Beacon Residential Cmty. Ass'n v. Skidmore, Owings & Merrill LLP

• Decision Date: 03 July 2014
• Docket Number: No. S208173.,S208173.
• Citation: 173 Cal.Rptr.3d 752,59 Cal.4th 568,327 P.3d 850
• Parties: BEACON RESIDENTIAL COMMUNITY ASSOCIATION, Plaintiff and Appellant, v. SKIDMORE, OWINGS & MERRILL LLP et al., Defendants and Respondents.
• Court: California Supreme Court

59 Cal.4th 568

327 P.3d 850

173 Cal.Rptr.3d 752

BEACON RESIDENTIAL COMMUNITY ASSOCIATION, Plaintiff and Appellant,

v.SKIDMORE, OWINGS & MERRILL LLP et al., Defendants and Respondents.

No. S208173.

Supreme Court of California

July 3, 2014.

Law Offices of Ann Rankin, Oakland, Ann Rankin, Terry L. Wilkens ; Katzoff & Riggs, Emeryville, Kenneth S. Katzoff, Robert R. Riggs, Sung E. Shim and Stephen G. Preonas for Plaintiff and Appellant.

Berding & Weil and Matt J. Malone for Consumer Attorneys of California and Executive Council of Homeowners as Amici Curiae on behalf of Plaintiff and Appellant.

Horvitz & Levy, Encino, Peder K. Batalden and Peter Abrahams for Defendants and Respondents Skidmore, Owings & Merrill LLP, and HKS, Inc.

Robles, Castles & Meredith and Richard C. Young for Defendant and Respondent Skidmore, Owings & Merrill LLP.

Schwartz & Janzen, Los Angeles, Noel E. Macaulay and Steven H. Schwartz for Defendant and Respondent HKS, Inc.

Fred J. Hiestand, Sacramento, for the Civil Justice Association of California as Amicus Curiae on behalf of Defendants and Respondents.

Shannon B. Jones Law Group, Kathleen F. Carpenter, San Francisco, Jessica M. Takano, Danville, and Amy R. Gowan for California Building Industry Association as Amicus Curiae on behalf of Defendants and Respondents.

Collins Collins Muir + Stewart, South Pasadena, David E. Barker and Melinda W. Ebelhar for The American Institute of Architects California Council and The American Institute of Architects as Amici Curiae on behalf of Defendants and Respondents.

LIU, J.

A homeowners association on behalf of its members sued a condominium developer and various other parties over construction design defects that allegedly make the homes unsafe and uninhabitable for significant portions of the year. Two defendants were architectural firms, which allegedly designed the homes in a negligent manner but did not make the final decisions regarding how the homes would be built. Applying our decision in Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 11 Cal.Rptr.2d 51, 834 P.2d 745 (Bily ) and relying on Weseloh Family Ltd. Partnership v. K.L. Wessel Construction Co., Inc. (2004) 125 Cal.App.4th 152, 22 Cal.Rptr.3d 660 (Weseloh ), the trial court sustained a demurrer in favor of the defendant architectural firms, reasoning that an architect who makes recommendations but not final decisions on construction owes no duty of care to future homeowners with whom it has no contractual relationship. The Court of Appeal reversed, concluding that an architect owes a duty of care to homeowners in these circumstances, both under the common law and under the Right to Repair Act ( Civ.Code, § 895 et seq. ).

Building on substantial case law and the common law principles on which it is based, we hold that an architect owes a duty of care to future homeowners in the design of a residential building where, as here, the architect is a principal architect on the project—that is, the architect, in providing professional design services, is not subordinate to other design professionals. The duty of care extends to such architects even when they do not actually build the project or exercise ultimate control over construction. Accordingly, we affirm the judgment of the Court of Appeal.

I.

In considering whether a demurrer should have been sustained, "we accept as true the well-pleaded facts in the operative complaint." ( Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1189, fn. 1, 151 Cal.Rptr.3d 827, 292 P.3d 871.) The facts alleged in plaintiffs' third amended complaint (the complaint) are as follows.

Skidmore, Owings & Merrill LLP (SOM) and HKS, Inc. (individually and doing business as HKS Architects, Inc.; hereafter HKS), are design professionals. SOM and HKS (collectively defendants) provided architectural and engineering services for The Beacon residential condominiums, a collection of 595 condominium units and associated common areas located in San Francisco (the Project). Although the units were initially rented out for two years after construction, defendants provided their services knowing that the finished construction would be sold as condominiums. A condominium association was formed, and the condominium's conditions, covenants, and restrictions were recorded, before construction commenced.

