Construction Law Seminar. Defense Practice Seminar Course Materials

Transcription

1 Construction Law Seminar Defense Practice Seminar Course Materials September 2012

2 All views, opinions and conclusions expressed are those of the authors and/or speakers, and do not necessarily reflect the opinion and/or policy of DRI and its leadership by DRI 55 West Monroe Street, Suite 2000 Chicago, Illinois All rights reserved. No part of this product may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or by any information storage or retrieval system, without the express written permission of DRI unless such copying is expressly permitted by federal copyright law. Produced in the United States of America

3 Course Materials Table of Contents Defending the Design Professional:... 1 A Review of Statutory and Contractual Defenses John P. Cahill, Jr. and Leslee N. Haas Choose Your Audience Wisely: Effective Techniques for Voir Dire Robert B. Hirschhorn Latest Developments in CGL Coverage for Construction Defects (2012 Update) Lee H. Shidlofsky Is Risk Transfer Risky Business? Contractual Indemnification, Additional Insureds, and OCIP/CCIP in the Construction Context Lisa J. Black Introduction to Construction Law: What You Need to Know When You Are Just Starting Out Diana Gerstberger and Robin D. Leibrock Making the Points to Win Your Case: How Juries Decide Nicole Whyte A Review and Update of Anti-Indemnity Statutes Kamy Molavi The Lack of Appeal of Arbitration for Non-Signatories Adrienne D. Cohen and Julie R. Ursic Advanced Techniques for Cross-Examination of the Technical Expert Toyja E. Kelley and Lydia S. Hu

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5 Defending the Design Professional: A Review of Statutory and Contractual Defenses John P. Cahill, Jr. Leslee N. Haas Hays, McConn, Rice & Pickering, P.C West Loop S., Suite 1000 Houston, TX (713) (713) [fax] jcahill@haysmcconn.com

6 John P. Cahill, Jr., has been licensed to practice law in the State of Texas since of November He graduated from Baylor University in 1983 with a Bachelor of Arts Degree and from Baylor University School of Law with a Juris Doctor in August He joined Hays, McConn, Rice & Pickering, P.C., as a shareholder on December 1, 1999, and serves on the firm s Management Committee. Mr. Cahill was a partner with the firm of Funderburk & Funderburk, L.L.P., where he practiced law from August 1984 until November of He concentrates his practice in the representation of architects, engineers, surveyors, real estate brokers, and others involved in the construction industry. Mr. Cahill has conducted numerous risk management seminars for various design professional organizations, insurance companies and brokers and for clients. Mr. Cahill was president of the Braes Bayou Little League and was an active baseball and basketball coach. He is a CCE instructor at St. Vincent de Paul Catholic Church in Houston. Leslee N. Haas has been licensed to practice law in the State of Texas since of November She graduated from the University of Texas at Austin with a Bachelor of Arts Degree in 1999 and from Texas Tech School of Law with a Juris Doctor in May She joined Hays, McConn, Rice & Pickering, P.C., as an associate in November Her practice areas include general civil litigation, construction litigation, commercial litigation, personal injury defense, product liability, premises liability, and employment litigation.

7 Defending the Design Professional: A Review of Statutory and Contractual Defenses Table of Contents I. Introduction...5 II. Statutory Defenses to Liability...5 A. Certificate or Affidavit of Merit, a/k/a, the Key to the Door...5 B. Alternative Procedural Requirements...6 C. Statute of Limitations...7 D. Statutes of Repose...7 E. Anti-Indemnity Statutes...8 III. Contractual Defenses to Liability...8 A. Construction Administration...9 B. Limitation of Liability Provisions in Contracts...10 C. Contractual Modification of the Statute of Limitations Period...11 D. Indemnity...11 E. Waiver of Subrogation...11 IV. Conclusion...12 Defending the Design Professional: A Review of Statutory and... Cahill and Haas 3

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9 Defending the Design Professional: A Review of Statutory and Contractual Defenses I. Introduction The purpose of this paper is to examine liability defenses for design professionals based upon statutory and contractual provisions. II. Statutory Defenses to Liability Several states have enacted various statutory provisions which effectively reduce or eliminate the liability of design professionals. These include Statutes of Repose, Certificates of Merit requirements, pre-suit review panels, and anti-indemnity statutes. A. Certificate or Affidavit of Merit, a/k/a, the Key to the Door Currently, twelve states require a Certificate or Affidavit of Merit as a prerequisite to pursuing claims against design professionals: Arizona, California, Colorado, Georgia, Maryland, Minnesota, Nevada, New Jersey, Oregon, Pennsylvania, South Carolina, and Texas. In most states, the design professional includes architects, engineers, and surveyors. A Certificate of Merit or Affidavit of Merit, in most circumstances, is an affidavit or certification by another licensed design professional setting forth facts in support of the plaintiff s claims of negligence or design defect against the design professional defendant. Some states, such as California, permit counsel for the Plaintiff to submit an affidavit stating that he or she has conferred with a professional licensed in the same discipline as the defendant and that, based upon the consultation, there is a meritorious basis for the filing of the suit. See Cal. Civ. Proc. Code (b)(1). Most states that require a Certificate of Merit dictate it be filed with the original complaint. Additional time is permitted if, due to limitations issues, a certificate cannot be obtained prior to the expiration of the limitations period. Other states require the Certificate of Merit be filed within a set number of days after the complaint is filed. For example, New Jersey requires the Affidavit of Lack of Care be filed within sixty days after the filing of the defendant s answer. N. J. Stat. Ann. 2A:53A-27. The ostensible purpose of a Certificate of Merit is to weed out frivolous claims against design professionals. As such, these statutes provide a mechanism for dismissal of the case in the event that a certificate of merit is not timely filed though some states allow an opportunity to remedy the failure prior to dismissal. Arizona provides that the court may extend the time for compliance with [the expert affidavit requirement] on application and good cause shown or by stipulation of the parties. Ariz. Rev. Stat. Ann California permits the attorney for the claimant to file a certification with the initial complaint stating that he or she was unable to comply with the consultation requirement due to limitations. Cal. Civ. Proc. Code In such cases, the certificate must be filed within sixty days after the filing of the complaint. However, other states provide no method for remedying the error. Texas is such a state. Texas statute requires the Certificate of Merit be filed with the initial petition, the exception being where the running of limitations is impending. Tex. Civ. Prac. & Rem. Code Ann A trial court has no discretion but to grant the defendant s motion to dismiss the complaint when a plaintiff fails to file a Certificate of Merit with the original complaint, though the court has discretion as to whether to dismiss with or without prejudice. Sharp Eng g v. Luis, 321 S.W.3d 748, 752 (Tex. App. Houston [14 th Dist.] 2010, no pet.). However, the distinc- Defending the Design Professional: A Review of Statutory and... Cahill and Haas 5

