American Bar Association

Forum on the Construction Industry

WHY WOULD I DO THAT?

A Review of Factors to Consider When Determining
Who Should Engage the Geotechnical Consultant

Christopher Dunn R. Craig Williams

Waller, Lansden, Dortch & Davis HKS Architects, Inc.
Nashville, Tennessee Dallas, Texas

J. Wallace Irvin
Waller, Lansden, Dortch & Davis
Nashville, Tennessee

Presented at the 2012 Midwinter Meeting

Innovative Legal Concepts Developed from Challenging Projects

February 2-3, 2012

Intercontinental Hotel Houston Near the Galleria, Houston, Texas

©2012 American Bar Association

 WHY WOULD I DO THAT?
A Review of Factors to Consider When Determining
Who Should Engage the Geotechnical Consultant

I. Introduction – The Dirt on Geotechnical Consultants, their Role in Project Delivery

A. The Geotechnical Consultant

1. Introduction

Stated broadly, a geotechnical consultant is oftentimes a geotechnical engineer who

evaluates earth materials, such as soil, rock and groundwater to understand and provide structural

information regarding the particular ground under which a project is to be built to determine if

the soil is suitable for the particular project. The geotechnical consultant typically produces a

report, known generally as a “geotechnical report” or “soils report” providing characteristics of

the soils and other underground conditions that could adversely impact the integrity of the

anticipated project insofar as site drainage, stability of the finished elevations, footings and/or

foundations are concerned, together with recommendations for engineering the soils and

constructing the project to mitigate against those consequences.

Geotechnical engineering combines elements of two sub-specialties, engineering geology

and soils engineering.1 The engineering geology element involves identification of the parent

rocks and the soils derived from them without analysis or testing of specific soils as foundation

materials. In contrast, the soils engineer element determines and forecasts what will happen to

the soil under load conditions created by a new structure.2 The geotechnical engineer applies

both sub-specialties, as appropriate, to render an opinion on whether the particular ground is

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suitable for construction of the project,3 and if so, the qualifications on which the opinion is

based.

2. The Geotechnical (Soils) Report- Introduction

The geotechnical report should include: (1) a site analysis, addressing general conditions

of the site that have a bearing on the project; (2) a soils analysis, addressing the characteristics of

the soils and other underground conditions discovered during the assessment; and (3)

recommendations to the developer, designers and contractor. The report serves: (1) to assist the

developer during project due diligence in evaluating the site’s feasibility for the anticipated

project; (2) as criteria for use by the civil and structural engineers when designing site

infrastructure, grades and elevations, footings and foundations for the project’s horizontal and

vertical structures; and (3) as a contract document providing requirements, by way of

recommendations, to implement for proper construction together with specific recommendations

to implement during construction to mitigate potential issues with the soils. The report is of

primary importance in determining the suitability of the site for the project and in providing

information essential to the proper design and construction of the project.

3. Site Feasibility Analysis

During its feasibility assessment, the developer is concerned with the suitability of soils

for horizontal and vertical construction as well as whether the site is appropriate for the

particular project.4 The site analysis consists of evaluating a potential site as it relates to the

“footprint” of the building,5 (involving not just the total gross area of the building, the number of

stories planned for the structure, but also its to determine whether every story has the same

design and composition),6 the overall construction program, the budget and the project schedule.7

Many physical, cultural and regulatory factors are involved in evaluating a potential site

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including geotechnical characteristics.8 Climate is also factor the geotechnical consultant must

address,9 including the temperature, humidity and precipitation in the particular area because

these factors affect the moisture content in the soil, and thus, the extent of measures to mitigate

the effect of any expansive soils found on the site.10 The geotechnical report should include the

depth of any bedrock, the elevation of the water table, the type of soils (sand, clay, silt, rock,

gravel, etc.), the optimum moisture content for compaction and the location of any fault lines.11

Each of these factors can be of significance to the developer during the feasibility analysis.

4. Soils and Underground Conditions Assessment

A major aspect of the geotechnical consultant’s undertaking is identifying the soils

beneath the anticipated project and determining the extent to which they must be engineered to

provide proper support for new structures.

The geotechnical consultant classifies soils based on samples taken at representative

locations based on the site analysis and the consultant’s general knowledge of the area’s soils,

with particular reference to known points of probable stress; notably in areas associated with

foundations of the vertical structures. The soil samples are drawn by auger, test pits or deep

wells at locations and depths determined by the consultant.

After obtaining samples, the consultant must classify the soils. The classification system

most commonly used by geotechnical consultants is the Unified Soil Classification System

(“USCS”), a soil classification system developed in the mid-20th century. The USCS classifies

soils in groups based on laboratory determinations of various soil characteristics, including, but

not limited to, the soil’s particle-size distribution. In addition to classifying the soils, the

geotechnical consultant analyzes other factors including the soil’s load bearing capacity, the

water table, seismic evaluations, subsidence and landslide hazards. Additional tests may include

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an assessment of the nature and potential for intrusion into the structure of sub-slab vapor and/or

soils gases.

5. The Geotechnical Report- Revisited

Various standards guide the geotechnical consultant in developing a suitable geotechnical

survey.12 Each standard provides detailed guidance and a basic checklist for geotechnical

consultants including: 1) recognizance of the project area; 2) development of a field soil

exploration plan; and 3) analysis of the field data and laboratory testing samples,13 including a

summary of the consultant’s findings relative to depth to bedrock, elevation of the water table, a

list of soil types and the overall soil bearing capacity, among other attributes.14

6. Characteristics of the Successful Geotechnical Consultant

Because a complete matrix of all of the potentially relevant underground conditions

cannot be determined with absolute certainty,15 the value added by the geotechnical consultant is

commensurate with its track record in successfully identifying the correct scope of analyses to

perform for prior projects, such as the location and depth of the borings and the nature of the

tests to be conducted, an exercise requiring significant training, experience and skill16 The

learning curve associated with becoming a competent geotechnical consultant can, therefore,

necessarily be a long one. It has been said that “learning to conduct soil exploration well requires

much practice and varied experience under the guidance of experienced practitioners.”17

Among the complexities a geotechnical consultant must master is an understanding of the

nature of the various professionally recognized soils tests in common use and an ability to

determine the most appropriate array of tests to apply for an engagement. In this regard, there

can be differences of opinion. For example, about one-fourth of geotechnical consultants only

use one method to determine the expansiveness of the soil.18 About half of geotechnical

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consultants use two methods while the remaining one-fourth utilize three or more methods.19

One possible explanation for this difference relates to the complexity of the expansiveness

conditions found in the area within which the respective geotechnical consultants practice.

Additionally, geotechnical consultants can select from up to nine different professionally

recognized methods with which to calculate the soils test data.20

An additional determination the geotechnical consultant must make is the number of

boring tests to use to determine the profile of the subsurface profile; i.e., whether one is

sufficient, or if the geotechnical consultant should utilize several borings over the footprint of the

project’s vertical structures to determine whether the profile of the soil is consistent or whether it

varies over the property.21 The geotechnical consultant must also determine the most appropriate

ASTM D text to utilize given the conditions of the project’s soils and, as discussed above, the

nature of the tests to be conducted to properly evaluate the expansiveness of the soils.