The homeowners association, plaintiff Beacon Residential Community Association (Association), sued several parties involved in the construction of those condominiums, including several business entities designated as the original owners and developers of the condominium, as well as SOM and HKS, with whom the owners and developers contracted for architectural services. SOM and HKS were the only architects on the Project. Plaintiff alleged that negligent architectural design work performed by defendants resulted in several defects, including extensive water infiltration, inadequate fire separations, structural cracks, and other safety hazards. One of the principal defects is "solar heat gain," which made the condominium units uninhabitable and unsafe during certain periods due to high temperatures. Plaintiff alleged that the solar heat gain is due to defendants' approval, contrary to state and local building codes, of less expensive, substandard windows and a building design that lacked adequate ventilation. Defendants are named in the first cause of action ("Civil Code Title 7—Violation of Statutory Building Standards for Original Construction"), the second cause of action ("Negligence Per Se in Violation of Statute"), and the fifth cause of action ("Negligence of Design Professionals and Contractors").

According to the complaint, defendants "provided architectural and engineering services" for the Project that "included, but were not limited to, architecture, landscape architecture, civil engineering, mechanical engineering, structural engineering, soils engineering and electrical engineering, as well as construction administration and construction contract management." Defendants were paid more than $5 million for their work on the Project. In addition to "providing original design services at the outset" of the Project, defendants played an active role throughout the construction process, coordinating efforts of the design and construction teams, conducting weekly site visits and inspections, recommending design revisions as needed, and monitoring compliance with design plans.

Defendants demurred, contending they owed no duty of care to the Association or its members under the facts alleged. The trial court agreed: "The allegations do not show that either of the architects went beyond the typical role of an architect, which is to make recommendations to the owner. Even if the architect initiated the substitutions, changes, and other elements of design that Plaintiff alleges to be the cause of serious defects, so long as the final decision rested with the owner, there is no duty owed by the architect to the future condominium owners, in the Court's view. The owner made the final decision according to the third amended complaint." The trial court granted plaintiff leave to amend the complaint to allege that defendants "actually dictated and controlled the decision to eliminate [ventilation] ducts, acting in a manner that was contrary to the directions of the owner, or that ignored the owner's directions," but plaintiff declined.

The Court of Appeal reversed. It applied the factors set forth by this court in Biakanja v. Irving (1958) 49 Cal.2d 647, 650, 320 P.2d 16 (Biakanja ), for determining whether a party owes a duty of care to a third party and concluded that defendants owed a duty of care to the Association in this case. The court distinguished Weseloh, supra, 125 Cal.App.4th 152, 22 Cal.Rptr.3d 660, a case that found no duty of care owed by a design engineer to a commercial property owner, on the grounds that Weseloh was decided on summary judgment rather than demurrer and that Weseloh had expressly limited its holding to its facts. The Court of Appeal further concluded that Bily, supra, 3 Cal.4th 370, 11 Cal.Rptr.2d 51, 834 P.2d 745, did not support defendants' position. Finally, the court concluded that the Right to Repair Act expressed a legislative intent to impose on design professionals a duty of care to future homeowners. (See Civ.Code, § 895 et seq. )

We granted review.

II.

"Actionable negligence involves a legal duty to use due care, a breach of such legal duty, and the breach as the proximate or legal cause of the resulting injury." ( United States Liab. Ins. Co. v. Haidinger–Hayes, Inc. (1970) 1 Cal.3d 586, 594, 83 Cal.Rptr. 418, 463 P.2d 770.) This case is concerned solely with the first element of negligence, the duty of care. Whether a duty of care exists "in a particular case is a question of law to be resolved by the court. [Citation.] [¶] A judicial conclusion that a duty is present or absent is merely ‘ "a shorthand statement ... rather than an aid to analysis.... ‘[D]uty,’ is not sacrosanct in itself, but only an expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection." ' [Citation.] ‘Courts, however, have invoked the concept of duty to limit generally "the otherwise potentially infinite liability which would follow from every negligent act...." ’ " ( Bily, supra, 3 Cal.4th at p. 397, 11 Cal.Rptr.2d 51, 834 P.2d 745.)

Here we consider whether design professionals owe a duty of care to a homeowners association and its members in the absence of privity. Although the issue presented in this case has not been decided by this court, we do not write on a blank slate. As explained below, courts have found in a variety of circumstances that builders, contractors, and architects owe a duty of care to third parties.

A.

Although liability for the supply of goods and services historically required privity of contract between the supplier and the injured party, the...