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Author: Matthew Harrison

CLAIMS AGAINST AN ARCHITECT

CLAIMS AGAINST AN ARCHITECT

WHEN THEY INVOLVE A BUILDING CODE VIOLATION AND OTHER CONTRACT MATTERS

One contentious area of Arizona law is what duty, if any, an architect or engineer has once a code violation occurs.  Claims against architects are generally based on negligence or negligent misrepresentation.  Although architects and engineers have contracts with their clients (either an owner or a general contractor) the performance of the architect or engineer is generally measured by whether or not the architect or engineer performed his or her services consistent with the ordinary skill and prudence of a licensed engineer or architect practicing in Arizona.[1]  Under this standard, the creation of plans and specifications that do not comply with applicable building codes is not in and of itself enough to impose liability on an architect or engineer.  In other words, failure to comply with the building code is not always considered a failure to meet the required standard of care.[2]  Since an architect merely warrants that plans are adequate and not perfect, it will always be necessary to obtain an expert opinion that an architect’s violation of the building code was a violation of the standard of care.[3]

However, the fact that a design professional met all applicable building codes is not in and of itself sufficient to establish he/she met the standard of care.  As such, an architect who established that he had met all applicable codes and standards may still be subject to a claim for negligence.  In addition, it is not a defense to a claim for negligence that a building inspector has approved a design. 

Contractors who are damaged by reliance on plans and specifications that violate building codes may, however, have claims against architects and engineers even if the contractor does not have a contract with the architect or engineer.  In Donnelly Const. Co. v. Oberg/Hunt/Gilleland, the Arizona Supreme Court held that a contractor who suffers foreseeable injury as a result of an architect’s failure to meet the appropriate standard of care in drafting plans has a claim against the architect even though the contractor does not have a contract with the architect.[4] 

In Donnelly, a general contractor relied on plans and specifications prepared by the owner’s architect while preparing a bid on a project.  After successfully winning the bid and beginning construction, the general contractor discovered significant errors in the project plans and specifications that made construction substantially more expensive than anticipated in the bid.  After completing the project, the general contractor brought a claim against the architect for the extra costs incurred.  In permitting the general contractor to proceed with its lawsuit, the Arizona Supreme Court stated:

Design professionals have a duty to use ordinary skill, care, and diligence in rendering their professional services.  When they are called upon to provide plans and specifications for a particular job, they must use their skill and care to provide plans and specifications which are sufficient and adequate.  This duty extends to those with whom the design professional is in privity and to those with whom he or she is not.[5] 

Finding that it was foreseeable to the architect that a general contractor would rely on its plans while bidding and could be injured if the plans were defective, the Arizona Supreme Court permitted the general contractor’s suit to move forward.[6]

Although there may be an avenue for recovery, design professionals do have options to limit their potential liability.  In Arizona, the Supreme Court has held that an architect or other design professional may properly limit its liability through contract.[7]  In 1800 Ocotillo, L.L.C. v. WLB Group Inc., the Supreme Court held that a clause in an architect-owner contract limiting damages to the amount of fees paid to the architect did not violate public policy and was enforceable.[8]  Often times, contracts entered into between an architect and an owner-developer limit their liability to a certain amount.[9]  These caps in potential liability have been upheld in Arizona.

Negligence Actions

Contractors, architects and even building inspectors may be sued in tort when a negligent action of the contractor leads to personal injury or property damage.[10]   “Negligent conduct is doing something that a reasonable person should realize involves an unreasonable risk of causing an invasion of an interest of another.”[11]  To establish a claim for negligence, a plaintiff is required to show the existence of a duty, violation of the duty, and foreseeable damages caused as a result of the violation.[12] 

Construction that violates building codes can give rise to negligence claims against contractors if the violation leads to a personal injury or damage to property other than the building itself.[13]  As discussed above, violation of a building code may be sufficient to establish the contractor’s duty of care and violation of that duty.[14]  This is referred to as negligence per se, and the doctrine applies when a person or entity violates a safety statute intended for the protection of third parties.[15]  Violation of a building code provision may be negligence per se.[16]  However, violation of the building code does not definitively establish that negligence per se occurred.  This finding depends on several factors with results determined on a case by case basis. 