An inadequate geotechnical analysis poses many risks to the project and its participants,

including a failure of the project’s structures; therefore, it is essential to all parties that the

geotechnical consultant has training and a track record appropriate to the needs of the project.

B. Engaging the Geotechnical Consultant –The Alternatives and their Rationale

1. The Owner/Developer

Historically, owners tend to engage the geotechnical consultant without considering any

alternatives. This flows, in part, by the fact the owner retains the geotechnical consultant only

when the planning group considers a geotechnical report necessary during the preliminary pre-

design phase as part of the overall project evaluation.22 Despite the fact most architects’ liability

insurance policies now cover geotechnical work, one of the principal reasons owners obtain these

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services directly is the degree of damages that can result from negligently performed

geotechnical services.23

Moreover, if a standard form American Institute of Architects (“AIA”) document is

utilized without modification, this requirement is set forth in the contract.24 Section 5.5 of the

AIA Document B101™-2007 states the “Owner shall furnish services of geotechnical engineers,

which may include but are not limited to test borings, test pits, determinations of soil bearing

values, percolation tests, evaluations of hazardous materials, seismic evaluation, ground

corrosion tests and resistivity tests, including necessary operations for anticipating subsoil

conditions, with written reports and appropriate recommendations.”25 The AIA continued this

approach from the 1997 document set.26 The rationale underlying the AIA approach is premised

on the risk factors. The AIA believes the resulting consequences associated with the variability

and uncertainty referenced above should be allocated to the owner/developer as part of the

architect’s risk minimization strategies.

The risk allocation is based upon the risk versus reward profiles of the owner/developer

who owns or controls the property and project, and the architect whose profit for services is

extremely small in comparison to that of his client. That profit margin does not justify the

exposures to the architect that may arise from shifting foundations or differing site conditions

claims from the contractor.

If the owner retains the geotechnical consultant, the AIA recommends utilizing AIA

Document G602™-1993.

2. The Architect

The architect and the structural engineer, who rely on the geotechnical report to design

the structure, are in the best position, as between architect and owner, to select an appropriate

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geotechnical consultant, determine scope of services and evaluate its work product.27 If the

architect and owner utilize unmodified AIA documents, the architect has a duty to notify the

owner of any consulting services that may be necessary.28 Although AIA Document B101™-

2007 states the owner may engage the architect for additional services including site evaluation

and planning,29 the owner remains responsible for retaining the geotechnical consultant unless

the AIA Document is modified.30

The owner’s rationale is the single point of responsibility. An owner may be liable to

contractors who rely on a negligently prepared geotechnical report if the owner expects

contractors to rely upon the report as they prepare and submit a bid.31 Of all the parties on a

project, the architect’s structural consultant is in the best position to select the geotechnical

consultant, define the scope of its services and identify questions in the geotechnical report that

may require additional testing or reporting.32 This is because between the owner and the design

team, the design team is in the best position to manage this risk and be accountable for the failure

to do so.33

3. Hybrid

Another potential scenario arises where the owner initially retains a geotechnical

consultant and later contracts with the architect to take over and accept responsibility for the

geotechnical consultant. Under this approach, the owner commissions the geotechnical

consultant to do whatever additional work the architect and its site evaluation require as a

condition of the assumption. This approach follows the practical reality that an owner needs to

know if a particular project site is suitable for an anticipated project. If the site will not

accommodate the owner’s needs, the owner will have no need to retain an architect. However,

an owner must assume its architect will agree to take over the responsibility for the geotechnical

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consultant, its reports and any liability associated with defects or omissions in the report. This

approach, as with shifting the responsibility for selecting a geotechnical consultant above, will

likely increase the cost of the architect’s services.

4. Standard Trade Driven Forms

a. AIA

Historically, the AIA took the position that it was the owner’s responsibility to supply

any necessary geotechnical consultants.34 In fact, as the instructions to the AIA-G602™ (1993)

explain:

“Under the AIA Owner-Architect Agreements and many other design

professional agreements, the Owner is responsible for obtaining the services of a
Geotechnical Engineer in order to obtain geotechnical information on the Project
site when such information is deemed necessary by the Architect.”

The most commonly used form is the AIA Document B-101™ (2007).35 Nevertheless, nearly all

of the AIA Documents contain a section that disclaims liability for geotechnical reports36 while

providing that the architect may rely on any information provided by the owner.37

b. EJCDC

The EJCDC provides forms for both the owner and engineer to contract with the

geotechnical consultant for the geotechnical services. In 2010, the EJCDC released new versions

of the E-530 (Agreement Between Owner and Geotechnical Engineer for Professional Services)

and the E-564 (Agreement Between Engineer & Geotechnical Engineer for Professional

Services), that contain several new clauses. The EJCDC also improved the definitions and

terminology to suit the particular needs of each document and to bring the geotechnical

agreements in line with other EJCDC design and construction contract documents.38

One of the new provisions expressly allows the owner to furnish the geotechnical

consultant’s report to bidders, contractors, engineers or other interested parties at any time

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without the need to obtain the geotechnical consultant’s permission.39 This change is consistent

with the EJCDC’s position that the site owner should disclose all available subsurface

information when conducting work at the site.40 However, there is also an express statement that

limits the geotechnical consultant’s responsibilities to third parties.41 The documents also

include an express certification that the agreement was not procured through bribery, fraud or

coercion.42 This is important on public projects that receive grant funding.

The 2010 version of the EJCDC documents also include provisions addressing who is

responsible for site restoration after the geotechnical consultant completes its investigation.

Under the EJCDC E-530, the geotechnical consultant must restore the site to the same condition

it was in before the geotechnical consultant began its investigation, including, but not limited to,

repairing or replacing damaged sidewalks, pavement or landscaping, subject to any exceptions

agreed to by the contracting parties.43 In addition, when the geotechnical consultant is on the

project, the documents require the geotechnical consultant to comply with the owner’, engineer’s

and/or contractor’s safety programs.44

The revised 2010 documents clarify the owner’s general obligation to pay the

geotechnical consultant for undisputed services.45 Similarly, the geotechnical consultant may

terminate the agreement if the owner refuses to pay undisputed sums.46 Further, indemnity for

certain categories of damages by the owner or the geotechnical consultant is now optional, not

mandatory.47

The EJCDC E-564 also contains stronger flow-down terms from the prime professional

services contract, expands options for addressing situations in which the project owner fails to

pay the prime professional and allows the prime professional and geotechnical consultant to

choose from four options for allocating or sharing the risk of owner non-payment.48 The

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document also revises the compensation provisions to improve clarity and completion of the

subcontract document.49

II. Background on Negotiating Contract Provisions. Why Does it Matter? Common

Issues Arising from Geotechnical Work Product

A. Claims Relating to Geotechnical Work Product Generally – Common Failures

The most common claims relating to the geotechnical work product are negligence,

breach of contract, and negligent misrepresentation; however, these claims often go hand in

hand. For example, a contractor sued a geotechnical consultant for breach of contract and

negligence, alleging the geotechnical consultant negligently failed to include the presence of four

underground storage tanks and the related soil contamination in its report.50 The contractor

argued this oversight caused the geotechnical consultant to breach their contract because he

failed to fully assess the subsurface soil conditions. Nevertheless, the court found in favor of the

geotechnical consultant, noting the contract required the geotechnical consultant to evaluate

subsurface soils and not an environmental site assessment as part of a foundation investigation.

