Construction Case Shows Line Between Tort and Contract

Frank and Lisa Martusciello contracted with an architectural firm, Larson Kramer and Associates, to design a luxury home for them. JDS Homes built the house in west suburban Burr Ridge.

It soon became apparent that the house was not all that luxurious. Drainage problems, water leakage, crumbling balustrades, improperly sloped stairs and porch, broken windows and a poorly constructed deck had to be repaired.

The Martusciellos filed a lawsuit against the architectural firm as well as the builders. They contended that the architects had left too many "blanks," forcing the construction company to fill in too many details incorrectly or inadequately.

They sued in contract as well as in tort, alleging architectural malpractice. The plaintiffs alleged that although there were plans filed with the village, they did not have a contract with the architect.

On appeal, though, without oral argument, the 1^st District Appellate Court affirmed the trial court’s dismissal of the negligence count. The court found that under the economic loss doctrine, because the architect-client relationship often produces a tangible result in the form of a blueprint or plan, damages were readily ascertainable and could be studied by the parties and be memorialized in a contract. Martusciello v. JDS Homes, Inc., 838 N.E.2d 9 (1^st Dist.2005). Therefore, the court held that, unlike tort damages, which deal with "personal injury or property damage resulting from a sudden or dangerous occurrence," the economic loss doctrine deals with a "purchaser’s disappointed expectations due to deterioration, internal breakdown or nonaccidental cause," leaving the plaintiffs with contractual damages as their only remedy. Citing Moorman Manufacturing Co. v. National Tank Col, 91 Ill.2d 69, 86, 435 N.E.2d 443 (1982).

Other jurisdictions, though, have held that a plaintiff may sue an architect for negligence. For example, in Aldrich v. ADD Inc., 437 Mass. 213, 770 N.E.2d 447 (2003), the Supreme Court of Massachusetts held that the trustees of a condominium trust could prevail on a claim brought against an architectural firm for alleged negligent design of a condominium. The court found that the trustees’ allegations of physical property damage were sufficient to state a cause of action for negligence and that the claim was not barred by the economic loss doctrine.

Simply, in Bilt-Rite Contractors, Inc., v. The Architectural Studio, 581 Pa. 454, 866 A.2d 270 (2005), the Pennsylvania Supreme Court held that the economic loss doctrine did not bar a contractor’s negligent misrepresentation suit against an architect because modern business realities recognize that "it is reasonable to hold professionals to a traditional duty of care for foreseeable harm," Id. 866 A.2d at 286. There, a general contractor brought an action against an architect for alleged misrepresentations in plans and specifications upon which the contractor relied in submitting a winning bid for the construction of a school. In Insurance Company of North America v. Cease Electrical Inc., 269 Wis.2d 286, 674 N.W.2d 886 (Ct. App.2003), the Wisconsin Supreme Court allowed purely economic damages stemming from negligence claims involving parties such as accountants ad architects who predominantly provide services as opposed to products.

The Illinois Appellate Court in Martusciello, though, relied upon the holding in 2314 Lincoln Park West Condominium Association v. Mann, Gin, Ebel & Frazier, Ltd., 136 Ill.2d 302, 555 N.E.2d 346 (1990). There, the plaintiffs were unsuccessful in seeking economic damages to repair defects to the property allegedly caused by the architectural firm’s negligent design because the court found that "such a claim concerns the quality, rather than the safety, of the building and thus is a matter more appropriately resolved under contract law." Id., 136 Ill.2d at 316-17.

But the plaintiffs in Martusciello argued that the Lincoln Park case should be limited to situations where a contract existed between the defendant architect and the plaintiff client. They argued that their case was distinguishable from 2314 Lincoln Park in that no formal contract existed.

They also argued that the general rule barring economic damages for architectural services is subject to an exception established by the Illinois Supreme Court in Congregation of the Passion, Holy Cross Province v. Touch Ross & Co., 159 Ill.2d 137, 162-64, 636 N.E.2d 503 (1994), in which the court noted that 2314 Lincoln Park does not stand for the proposition that all recovery for malpractice is tort is barred under the economic loss doctrine. Id., 159 Ill.2d at 161-62. "Where a duty arises outside of the contract, the economic loss doctrine does not prohibit recovery in tort for the negligent breach of that duty." 159 Ill.2d at 162. The plaintiffs in Martusciello alleged they had insufficient plans and invoices from the architect, but the parties’ rights and liabilities were not defined in a contract.

Although many aspects of an architect-client relationship can be memorialized in a written contract, an architect’s job may involve details that are not committed to writing. Many people have been involved in construction jobs where certain "surprises" could not be known until the job progressed. The contractor on the job would tell the property owner that the architect’s plans simply couldn’t be accomplished as initially conceived or that a better way became apparent after the actual construction was under way.

Although blueprints could be changed, that would only lead to a greater expense and waste of time because the builder could accomplish the change right on the job.

In other words, whatever design the architects envisioned, the ideas did not lay out the way it was planned, nor could it be known before construction. If under those circumstances a client suffers damages, is it fair that he is limited to what was in the written plans?

If the Illinois Supreme Court accepts the Petition for Leave to Appeal filed by the plaintiffs in Martusciello, it can clarify state law regarding professional negligence when a contract does not exist between the parties.

Certainly, the expectation of the plaintiffs was not fulfilled. The equities of their bearing the burden from problems that stemmed from the duties of a professional they hired deserves another look.