10 tion between dismissal with prejudice versus dismissal without prejudice may be rendered meaningless if the motion to dismiss is filed after the running of the limitations period. Under the current version of the Texas statute, there is no requirement that the motion to dismiss for failure to provide a certificate of merit be filed immediately instead of waiting until the expiration of limitations. Maryland has a mechanism by which there can be a time extension for filing the Certificate of Merit. Maryland s statute requires that the certificate be filed within 90 days of filing of the complaint or the defendant may move to dismiss the case without prejudice, though the deadline can be extended as long as the request is made within the initial ninety day period. Md. Code Ann. Cts. & Jud. Proc. 3-2C-02. A motion to dismiss is not a mandatory motion and may be raised at any time. Heavenly Days Crematorium, LLC v. Harris, Smariga & Associates, Inc., 202 MD. App. 252; 32 A.3d 155 (2011) writ of cert granted 425 Md. 227; 40 A.3d 39 (2012). The Court noted that it was sympathetic to [Plaintiff s] contention that the statute of limitations has run, effectively converting the August 16, 2010 dismissal without prejudice into a dismissal with prejudice. The Court further acknowledged that the result was potentially harsh where the statute of limitations had run because such claimants were time barred from refiling their claims, despite the fact that the claims may have been meritorious and timely when filed. 202 Md. App. at 281; 32 A.3d at B. Alternative Procedural Requirements Other states provide prerequisites for suits against design professionals. Kansas provides that a party may request an early screening of a malpractice case: (a) If a professional malpractice liability action is filed in a district court and one of the parties requests, by filing a memorandum, that a professional malpractice screening panel be convened, the judge of the district court shall convene a professional malpractice screening panel. If a claim for damages arising out of the rendering of or failure to render services by a professional licensee has not been formalized by the filing of a petition, any party affected by such claim may request, by filing a memorandum with the court, that a screening panel be convened and, if such request is made, the judge of the district court or the chief judge of such court shall convene a screening panel. If a petition or claim is filed naming more than one defendant or more than one person against whom a claim is being made, each defendant or person is entitled to request a separate screening panel. Kan. Stat. Ann ; see Health Care Props., L.L.C. v. Paul-Wertenberger Constr., Inc., 177 P.3d 428 (Kan. Ct. App. 2008) (applying statute to architect). The panel is comprised of three individuals licensed in the same profession as the defendant and a lawyer appointed by the court to serve as chair person without voting privileges. Kan. Stat. Ann (b). The panel issues a written opinion regarding whether the professional deviated from the standard of care which caused the claimant s alleged injury and there may be concurring and dissenting opinions. The panel s decision is not binding and either party may reject the panel s determination and proceed to trial The opinion may be admitted into evidence in any subsequent legal proceeding (c). Panel members may be subpoenaed to testify. Wyoming had previously enacted a mandatory panel review of all professional liability claims. However, the law was held to be unconstitutional in State ex rel. Wyo. Ass n of Consulting Eng rs & Land Surveyors v. Sullivan, 798 P.2d 826, 1990 Wyo. LEXIS 116 (Wyo. 1990). Florida mandates pre-suit notice providing a design professional or contractor the opportunity to inspect and cure alleged deficiencies. Fla. Stat The statute requires the claimant to serve written 6 Construction Law Seminar September 2012