In another case, however, a court found a contractor liable for damages that occurred

when the contractor’s geotechnical consultant provided incorrect soil advice, which later led to a

shift in the foundation of the structure, breaks in the plumbing pipes, cracks in the walls, and

ultimately eighteen inches in settlement.51 The court noted the geotechnical consultant’s

negligent soils engineering work was a cause of the soil settlement and the resulting property

damage, which breached the contractor’s contract/warranty with the owner.

Courts have also permitted contractors to file breach of contract claims against owners

and design professionals as well. For instance, a court permitted a contractor to file a breach of

contract claim against the owner as well as a negligence claim against the designer based upon a

breach of the implied warranty of design adequacy of the plans.52 The contractor agreed to

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install a sewer system for a small town. The contract between the contractor and the owner

contained, as an exhibit, a soils survey that included the results from test borings. During

construction, the contractor encountered soils that caused construction costs to rise. In addition,

the high pressure caused by excess water in the subsurface prevented the contractor from sealing

the manholes in the manner required by the contract. The court dismissed the contractor’s cause

of action seeking damages for additional costs caused by the differing subsurface conditions

because the contract placed the risk of differing site conditions upon the contractor. However,

the court allowed the contractor to move forward on its claims for additional construction costs

and delay damages resulting from the owner’s and design professional’s failure to approve

another method of sealing the manholes. The court, citing the Spearin53 doctrine, found the

owner and design professional could be liable for breaching the implied warranty and accuracy

of the plans and specifications.

A claim for negligent misrepresentation is more complicated. Where a contract does not

contain an exculpatory or changed conditions clause, a contractor may assert a breach of contract

claim for subsurface conditions that vary from those represented in the contract. For instance,

where a contractor encountered conditions that were materially different than those “reasonably

obtainable” or “reasonably ascertained,” the court permitted the contractor to recover under the

contract for extra work necessitated by the differing conditions.54

To establish a claim of negligent misrepresentation against a geotechnical consultant, a

party must show the geotechnical consultant is in the business of providing information to others

to guide their own business decisions, the geotechnical consultant provided incorrect or

misleading information, and that the geotechnical consultant provided the information to the

party to give him guidance in its business decisions.55 Because a geotechnical consultant is in

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the business of providing information and ideas, not a tangible product, he could likely be held

liable for negligent misrepresentation if it caused damages beyond mere economic loss.56 In one

instance, a geotechnical consultant and architect were sued for breach of contract and negligent

misrepresentation when a building developed cracks during construction due to unstable soil and

the architect and geotechnical consultant did not inform the contractor that the cracks could be a

result of the unstable soil even though they knew the profile of that soil.

Importantly, negligent misrepresentation claims are not limited to claims by a contractor

against the owner. Subcontractors have also obtained judgments against owners for

misrepresentation based upon an implied warranty of the accuracy of the owner’s plans and

specifications.57 Subcontractors may also, under an intended third-party beneficiary theory,

bring a similar claim against a design professional and the geotechnical consultant.

However, owners may contractually limit their liability to contractors. For instance,

where a contract provided that the owner may make an equitable adjustment only where

subsurface physical conditions materially vary from those ordinarily encountered and generally

recognized and not for subsurface soil conditions or rock conditions, the owner was not liable for

geological reports that were not accurate.58

General exculpatory clauses do not always insulate an owner from a contractor’s

misrepresentation claim. Despite a contract that precluded claims for differing site conditions, a

contractor prevailed on its misrepresentation claims where the owner represented the job site

required stripping of dry soil as opposed to wet soil.59 In that case, the contractor was delayed

more than 6 months as a result of rain leaving the construction site under 3 to 4 feet of water

while the expected work was only expected to take 3 days.

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 In addition to affirmative claims against the owner, architect and geotechnical consultant,

contractors may also defend against negligence or breach of contract brought by the owner under

the same theories. For instance, a court found a contractor was not liable to the owner for

damages resulting from a building collapse because the contractor poured foundations in

accordance with specifications provided by the owner, the architect and the foundation

engineer.60

Regardless of whether the geotechnical consultant is retained by the owner or the

architect, the touchstone of a negligence or negligent misrepresentation claim is the geotechnical

consultant’s standard of care.61 This rule also applies to any obligation the geotechnical

consultant has to third-parties.62 Therefore, it does not matter if a claim against the geotechnical

consultant is for breach of contract or a tort.63

The professional standard of care applies unless the owner and geotechnical consultant

expressly agree to utilize a different standard.64 The EJCDC has long included a standard of care

for a design professional in its standard form engineering agreement.65 The AIA also includes a

standard of care.66

B. Common Claims and Defenses as Between Owner and Architect as to Furnished

Geotechnical Information

If the geotechnical engineer is negligent, there is a question of what causes of action

could be asserted by the owner for any damages incurred. When the only claimed damages are

economic, a privity of contract issue arises due to the economic loss doctrine. The economic loss

doctrine is a court-developed doctrine utilized by a majority of the states and territories in the

United States.67 In essence, the economic loss doctrine prohibits a party from recovering purely

economic damages for a product defect when the only damage is to the product itself.

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 The economic loss doctrine arose from the Supreme Court case East River S.S. Corp. v.

Transamerica Delaval, Inc., 476 U.S. 858 (1986). There, the purchaser of a supertanker filed a

lawsuit against the shipbuilder under a strict liability products theory seeking only economic

damages arising from alleged design and manufacturing defects that caused the ship to

malfunction. The Court held the economic loss doctrine barred tort claims when a “defective

product in a commercial transaction malfunctions, injuring only the product itself.” The majority

of states follow this rule.68 In contrast, the minority rule does not recognize the economic loss

doctrine and, instead, allows a party to bring an action in tort for economic loss without

limitation.69 However, several states find a middle ground,70 creating exceptions to the majority

rule. Although the intermediate rule recognizes the economic loss doctrine, these states allow

recovery in tort in certain limited situations, seeking to find differences between consumers who

are disappointed and those who are in danger.

While the architect may have been free from error, absent relying on the geotechnical

consultant’s report, the architect may still be held vicariously liable for the geotechnical

consultant’s actions. When the only claimed damages are economic, the contract provisions will

govern in most states.

Under the economic loss rule, the owner will not have a direct claim against the

architect71 absent provision in the consultant agreement identifying the owner as the intended

third party beneficiary of the subcontract.72 In a sense, when a consultant makes an error, the

owner will have to sue through the design professional in order to get to the consultant or to get

any kind of remedy. An owner will be without any cause of action against the prime design

professional’s consultant because it did not contract with the consultant directly.

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 A minority viewpoint, however, would permit direct action by the owner against the

design professional not in privity of contract.73 In Flagstaff Affordable Housing, the court held

the economic loss rule applied only to claims for purely economic loss between the parties in

privity of contract. With respect to third parties, the court held tort remedies may be available to

recover economic loss from a non-contracting party. Instead, the focus should be on whether the

applicable substantive law allows liability in the particular context. It appears from Flagstaff, the

focus should start with application of the principles of third party liability of design professionals

set forth in Donnely Construction Company v. Oberg/Hunt/Gilleland, 677 P.2d 1292 (Ariz.

