Orange County Branch Newsletter

May 2013

Law & CE News

Beacon Residential Community Assoc. v. Skidmore, Owings & Merrill LLP - Review Granted by California Supreme Court


Article courtesy of: Collins, Collins, Muir & Stewart, LLP

Design Professionals (and their insurance companies and attorneys) across the State of California are breathing a sigh of relief as the California Supreme Court agreed to review the controversial Court of Appeals opinion in the case of Beacon Residential Community Assoc. v. Skidmore, Owings & Merrill LLP (2012) 211 Cal.App.4th 1301.  The Beacon opinion recently made waves by potentially opening the door to impose both a common law and statutory duty on behalf of design professionals who provide professional services to Developers with the Appellate Court holding that design professionals owed a duty of care to third party purchasers in a residential context. Effective with the Supreme Court granting review, the case can no longer be cited as the law in California.  While there are no guarantees the ruling will be different in the Supreme Court, the fact that they agreed to accept the case for review has sparked some hope that the Court will reverse the holding issued by the Appellate court.

The case involved design-defect claims by a community association against two design professional firms in connection with the design and construction of a luxury high rise residential development.  Plaintiffs claimed a number of design related defects that resulted in purported building code violations that made some of the residential units uninhabitable.  In seeking to hold the design-defendants directly liable for the alleged defects, the association alleged that the design professionals owed the association and future third-party purchasers a duty of care.  The trial court sustained the design professionals’ demurrers on the grounds that they did not owe a legal duty to the future purchaser-plaintiffs under the “special relationship” factors identified in Weseloh Family Ltd. Partnership v. K.L. Wessell Construction Co., Inc. (2004) 125 Cal.App.4th 152.

The Court of Appeals disagreed and found that the design professionals did owe a common law duty of care to subsequent purchasers even in the absence of contract.  See Cooper v. Jevne (1976) 56 Cal.App.3d 860.  According to the Court, the question was whether the common law rule remains valid in light of the more recent Weseloh-era opinions.  Analyzing the same Weseloh factors as the trial court, the appellate court held that the social policies in favor of imposing a duty to subsequent purchasers outweighed the potential risks of increased construction costs and disproportionate liability.  In all, the Beacon opinion appears to be the first time that the Court of Appeals has specifically determined (in a published opinion) the existence of a duty in this arena using the Weseloh factors.   

Of potentially greater significance was the appellate court’s interpretation of California Senate Bill No. 800 (otherwise known as the “Right to Repair Act”) to potentially impose a statutory duty on behalf of design professionals who furnish services in connection with residential construction.  Beacon effectively demonstrates that the design professionals may, under certain circumstances, owe a statutory duty to subsequent purchasers of residential construction even in the absence of contract.

So what does this all mean for design professionals?  The Supreme Court’s decision will ultimately determine whether the Beacon opinion becomes the law of the land, or whether a design professional’s duty of care in this arena is confined within traditional bounds.  An affirmation of the Beacon opinion would undoubtedly result in a body-blow to the legal protections afforded to design professionals under California law and could unfortunately provide plaintiffs with yet another arrow in their quiver to at least survive the initial pleading stages of litigation in this context.  Stay tuned.

Please contact us at our Oakland, South Pasadena, Orange, or San Diego offices to discuss further.

Brian K. Stewart, Esq.
1100 El Centro Street | South Pasadena, CA 91030
Phone:  (626) 243-1100 | Fax:  (626) 243-1111
[email protected] | www.ccmslaw.com

Michael B. McDonald, Esq.
1100 El Centro Street | South Pasadena, CA 91030
Phone:  (626) 243-1100 | Fax:  (626) 243-1111
[email protected] | www.ccmslaw.com

Nothing contained within this article should be considered the rendering of legal advice.  Anyone who reads this article should always consult with an attorney before acting on anything contained in this or any other article on legal matters, as facts and circumstances will vary from case to case.

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