11 notice on the contractor, subcontractor, supplier, or design professional, as applicable, describing the claim in reasonable detail sufficient to determine the general nature of each alleged construction defect and a description of the damage or loss resulting from the defect, if known. The design professional has thirty days to inspect and test. Within forty-five days of receiving the initial notice, the design professional must provide a written response to the claimant setting forth details of the inspection, willingness to make repairs and, if so, the scope and time table for repairs or whether the claims are disputed. The claimant may proceed with suit if the claim is disputed. If the design professional extends an offer, the claimant must respond either by accepting or rejecting the offer within forty-five days with the result of a failure to respond being a possible stay of any suit. However, Fla. Stat allows the parties to a construction contract to opt out of this as long as the contract contains the statutory opt out language. C. Statute of Limitations For negligence claims, the statute of limitations usually begins to run from the date of the injury. The discovery rule operates to extend the running of the limitations period until the date the claimant is in possession of enough information to where he is or should be aware of the claim. In Southwest Olshan Foundation Repair Co., LLC v. Gonzales, the court of appeals determined that the limitations period began to run when the homeowner noticed something was wrong with her foundation which occurred more than two years before she filed suit for defective foundation repairs. 345 S.W.3d 431 (Tex. App. San Antonio 2011, pet. granted). The homeowner asserted that she did not know the pilings used in the foundation repair were defective until she obtained a report several years later. The court rejected the argument explaining that the type of injury she complained of could have been discovered by the use of diligence. D. Statutes of Repose The vast majority of states have enacted a statute of repose benefitting design professionals. The most common repose period is ten years although several states have enacted substantially shorter times as well as repose periods that vary depending on the type of construction. In almost all cases, the statute begins to run from the date of substantial completion of the project. Oregon defines substantial completion as the date when the contractee accepts in writing the construction, alteration or repair of the improvement to real property or any designated portion thereof as having reached that state of completion when it may be used or occupied for its intended purpose or, if there is no such written acceptance, the date of acceptance of the completed construction, alteration or repair of such improvement by the contractee. Or. Rev. Stat (4)(b). Repose statutes have also been challenged as unconstitutional. Most courts determined that the repose statutes, as long as the time frame was reasonable, were constitutional. However, in at least one state, the statute of repose s constitutionality was successfully challenged. In Perkins v. Northeastern Log Homes, 808 S.W.2d 809 (Ky. 1991). Kentucky s statute of repose, barring suits against the design professional filed more than five years after substantial completion, was held unconstitutional. The Kentucky Supreme Court determined that the statute of repose was special legislation targeting certain defendants and types of claims and held it was unconstitutional because it would cut off rights before they accrued, essentially causing a claimant to sue before knowing he was injured. The Court explained that a statute of repose violates the Kentucky Constitution and would be impermissible even if the repose period was lengthened. Responsible third party statutes may impact statutes of repose. The Texas Supreme Court was asked to determine the interplay between the statute repose and the designation of a responsible third party. Under Texas contribution statute, a party could designate another entity or person as a responsible Defending the Design Professional: A Review of Statutory and... Cahill and Haas 7

12 third party liable for part or all of Plaintiff s claimed damages. TEX.CIV.PRAC.&REM.CODE A designated responsible third party does not become party to a suit, but will be listed on the jury charge as part of the proportional liability question. However, the statute originally provided that a plaintiff may sue a party designated as a responsible third party even if the limitations period had already expired if the responsible third party was sued within 60 days of the designation. In Galbraith Eng r Consultants, Inc. v. Pochucha, the Texas Supreme Court determined that a party designated as a responsible third party did not lose the defense of the statute of repose as it specifically extended limitations for a 60 days window after the court s order of designation: [W]hile statutes of limitations operate procedurally to bar the enforcement of a right, a statute of repose takes away the right altogether, creating a substantive right to be free of liability after a specified time. Thus, the purpose of a statute of repose is to provide absolute protection to certain parties from the burden of indefinite potential liability. The Court further explained that by allowing the revival of the claim barred by a statute of repose for the sixty day period described in Chapter 33, it would essentially nullify the repose statute since liability could be extended indefinitely through the designation of a responsible third party. The Court concluded that being designated as a responsible third party did not revive claims extinguished by the statute of repose. E. Anti-Indemnity Statutes As contractual indemnification provisions became a common occurrence, several states enacted what are called anti-indemnity statutes. As explained by the Arizona Supreme Court, Anti-indemnification statutes are primarily intended to prevent parties from eliminating their incentive to exercise due care. Because an indemnity provision eliminates all liability for damages, it also eliminates much of the incentive to exercise due care Ocotillo, LLC v. WLB Group, Inc., 196 P.3d 222, 219 Ariz. 200, 203 (Ariz. 2008). Most states have enacted some form of anti-indemnity provision. In general, anti-indemnity statues bar a party from contractually requiring another party to indemnify it for its own negligence. For example, Missouri enacted legislation voiding as against public policy any contract or agreement for public or private construction work, a party s covenant, promise or agreement to indemnify or hold harmless another person from that person s own negligence or wrongdoing. Mo. Ann. Stat New York has a similar provision which states, Agreements by owners, contractors, subcontractors or suppliers to indemnify architects, engineers and surveyors from liability caused by or arising out of defects in maps, plans, designs and specifications void and unenforceable. NY Gen. Oblig The practical effect of these provisions will be to negate negotiated indemnity provisions, in most instances, effectively limiting an architect or engineer to only indemnify an owner for the negligence of the architect/engineer or its consultants (of any tier). See, e.g., Tex. Ins. Code Ann (Vernon Supp. 2012); see also Ariz. Rev. Stat. Ann (voiding as against public policy indemnification provisions in construction and architect-engineer contracts for indemnitee s sole negligence); Mont. Code Ann (voiding indemnification for indemnitee s own negligence but permitting other contractual indemnification provisions). III. Contractual Defenses to Liability Contracts vary by Project, owner, the design professional and other variables, including whether the contract is an AIA form, EJCDC (NSPE), Consensus Docs, letter agreement, or, and yes, it happens, an oral agreement. To complicate matters, the form contracts are typically modified. And, to make matters worse, the parties conduct may do away with contractual protections. 8 Construction Law Seminar September 2012