1984).

III. Negotiating Geotechnical Related Provisions in the Owner-Architect Agreement.

A. The Distinction Between the AIA Approach and the Single Point of
Accountability Approach with Illustrative Contract Provisions

Under the AIA approach, the owner has the responsibility of hiring a geotechnical

consultant.74 AIA Document G602TM-1993 may be used to create the agreement between an

owner and geotechnical consultant.75 An owner may use this document, a request for proposal,

to tailor the scope of services to the relevant project. The owner may then contract with the

architect using AIA Document B201™-2007. The AIA Document B201™-2007 states that the

architect is entitled to rely on all information provided by the owner.76 The geotechnical

consultant’s report would be a part of the information given to the architect. Thus, the architect

could rely on that information without incurring liability for its possible errors.

However, the owner may want the architect to contract with the geotechnical consultant,

resulting in a single point of accountability. This will result in heightened liability for the

architect. In contracting directly with the geotechnical consultant, the architect can be held

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vicariously liable for a consultant’s actions if the design professional was the one who contracted

with the consultant.

B. Allocating Risks and Responsibilities in Selecting the Geotechnical Consultant

When an architect or construction manager contracts with the geotechnical consultant, the

architect or construction manager will be held liable for damages awarded that exceed the limit

of liability in the geotechnical consultant’s contract. The design professional may be able to

escape liability if an owner hires a specific consultant directly or if an owner requires the prime

to use a specific consultant. Thus, the architect and the construction managers should avoid

selecting the geotechnical consultant, if at all possible.77

Where the owner does hire the geotechnical consultant, it will likely want to alter the

language in the Owner/Architect agreement to allocate more risk to the architect. Rather than

allowing the architect to rely on all material furnished to him by the owner, the owner may want

to include a limitation: The architect will be able to “rely” on that material given to him unless it

“knows” or “should have known” that the geotechnical consultant’s report was incomplete or

inaccurate. This may require an architect to conduct independent investigation, thereby making

him liable for damages that may ensue due to geotechnical errors. However, this will result in

the owner paying for unnecessary duplicative services to perform an additional investigation.

Alternatively, the owner may take the approach the architect should assume and

thereafter be responsible for owner’s geotechnical consultants, as noted above. Assuming the

owner has paid for the original work product, and will pay for additional work product the

architect requires as a condition of the assumption, the risk to that architect may be less than if

the architect had originally engaged the consultant.

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 Even if there is no direct contractual relationship between the owner and the geotechnical

consultant, a court may find the engineer to be an independent contractor and solely responsible

for its own actions. Thus, the owner will not have to sue “through” the design professional in

order to sue the consultant; the owner can sue the consultant directly.

C. Defining the Scope of Geotechnical Services; i.e., how many borings, how deep,
location of borings, nature of tests; allocating risk of areas not tested

In determining the number of borings as well as the location and depth of those borings, a

geotechnical consultant will need to know the location of the proposed project, the physical size

of the proposed project, the type of construction planned, the number of stories planned, and

whether the project includes a basement.78 The more complete the information given to the

geotechnical consultant is the better, because if he is not given enough information, he will be

forced to rely more on its experience as a geotechnical consultant rather than on the data of the

proposed project and the profile of that specific soil.79 Also, a larger project will necessitate a

wider scope of services from the geotechnical consultant. For a large project, a geotechnical

consultant may have to use more field exploration methods, including soil probing, hand

augering, digging of test pits, and even special field or laboratory testing.80 Even though these

kinds of guidelines are available, it is highly recommended that a civil or structural engineer

rather than the architect make geotechnical assessments. Further, by shifting the responsibility

for the geotechnical assessments to the consultant, the architect may continue to rely on this

information under the AIA Documents.81

An engineer should be the individual to dictate these requirements; not the architect. The

problem arises when the soil analysis is done before all of the consultants are hired. If an

architect must make recommendations to the owner on the scope of the soil testing, such as

location and depth of those borings, the architect should consult the current, applicable standards,

18
such as those provided by the American Society of Civil Engineers.82 Even though these kinds

of guidelines are available, it is highly recommended that a civil or structural engineer rather

than the architect make geotechnical assessments.

It is common practice to prepare soil profiles across a site in borings spaced some

distance apart.83 In determining the number of borings as well as the location and depth of those

borings, a geotechnical consultant will need to know the location of the proposed project, the

physical size of the proposed project, the type of constriction planned, the number of stores

planned, and whether the project includes a basement.84

D. Insurance Considerations

1. Professional Liability Insurance

a. Claims Made Policies

A claims-made policy insures losses that occur and are reported during the policy period.

A claims made policy differs from an occurrence policy in several ways. Importantly, under a

claims made policy, all coverage ceases when the policy is canceled or not renewed, even though

a design professional may have been insured when the services were rendered.85 In contrast,

under an occurrence policy, the policy covers a claim filed after the policy is cancelled if the

policy was in force when the claim arose.86

In the 1970s, professional liability insurers experienced a dramatic upswing in late-

reported claims, accompanied by a corresponding increase in the average cost of claims.87

Because of the difficulty associated with accurately setting the price for the policy, almost every

insurer switched to a claims-made form.88 This is because a policy issued on a claims made

basis makes it easier for an insurer to predict any costs associated with claims made against the

policy.89 If insurers wrote professional liability policies on an occurrence basis, the cost of this

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coverage would be prohibited because insurers would include contingencies for unknowns, such

as claims incurred but not reported.90 Thus, design professionals using professional liability

insurance as a risk management tool must maintain continuous coverage.91 It is also advisable to

maintain a policy with the same insurer because switching insurers raises risks that acts that

occurred prior to the effective date of the new policy will not be covered. Thus, it is important to

insure that the insurer offers a rider to cover prior acts.

b. Negligence Based

Professional negligence is triggered by a claim alleging a negligent act, error or

omission.92 A design professional is negligent whenever they fail to provide their respective

professional service in accordance with the applicable standard of care. However, simply

because a design professional commits an error or makes an omission in providing design

services does not trigger the policy’s protections unless the architect is negligent.93 For instance,

if a structural engineer calculates the load for a particular beam and overdesigns the particular

beam, the structural engineer is not necessarily negligent. If the engineer used a higher safety

rating than required, there is an argument that the engineer committed an error. However, if the

same engineer designs a beam that is only capable of supporting half of the desired load, the

engineer may be found to be negligent if a similar engineer could have successfully designed the

beam to carry the full load.

