward). 

2. Risk defeating insurance 

coverage by assuming 

liability under a contract 

that otherwise would 

not have existed.

Limitation of Liability 

“A NO BRAINER” 

Sam’s Hotel v. Environs (Indiana – 2011) 

Architect contracted with Owner to 

provide design and construction 

observation services for a Homewood 

Suites hotel for a fee of $70,000. 

Contract contained a limitation of 

liability clause stating, “…The Owner 

agrees that to the fullest extent 

permitted by law, Architect’s total 

liability to the Owner shall not exceed 

the amount of the total lump sum fee 

due to negligence, errors, omissions, 

strict liability, breach of contract or 

breach of warranty…”



The Building Commissioner of Allen County, Indiana, issued an order 

directing the Owner to demolish the partially complete building due 

to the dangers posed by its structural structural instability.



The Court ruled that the limitation of liability clause was 

enforceable and the Owner’s claim was limited to $70,000. 

The Court pointed out that Owner was not an 

“…unsuspecting or unknowing party… disadvantaged by a 

murky provision…” and that the contract at issue was 

between two sophisticated business entities. In the words 

of the Court “…In the end, this is a construction defect case 

where the owner and architect unambiguously agreed to 

limit the architect's liability in connection with its provision 

of services. If the Owner wanted greater protection from a 

negligent design, it could have obtained such protection 

through different contractual terms or a performance 

bond…”

Liability for Third Party Injuries 

Thompson v. CH2M Hill (Illinois – 2011) 

Engineer contracted with shopping mall developer to design a replacement 

bridge deck for highway off ramp servicing mall. The contract defined the 

standard of care as: “the degree of skill and care and diligence normally 

employed by professional engineers or consultants performing the same or 

similar services.” The design replaced the low median separating the lanes of 

traffic on the bridge with a substantially similar median. 

Some years after the completion of the project, a car hit the low median 

and vaulted over it into oncoming traffic resulting in injuries and death. 

Suit was commenced against the engineer alleging that the engineer owed 

a duty to the injured third parties and was negligent in several regards, 

including (a) not performing a median barrier analysis and (b) not including a 

Jersey barrier in its design.


Thompson v. CH2M Hill (Illinois – 2011)


Thompson v. CH2M Hill (Illinois – 2011) 

Engineer granted summary judgment as 1) it owed no independent duty to third 

parties, and 2) its contract defined the limits of its obligations which it met by 

providing services in accordance with the usual standard of care. Appellate 

Court reversed, finding unresolved issues raised by expert’s affidavit. 

The Supreme Court ruled that the engineer’s duties were as stated in its contract 

so that the case should be decided as a matter of law (not on the basis of expert 

testimony) ruling that “The standard of care was limited to the degree of skill and 

diligence normally employed by professional engineers performing the same or 

similar services, namely, replacing the bridge deck – and replacing the bridge 

deck did not include improving the bridge deck or considering adding a Jersey 

barrier.”


Smith v. Black & Vernooy Architects (Texas-2011) 

Architect prepared design of vacation 

home pursuant to contract with 

Homeowner. The Architect’s design 

included a balcony off the master 

bedroom. Contractor failed to 

construct balcony in compliance with 

the plans leaving various deficiencies 

in the structural attachment of the 

balcony to the home. 

Smith, a friend of the Homeowner, 

suffered injuries resulting in 

paraplegia when she fell 20 feet as the 

result of the sudden collapse of the 

balcony.

Good Design, Bad Construction



The Architect’s design was proper. Contractor’s failure to follow the design caused the 

collapse. Architect contracted to make periodic observations of the construction, to report 

observed deviations and to “endeavor to guard” the Homeowner against construction defects. 

The Architect failed to observe and report the balcony attachment deficiencies despite having 

photographed them. 

Smith sued the Homeowner, Contractor and Architect but settled with Contractor and 

Homeowner before trial. 

Plaintiff’s expert testified that the standard of care required the A/E to observe and note 

readily apparent defects. 

Jury found the Architect negligent and allocated 10% responsibility. The Architect appealed 

arguing that it owed no duty to injured party for accident resulting solely from construction 

deficiencies and that liability to third party could not be based on failure to discover 

construction defects.



Deficiencies apparent in Architect’s field photos


Smith v. Black & Vernooy (Texas-2011) 

DECISION 1 

The Court ruled that the Architect, having contractually agreed to 

‘endeavor to guard’ against defects and deficiencies, had a duty to 

notify the Homeowner of open, obvious, and observable 

construction defects affecting safety and structural integrity. 

The Court concluded that the Architect’s duty to use due care in 

fulfilling its contractual duties … extended to those persons 

foreseeably subjected to the risk of personal injury including thirdparty 

visitors.


Smith v. Black & Vernooy (Texas-2011) 

DECISION 2 

The Court reversed its earlier decision 

and ruled that “nothing in the 

language of the contract demonstrates 

that these duties were to be engaged 

in for the benefit of third parties…the 

agreement specifically stated that 

‘nothing contained in this Agreement 

shall create a contractual relationship 

with or a cause of action in favor of a 

third party…we must conclude that 

when the Architects entered into the 

agreement, they assumed no 

contractual duty to third parties.” 

The court also reversed its previous 

holding and ruled the Architect owed no 

duty of care to third parties under the 

“common law.”