13 A. Construction Administration Much litigation had discussed the extent of a design professional s construction administration responsibilities, including the duty to evaluate (not inspect) the work of a general contractor and subcontractors. A major source of potential liability for the architect or engineer relates to the provision of construction administration services. The B201, successor to the B141, defines construction administration services in Article 2.6, particularly Article which provides, in pertinent part, that The Architect shall provide administration in the contract between the owner and the contractor... Texas defines the Practice of Architecture to include observing the construction, modification, or alteration of work to evaluate conformance with architectural plans and specifications. Tex. Occ. Code Ann Typically, an Architect agrees to visit the site at most appropriate to the stage construction, or as otherwise required... Article , AIA Document B Many agreements and modifications in the scope of services provide that the architect may visit at specific intervals. This is significant in that, if an architect does not comply with specific agreements and, hence, his or her duties to make site visits, the language which exonerates the Architect from liability, as set forth in the general conditions or in the B201 may not become operative to reduce the liability of the architect. Where it is determined that the architect or engineer performed the agreed upon site visits, there is a significant advantage in defending the architect. The Florida Court of Appeals construed contractual language in which the Architect agreed to make periodic visits to the site to familiarize himself generally with the progress and quality of the work and to determine in general if the Work is proceeding in accordance with the Contract Documents and to endeavor to guard the Owner against defects and deficiencies in the work of the Contractor. The Owner agreed that the Architect would not be responsible for the acts or omissions persons performing project work. Shepard v. City of Palatka, 414 So. 2d 1077 (Fla. 5th DCA 1981). The court explained that the architects failure to make the agreed upon site visits could allow liability even in the face of the language that the architect was not responsible for the work of the contractors. Because it was determined that the architect had conducted site visits, it had no duty to detect the omission of the contractor and was absolved of liability for any such defect. In Black + Vernooy v. Smith, it was held that the architect owed no duty to third parties injured as a result of a defectively installed deck that separated from the house and fell injuring the claimants. 346 S.W.3d 877 (Tex. App. Austin 2011, pet. granted). The basis of the complaint was that under the contract between the architect and the homeowners, the engineer would periodically visit the construction site, to report observed deviations from the design plans to the [owners], and to guard the [owners] against defects in the construction of the home. The architect took pictures during site visits that showed certain construction defects. However, the court determined that this contractual duty did not extend to third parties and that the architect owed no common law duty to the claimant. Relying on the limiting language in the contract, the court explained that the contract between the architects and owners permitted the architects to reject the contractor s work but did not authorize the architect to control the actual work performed. As a result, it held that the architects owed no duty either under contract or common law to the third-party claimant. The case is currently pending before the Texas Supreme Court. AIA B , , contains language which, as identified above, protects the Architect from liabilities arising out of a Contractor s work: The Architect shall not have control over, charge of, or responsibility for the construction means, methods, techniques, sequences or procedures, or for safety precautions and programs in connection with the Work, nor shall the Architect be responsible for the Contractor s failure to per- Defending the Design Professional: A Review of Statutory and... Cahill and Haas 9

14 form the Work in accordance with the requirements of the Contract Documents. The Architect shall be responsible for the Architect s negligent acts or omissions, but shall not have control over or charge of, and shall not be responsible for, acts or omissions of the Contractor or of any other persons or entities performing portions of the Work. As long as the design professional follows the limits of his scope of work and does not expand that scope, he or she should avoid liability. Herczeg v. Hampton Township Mun. Auth., 766 A.2d 866 (Pa. Super. Ct. 1999). During construction, trenchwork was done without shoring or bracing, in violation of project specifications, industry practice and federal regulations. Decedent s representatives alleged that the designer had actual knowledge of the lack of safety. The engineer contended that his contract did not provide any responsibility for job site safety and did not owe a duty to act. The court held that there was no duty on a design professional to protect workers from hazards on a construction site unless there was an undertaking, either by contract or course of conduct the supervisor controlled the construction and/or to maintain safe conditions of the site. Herczeg, 766 A.2d at 871, citing Young v. Eastern Engineering & Elevator Co., Inc., 554 A.2d 77, 79 (Pa. Super. Ct. 1989). The Herczeg court noted that an engineer may take on liability beyond its contract under certain circumstances, such as actual supervision and control the contractor or subcontractors, consistent participation in construction activities at the site, undertaking responsibility for safety, having authority to issue change order, and retaining the right to stop work. Even where an engineer testified that he would have undertaken to stop an unsafe worksite practice, had he seen it, Texas has held that an engineer has no duty regarding work site safety where the contract provides that the engineer did not have control over the work site or a duty to provide for work site safety. Romero v. Parkhill, Smith & Cooper, Inc., 881 S.W.2d 522 (Tex. App. El Paso 1994, writ denied); see also Graham v. Freese & Nichols, 927 S.W.2d 294 (Tex. App. Eastland 1996, writ denied). Admittedly, not all courts support this. In New Jersey, a design professional with no contractual safety obligations may nevertheless have a duty when he or she has actual knowledge of an unsafe or dangerous condition. Carvalho v. Toll Bros. & Developers, 675 A.2d 565 (N.J. 1996). Generally, with the exception of Texas in Black + Vernooy v. Smith, it would seem that the general trend is that a design professional s defense is strengthened by showing 1) compliance with the site visit and observations requirements and 2) that the alleged conditions or defects were not observable. B. Limitation of Liability Provisions in Contracts Limitation of liability provisions may limit the amounts and extent of recovery and may even waive certain causes of action. Some courts have strictly construed these provisions. Georgia has upheld limitation of liability provisions in a contract between an architect and developer. In Precision Planning, Inc. v. Richmark Cmtys., Inc. 298 Ga. App. 78, 679 S.E.2d 43 (Ga. Ct. App. 2009). The limitation of liability provision limited the recovery amount under the contract to $50,000 or the amount of the fee received for services, whichever was greater. Likewise, New Jersey courts have upheld limitation of liability provisions so long as the cap is [not] so minimal compared with the expected compensation, that the concern for the consequences of a breach is drastically minimized. Marbro, Inc. v. Borough of Tinton Falls, 297 N.J. Super. 411 (Law Div. 1996). The provisions are strictly construed. In Florida, for example, an engineer was not entitled to the benefits of a limitation of liability provision which extended only to his firm, but not to him individually. Witt v. La Gorce Country Club, Inc., 35 So. 3d 1033 (Fl. 3rd DCA 2010). 10 Construction Law Seminar September 2012