Courts have held that the basis for review of a design professional’s services is based

upon some degree of fairness, meaning the courts want to acknowledge that perfection is not the

measure of whether or not the design professional performed its services without neglect. In

other words, a design professional may make mistakes and not be negligent in the performance

of its services.94

20
 c. Higher Deductibles

Insurers calculate premium costs based on the coverage provided, any applicable

endorsements and exclusions and the deductible.95 However, a design professional may exercise

some control over the premium cost by agreeing to a higher deductible.96 For instance, by

increasing the deductible, the insurer’s exposure is lowered, lowering the premium.97 Although

higher deductibles increase a design professional’s exposure to claims payments, it also provides

an incentive to increased practice management.98

d. Appropriate Limits

One upside of the shift of professional liability policies to a claims-made basis is that if

the design professional maintains a policy with the same insurer, the limits of liability are those

in effect at the time the claim is made, even if the claim occurred during a time when the policy

limit was lower.99 For example, if a design professional procured a policy in 2000 with a limit of

$100,000 and gradually increased that limit to $500,000 today, an occurrence in 2004 is covered

by today’s higher limit.100

Professional liability limits vary widely depending upon the size of the design firm and

the types of projects they undertake. Although the most typical limit is one million dollars

($1,000,000) per occurrence, one rule of thumb in selecting appropriate limits is to purchase an

aggregate limit in an amount at least twice the per-claim limit.101 One way to gauge the most

appropriate limit for a particular firm is to compare what other similar size design professionals

maintain.102 This information may be obtained through insurance brokers or trade associations,

which frequently track such information.103

21
 e. No Additional Insured Status Available

Construction contracts frequently contain a provision requiring the contractor to name the

owner as an additional insured on its general liability policy. Not surprisingly, owners

sometimes expect a similar contractual requirement from a design professional. However,

insurers rarely, if ever, consent to such a request for several reasons.

First, an insured provides coverage for actual or alleged liability emanating from

providing, or failing to provide, competent professional services.104 When an owner requires a

contractor to list the owner as an additional insured, it does so because the contractor and the

owner face similar risks, i.e., claims for damage arising out of the contractor’s faulty work.

Although the contractor performs the work, the owner ultimately owns the property upon which

the work is performed. In contrast, a professional liability policy insures the design professional

will provide service in accordance with a particular standard of care that applies only to members

of that profession.105 The owner, thus, does not face the same exposure and cannot be defended

according to this professional standard of care.106 In addition, the owner’s own insurance

policies should defend it against any vicarious liability, avoiding the inevitable conflicts that

would arise between the owner and the design professional.107

2. General Liability Insurance

a. Occurrence Based Policies

General liability insurance policies are most often occurrence based policies. An

occurrence is frequently defined as “an accident, including continuous or repeated exposure to

substantially the same general harmful conditions.”108 Although every occurrence based policy

defines the term “occurrence,” most fail to do so for the term “accident.” Thus, the question of

what constitutes an accident, and in turn an occurrence, is a question of state law.109

22
 As discussed above, an occurrence policy differs from a claims made policy in that the

policy covers claims that occurred while the policy was in effect even if the claim is reported

after the policy expires.

b. Exclusions for Professional Services

Most general liability policies contain an exclusion for professional services.110 This is

because insurers believe professional liability claims are more appropriately covered by a

professional liability policy.111 However, most policies allow coverage for incidental design

services performed by contractors as part of the means and methods of construction.112

Nevertheless, owners may be able to obtain an endorsement for the design services.113

c. Additional Insured Status is Common if Required by Written

Contract

Frequently on a construction project, owners require the contractor and subcontractors of

all tiers to list the owner as an additional insured. Generally, the subcontractors will satisfy this

contractual requirement by obtaining a standard endorsement allowing for such coverage.114

E. Waivers and Limits – The Pros and Cons; Common Solutions

1. Limiting Liability

The key issue regarding architects hiring geotechnical consultants is that most

geotechnical engineering firms limit their liability, usually that damages not exceed their fee.

Thus, an architect could be sued for millions of dollars for damage caused by foundation

problems due to erroneous advice given by the geotechnical consultant, and the architect would

be forced to pay the total amount of damages less the amount of the geotechnical consultant’s

fee. An architect should not sign a contract with a geotechnical consultant without ensuring that

it does not have a limitation of liability clause. If an architect signs a contract that contains one

23
of these clauses, he will be held vicariously liable for the geotechnical consultant’s work for

damages in excess of the liability limit.

2. Waiver of Consequential Damages

Under the AIA approach, the waiver of consequential damages is a standard part of the

Owner/Architect Agreement. Section 8.1.3 of AIA Document B101™-2007 dictates: “The

Architect and Owner waive consequential damages for claims, disputes or other matters in

question arising out of or relating to this Agreement. This mutual waiver is applicable, without

limitation, to all consequential damages due to either party’s termination of this Agreement . . . .”

Thus, owners are waiving consequential damages related to loss of use, lost profits, diminution

in value, and lost rent.115

IV. Checklist of Issues and Conclusions

Below is a checklist of certain issues to consider in staking out positions regarding the

engagement of a geotechnical consultant.

24
Concept Owner Perspective Architect Perspective

What is the risk if the owner engages the
geotechnical consultant separately from
the architect?
In litigation to recover damages Architect does not typically consider
resulting from a defective foundation this a problem. Liability associated
designed by the architect, the owner with reliance on owner supplied
will be faced with defenses from the report is much less than if architect
architect the design relied on the owner had engaged the report.
provided geotechnical report which
architect is entitled to rely upon
notwithstanding evident inadequacies
in that report, and despite fact architect
selected the geotechnical consultant.
The geotechnical consultant will likely
defend based on standard of care and
contractual limits of liability. Major
potential for multiple actions,
inconsistent result, and inadequate
recovery.

Who should engage the geotechnical
consultant?
Unless the owner is sophisticated in its
own right will rely on the architect for
recommendations. Additionally, unless
well represented by counsel, is not
likely to understand it is assuming a
risk (defective geotechnical work) it is
not as capable as managing as the
design team.
From the pure risk minimization
standpoint, it is best to try to get the
owner to accept the risk, explaining it
is typical for owners to engage the
geotechnical consultant. If pressed,
however, architect will generally be
willing to engage the geotechnical
consultant, subject to compensation
in the form of a risk premium.

What if the owner engaged the
geotechnical consultant during pre-
design? Is it locked into staying with the
geotechnical consultant?
Once aware of the single point of See above.
responsibility concern, owner will want
architect to provide the geotechnical
consultant. Two approaches are taken.
One, for the architect to start over with
a new geotechnical consultant. The
other, for the owner to assign the
geotechnical consultant contract to the
architect.

What kind of geotechnical consultant
does the anticipated project merit - Baby
or veteran; Dabbler or specialist?
The owner ordinarily wants the best
qualified geotechnical consultant for
the project, consistent with its cost
objectives, and will normally rely on
the architect for this determination
The architect is generally not too
concerned about this if it is owner
supplied; however, will have the
same attitude as owner if architect is
to supply the geotechnical consultant.

25
Concept Owner Perspective Architect Perspective

What should be the contract standard of
care
Owner normally wants the highest Architects tend to stress the fact
possible standard of care. Owner can higher standards are not backed by
address insurance concerns a high liability insurance
standard of care is an uninsured
contractually assumed liability by
adding in the remedies section the right
in the alternative to pursue remedies
based on the common law standard.

