constrobservationConstruction observation is a powerful weapon for architects and engineers (A/E) in their risk management arsenal. Certain clients understand the benefits when A/E firms offer construction phase services. However, driven by slow economic conditions, many clients are asking firms to do more, with less, including reducing or eliminating construction phase services. Other clients decide they will administer the construction contract themselves or decide to use a third party instead of the A/E firm. Clients have also held the A/E to a higher standard of care when providing construction observation services. How do these actions affect A/E firms?… It significantly increases the A/E’s risk and liability exposures.

Construction Phase Risks

Details in design documents cannot anticipate every contingency that may occur during the construction phase. If the A/E firm of record is not retained to provide clarification of the plans and specifications the risk of misinterpretation of the contract documents increases. Bad decisions can lead to project confusion, delays, increased costs, disputes and claims between the owner and the A/E.

The exposure of the A/E is increased due to certain owners and contractors asserting that the designer has a similar responsibility of the contractor for discovering all defects on the project. Based on this distortion and unrealistic expectation of construction observation services, owners and contractors have stated the A/E should be a guarantor of the contractor’s work. These expectations dramatically increase the A/E’s standard of care and risks associated with construction phase services. Court decisions have ruled in Owners’ favor holding that the A/E has a duty to guard the owner against all non-conforming work on the project, although much of that work was completed when the firm was not present on-site. Members of the plaintiff’s bar continue efforts to hold the A/E accountable for this higher standard of care for construction phase services. Continue reading “Construction Observation: Important Risk Management Service”

Familiar Faces in the 2014 Architect 50

The Architect 50

We love seeing our members’ design clients on any premier list of architects. Scrolling through the brand new 2014 ARCHITECT 50 list from Architect Magazine, we’re excited to see several familiar names, including Brooks + Scarpa Architects and Mark Cavagnero Associates.

Each year, Architect Magazine strives “to compile a list that recognizes firms small and large, who are making their mark beyond just their ability to run a financially lucrative business. This year, [they] added a few new data points, capturing information on how firms are helping their interns gain licensure, both through financial incentives and culture. And [they] asked firms to submit a portfolio with an energy-efficient project that best exemplified their commitment to sustainability.” Read more about the methodology behind the annual selection of the Top 50 here.

More detailed lists of the Top 50 in Design, Top 50 in Business, and Top 50 in Sustainability are available on the Architect Magazine website, too. Congratulations to all the winners!

Graduation2

We’re proud to announce that the American Institute of Architects (AIA) panel–which includes a/e ProNet member Tom Coghlan of Design Insurance Agency, Inc.–has selected Kevin Fletcher and Nathan Blair to receive the 2014 a/e ProNet AIA David W. Lakamp Scholarship.

The scholarship program was initiated by a/e ProNet in 1990, and includes an annual award of $5,000 to two architecture students who demonstrate a particular interest in the principles of management in architecture practice.

You can read more about our scholarship and how to apply next year at our website. But here, let’s learn a little more about the next generation of leaders in the architecture community.

Kevin Fletcher

Kevin Fletcher grew up in Miami, FL and will be completing his Bachelors of Science in Architecture at Wentworth Institute of Technology in 2015 with plans of attending graduate school in the fall of 2015. During his time as an undergraduate student, Fletcher, a Dean’s List Scholar, has remained an active member of the American Institute of Architecture Students (AIAS).

In the summers throughout his college education, Fletcher has gained experience working as an Intern at BC Architects AIA, Inc. Prior to graduation, he has applied his talents in areas of marketing presentations, conceptual design, design development, and construction documents. All of which have contributed to his understanding of building systems, codes, and construction methods. Following graduate school, Fletcher plans on pursuing his NCARB registration along with his LEED accreditation.

Apart from his academic and professional involvement within the field of architecture, Fletcher has spent time developing skills in other areas of graphic design, photography, and videography. All the while, maintaining an active lifestyle along with a passion for travel.

Nathan Blair

Mr. Blair graduated with a Bachelor of Science in Architecture from the University of Utah in 2014. He will be returning to the U of U in the fall to complete work on a Masters of Architecture with an expected graduation in 2016. Mr. Blair is currently employed with Epic Engineering located in Heber City, UT. He has immensely enjoyed his time there helping to grow a newly established architecture department. Upon completion of the Master’s degree program, it is Mr. Blair’s intention to seek fulfillment of IDP credit hours with Epic Engineering.