15 C. Contractual Modification of the Statute of Limitations Period Some states permit parties to contractually modify the statute of limitations period for breach of the contract. These are generally enforceable, so long as they are reasonable. It has been held that a contractual limitation shortening the time to commence suit are valid, at least so long as a reasonable time is afforded. New Welton Homes v. Eckman, 830 N.E.2d 31, 35 (Ind. 2005). For example, in Texas, the limitation period for a breach of contract action statutorily accrues four years after the breach of the contract. However, the legislature permits parties to contractually reduce the limitations period to not less than 2 years after the breach. Tex. Civ. Prac. & Rem. Code Ann Mississippi, on the other hand, voids such provisions stating that the object of this [legislation] being to make the period of limitations for the various causes of action the same for all litigants. Miss. Code. Ann ; see also Vt. Stat. Ann., tit. 12, 465. This operates to benefit design professionals in responding to owners who demand longer limitations periods. D. Indemnity Indemnification provisions have become common place in most construction related documents. However, almost all states have either enacted legislatively or through court opinions some form of limitations on these contractual indemnity provisions. As discussed above, the vast majority of states have enacted antiindemnity provisions that apply to the design professional. Several others have enacted specific requirements for the indemnity provision to be valid. For example, Florida courts have held that in order for an indemnity provision to be valid under Florida law, the provision must include a monetary limitation that bears a reasonable commercial relationship to the contract and is part of the project specifications or bid documents, if any or it is void and unenforceable. Fla. St (1). The requirements of the statute were upheld in Griswold Ready Mix Concrete, Inc. v. Tony Reddick, & Pumpco, Inc., Case No. 1D , 2012 Fla. App. LEXIS 5600, at *3-4 (Fla. 1st DCA Apr. 12, 2012). Other states permit a party to limit its indemnification obligation to damages arising from its negligence only. For example, in Trung Mai v. Melchiori Constr. Co., 2010 Cal. App. Unpub. LEXIS 7460 (Cal. Ct. App. Sept. 21, 2010), it was held that contract language limiting indemnity obligations to claims arising out of or in connection with [its] operations to be performed under this Agreement... and Subcontractor, however, shall not be obligated under this Agreement to indemnify Owner or Contractor for Claims arising from the sole negligence or willful misconduct of Owner or Contractor... effectively limited that agreement to indemnify the general contractor to damages only for the subcontractor s own negligence. E. Waiver of Subrogation Both standard contract forms as well as individually drafted contracts often contain waiver of subrogation provisions. Several states have determined that the waiver of subrogation clause waives all subrogation rights. The Stop & Shop Supermarket Co. v. ABCO Refrigeration Supply Corp., 842 A.2d 1194, (Conn. Super. Ct. 2003)(holding that the waiver of subrogation provision waived all claims including damage to property not clearly defined as part of the scope of Work); Allianz Ins. Co. of Canada v. TrizecHahn One NY Plaza, L.L.C., No. 03 Civ. 0833, 2005 U.S. Dist. LEXIS 44839, at * 19 (S.D.N.Y. Aug. 15, 2005); Touchet Valley Grain Growers v. Opp & Seibold General Constr., 119 Wn.2d 334, 342 (Wash. 1992) (contract stated subrogation rights are expressly waived... to the extent of insurance coverage on losses arising from or in connection with the Project ); Celina Insurance Co. v. Indianapolis Roofing & Sheet Metal Corp., 953 N.E.2d 679 (Ind. App. 2011); Amico Mut. Ins. Co. v. Bergmeyer Assocs., Inc., Mass. Super. 557; 2008 Mass. Super. LEXIS 84 (Mass. Dist. Ct. 2008). Defending the Design Professional: A Review of Statutory and... Cahill and Haas 11

