So What’s the Point of Jobsite Visit? • To Ensure work is in “General Conformance” – Avoid obligation of taking measurements or making exhaustive inspections – If non-conforming: REJECT IT ▪ It is Designer’s DUTY Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 30
Means and Methods • Design Professional not supposed to make sure the Means and Methods of work are in conformance – Example: ▪ NOT: This is how you weld ▪ BUT: Welding is in place • Concern is the Final Result… – Not how it got done Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 31
Means and Methods Example • The roof of a new building is to be framed with wood trusses • The design documents require the installation of the trusses comport with certain published industry standards that include requirements for bracing the trusses • The standards require that one should “See a registered professional engineer” for the design of bracing patterns for trusses of the size to be installed in this case • During construction, the trusses are not properly braced, they are improperly loaded, and the trusses collapse, injuring a worker Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 32
Lawsuit • Lawsuit allegations: – The architect and structural engineer improperly approved incomplete truss shop drawings, which did not include a bracing plan – The design professionals did not conduct a site visit during the “critical” stage of the truss erection, at which time they could have seen the bracing and loading problems and acted to correct them Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 33
Over Budget? • How can designer limit liability when construction costs exceed budget? – Put it in the contract – 2.1.7.2: …Neither the Architect or Owner has control over the cost of labor, materials or equipment, over the Contractor’s methods of determining bid prices, or over competitive bidding, market, or negotiating conditions. ▪ Accordingly, the Architect cannot and does not warrant or represent that bids or prices will not vary from the Owner’s budget or from any estimate by the Architect Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 34
Minimizing Risk • How else can a design professional minimize his/her risk? – Communication with the Owner/Client ▪ Contract language is one thing… » But make sure the Owner is still AWARE of the scope/limits/role Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 35
Designer’s Own Plans • Designer is responsible for own plans and drawings • Be mindful not to overstep boundaries • Watch out for shortfalls as well! Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 36
Case in Point • Design and construction of new jail cell and gym • Designer: provided shoring for jail cell decking • No shoring detail for gym decking – Concrete pour takes place, and deck collapses ▪ Two workers seriously injured Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 37
Lawsuit • Workers file lawsuit against owner, contractor, subcontractors, AND architect – Architect: “I was not even required to provide shoring detail for jail cell decking” – Plaintiff: “Why put it in one place but not the other?” • So was it architect’s responsibility to include in both places? • Spoiler alert!!! – Plaintiffs had expert architect who testified it was designer’s responsibility Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 38
Lesson • Don’t extend your own scope • Details: ALL OR NOTHING Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 39
Shop Drawings • One of several sets of drawings that are prepared throughout the design and construction process • Prepared by the contractor, subcontractors, or material suppliers ▪ Show specific and detailed areas of work and how it will fit into the puzzle • Fine-tuning method to implement the initial design concept into the intended final product Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 40
Submittal Process • Intended to verify that the interpretation of the construction documents by the contractors and subcontractors is in compliance with the design intent of the design team – prior to manufacture and installation of the components identified in the submittal. Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 41
Responsibility with Shop Drawings • In General: – Work detail laid out in contract = design professional’s responsibility – Work detail NOT described in contract = contractor’s responsibility for preparing the detail (and owning up to any defects) Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 42
Clarification • Size of building columns and floor beams: responsibility of the designer • Detailing the connections between the two: responsibility of the contractor – UNLESS: unique loading requirements exist Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 43
Hyatt Regency Hotel, Kansas City, MO Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 44
Disaster 4 th floor skywalk buckles, collapses onto 2 nd floor • skywalk, both collapse to ground • 114 killed; hundreds injured Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 45
Designer Error • Design of hanger rod connections was changed – Fabricator changed design from one-rod system to a two-rod system to simplify the assembly Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 46
Finger Pointing • Fabricator testified that it contacted Engineer for change approval • Engineer denied call ever took place • Smoking gun: Fabricator made change to contract’s Shop Drawings and Erection Drawings – Engineer received revised Shop Drawing and Erection Drawing… – And returned it with its stamped seal of approval Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 47