Mr. Blair’s design interests center around identifying and isolating the spirit of our time with an affinity for communicating these visions through contemporary materials and methods. Mr. Blair was recently able to implement these ideologies by competing in the CTBUH Student Tall Building Design Competition, receiving positive remarks. He is also looking forward to participating in the University of Utah’s DesignBuildBLUFF program.

During his free time, Mr. Blair will most likely be found fly fishing. He also enjoys playing tennis, golf, billiards, and getting sushi on the weekends. Mr. Blair is constantly striving to improve himself personally and professionally, and concludes in his own words, “My name is Nathan Blair. I’m a lifelong student, an aspiring architect, and I’m a Mormon.”

Congratulations, Kevin & Nathan! We wish you both the best of luck in your academic and professional careers.

The ALS Ice Bucket Challenge is everywhere these days. From the guy next door to your favorite aunt and uncle to Gwenyth Paltrow, it seems everyone agrees that raising money and awareness to fight “Lou Gehrig’s Disease” is worth a deluge of ice water over their heads and capturing the hilarity on camera. Donations from the campaign have already topped $53 million! Thank you to the Novedge Blog for collecting a few videos of architects taking the challenge and challenging one another, all for a good cause! Here are a couple more good ones we found:

FitzGerald Associates Architects

Continue reading “Architects Taking the ALS Ice Bucket Challenge!”

marijuana_wallpaper_plants_nature_wallpaper_1024_768_1169Two states have legalized the recreational use of marijuana within the last year, and it feels like the trend will continue to unfold, too. How does the state-level legalization of a federally-restricted of a narcotic impact workplace drug policy? Our April 2014 Guest Essay, authored by Stephanie Rawitt of Clark Hill, seeks to answer this very question for you. The following is an excerpt of that essay. You can download the full PDF of the newsletter for free from our website.

In a wave of change that children of the 1960s only dreamed, debated and theorized about, almost half of the states in the United States have now passed laws legalizing the controlled distribution of medicinal marijuana, and two states have even legalized the sale of recreational marijuana. While this could truly be the “Dawning of the Age of Aquarius” straight out of the Broadway musical Hair, these new laws raise a variety of questions for employers who have drug screening programs or any type of drug-free workplace policy. The big question for employers is – are their drug-free workplace policies still enforceable? More specifically, what happens when an employee or job applicant with a prescription for medical marijuana fails a drug test? Will employers who discipline employees using medical marijuana who fail drug tests face liability under the Americans with Disabilities Act or their respective state anti-discrimination laws? While in one sense, there are easy answers to the questions raised by the states’ legalization of marijuana, there are many grey areas which require employers to understand their state and local laws and also to pay attention to the landscape of this evolving issue.

For the most part, courts have been affirming an employer’s right to enforce its drug-free workplace policies. Despite the increasing rise of the states’ respective medical marijuana laws and the legalization of recreational marijuana in Colorado and Washington, marijuana possession and use is still illegal under federal law. The Controlled Substance Act (CSA) categorizes marijuana as a Schedule I drug, which means that it has a strong potential for abuse and is not currently recognized by the federal government as an acceptable medication. See, 21 U.S.C. §§811-812. In 2005, the U.S. Supreme Court held that the possession of marijuana is illegal under the CSA regardless of whether a state allows the use of medical marijuana. Gonzales v. Raich, 545 U.S. 1 (2005). Plainly, with reference to this issue, federal law will pre-empt state law where there is a conflict between the two.

Given that marijuana use and possession are illegal under federal law, employers that have federal contracts or are subject to federal drug-free workplace regulations should not need to change or modify their existing policies. These employers should continue to comply with applicable federal law, even if they are located in a state where marijuana has been legalized for medicinal or recreational use. Continue reading “Stirring the Pot: Workplace Drug Policy Implementation in the Era of Legalized Medicinal and Recreational Marijuana”

We hope you’ve all been having a hot, sporty summer! In that vein, we’d like to congratulate an a/e ProNet client, Keisker & Wiggle Architects, Inc. The United States Tennis Association (USTA) recently named the Indian Wells Tennis Garden as its 2014 Featured Facility Award winner. Keisker & Wiggle, a Capistrano Beach, California firm, did the master plan and layout of the renovation for Stadiums One and Two.

