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Minnesota Law for Design Professionals

Minnesota Law for Design Professionals. VINCENT W. KING, P.A. 310 FOURTH AVENUE SOUTH SUITE 900 MINNEAPOLIS MINNESOTA 55415 USA http://www.vklaw.net E-MAIL vinceking@vklaw.net TEL 612.288.9225 FAX 612.344.1255. Agenda. The Standard of Care Insurance Overview Case Studies.

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Minnesota Law for Design Professionals

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    1. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 1

    2. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 2 Minnesota Law for Design Professionals VINCENT W. KING, P.A. 310 FOURTH AVENUE SOUTH SUITE 900 MINNEAPOLIS MINNESOTA 55415 USA http://www.vklaw.net E-MAIL vinceking@vklaw.net TEL 612.288.9225 FAX 612.344.1255

    3. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 3 Agenda The Standard of Care Insurance Overview Case Studies

    4. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 4 The Standard of Care

    5. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 5 Standard of Care Negligence Contract Warranty/Strict Liability Misrepresentation Intentional Interference Defamation Indemnity Statutory Liability

    6. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 6 Standard of Care: Negligence

    7. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 7 Negligence: Elements Duty imposed by law (compared to contracts) Breach of the duty Damage Proximate causation

    8. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 8 Negligence: Duty – Sources Common law Contract Statute

    9. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 9 Negligence: Duty -- Breach “Ordinary person” standard Similarly – situated professionals Need for expert testimony Foreseeability

    10. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 10 Negligence: Damage Damages not presumed Added first benefit rule

    11. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 11 Negligence: Proximate Cause Damage a “natural and probable consequence” Failure to follow design, no damage from negligence

    12. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 12 Negligence: A/E’s Liability for Damages No privity: personal injury or property damage Privity, or reliance: economic loss

    13. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 13 Negligence: Proving Negligence Expert testimony typically required “Common knowledge” exception

    14. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 14 Negligence: Who Can Sue A/Es Owners General Contractors Subcontractors Construction Workers Sureties Lenders Others

    15. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 15 Standard of Care: Contracts

    16. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 16 Contracts: The Role of Contracts Contract: Duty accepted by agreement Contract will define scope of duty to owner Contract will define scope of duty to third parties Owner-contractor agreement may be irrelevant

    17. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 17 Contracts, Negligence & The Standard of Care

    18. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 18 Contracts, Negligence and the Standard of Care

    19. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 19 Contracts: Exceptions Contract can disclaim duties imposed by law, BUT: There are exceptions to the rule regarding contracts and S.O.C.: A/E performs extra-contractual activities Public policy Actual knowledge of jobsite safety issues

    20. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 20 Contracts, Negligence & the Standard of Care

    21. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 21 Standard of Care: Warranty / Strict Liability

    22. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 22 Warranty Express Implied

    23. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 23 Strict Liability Ultra-Hazardous activity Trespass Products liability

    24. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 24 Standard of Care: Misrepresenta-tion

    25. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 25 Misrepresentation: Fraudulent False representation Intent to deceive Reliance Damage Proximate causation

    26. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 26 Misrepresentation: Negligent Supplying info for guidance of others Reliance Damage Proximate causation

    27. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 27 Standard of Care: Intentional Interference

    28. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 28 Intentional Interference Contract between A & B C knows about contract C induces B to breach C has no justification A suffers damage A/E Immunity? (B141 2.6.1.8) Not if bad faith

    29. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 29 Standard of Care: Defamation

    30. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 30 Defamation Communication of false statement Harm to reputation A/E Immunity? (B141 2.6.1.8) Not if bad faith Deceptive Trade Practices Liability?

    31. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 31 Standard of Care: Indemnity

    32. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 32 Indemnity Contract Common law Implied indemnity (equitable) Anti-indemnity statutes Insurance

    33. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 33 Standard of Care: Statutory Liability

    34. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 34 Statutory Liability – ADA Places of public accommodation Person who owns, leases, or operates Commercial facilities Failure to “design and construct” Ellerbe Becket cases Days Inn cases What to do

    35. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 35 Statutory Liability – OSHA Employers engaged in construction work A/Es: what does contract say Substantial control over site Should be OK under standard AIA / EJCDC clauses

    36. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 36 Statutory Liability – Licensing, Bldg Codes Plans, specs under supervision of licensee Compliance w/building codes Collection of fees Disgorgement of fees Negligence “per se”