Shop Drawings Example • Design and construction of a new dining facility on a college campus • Architectural documents called for a metal roof. One type of metal roof was indicated in the drawings; another type was called for in the specifications • Roofer attempted to clarify this discrepancy in the submittal process. • In the midst of the submittal process, the building owner made the decision that the new roof should visually match the metal roof on another campus building. • The shop drawings ultimately approved by the architect reflected the owner’s request. However, the manufacturer's product data that was approved by the architect required an additional solid substrate that was not called for in the original design documents. Neither a directive to install the additional component nor approval for what would have been the corresponding additional cost was issued. Thomas G. Cronin, Esq Gordon & Rees • As a result, the solid substrate was never installed, and the roof Chicago, IL leaked. tcronin@gordonrees.com (312) 980-6770 48
How About “Approved as Noted?” • Installation of roofing system on large project – Roof required to have Class C fire rating – Sub submitted shop drawings to Architect, and Architect approved and forwarded roof system submittal to Sub – Sub made changes and proposed an alternate roofing system – Architect stamped new submittal “Approved as Noted,” with notation that new system must be Class C and that Sub must get certification from manufacturer that roof system is code compliant Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 49
Lawsuit • Sub never confirmed with product manufacturer, installed roof system • Surprise, Surprise… Roof system NOT code compliant • Removal and replacement of entire roof system: $3.5 million -Translation: LAWSUIT – Allegation: Breach of standard of care for “conditionally” approving a non-compliant roof system without determining whether it would meet specified fire rating Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 50
Avoidable? • Best Practice: Request contractor to submit confirmation that new material is code-compliant • Put the onus back on contractor • Doing so would have avoided litigation here… • And if contractor failed to confirm, litigation—if any—would have been brief Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 51
So What Gives? • Even when you spell it out, litigation can ensue – Especially with that much $$$ involved Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 52
What About Installation of Materials? • What should the architect do if contacted about proper installation method for material or product? – Direct contractor to manufacturer’s own product and installation materials ▪ THAT’S IT! ▪ Don’t overextend your scope! Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 53
But… • If you do provide guidance about installation… – Make sure it is consistent with manufacturer’s installation instructions!!! Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 54
What if it’s Broken? • If product or material fails to function properly, who’s to blame??? – Improper substitution: Contractor – Improper installation: Installer – Inherently defective: Manufacturer • Designer’s liability: much more limited – Standard of Care to the rescue – Responsible for using typical skill and care of other designers in preparing plans and specs Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 55
Punchlist • Different level of inspection from general observations • More detailed to determine whether substantial completion and final completion are attained • A/E is NOT the guarantor of Contractor’s work… …but there is a higher level of scrutiny Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 56
Contractual Provisions to AVOID • Be wary of contract provisions that can increase the design professional’s potential liability Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 57
Avoid 1) Elevation of Ordinary Standard of Care -Class, we’ve been through this… -Never guarantee results such as schedule, costs, or performance -Never agree to perform to the “highest standards” -Not only will this elevate your risk of liability, but most insurance policies exclude coverage where a designer guarantees or warrants a result! Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 58
Avoid 2) Indemnification of Non-Clients -Agreeing to defend and hold harmless the Owner from claims and damages arising from the designer’s errors and omissions is one thing… -But a sneaky owner may try to include its agents, officers, employees, and even the general contractor Solution: Limit indemnification obligations to designer’s OWN errors and omissions! Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 59
Avoid 3) Control over Jobsite -Avoid scheduling and sequencing any work -Avoid jobsite safety responsibilities If Design Professional does not avoid these, it is now exposed to liability for work site accidents! Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 60
Avoid 4) Absolute Conformance of Job Drawings to Contract Docs -Should review shop drawings for conformance with the general intent of the contract documents -Can be held liable for failing to observe deviations from the design BUT…Avoid increased responsibility such as reviewing to ensure that they ABSOLUTELY COMPLY with the contract docs Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 61