16 In contrast, other states permit some claims to move forward despite a waiver of subrogation clause. For example, the Colorado Supreme Court determined that the waiver clause in a construction contract did not bar all claims against the contractors for damages to property that was not defined as being part of the Work under the contract. Copper Mountain, Inc. v. Indus. Sys, Inc., 208 P.3d 692 (Colo. 2009). In Copper Mountin, Copper Mountain, Inc. hired Amako Resort Construction, Inc. to renovate a lodge at its resort. Amako then subcontracted with Industrial Systems, Inc. to build the steel framework for the new addition. A fire started causing damage to the existing portions of the lodge as well as the addition. The court held that the waiver provision applied to claims arising out of damages to the additions (part of the Work ), but not the original lodge (not part of the Work. ). A Texas court has found that an enforceable waiver of subrogation opinion could be determined to be ambiguous when there is an effort to contend that indemnity provisions counter the provision. In Tellepsen Builders, L.P. v. Kendall/Heaton Assocs., Inc., 325 S.W.3d 692 (Tex. App. Houston [1st Dist.] 2010, pet denied), Tellepsen, whose claims were subrogated to Zurich Insurance Company, claimed that it was entitled to reimbursement from its subcontractors for damages it incurred in repairing structural and water damage sustained as a result of construction defects to the Camp Allen Retreat and Conference Center. Tellepsen asserted that the waiver of subrogation provision would render the indemnity provisions meaningless. The court determined that the obligations created in the indemnity portion of the contract would render the clear and enforceable waiver of subrogation provision in the contract as a whole to be ambiguous. IV. Conclusion As set forth above, the design professional has multiple statutory and contractual defenses. By incorporating slight modifications to the standard form contracts, the design professional is able to limit the scope of his liability as well as indemnification obligations. 12 Construction Law Seminar September 2012

17 CERTIFICATE OF MERIT/STATUTE OF LIMITATION/STATUTE OF REPOSE CHART State Certificate of Merit ( COM ) Required Alabama No. Actions against design professionals is governed by ALA. CODE , et. seq. Alaska No. Actions against design professionals is governed by ALASKA STAT , et. seq. Arizona Yes. ARIZ REV. STAT Applicability Filing Deadline Statute of Limitations Architects, contractors, engineers Registered contractor, architect, or engineer Claims against licensed professionals generally. Not applicable. 2 years for property damage and person injuries. ALA. CODE Not applicable. 2 years ALASKA STAT Claimant s attorney certifies in a written statement filed and served with the claim whether expert testimony is necessary in the case. If expert testimony is necessary, then an expert affidavit is served with the initial disclosure responses. 4 yrs for breach of contract claims ARIZ. REV. STAT Arkansas No. Not applicable. Not applicable. 3 years ARK. CODE ANN (3). Statute of Repose 7 years from date of substantial completion of the project. 1 ALA. CODE years from date of substantial completion ALASKA STAT Statute of repose- 8 years from date of substantial completion. If defect discovered in the 8 th year, suit may be filed up to 9 years after date of substantial completion. ARIZ. REV. STAT years after substantial completion for actions 1 Statute of repose is 7 years unless the design profession or builder had actual knowledge of the defect or deficiency and failed to disclose it / Defending the Design Professional: A Review of Statutory and... Cahill and Haas 13

18 State Certificate of Merit ( COM ) Required Applicability Filing Deadline Statute of Limitations California Yes. CAL. CIV. PRO. CODE Colorado Yes. COLO. REV. STAT Architects, engineers and land surveyors All licensed professionals. Certificate executed by attorney must be filed and served on or before the date of service of the complaint. If cannot comply with statute because of limitations issue, certificate must be filed within 60 days after filing the complaint. A certificate of review must be filed within 60 days of service of the lawsuit. The attorney must attest that he consulted with a professional with expertise in the same area 4 years for patent defects CAL. CIV PROC. CODE years. COLO. REV. STAT Unless the claim is for res ipsa loquitur or failure to inform of risks of the procedure. Id / Statute of Repose regarding deficiency in design, supervision and construction; 4 years after substantial completion for personal injury & wrongful death; if plans are provided and not used within 3 yrs, no cause of action exists. ARK. CODE ANN years for latent defects CAL. CIV PROC. CODE Statute of repose is 6 years after substantial completion. If cause of action for personal injury, death or damage to real property arises in the 5 th or 6 th year, an additional two years is provided from the 14 Construction Law Seminar September 2012

19 State Certificate of Merit ( COM ) Required Applicability Filing Deadline Statute of Limitations as the defendant and that professional determined the claims does not lack substantial justification for bringing the suit. Connecticut No. Not applicable. Not applicable. 3 years CONN. GEN. STAT Delaware No. Not applicable. Not applicable. 3 years DEL. CODE ANN., tit Florida No, but there is a mandatory presuit notice requirement. FLA. STAT Not applicable. Not applicable. 4 years for patent defects. FLA. STAT Statute of Repose date the injury arises. COLO. REV. STAT years for architect, professional engineer or land surveyor CONN. GEN. STAT a 6 yrs DEL. CODE ANN., tit years after the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest. FLA. STAT Georgia Yes. GA. CODE Professional With the complaint, 4 years for damage 8 years after substantial / Defending the Design Professional: A Review of Statutory and... Cahill and Haas 15

20 State Certificate of Merit ( COM ) Required ANN engineers, land surveyors, architects. Applicability Filing Deadline Statute of Limitations movant must file an expert affidavit setting forth at least one act of negligence or omission. Deadline extended by 45 days if counsel for plaintiff files affidavit stating that the firm was not retained within 90 days of the filing of the petition. to personalty GA. CODE ANN years for simple contracts GA. CODE ANN years for personal injury GA. CODE ANN Hawaii No, but there is a mandatory design consultation panel review. HAW. REV. STAT. ANN. 672B-5 and HAW. REV. STAT. ANN. 672E for contractors Not applicable. Not applicable. 2 years HAW. REV. STAT. ANN Idaho No. Not applicable. Not applicable. 2 years for professional malpractice IDAHO CODE ANN years for breach of / Statute of Repose completion but extended to 10 years after substantial completion if injury occurred within the 7 th or 8 th years after substantial completion. GA. CODE ANN years for landsurveyors GA. CODE ANN years after completion of the project HAW. REV. STAT. ANN years from final completion of the project IDAHO CODE ANN Construction Law Seminar September 2012