Proximate Cause 

Edwards v. Wilson & Company (Kansas – 2011) 

City contracted with Architect for design of storm sewer 

improvement project. Architect’s design called for installation 

of large concrete pipe. Contractor installed pipe but portions 

failed and were removed and replaced. Removed pipe was 

placed in a vacant lot adjacent to the project site. 

In anticipation of claim relating to pipe failure, Contractor 

sought to cut samples from the removed concrete pipe. 

Contractor’s employee Edwards stood on top of the removed 

pipe to make a longitudinal cut with a saw. The pipe split 

open, separated, and rolled outward, causing Edwards to fall 

and be crushed when the pipe rolled on him.



Edwards’ family commenced suit against 

Architect claiming that Architect’s negligent 

design for pipe bedding led to it being removed 

thereby creating need for forensic testing which 

led to the accident causing Edwards death.



The Court affirmed the granting of summary judgment dismissing Edwards’ 

case ruling that the Architect’s negligence was not the proximate cause of 

Edward’s death. The Court defined proximate cause as "…a cause which in 

natural and continuous sequence, unbroken by intervening cause, produces 

the injury…” and held that intervening events broke any causal connection 

between the Architect’s negligence and the death of Edwards.

CONTROL and Liability for Worksite Injuries 

Presley v. CRSS D.C. (2011) 

Plaintiff, an employee of the 

Contractor for the renovation of the 

U.S. Department of State Building, 

was seriously injured when a 

subcontractor’s crane knocked him off 

a cooling tower. 

Owner contracted with CRSS to 

“…physically inspect work…review 

work for code compliance and 

monitor labor and safety 

requirements…” 

However, CRSS was “…not responsible 

for and will not have control or charge 

of construction means, methods, 

sequences or procedures; safety 

programs or procedures; or for acts or 

omissions of other contractors, agents 

or employees, or any other persons 

performing any of the work…” 

Plaintiff installing fan 

shrouds for 

Cooling Towers



Plaintiff claimed that a statutory duty existed under the 

obligations imposed by the DC’s Industrial Safety Act, and 

that CRSS assumed a common-law duty of care to Presley by 

undertaking to monitor safety conditions in its contract. 

The Court found that CRSS lacked the requisite "control or 

custody" over the workplace to be subject to statutory 

liability under the ISA. The Court emphasized that CRSS did 

not own the worksite, did not promulgate safety regulations, 

had only limited authority to stop work, did not normally act 

directly to rectify safety violations, and was not required to 

maintain a constant presence at the workplace.



The Court also determined 

that CRSS owed no common 

law duty to plaintiff noting 

that the Owner had retained a 

skilled construction contractor 

who was obligated to 

implement safety procedures. 

In contrast, CRSS agreed to perform only the limited duties of a contract 

compliance consultant, not the more extensive duties of a safety engineer or 

general contractor. The Court concluded that “… imposition of a duty may be 

appropriate in other cases, with different contractual arrangements, or where 

the actual performance of the contract indicates a measure of control of the 

worksite, it is not appropriate to do so based upon the facts in this case.


Estate of Roger R. Jewell v. William C. Larsen, P. E. (NY) 

While engaged in construction of a water tower, Contractor’s 

employee, Roger Jewell, fell to his death. 

The jury rendered a verdict against the Engineer finding a 

failure to properly monitor the Contractor’s safety practices. 

The contract gave the Engineer authority 1) to act as the 

Owner's representative in all matters pertaining to the work of 

the contract, 2) to discharge any employee who "endangers 

the safety of persons in the vicinity, whether or not employed 

by the Contractor” and 3) to declare the Contractor in default 

for failing to follow the instructions of the Engineer. 

The Engineer appealed the multi-million dollar verdict.


Estate of Roger R. Jewell v. William C. Larsen, P. E. (NY) 

“In our opinion, these 

provisions of the contract, 

taken together, gave Larsen 

Engineers sufficient authority 

to supervise and control the 

safety practices of the 

Contractor, to impose upon 

Larsen Engineers liability under 

Labor Law § 240. 

The jury’s verdict is affirmed“

Mediation Arbitration Litigation 

No decision. 

Limited downside. 

Can be effective. 

Get it off your chest. 

On average a good 

idea 

BINDING decision. 

On your tab. 

No effective appeal. 

Risky selection process. 

Depends on Arbitrator. 

BINDING decision. 

Jury in many cases. 

Appeals & Motions. 

Supervised Discovery. 

Depends upon Judge. 

(Commercial Part)

Arbitration or Litigation 

Key is consistency among all contracts. 

Typically best to have all parties 

with potential liability in same forum at same time.

Choice of Law, Venue, Limitations 

“This Agreement shall be 

governed by the law of the 

State of New York or the 

jurisdiction in which the 

Project is located” 

“Actions will be venued in 

Onondaga County” 

“Causes of action shall accrue upon substantial completion” 

-Can specify applicable law. 

-Can specify location of litigation within the State. 

-Can specify commencement of running of Statute of 

Limitations

In Conclusion 

Sam Vulcano svulcano@sugarmanlaw.com

This concludes The American Institute of Architects 

Continuing Education Systems Program 

Laurel Tenuto, Client Risk Management Coordinator 

Laurel.Tenuto@lrlicorp.com 

Barbara Sable, Director, Professional Enterprise Risk Solutions 

Barbara.Sable@rlicorp.com

Review of Significant Cases Involving Design Professionals

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