Risk Transfer • Means exactly what it says • Several ways for Design Professional to shift risk – Additional Insured – Indemnification – Limitation of Liability Thomas G. Cronin, Esq Our focus will be on the last 2 Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 62
Indemnity Indemnity: The obligation to make good any loss or damage another party has incurred or may incur by acting on the party’s behalf or in the party’s benefit The Indemnitor is the party who, by contract, has agreed to indemnify the Indemnitee from or against a loss Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 63
Anti-Indemnification Statute • Illinois public policy prohibits indemnification of a party by contract for its own negligence • Construction Contract Indemnification for Negligence Act (740 ILCS 35/0.01, et seq. ) – With respect to contracts or agreements, either public or private, for the construction, alteration, repair or maintenance of a building, structure, highway bridge, viaducts or other work dealing with construction, or for any moving, demolition or excavation connected therewith, every covenant, promise or agreement to indemnify or hold harmless another person from that person’s own negligence is void as against public policy and wholly unenforceable. Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 64
Indemnification Act – The Indemnification Act will be applied BROADLY ▪ Practically no activity that is even remotely related to construction for which the Act does not apply (such as crane rentals) Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 65
The Real Effect of Indemnity • Waiving Kotecki – Kotecki: Illinois law that limits an employer’s exposure to amount it paid in worker’s compensation – Can be waived through indemnification provision Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 66
Typical Hold Harmless Agreement • “SUB shall indemnify and hold harmless owner, GC, its agents and employees, from any and all claims, suits, losses and expenses, provided that such claim, suit, loss, or expense is attributable to bodily injury, sickness, disease or death, or injury to property, which is caused by (a) negligence of SUB, its agents, employees, subcontractors, or suppliers; or (b) a defect in material or workmanship of the work or any portion thereof.” – Result = Kotecki cap waived – Employer’s liability now UNLIMITED Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 67
Desired Inclusion for Design Professional • Usually, both owners AND design professionals will want language that waives Kotecki limits of the employer of an injured worker • Best Practice: INCLUDE IT! Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 68
Limitation of Liability • Architect/Engineer’s most likely adversary in litigation? The Owner Limitation of Liability = another avenue to control risk Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 69
Limitation of Liability Clause • Means exactly what it says – Limits or confines the amount of damages that can be obtained from the architect/engineer in judgment or arbitration award – Will NOT prevent a large judgment against design professional if anyone other than the owner/client wins ▪ Clause only relates to the parties who made the agreement Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 70
How Can Liability be Limited? 1) Limit exposure to certain $$$ amount -Can be achieved by either: -Stating specific dollar amount; or -Setting the amount to correspond to professional’s fee Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 71
Example – Owner agrees, to the fullest extent permitted by law, to limit the liability of Architect to the Owner for any and all claims, losses, costs…so that the total aggregate liability of Architect to Owner shall not exceed Architect’s total fee received for services rendered on the Project. It is intended that this limitation apply to any and all liability or causes of action however alleged or arising, unless specifically prohibited by law. ▪ Caps liability to amount received Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 72
How Else Can Liability be Limited? 2) Limit exposure to available insurance -Theory: Client should only be able to collect damages up to the amount of available insurance -Protects design professional from personal exposure (excess judgment) Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 73
Example • Owner may recover from Architect on account of any negligent act, error or omission…which arise or are in any way related to any services performed hereunder, only that amount equal to the insurance proceeds then available from Architect’s professional liability (errors and omissions) policy payable with respect thereto on the date any judgment is entered – INTENT of parties that Architect’s total liability to Owner is capped by available proceeds Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 74
Why This is Tricky • Owner’s perspective: – Architect has $1M policy – But once Owner files suit… ▪ Attorney’s fees ▪ Expert fees ▪ More attorney’s fees… So how much will be left (i.e. available) by judgment??? Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 75