What should be the scope of the report-
how many borings, where, at what
depths; what kinds of analyses should be
made; what should the report address?
Owners typically have no clue; and will
rely normally on the Geotechnical
consultant and Design Team to make
this determination.
Architects and their structural
engineers tend to prefer to leave this
up to the geotechnical consultant if
supplied by owner; but will get hands
on if it is their subcontractor.

What form should be used? Owners should use a custom contract,

which addresses points noted below.

If the owner is to furnish the

geotechnical report, it should avoid the
AIA and EJCDC forms. The AIA
Owner-Architect agreement calls for
the owner to provide the geotechnical
consultant, and includes a waiver of
consequential damages; The AIA
Owner-Geotechnical Consultant form
G602; the EJCDC owner-geotechnical
form includes a waiver of
consequential damages

If architect is to furnish geotechnical

Confidentiality/Non-Disclosure Clause
Managing Design Development
consultant, owner should include in the
Owner-Architect agreement
requirements the geotechnical
consultant name the owner as the
intended beneficiary, not have any limit
of liability or waiver of consequential
damages and provide insurance
acceptable to owner.
Establish need at the commencement
and establish terms, if appropriate,
before and during negotiation.
Establish design schedule; schedules
with milestones; parameters; Owner
review & authorization to proceed

Duration of Design and Construction Schedules; time limits; accountability Could enhance Article 3 (most
for failure to meet milestones glaring issue is lack of
accountability for delay)
Determine Fast Track procedures
Could be added

26
Concept Owner Perspective Architect Perspective

Compensation

Payment

Document Control/Use/Ownership License to use (preferably own) work Prefer the AIA approach; i.e., will
product as architectural work and/or give limited license subject to
work for hire. payment in full for entire project.

Course of construction Geotechnical consultant reports Same as Owner

ALWAYS require contractor to comply
with recommendations, as verified by
geotechnical consultant in field; and
code normally requires special
inspection reports from geotechnical
consultant. Therefore the contract must
require geotechnical consultant to
provide COC work as part of the Basic
geotechnical consultant.

Subcontracts Owner prefers the architect subcontract Architects furnishing the

with the geotechnical consultant, as geotechnical consultant should avoid
noted above. the AIA subconsultant agreement,
and take the approach indicated for
owners, supra.

Allocating responsibility for what can go

wrong before completion

Changes Establish procedures and controls; no

work furnished before change is
authorized.

Avoidable Delays Define and allocate responsibility for

management and consequences for
failure to do so

Unavoidable Delays Define-delineate between owner-

caused and force Majeure delays and
remedies for each

Notice of Claims Written notice & short trigger for initial

notice

Remedies Define the process; contingent

assignment of contracts

27
Concept Owner Perspective Architect Perspective

Third-Party Claims Indemnity

Insurance Require CGL, Worker's Compensation, Article 14

Employer's Liability; Errors &
Omissions; Consider Pollution
Liability. Insurance- to address
Releases caused by the drill rig.

Allocating responsibility for what can go

wrong after completion

Defects Appropriate call-back warranties; Article 13

warranty reserves

Mitigating Economic Loss Minimum owner protection

Rule requirements in Subcontract and Sub-
subcontracts

Third Party Claims Appropriate Indemnities

Insurance Products & Completed Operations;

Errors & Omissions tail coverage

Dispute Resolution

Termination for Convenience Establish clear right; alternative

termination fee, if any

Third-Party Regulatory/Contractual Lender

Requirements
Regulatory Requirements

Lender/Developer/CCR Requirements

28
1
Larry P. Jedele, Geotechnical Services 1, available at
http://www.aia.org/aiaucmp/groups/aia/documents/pdf/aiab089251.pdf (last visited October 12, 2011).
2
Cunin, Soils Part I: Engineering Aspects and Physical Properties, The Construction Specifier 81 (May 1968).
3
Haire v. Nathan Watson Co., 221 S.W.3d 293, 296 (Tex. Ct. App. 2007).
4
American Institute of Architects, The Architect’s Handbook of Professional Practice, p. 617 (12th ed. 1994).
5
Id.
6
Id.
7
Id.
8
Id. at 621.
9
Id.at 617.
10
Expansive Soil and Expansive Clay: The Hidden Force Behind Basement and Foundation Problems,
http://geology.com/articles/expansive-soil.shtml (last visited October 12, 2011); John D. Nelson & Debora J. Miller,
Expansive Soils: Problems and Practice in Foundation and Pavement Engineering 1 (1992).
11
The Architect’s Handbook of Professional Practice, pp. 621-622 (AIA) (12th ed. 1994).
12
See, e.g., ASTM Standard D420-98 (2003); Site Characterization for Engineering, Design, and Construction
Purposes (2009) by (ASTM); Engineer Manual 110-1-1804, Geotechnical Investigations, Army Corps of Engineers
(1984).
13
Bruner & O’Connor on Construction Law §14.18.
14
Id.
15
Id. §14.2.
16
See Cunin, Soils Part II: Test Borings, The Construction Specifier 63 (June 1968) (“In test boring, the sensitivity
required in knowing when to take the ‘sample,’ and the interpretation of the picture it presents, makes this an art
rather than a science. Adequate and reliable interpretation of the exact nature of soil samples is often a matter of
judgment.”).
17
See Reese, Why Foundations Fail, the Construction Specifier 66 (Jan. 1989).
18
David Rogers, et al., Damage to Foundations From Expansive Soils, available at
http://web.mst.edu/~rogersda/expansive_soils/DAMAGE%20TO%20FOUNDATIONS%20FROM%20EXPANSIV
E%20SOILS.pdf
19
Rogers, supra, at 40.
20
Rogers, supra, at 40.
21
U.S. Dep’t of Transp., Geotechnical Aspects of Pavements Reference Manual, §4.5.6,
http://www.fhwa.dot.gov/engineering/geotech/pubs/05037/04c.cfm (last updated Apr. 7, 2011).
22
National Research Council, Geological and Geotechnical Engineering in the New Millennium 59 (2006).
23
Matthew Bender, Construction Law, ¶3.03[2][a][iv] (2009).
24
Standard Form of Agreement between Owner and Architect, AIA Document B-101™ §5.2 (2007).
25
Standard Form of Agreement between Owner and Architect, AIA Document B-101™ §5.5 (2007).
26
Abbreviated Standard Form of Agreement Between Owner and Architect, AIA Document B151™ §4.5 (1997).
27
John E. Kofron, Design/Build and the AIA’s New 2004 Design/Build Documents, A Brief Overview from the
Owner’s Perspective (ABA Forum October 12, 13, 2006) (Scottsdale, Arizona).
28
Standard Form of Agreement between Owner and Architect, AIA Document B101™ §3.2.2 (2007).
29
Standard Form of Agreement between Owner and Architect, AIA Document B101™ §4.1.5 (2007).
30
Standard Form of Agreement between Owner and Architect, AIA Document B101™ §5.5 (2007).
31
See, e.g., Zontelli & Sons, Inc. v. City of Nashwauk, 373 N.W.2d 744 (Minn. 1985).
32
John E. Kofron, “Design/Build and the AIA’s New 2004 Design/Build Documents: A Brief Overview from the
Owner’s Perspective,” (ABA Forum Oct. 12-13, 2006) (Scottsdale, Arizona ).
33
Id.
34
Standard Form of Agreement between Owner and Architect, AIA Document B101™ §5.5 (2007).
35
See also Standard Form of Architect’s Services: Design and Construction Contract Administration, AIA
Document B201TM §4.3 (2007).
36
Standard Form of Agreement between Owner and Architect, AIA Document B101™ §5.5 (2007).
37
Standard Form of Architect’s Services: Design and Construction Contract Administration, AIA Document B-
201TM §2.1.2 (2007).
38
See, e.g., EJCDC E-530, Article 7 (2010).
39
See, e.g., EJCDC E-530 §6.03(B) (2010).