This principle is described in the Ohio Court of Appeals case Moore v. McCarty’s Heritage, Inc.[17]   In Moore, the court examined the interplay between code violations and negligence when it opined:

A building code provision which prescribes a standard or obligation for a builder to follow in abstract or general terms, permitting alternative choices and use of discretion and setting no fixed and absolute standards of duty, cannot form a basis for a determination that a violation thereof by a builder is negligence per se. . .

[w]here a building code imposes upon a builder a specific duty for the protection or benefit of others and he neglects to perform that duty, he is liable to those for whose protection or benefit it was imposed for any damages which were proximately produced by such neglect.[18]

Therefore, if the code provides requirements and restrictions in abstract and general terms with no fixed duties outlined, the ability for a determination of negligence per se is minimized.   However, if the building code provides definitive and established requirements and a distinct and articulated duty is shown, the ability for negligence per se to be found increases significantly.  This process will involve a fact-intensive and case-by-case analysis of both the code and also the actions in question.

Even if a violation of a building code is held to be negligence per se, the violation leads to liability only if damages occurred and there is causation between the negligence and the damaged caused.  This principal is examined in the New York case Beecher v. Northern Men’s Sauna.[19]   In Beecher, a patron died from smoke inhalation during a fire at the business.  It was argued by plaintiff’s counsel that the architect was negligent because the design of certain exit doors at the building had violated code.  The court rejected plaintiff’s argument and held that even if the architect did violate the building code, there was no evidence provided by the plaintiff that the location and design of the exit doors contributed to the death of the patron.  Since there was no causation between the potential negligent door design in violation of the building code and the smoke inhalation of the patron, the architect could not be held liable for damages.[20]

[1] National Housing Industries, Inc. v. E. L. Jones Development Co., 118 Ariz. 374, 377, 576 P.2d 1374, 1377 (Ariz. App 1978).

[2] See, e.g., Garaman, Inc. v. Williams, AIA, 912 P.2d 1121, 1124 (Wyo. 1996) (architect’s failure to comply with code requirement does not in and of itself establish negligence).

[3] Id.

[4] 139 Ariz. 184, 677 P.2d 1092 (1984).  It should be noted that subsequent case law has limited portions of this opinion for other issues.  See i.e, Flagstaff Affordable Housing Ltd. v. Design Alliance, Inc., 221 Ariz. 433, 212 P.3d 125 (Ct. App. 2009).  However, the basic premise concerning potential lability of architect remains intact.

[5] Id. at 187, 677 P.2d at 1265 (citations omitted).

[6] Id. at 187-88, 677 P.2d at 1295-96.

[7] 1800 Ocotillo, L.L.C. v. WLB Group, Inc., 219 Ariz. 200, 196 P.3d 222 (2008).

[8] Id. at 204, 196 P.3d at 226 ¶¶ 17-21.

[9] It is prevalent that a contract will contain a limitation of any damages to the amount paid to the design professional, which can be substantially less than the actual damaged caused by the defective and negligent design of a project.

[10] Chirco v. Woodward Const. Co., 141 Ariz. 514, 516, 687 P.2d 1269, 1271 (1984).

[11] Wilson v. City of Tucson, 8 Ariz. App. 398, 402, 446 P.2d 504, 508 (1968).

[12] Id.

[13] Chirco, 141 Ariz. at 516, 687 P.2d at 1271.

[14] J.H. Welch & Son Contracting Co. v. Gardner, 96 Ariz. 95, 99, 392 P.2d 567, 570 (1964).

[15] Id.

[16] See, e.g., Pierce v. ALSC Architects, P.S., 890 P.2d 1254 (Mont. 1995) (holding that an architect violated the uniform building code when a door was left in a remodeled building which permitted an employee to gain access to a storage room and fall through a drop ceiling).

[17] 404 N.E.2d 167 (Ohio App. 1978).

[18] Id.at 172.

[19]707 N.Y.S.2d 465 (App. Div. 2000).

[20] Id. at 456-66.