Owners Reluctant to Include • Puts risk on the Owner – Typically unwilling to agree to Limitation of Liability clause, especially if paying Architect a large fee • But MUST be included in certain situations: 1) Providing free services (i.e. church, nonprofit organization) 2) Work for relative or friend at low cost Thomas G. Cronin, Esq 3) Performing work at greatly reduced rates Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 76
Contract Language to the Rescue • Thompson v. Gordon Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 77
Background • 1991 – Development of shopping mall in Gurnee, IL Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 78
Contract Requirements • Project included the need to accommodate expected increase in traffic • Engineer contracted to design: – 2 ramps from expressway – Replacement bridge deck surface over expressway Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 79
Replacement Bridge Deck • Original Bridge Deck: concrete median measuring 6 inches tall x 4 feet wide • Replacement Bridge Deck: increased median height by 1 inch • Completed in 1992 Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 80
Accident • November 1998 • Thompson family traveling WEST • Christine Gordon traveling EAST • When… – Gordon loses control… – Hits the center median… – Catapults into the air… – And lands on top of Thompsons’ car Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 81
Lawsuit • Thompsons bring a negligence action against many defendants…including Engineer • Plaintiff alleges that Engineer was negligent in “failing to design and construct a Jersey barrier” • Plaintiff: Jersey barrier would have prevented Gordon’s car from vaulting into the air when it hit the median Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 82
Litigation • Engineer files MSJ – No Duty to Plaintiff – Contract did NOT require median barrier analysis or design • Plaintiff responds – Expert Engineer: Engineer failed to meet standard of care by failing to include Jersey barrier Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 83
And so begins the legal journey… • Trial Court – MSJ granted – Scope of work limited to terms of contract • Appellate Court – Reversed – Plaintiff expert testimony establishes Engineer’s breach of duty Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 84
Illinois Supreme Court IL Supreme Court had to decide: – whether the contract imposed a professional duty of care on Engineer’s work… – and whether the alleged breach of its duty was subject to expert testimony in order to create a factual question Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 85
Findings • IL Supreme Court went right to the contract and its language – Standard of Care as set forth in the contract: »“The degree of skill and diligence normally employed by professional engineers or consultants performing the same or similar services.” Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 86
Supreme Court Analysis • 1. Contract only required Engineer to replace the bridge deck…not improve it (by adding a Jersey barrier) • 2. Standard of Care was limited to the degree of skill and diligence normally employed by engineers performing the same/similar services—here, replacing the bridge deck • 3. Because replacing bridge deck did not entail improving it—including adding or even considering a Jersey barrier—the Appellate Court wrongly allowed expert testimony that expanded Engineer’s duty in the contract Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 87
Added Insult • IL Supreme Court cited Appellate Court dissent: »a duty to investigate the need for an improved median barrier “imposes an obligation on [Engineer] that is not provided for in the contract.” »-a court cannot alter, change, or modify existing terms of a contract OR add new terms or conditions that the parties did not agree to Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 88
Notable Victories in Illinois Let’s take a look… Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 89
BEARS Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 90
BULLS Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 91
BLACKHAWKS Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 92
SOX Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 93
CUBS Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 94
Blago Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 95
DESIGN PROFESSIONALS Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 96
So What Does Thompson Mean for Design Professionals? It ensures that duties cannot be expanded outside the terms of the contract Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 97
Negotiation Strategies for Design Firms • Eliminate or limit contractual indemnity clauses • Explicitly exclude defense obligation • Explicitly limit defense to claims based solely upon A/E’s negligence • Negotiate Limit of Liability (LOL) on defense obligation if not overall project liability Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 98
Alternative Dispute Resolution • Incorporating Alternative Dispute Resolution in the contract can be beneficial and cost-effective – 2 different types: 1. Arbitration 2. Mediation Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 99
Arbitration • Binding process where parties present witnesses and evidence to unbiased arbitrator – Arbitrator usually chosen for his/her expertise in the field – Can be one-person or three-person panel – Courts inclined to enforce valid arbitration clauses Thomas G. Cronin, Esq Gordon & Rees Chicago, IL tcronin@gordonrees.com (312) 980-6770 100
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