29
40
See, e.g., EJCDC E-530, Exhibit B, §B2.01(c) (2010) (requiring owner to furnish geotechnical engineer any
available information pertinent to the project including, but not limited to tests of subsurface conditions).
41
See, e.g., EJCDC E-530 §6.03(C) (2010).
42
See, e.g., EJCDC E-530 §8.04(A) (2010).
43
See, e.g., EJCDC E-530, Exhibit A, Part I, §A1.02(B)(1)(e) (2010).
44
See, e.g., EJCDC E-530, Exhibit A, Part II, §A 2.02(A)(2) (2010).
45
EJCDC E-530 §4.02 (2010).
46
EJCDC E-530 §6.05(b)(1) (2010).
47
See, EJCDC E-530 §6.10(B) (2010).
48
http://content.geoinstitute.org/files/pdf/TheEngineersJointContractDocumentsCommitteeIssuesNewGeotechnical-
ServicesAgreements.pdf (last accessed November 3, 2011)
49
Id.
50
Resolution Trust Corp. v. W. Techs., Inc., 877 P.2d 294 (Ariz. Ct. App. 1994).
51
Am. Mutual Family Ins. Co. v. Am. Girl Inc., 673 N.W.2d 65 (Wis. 2004).
52
W.H. Lyman Const. Co. v. Village of Gurnee, 403 N.E.2d 1325 (Ill. Ct. App. 1980).
53
United States v. Spearin, 248 U.S. 132 (1918).
54
SMC Corp. v. NJ Water Supply Auth., 759 A.2d 1223 (NJ App. Div. 2000) (contractor who encountered a 9 foot
scour hole at the site where it was supposed to erect cofferdams, requiring a different method of completing the
work permitted to move forward with breach of contract claim for owner’s failure to pay for extra work).
55
Tolan & Son, Inc. v. KLLM Architects, Inc., 719 N.E.2d 288, 296 (Ill. App. Ct. 1999).
56
Tolan, 719 N.E.2d at 298.
57
See, e.g., Midwest Dredging Co. v. McAnnich Corp, 424 N.W.2d 216 (Iowa 1988).
58
S&M Constructors, Inc. v. City of Columbus, 434 N.E.2d 1349 (Ohio 1982).
59
PT&L Construction Co., Inc. v. New Jersey Dept. of Trans., 531 A.2d 1330 (NJ 1987) (owner liable to contractor
where heavy rain left the project site under three to four feet of water, resulting in a delay of over 171 days where
the work was intended to take 3 days).
60
Blue Bell, Inc. v. Cassidy d/b/a John Cassidy Construction Company, 200 F. Supp. 443 (E.D. Miss. 1961).
61
Steven G. Stein and Carl L. Popovsky, “Design Professional Liability for Differing Site Conditions and the Risk-
Sharing Philosophy,” 20 Construction Lawyer 13 (April 2000).
62
See generally, Steven G.M. Stein, Construction Law §5A.07 (1998 Supp.).
63
Stein and Popovsky, “Design Professional Liability for Differing Site Conditions and the Risk-Sharing
Philosophy,” 20 Construction Lawyer 13 (April 2000).
64
Id. See also, Justin Sweet, Legal Aspects of Architecture, Engineering and the Construction Process §14.05A and
235 (6th ed. 2000).
65
Standard Form of Agreement Between Owner and Engineer, EJCDC 1910-1 (1996).
66
Standard Form of Agreement Between Owner and Architect, AIA Document B101™ §2.2 (2007).
67
Gary L. Wckert, Subrogator, NASP, “Subrogation and the Economic Loss Dotrine - A 50 State Survey,” p. 68
(Spring/Summer 2007).
68
Id. The following states follow the majority rule: Alabama, Lloyd Word Coal Co. v. Clark Equip. Co., 543 So.2d
671 (Ala. 1989); Delaware (but contains exception for residential construction), (Danforth v. Acorn Structures, Inc.,
608 A.2d 1194 (D. Super. 1999); Florida, Florida Power & Light Co. v. Westinghouse Elec. Corp., 510 So.2d 899
(Fla. 1987); Hawaii, Bronster v. United States Steel, 919 P.2d 294 (Hawaii 1996); Idaho, Duffin v. Idaho Crop
Improvement Ass’n, 895 P.2d 1195 (Idaho 1995); Indiana, Bamberger & Feibleman v. Indianapolis Power & Light
Co., 665 N.E.2d 933 (Ind. App. 1996); Kentucky, Gidding & Lewis, Inc. v. Industrial Risk Insurers, 2009-SC-
000485-DC (Kentucky June 16, 2011); Maine, Oceanside at Pine Point Condominiums v. Peachtree Doors, Inc.,
659 A.2d 267 (Me. 1995); Minnesota, Superwood Corp. v. Siempelkamp Corp., 311 N.W.2d 159 (Minn. 1981);
Mississippi, State Farm Mutual Auto Ins. Co. v. Ford Motor Co., 736 So.2d 384 (Miss. Ct. App. 1999); Missouri,
Clevenger and Wright, Co. v. A.O. Smith HArvestore Products, Inc., 625 S.W.2d 906 (Mo. Ct. App. 1981);
Nebraska, National Crane Corp. v. Ohio Steel Tube, 332 N.W.2d 39 (Neb. 1983); Nevada, Charlie Brown
Construction Co., Inc. v. City of Boulder City, 797 P.2d 946 (Nev. 1990); New Jersey, Alloway v. General Marine
Industries, L.P., 695 A.2d 264 (N.J. 1997); New Mexico, Utah Int’l, Inc. v. Caterpillar Tractor Co., 775 P.2d 741
(Utah. Ct. App. 1989); New York, Bocre Leasing Corp. v. General Motors Corp., 645 N.E.2d 1195 (N.Y. 1995);
North Carolina, Moore v. Coachmen Industries, Inc., 499 S.E.2d 722 (N.C. 1998); North Dakota, Hagart Farms v.
Hatton Industries, Inc., 350 N.W.2d 591 (N.D. 1984); Ohio, Foster Wheeler Enviresponse, Inc. v. Franklin County
Convention, 678 N.E.2d 519 (Ohio 1997); Oklahoma, Waggoner v. Town and Country Mobile Homes, Inc., 808