© 2016 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

DEFENSES FOR ALLEGATIONS OF CODE VIOLATIONS AND BREACH OF CONTRACT

 

A contractor may have several avenues to counter, or at least diminish, its potential liability against allegations of building code violations and breach of contract claims.   In order to build potential defenses for these allegations, a contractor will want to examine the underlying contract terms and specifications.   A builder, or owner, will also want to examine other individuals or entities with involvement in the project (such as the design and engineering professionals) for potential liability or as defenses to counter the allegations of unprofessional or defective construction.

The Allocation of Risk for Code Violations

One potential defense for a contractor is its reliance on the plans and specifications supplied by the owner.  When owners furnish plans to a contractor, the owner warrants that the plans and specifications are adequate to construct the project—including that the plans are in compliance with applicable building codes.[1]  However, this warranty only extends as far as the design specifications, which are defined as specifications that “precisely detail the manner in which the work is to be done.”[2]  In this situation, the contractor is still responsible for the performance of the work specified in the contract documents.[3]  Deciding whether a violation of building codes implicates the design provided and the design professional who created it or performance of the contractor can prove to be problematic.

This interplay can be seen in the Florida case opinion, Atlantic Nat. Bank v. Modular Age, Inc.[4]   In Modular Age, Atlantic National Bank provided funding for construction of a hotel.  The bank then sued the surety company of the general contractor for defective construction when the walls between rooms in the hotel were found to be noncompliant with building codes.  Specifically, the walls did not meet the fire rating for safety imposed by the building code.  The court framed the issue for the case by asking whether or not walls which meet the building code were a design requirement for which the architect was responsible, or were they a construction requirement, independent of design for which the building contractor was responsible.[5]  In Modular Age, the terms of the contract between the owner and the contractor stated:

The contractor shall secure and pay for all permits, governmental fees and licenses necessary for the proper execution and completion of the Work, which are applicable at the time the bids are received.  It is not the responsibility of the Contractor to make certain that the Drawings and Specifications are in accordance with applicable laws, statutes, building codes and regulations.[6]

The contract utilized was an American Institute of Architects (AIA) form.[7]  Even though the contractor had recommended the wall system that was utilized at the project, the Modular Age Court determined that this was a failure of the architect to include in the design the code-compliant specifications.  The Court stated:

[i]t is clearly the architect’s function and responsibility to design walls which will meet code requirements for one hour fire resistance rating between tenancies.  It is his responsibility to insure that the plans and specifications comply with the applicable building codes for the area where the structure is to be built.[8]

In its final analysis of the architect’s responsibility, the Modular Age Court, quoting Teufel v. Wienir,[9] concluded:

If an item is installed in accordance with the specifications of a Standard American Institute of Architects’ guaranty, the contractor is not liable if the item’s failure to function properly is due to its design being improper for intended use.[10]

The Modular Age opinion demonstrates how it is not always obvious on its face whether a code violation arises from a design flaw or a contractor error and in that it shows how contractual language can affect the allocation of risks relating to repairs necessitated by violations of applicable building codes.  The opinion also demonstrates that the answer to these questions will often include a fact-intensive analysis of the code violation, the underlying contract, and the project design in order to determine responsibility.

Allocating the Risk of Code Violations by Contract Terms

As demonstrated in the Modular Age opinion, often contractors will attempt to limit their responsibility concerning code violations by utilizing language in the underlying construction contract.  For example, many of the standard contract forms have language limiting the contractor’s responsibility.  One such example is the often utilized AIA A201 document, which states:

The Contractor is not required to ascertain that the Contract Documents are in accordance with applicable laws, statutes, ordinances, building codes, and rules and regulations, but any nonconformity discovered by or made known to the Contractor shall be reported promptly to the Architect.[11] 

This limitation of risk to the contractor for code violations can also be found in the AIA A201 contract form which states “[t]he Contractor shall not be responsible for the adequacy of the performance or design criteria required by the Contract Documents.[12]

The Associated General Contractors’ standard contract form (often referred to as the “AGC form”) contains similar limitation language protecting the contractor when it states:

If in the course of the performance of the [Contractor’s obligations] the Contractor discovers any errors, omissions or inconsistencies in the Contract Documents, the Contractor shall promptly report them to the Owner.  It is recognized, however, that the Contractor is not acting in the capacity of a licensed design professional, and that the Contractor’s examination is to facilitate construction and does not create an affirmative responsibility to detect errors, omissions or inconsistencies or to ascertain compliance with applicable laws, building codes or regulations.  Following receipt of written notice from the Contractor of defects, the Owner shall promptly inform the Contractor what action, if any, the Contractor shall take with regard to the defects.