Indian Wells Tennis Garden

In addition, Indian Wells Tennis Garden has been recognized as one of 12 winners of the USTA’s 33rd annual Outstanding Facility Awards Program, recognizing excellence in the construction and/or renovation of tennis facilities throughout the country.

Opened in March of 2000, Indian Wells Tennis Garden is home to the second-largest tennis stadium in the world, with the main stadium seating 16,100 fans and includes 44 stadium suites, broadcast and media facilities and an 8,000 square foot food commissary.

Representatives will be honored during the upcoming US Open at the USTA Awards Breakfast on Sept. 1, during the association’s Semi-annual Meeting. The award recognizes one facility from among all those that meet the criteria for an outstanding facility award. The “featured facility” exemplifies the highest level of excellence in facility design; court construction; court amenities; and other related components such as strong programming and implementation of 10 and Under Tennis.

“The Indian Wells Tennis Garden has embraced many of our initiatives, including youth tennis utilizing 36- and 60-foot courts, introducing thousands of new players to the sport each year,” said Kurt Kamperman, Chief Executive, Community Tennis, USTA. “It is outstanding tennis facilities like the Indian Wells Tennis Garden that help us grow the game at the grass-roots level, and for that reason and so much more, we are proud to recognize the Indian Wells Tennis Garden for its ongoing impact and contribution to the sport of tennis.”

Shout-out Credit:

Alicia K. Igram, AAI, VP & Branch Rep
Design & Consulting Liability Specialist
IOA Insurance Services – Aliso Viejo, CA
Email: Alicia.Igram@ioausa.com / Phone: 949-680-1789

The Travelers Contract Solutions Matrix

travelerslogoWhen it comes to insuring architects, engineers, and design consultants, one thing the top-tier Professional Liability insurance providers have in common is a wealth of risk management resources for their clients. Some of these resources are even made available to the public. For example, in the past, we’ve blogged War Stories: Real-life Claims Scenarios from Victor O. Schinnerer and Beazley Pro, a new publication from Beazley.

But if, in the course of the day, you come up against an insurance term you wish you understood better, the Travelers Contract Solutions Matrix is a good place to look for your answer

Organized glossary style, this index begins with A Well-Written Contract and ends with Waiver of Subrogation. It’s a place to find definitions, explanations, examples, and answers to frequently asked questions, each presented in the form of a concise two-page document. Other relevant topics included are Additional Insureds, Duty to Defend, Requests for Information, and Unauthorized Changes.

The following is an excerpt from the Travelers Contract Solutions Matrix document on Insurance Requirements:

III. Negotiating points

Policy Limits. You may be asked to provide higher limits than you maintain under your current professional liability or other insurance policy. You may be able to recoup that additional cost of higher limits from the other party to the contract through higher fees. In some cases, specific job excess or specific client excess coverage is available to increase limits on a single project or for a single client.

Length of Obligation. Since professional liability coverage is written on a claims-made basis, you may be asked to maintain the coverage for years following completion of the project. You should negotiate a reasonable period of time in light of the economics of the project and the applicable statute of limitations/statute of repose.

Insurability. Typically, professional liability policies do not cover express warranties and guarantees or liability assumed by contract (liability beyond what a design professional would normally have under the law). Therefore, it is important to evaluate each provision in a proposed contract to verify that you are not guaranteeing your work or being held to a standard of care that is greater than what is imposed by law. In particular, any indemnity clause should be carefully reviewed for this issue.

Download the full PDF version of this resource to find information on Professional Liability, Commercial General Liability (CGL), Workers’ Compensation and Employers’ Liability, and Commercial Auto Liability.

We hope this perk from Travelers is helpful to you. Of course, if you have insurance questions, you can always contact your local a/e ProNet broker and get a quick, straight, specialized answer.

wooden gavel and books on wooden table,on brown background

The following is an excerpt from a recent Gordon & Rees LLP article entitled California Supreme Court Holds Principal Architects Owe Duty of Care to Future Homeowners:

On July 3, the Supreme Court of California published its decision in Beacon Residential Community Assn. v. Skidmore, Owings & Merrill. In short, the court concluded that prime architects designing residential buildings owe a duty of care to future homeowners even though they do not actually build the projects themselves or exercise ultimate control over their construction.