    37. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 37

    38. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 38 Standard of Care: Case Study Original mechanical spec, which had been "value-engineered" several times (including the removal of heat exchangers from the design concept) until it was more or less a performance spec, called for a boiler capable of delivering 138-foot water column to the project. ME's design intent apparently was to obtain a pressure of 80 lbs./sq. inch, but under actual building conditions the specified performance criteria would only yield about 60 psi.   In a proposed addendum issued just a day or two prior to bid submission deadline, the ME submitted to the Architect a recommendation to specify a boiler capable of delivering 125 psi, but the Architect allegedly failed to include this recommendation in the addendum. Boiler supplier, through MEP Sub, submitted shop drawings for a boiler which would only deliver 30 psi-- clearly in violation of the original performance criteria. No one among the MEP Sub, prime contractor, ME, or Architect caught this discrepancy during the shop drawing review process.   The 30 psi boiler was delivered to the site and sat unpacked in its crate for several months.One week before the project's Fall "soft opening" date, the MEP Sub unpacked the boiler and finally discovered the discrepancy. Owner directed contractor to install temporary boiler in hotel. This lasted six weeks, necessitating a round-the-clock boiler watch, while design and construction team tried to figure out what to do. Ultimate resolution was to add heat exchangers to the 30 psi boiler. hOwner's ultimate claim for this item topped $650,000. 1.What are the relative rights and responsibilities of the parties in this situation? 2.Who had the "last clear chance" to correct the problem? 3. How could the Owner's alleged damages have been mitigated? What role could the Architect have played?

    39. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 39 Standard of Care: Case Study Precast spec stated as follows: C. Anchorage and support: 1. Design the anchorage and support members for this work to accommodate all loads and thermal, seismic and building movements without harmful effect to the precast members, or transferring torsional effect to the structural steel framing, and to permit the noiseless movement of the precast concrete members caused by an external temperature variation between 20o F and 180o F . 2. Fasteners and connections are schematically shown on the Drawings. Final types and sizes shall be designed by a California-registered structural engineer employed by the Contractor, and are subject to review by the Construction Inspector. In no case shall the fasteners or connections conflict with or require revision of the finish profiles of the precast concrete members.

    40. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 40 Standard of Care: Case Study  On a fast-track project, following issuance of CDs for the various bid packages, there were numerous bulletins, addenda, Architect's Supplemental Instructions, Construction Change Directives, and Requests For Information reflecting a variety of changes and Clarifications to the CDs. As a result, the "Construction Documents" are now a rather daunting compilation of full-size drawings and 8-1/2" x 11" sheets. As construction gets into full swing and the prime Contractors (there is no General) get ready to buy out the remaining portions of the project, the Owner asks the A/E to issue, as an ASI, a "benchmark" set of drawings incorporating all the earlier CCDs, ASIs, RFIs, etc. The Owner wants this new "benchmark" set to serve as the "Contract Documents" henceforth.  What is your reaction?

    41. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 41

    42. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 42 Certificate of Merit Law

    43. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 43 Certificate of Merit Law Affidavit of expert review Served w/ complaint unless exceptions In any case, w/in 90 days Mandatory dismissal w/prejudice Defendant must give 60 days notice Identity of experts w/in 180 days Exceptions Design-Build??

    44. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 44 Insurance

    45. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 45 Insurance – Types of Policies Commercial General Liability Professional Liability OCP Builders’ Risk

    46. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 46 Insurance – New Policies 11.3 PROJECT MANAGEMENT PROTECTIVE LIABILITY INSURANCE 11.3.1 Optionally, the Owner may require the Contractor to purchase and maintain Project Management Protective Liability insurance from the Contractor’s usual sources as primary coverage for the Owner’s, Contractor’s and Architect’s vicarious liability for construction operations under the Contract. Unless otherwise required by the Contract Documents, the Owner shall reimburse the Contractor by increasing the Contract Sum to pay the cost of purchasing and maintaining such optional insurance coverage, and the Contractor shall not be responsible for purchasing any other liability insurance on behalf of the Owner. The minimum limits of liability purchased with such coverage shall be equal to the aggregate of the limits required for Contractor’s Liability Insurance under Clauses 11.1.1.2 through 11.1.1.5. 11.3.2 To the extent damages are covered by Project Management Protective Liability insurance, the Owner, Contractor and Architect waive all rights against each other for damages, except such rights as they may have to the proceeds of such insurance. The policy shall provide for such waivers of subrogation by endorsement or otherwise.   11.3.3 The Owner shall not require the Contractor to include the Owner, Architect or other persons or entities as additional insureds on the Contractor’s Liability Insurance coverage under Paragraph 11.1

    47. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 47 Insurance – Special Issues Claims made vs. occurrence OCIP Project Policies Design/Build Additional Insured Duty to defend Deductibles Failure to procure

    48. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 48 Personal Liability Minn. Stat. 319B.08 Sign / Seal Docs Other forms of activity Can’t hide behind corporate form Make sure E&O insurance covers present AND former employees Corporate indemnity Partnership issues

    49. Copyright (c) 2000, 2001 Vincent W. King, PA All Rights Reserved 49

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