21 State Certificate of Merit ( COM ) Required Applicability Filing Deadline Statute of Limitations contract IDAHO CODE ANN Illinois No. Not applicable. Not applicable. 4 years 735 ILL. COMP. STAT. ANN. 5/ Indiana No. Not applicable. Not applicable. 2 years for personal injury IND. CODE ANN years for breach of contract IND. CODE ANN years for injury to real property IND. CODE ANN Iowa No. Not applicable. Not applicable. 5 years for injury to property IOWA CODE ANN (4) Kansas No, but there is a pre-suit notice requirement. KAN. STAT. ANN Not applicable. Not applicable. 2 years KAN. STAT. ANN / Statute of Repose 10 years unless discovered at end of repose period and then additional 4 years from date of discovery 735 ILL. COMP. STAT. ANN. 5/ years after substantial completion or 12 years after submission of plans IND. CODE ANN If injury occurs in 9 or 10 yr, then two more years added IND. CODE ANN years for injury to property IOWA CODE ANN (11) 10 years KAN. STAT. ANN Defending the Design Professional: A Review of Statutory and... Cahill and Haas 17

22 State Certificate of Merit ( COM ) Required Applicability Filing Deadline Statute of Limitations Kentucky No. Not applicable. Not applicable. 1 year KY. REV. STAT. ANN Louisiana No. Not applicable. Not applicable. 1 year for damage to immovable property. LA. CIV. CODE ANN Maine No. Not applicable. Not applicable. 4 years ME. REV. STAT. ANN. tit. 14, 752-A & ME. REV. STAT. ANN. tit. 14, 752-D Maryland Yes; MD. CODE ANN. CTS. & JUD. PROC. 3-2C-02 Profession Engineer, land surveyor or property line surveyor; architect; landscape architect; interior designer MD. CODE ANN. CTS. & JUD. PROC. 3-2C- 01 Within 90 days of the filing of the complaint (land surveyors) 3years from date of injury MD. CODE ANN. CTS. & JUD. PROC / Statute of Repose No. 5 years after date of registry of acceptance. If discovered in the 5 th year, one more year to file suit. LA. REV. STAT. ANN. 9:5607 & LA. REV. STAT. ANN. 9: years ME. REV. STAT. ANN. tit. 14, 752-A & ME. REV. STAT. ANN. tit. 14, 752-D (land surveyors) 10 years for architect, professional engineer, or contractor MD. CODE ANN. CTS. & JUD. PROC Construction Law Seminar September 2012

23 State Certificate of Merit ( COM ) Required Applicability Filing Deadline Statute of Limitations Massachusetts No. Not applicable. Not applicable. 3 years MASS. ANN. LAWS ch. 260, 2B Michigan No. Not applicable. Not applicable. 2 years for professional malpractice MICH. COMP. LAWS Minnesota Yes. MINN. STAT architect, engineer, land surveyor, or landscape architect licensed or certified under chapter 326 or 326A Served with the pleadings or 90 days after service of the summons. MINN. STAT years MINN. STAT & MINN. STAT Mississippi No. Not applicable. Not applicable. 6 yrs after written acceptance or occupancy MISS. CODE ANN Missouri No. Not applicable. Not applicable. 5 years MO. ANN. STAT / Statute of Repose 6 years after substantial completion or open to the public MASS. ANN. LAWS ch. 260, 2B 6 years after substantial completion 10 years if gross neg. MICH. COMP. LAWS years after substantial completion MINN. STAT & MINN. STAT yrs after written acceptance or occupancy MISS. CODE ANN years MO. ANN. STAT & MO. ANN. STAT (land surveyors) Defending the Design Professional: A Review of Statutory and... Cahill and Haas 19

24 State Certificate of Merit ( COM ) Required Applicability Filing Deadline Statute of Limitations Montana No. Not applicable. Not applicable. 3 years for personal injury MONT. CODE ANN years for injury to property MONT. CODE ANN Nebraska No. Not applicable. Not applicable. 2 years NEB. REV. STAT. Nevada Yes; NEV. REV. STAT. ANN Profession Engineer, land surveyor; architect; landscape architect Affidavit of attorney with first filed petition attaching a report by the expert unless obtaining report would cause case to be barred by limitations or repose. In this case, affidavit and report must be filed within 45 days after suit filed. ANN years for warranty claims NEB. REV. STAT. ANN years for breach of contract. 2 years for personal injury. NEV. REV. STAT. ANN New Hampshire No. Not applicable. Not applicable. 3 years N. H. REV. STAT / Statute of Repose 10 years MONT. CODE ANN years NEB. REV. STAT. ANN & NEB. REV. STAT. ANN years after substantial completion for latent defects or if discovered in 8 th year, 10 years; 10 years for defects which should have been known; if discovered in 10 th year, then 12 years; 6 years for patent defects, if discovered in 6 th year, then 8 years NEV. REV. STAT. ANN years from the date of substantial completion N. 20 Construction Law Seminar September 2012