30
P.2d 649 (Okla. 1990); Pennsylvania, R.E.M. Coal Co., Inc. v. Clark Equipment Co., 563 A.2d 128 (Pa. Super.
1989); South Carolina, Kennedy v. Columbia Leather and Mfg. Co., Inc., 384 S.E.2d 730 (S.C. 1989); South Dakota,
Diamond Surface, Inc. v. State Cement Plant Comm’n, 583 N.W.2d 155 (S.D. 1998); Tennessee, Trinity Industries,
Inc. v. McKinnon Bridge Co., Inc., 77 S.W.3d 159 (Tenn. Ct. App. 2001); Texas, Nobility Homes of Texas, Inc. v.
Shivers, 557 S.W.2d 77 (Tex. 1977); Vermont, Paquette v. Deere and Co., 719 A.2d 410 (Vt. 1998); Virginia,
Sensenbrenner v. Rust, Orling & Neale, Architects, Inc., 374 S.E.2d 55 (Va. 1988); Wisconsin, Sunnyslope
Grading, Inc. v. Miller, Bradford & Risberg, Inc., 437 N.W.2d 213 (Wis. 1989); Wyoming, Continental Ins. Co. v.
Page Engineering Co., 783 P.2d 641 (Wyo. 1983).
69
Id. The following states follow the minority rule. Colorado, Town of Alma v. Shanks, 10 P.3d 1256 (Colo. 2000);
Connecticut, Conn. Gen. Stat. §§52-572m(b), et seq.; Louisiana, La. Rev. Stat. Ann. §9:2800.51, et seq.
70
Id. The following states follow the intermediate rule. Alaska, Northern Power & Engineering Corp. v. Caterpiller
Tractor Co., 623 P.2d 324 (Alaska 1981); Arizona, Salt River Project Agric. Improvement & Power Dist. v.
Westinghouse Elec. Corp., 694 P.2d 198 (Ariz. 1984); Arkansas, Berkeley Pump Co. v. Reed-Joseph Land Co., 653
S.W.2d 128 (Ark. 1983); Georgia, O.C.G.A. §51-1-11; Illinois, Moorman Mfg. Co. v. National Tank Co., 435
N.E.2d 443 (Ill. 1982); Iowa, American Fire & Casualty Co. v. Ford Motor Co., 588 N.W.2d 437 (Iowa 1999);
Kansas, Daitom, Inc. v. Pennwalt Corp., 741 F.2d 1569 (10th Cir. 1984); Maryland, A.J. Decoster v. Westinghouse
Elec. Corp., 634 A.2d 1330 (Md. 1994); Massachusetts, Bay State-Spray & Province S.S., Inc. v. Caterpillar Tractor
Co., 751 N.E.2d 862 (Mass. 1989); Michigan, Niebarger v. Universal Cooperatives, 486 N.W.2d 612 (Mich. 1992);
Montana, Streich v. Hilton-Davis, 692 P.2d 440 (Mont. 1992); New Hampshire, Ellis v. Robert C. Morris, Inc., 513
A.2d 290 (N.H. 1988); Oregon, Russell v. Ford Motor Co., 575 P.2d 1383 (Or. 1978); Rhode Island, Rousseau v.
K.N. Construction, Inc., 727 N.E.2d 190 (R.I. 1999); Utah, Hermansen v. Tasulis, 48 P.3d 234 (Utah 2002);
Washington, Berg v. General Motors Corp., 555 P.2d 818 (Wash. 1976); West Virginia, Anderson v. Chrysler
Corp., 403 S.E.2d 189 (W. Va. 1991).
71
See, e.g., Sensenbrenner v. Rust, Orling & Neale, 374 S.E.2d 55 (Va. 1988) (in response to a certified question
from the Fourth Circuit Court of Appeals, the Virginia Supreme Court held an owner may not proceed on a
negligence claim against an architect for solely economic damages).
72
See, e.g., Pierce Associates, Inc. v. Nemours Foundation, 865 F.2d 530 (3rd Cir. 1988) (finding an owner was not
a third-party beneficiary of a subcontract that did not contain a provision stating the owner was an intended
beneficiary, despite the fact owners ultimately benefit from the work of subcontractors).
73
Flagstaff Affordable Hous. Ltd. P’ship v. Design Alliance, Inc., 223 P.3d 664 (Ariz. 2010).
74
Jedele, supra, at 7.
75
Jedele, supra, at 9.
76
Standard Form of Architect’s Services: Design and Construction Contract Administration, AIA Document B-
201TM §2.1.2 (2007).
77
American Bar Association Forum on the Construction Industry, Design Professional and Construction Manager
Law 286 (Stephen A. Hess, et al. eds. 2007).
78
Jedele, supra, at 4.
79
Id.
80
Id. at 6.
81
Standard Form of Architect’s Services: Design and Construction Contract Administration, AIA Document B-
201TM §2.1.2 (2007).
82
See American Society of Civil Engineers, http://www.asce.org/ (last visited July 21, 2011).
83
Whiteman, “Organizing and Evaluating Uncertainty on Geotechnical Engineering,” Journal of Geotechnical and
Geoenvironmental Engineering, p. 584 (July 2000).
84
Jedele, supra. at 4.
85
The Architect’s Handbook of Professional Practice, p. 371(14th ed. 2008).
86
Id.
87
Paul Dorroh and Mary E. Whisenand, Understanding Your Claims-Made Professional Liability Insurance Policy,
p.1, available at http://www.soa.org/files/pdf/eact-dorroh-whisenand-claims.pdf (last accessed October 12, 2011).
88
Id. at 2.
89
The Architect’s Handbook of Professional Practice, p. 372 (14th ed. 2008).
90
Id.
91
Id.
92
Construction Law Handbook §20.03[D] (Cushman 1999).
93
Id.

31
94
Dukes v. Philip Johnson/Alan Ritchie, Architects, P.C., 252 S.W.3d 589, 594 (Tex. Ct. App. 2008); I.O.I. Systems,
Inc. v. City of Cleveland, Texas, 615 S.W.2d 786 (Tex. Civ. App. 1980).
95
The Architecture Student’s Handbook of Professional Practice, §5.5 (2011).
96
Id.
97
Id.
98
Id.
99
Paul Dorroh and Mary E. Whisenand, Understanding Your Claims-Made Professional Liability Insurance Policy,
supra, at 6.
100
Id.
101
Ames & Gouch, Risk Brief, Design and Construction, “Picking the Right Limit for Professional Liability
Insurance” (March 2010).
102
Id.
103
Id.
104
RA&MC Quarterly, Fall Quarter 1999, Volume 17, Issue 4, p. 1.
105
Id.
106
Id.
107
Id.
108
Construction Insurance, a Guide for Attorneys and Other Professionals, p. 72 (Palley, et al., ABA 2011).
109
See, e.g., ACS Constr. Co., Inc. of Mississippi v. CGU, 332 F.3d 885 (5th Cir. 2003) (noting that because the
insurance policy failed to define the term “accident,” the court must look to state law to determine what constitutes
an accident).
110
Construction Insurance, a Guide for Attorneys and Other Professionals, supra, at 98.
111
Construction Law Handbook, §20.03[B](e) (Cushman ed.) (Aspen 1999)
112
Id.
113
Id.
114
Id. at 157
115
Fairfield & Woods, P.C., Is the AIA’s Mutual Waiver of Consequential Damages Really Mutual?,
http://www.fwlaw.com/tabid/204/Default.aspx (last visited October 12, 2011).

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