Claim of the Week: What's In Your Scope of Services?

The project at hand involved improvements to a town’s riverside recreation facility and parking area. The architect’s limited role required preparation of schematic layouts, a detailed site plan map and coordination with the town engineer for zoning approval for improvements. The town hired the architect by accepting his proposal for providing limited architectural services. In fact, once accepted, the proposal was signed and became the contract.

The insured’s proposal/contract offered to:

- Decrease area of asphalt for parking area

- Provide for separation of pedestrian and vehicular traffic

- Relocate entrance to a miniature golf course

- Comply with applicable regulations

- "Provide other design services to meet the project needs."

The scope of services was broadly worded as the proposal was meant to be an “offer.” Construction phase services were not specifically included. The sweeping, catch-all language, “Other design services to meet the project needs,” was intended as the concluding sentence of the proposal, written to demonstrate our insured’s “can do” spirit.

Meanwhile, under a separate contract, the town hired a civil engineer to design the parking area based on the insured’s schematic layout. The engineer’s design included specs for wheelstops, curbings and a pedestrian walkway. The engineer’s responsibilities included construction observation that was limited to just a few site visits. The architect’s original schematic plan reconfigured the parking lot to include a grassy buffer between the parking lot and a river. That plan was rejected and the town accepted a revised version that added a small parking area along the river.

Fast forward five years.

On a cold, overcast day in October, a man driving a Ford Explorer took his 75 year old mother-in-law for a picnic lunch at the park. The Explorer suddenly surged forward, jumped the curb (remember the grassy buffer was removed), raced across the pedestrian walkway, broke though a chain link fence and plunged into the river. The driver immediately exited though a window and was rescued by a passing schooner. Some 30 minutes later a scuba diver entered to connect a wrecker cable to the submerged vehicle when he noticed a hand on the top of the back seat. Miraculously, the mother-in-law was successfully resuscitated.

Naturally, someone had to be sued. The woman’s other daughter claimed that as a result of the trauma, her mom suffered brain damage and would need nursing care for the rest of her life. This allegation was made despite the fact that the woman had been experiencing diminished memory and other forms of dementia prior to the accident. The plaintiff’s attorney set forth general allegations ranging from premises liability to construction activities to non-specific design responsibilities (i.e., violation of building codes).

The pretrial assessment pointed toward a very remote chance that the insured would be liable due to the limited design services provided and no construction phase services. However, town employees who appeared for depositions testified that the insured had visited the site during construction. Even though the architect explained that he had stopped by the site one evening on his way back to the office from visiting a different project, the testimony of the town employees created a factual issue as to whether the architect had taken on a duty to question why wheelstops had not been installed, and ask who had authorized construction of 4–inch curbs when the civil engineer had specified 6–inch curbs.

The plaintiff had additional motive to look to the insured for compensation when the town’s attorney filed a motion for summary judgment based on the doctrine of sovereign immunity. The plaintiff and the co-defendant town argued that the clause in the letter proposal, “Other design services to meet the project needs,” created a limitless scope! Because of this factual issue, the existence of joint and several liability in the jurisdiction, the limited insurance available to the defendant driver, the tort claim cap on damages available to the town, the parties contributed to a global settlement approaching $800,000.

Lessons Learned:

- Define scope of services

– Regardless of project size.

- State specifically what is included.

- Identify excluded services.

- Do parties intend for the Proposal to become the Contract?

#Engineers #Architects #ScopeofServices #ProfessionalServicesAgreement #RiskManagement #Beazley #ContractNegotiations