25 State Certificate of Merit ( COM ) Required New Jersey Yes affidavit of lack of care. N.J. STAT. ANN. 2A:53A-27 Applicability Filing Deadline Statute of Limitations Architect, engineer, land surveyor, attorneys, and medical professionals N.J. STAT. ANN. 2A:53A-26 Within 60 days after the filing of the defendant s answer. The court may grant an additional 60 days based upon a finding of good cause. N.J. STAT. ANN. 2A:53A-27. Statute of Repose ANN. 508:4 H. REV. STAT. ANN. 508:4-b 6 years N.J. STAT. ANN. 2A:14-1 New Mexico No. Not applicable. Not applicable. 4 years N.M. STAT. ANN New York No. Not applicable. Not applicable. 3 years for professional malpractice N.Y. C.P.L.R North Carolina No. Not applicable. Not applicable. 3 years generally N.C. GEN. STAT North Dakota No. Not applicable. Not applicable. 6 years for contractual claim N.D. CENT. CODE years for professional malpractice 10 years N.J. STAT. ANN. 2A: & N.J. STAT. ANN. 2A: (land surveyor) 10 years after date of substantial completion N.M. STAT. ANN No true repose statute. 6 years N.C. GEN. STAT. 1-50(a)(5)(a) 10 years (land surveyor) N.C. GEN. STAT years; if discovered in 10 th year, then 12 years N.D. CENT. CODE / Defending the Design Professional: A Review of Statutory and... Cahill and Haas 21

26 State Certificate of Merit ( COM ) Required Applicability Filing Deadline Statute of Limitations N.D. CENT. CODE Ohio No. Not applicable. Not applicable. 4 year tort claims OHIO REV. CODE ANN years for breach of contract OHIO REV. CODE ANN Oklahoma No. Not applicable Not applicable. 2 years for tort OKLA. STAT. ANN. tit. 76, 5.5 Oregon Yes ORE. REV. STAT. ANN Profession Engineer, land surveyor; architect; landscape architect Certification by the attorney must be filed with the original complaint, counter-claim or third-party complaint unless complying with section would cause case to be barred by 2 years ORE. REV. STAT. ANN / Statute of Repose 10 years after substantial completion for tort claims OHIO REV. CODE ANN years generally OKLA. STAT. ANN. tit. 12, 109 For personal injury claim occurring in the 5 th year after substantial completion, additional two years to file suit. However, cannot bring personal claim more than 7 years after substantial completion. OKLA. STAT. ANN. tit. 12, years for residential & 6 years for commercial ORE. REV. STAT. ANN years for land surveyor- ORE. REV. STAT. ANN Construction Law Seminar September 2012

27 State Certificate of Merit ( COM ) Required Pennsylvania Yes PA. R.C.P. No Applicability Filing Deadline Statute of Limitations Licensed architect, land surveyor, engineer PA. R.C.P. No limitations. In this case, affidavit and report must be filed within 30 days after the claim is filed. Certification by the attorney must be filed with the complaint or within 60 days after the filing of the complaint Pa. R.C.P. No Form provided at PA. R.C.P. No years 42 PA. CONS. STAT 5524 Rhode Island No. Not applicable. Not applicable. 3 years for personal injury claims R.I. South Carolina Yes. S.C. CODE ANN Licensed professionals including engineers, land surveyors, and architects With the Original Complaint. If cannot obtain certificate of merit due to limitations issues, an additional 45 days to supplement is permitted under the statute. GEN. LAWS years S.C. CODE ANN South Dakota No. Not applicable. Not applicable. 6 years for contractual based claim S.D. CODIFIED LAWS Tennessee No. Not applicable. Not applicable. 3 years TENN. CODE ANN / Statute of Repose 12 years 42 PA. CONS. STAT PA. CONS. STAT 5537 (land surveyor); 12 yrs 42 PA. CONS. STAT (landscape architect) 10 years for tort claims R.I. GEN. LAWS years after substantial completion for architects, professional engineers or contractors S.C. CODE ANN years S.D. CODIFIED LAWS 15-2A-3 11 yrs if discovered in 10 th yr- S.D. Codified Laws 15-2A-5 4 years after substantial completion Defending the Design Professional: A Review of Statutory and... Cahill and Haas 23

28 State Certificate of Merit ( COM ) Required Texas Yes; TEX. CIV. PRAC. & REM. Code Ann Applicability Filing Deadline Statute of Limitations Licensed architect, licensed professional engineer, registered professional land surveyor, registered landscape architect, and any firm in which the above practice. With first filed petition unless the limitations period is about to expire within ten days of the filing of the petition and the time constraint prohibits obtaining the COM before filing, then the plaintiff has 30 days from the date of filing the petition to obtain the COM. If not filed, the court must dismiss but can dismiss with or without prejudice. 3 Statute of Repose TENN. CODE ANN TENN. CODE ANN years for personal injury TEX. CIV. PRAC. & REM. CODE ANN years for breach of contract TEX. CIV. PRAC. & REM. CODE ANN Utah No. Not applicable. Not applicable. 6 years. UTAH CODE ANN. 78B Vermont No. Not applicable. Not applicable. 6 years 12 VT. STAT. ANN. 511 Virginia No. Not applicable. Not applicable. 2 years VA. CODE ANN (surveyors) 10 years from date of substantial completion of the property. If written notice sent within 10 years, the limitations period is extended 2 years from the date of notice. TEX. CIV. PRAC. & REM. CODE ANN years UTAH CODE ANN. 78B No true statute of repose. 5 years after the performance or furnishing of such services and 3 Sharp Eng g v. Luis, 321 S.W.3d 748 (Tex. App. Houston [14 th Dist.] 2010, no pet.) / Construction Law Seminar September 2012