Of importance, Beacon involved a demurrer at the trial court level meaning that, on appeal, the Supreme Court was required to accept the facts pled in the plaintiff’s amended complaint as true. This included the allegation that the Beacon project’s designers provided their services “knowing that the finished construction would be sold as condominiums.” It also was claimed that the defendants played an active role throughout the construction process, including coordinating efforts of the design and construction teams, conducting weekly site visits and inspections, recommending design revisions as needed, and monitoring compliance with design plans. For their various services, the designers were reportedly paid $5 million. The plaintiff alleged that negligent design work resulted in several defects, including extensive water infiltration, inadequate fire separations, excessive solar heat gain, structural cracks, and other safety hazards…

Although not a total loss for the design community, Beacon will have the effect of expanding architects and engineers (A&E) liability to a broader spectrum of claimants and generally keep A&E defendants in lawsuits for longer periods of time.

For an explanation of the court’s decision, including a concise summary of the affects of the ruling on Architects and Engineers, visit the original Gordon & Rees post by attorney Dion N. Cominos.

Complex precedents like this are just one of the reasons why A&Es are best served by consulting specialist brokers about their Professional Liability insurance needs. Does your current professional liability insurance policy include pre-claims assistance? How about the latitude to choose your own council in the event of of a claim? Call your local a/e ProNet Broker and get answers to these questions today.

PNN_201403_Waiver of Subrogation A Valid Defense for Architects and EngineersAn attorney is asked to defend an architect in a claim for defective design of a geothermal HVAC system, which allegedly caused an explosion and several million dollars of property damage to an owner’s manufacturing facility. He reviews the file, making notes. The plaintiff is the owner’s casualty insurer, which has paid the claim and sued the general contractor in subrogation. It’s actually the general contractor who has named the architect as a third-party defendant, seeking contribution and indemnity. All sorts of interesting defenses present themselves: statute of repose (work was completed years ago), no common law indemnity claim, no negligence…but what about the contracts for the original project?

Contained within the AIA A201 General Conditions is a boiler plate “waiver of subrogation” clause. It appears to bar subrogation claims for damages covered by insurance on the property. The owner’s carrier picked up the tab, so how can it sue in subrogation now? Are these waivers of subrogation provisions enforceable?

Since the project is in North Carolina, our inquiry starts with a 1987 North Carolina Court of Appeals decision, St. Paul Fire & Marine Insurance Company v. Freeman-White Associates, Inc. The case involves an architect who performed design services for a Charlotte, North Carolina hospital. During construction, a wing of the hospital collapsed, causing significant property damage. The hospital’s insurer paid the claim under an “all risk” policy and then sued the architect in subrogation. The agreements between the parties to the construction incorporated the AIA A201 General Conditions, including its standard waiver of subrogation clause, and the clause was applied by the trial court to dismiss the complaint against the architect under Rule 12(b)6. Unfortunately, on appeal, the court of appeals declined to enforce the waiver of subrogation provision and reversed the trial court’s dismissal.

The rationale? The appeals court held that because the contract required the architect to provide coverage for its own errors and omissions, the contract was susceptible to two interpretations: 1) the true intent of the contracting parties was that the owner would waive all claims for damages against which the owner had insured itself; or 2) the contracting parties intended for the architect to insure against its own negligence in order to negate the waiver as to losses caused by the architect’s negligence.

Not a great result for the client. However, St. Paul Fire & Marine Insurance Company v. Freeman-White Associates, Inc. is a 1987 decision. Surely there has been some better law made since then…

Waiver of Subrogation in General in Construction Contracts

“Subrogation is the substitution of [one person or entity] to the position of another, an obligee, whose claim he has satisfied…” Thus, in the insurance context, the doctrine of subrogation allows an insurer who has indemnifed its insured to step into the shoes of its insured and sue any at-fault party which may have caused the damages. The right of subrogation may arise by equitable, common law principles, or by virtue of any express assignment in the insuring agreement. The policies underlying subrogation are appealing: 1) it feels “fair” that the ultimate liability for a loss should land on the wrongdoer, not an insured’s insurer; 2) in theory, subrogation should keep insurance premiums down; and 3) parties remain incentivized to avoid mistakes. In addition, fault-based claims in the midst of construction can cause delays and increased hostility during the project. Costly litigation would ensue, the avoidance of which was one of the purposes for which the property insurance was originally obtained. Continue reading “Waiver of Subrogation: A Valid Defense for Architects and Engineers?”