The next paragraph of the AGC form further limits the contractor’s risk when it states:

The Contractor shall have no liability for errors, omissions or inconsistencies discovered unless the Contractor knowingly fails to report a recognized problem to the Owner.[13]

Under both the AIA and AGC forms, the contractor’s potential liability for code violations only occurs for knowingly failing to inform the owner of code violations discovered.  Additionally, the language of the AIA form also appears to transfer the contractor’s responsibility for performance criteria back to the architect, which could potentially provide additional protection to the contractor.  As seen in the Modular Age opinion, the contract form that was used is important, because it can significantly and materially alter the common law allocations of responsibility for code errors between the contractor and the owner’s architect.[14]

[1] Willamette Crushing Co. v. State, 188 Ariz. 79, 81, 932 P.2d 1350, 1352 (Ariz. App. 1997).

[2] Id.

[3] Id.

[4] Atlantic Nat. Bank v. Modular Age, Inc., 363 So. 2d 1152 (App. Fla. 1978).

[5] Id. at 1153

[6] Id. at 1155

[7] Id.

[8] Id.

[9] Teufel v. Wienir 411 P.2d 151 (Wash. 1966).

[10] Id.

[11] AIA, A201, ¶ 3.2.2.

[12] AIA, A201, ¶ 3.12.10.

[13] AGC Document No. 200, ¶¶ 3.3.2 and 3.3.3.

[14]  In design-build construction, the contractor is assuming responsibility for the architect’s design.   In this situation, the owner will have the right to hold the contractor responsible if the plans and specifications do not meet building codes.  However, the contractor it may still have a claim against the architect the contractor employed to design the project.

© 2016 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

COMPLIANCE WITH BUILDING CODES DOES NOT GUARANTEE COMPLIANCE WITH THE CONTRACT

 

Another important question I am often asked is what happens to a contractor who complies fully with all the local code provisions.   Can the contractor breathe a sigh of relief with the knowledge that nothing negative involving the construction contract will occur?  Unfortunately, this is not the situation.   Even if a builder complies with all building codes, files the appropriate documentation with the applicable government agencies, passes all inspections, and obtains a certificate of occupancy, this does not guarantee that they would be free from litigation and claims of breach of contract. 

Often defects will occur even though a contractor complied with all appropriate standards.  Although a contractor may be certain that violation of a building code is enough for construction to be shown to be not workmanlike, compliance with a building code is not sufficient evidence to guarantee a finding that construction was performed in a workmanlike manner.

For example, in the Arizona Court of Appeals’ opinion Continental Townhouses East Unit One Ass’n v. Brockbank, the contractor requested two jury instructions that were not given by the trial court: 1) stating that since his contractor’s work passed the City of Mesa minimum workmanship standards, it was good and workmanlike; and 2) “compliance by a contractor with [a building code] discharges [a contractor’s] obligation for the safety of the occupants.” [1]

The Court of Appeals disagreed with the contractor’s argument that the desired instructions should have been provided to the jury, holding that the minimum workmanship standard contained within the building code “was only one of several elements which the jury could consider to determine workmanlike quality.”[2]  Instead, the Brockbank Court held that to determine whether a project was performed in a workmanlike manner is “one of reasonableness in light of surrounding circumstances” along with other factors outside of the minimum obligations of the building code.[3]

In the last several years, Arizona has documented an increase of construction defect litigation.  Often the allegation is that there was a breach in the “implied warranty” within the contract.  In the context of the contract, the implied warranty of habitability is often the term used to show a breach of the warranty in the contract-although not outlined by specific terms in the agreement.  It is often defined as a guarantee by the builder that the structure will have no defects that would substantially impair the enjoyment of the property.  The breach of this warranty generally involves design or workmanship defects that would make the property unsuitable for its intended use.[4]  These implied warranties of workmanship and habitability often interplay and are sometimes treated as one implied warranty.[5]  In addition, Arizona courts have expanded the allegation of breach of these implied warranties beyond circumstances where there is privity of contract[6] between the parties.[7]  (“Privity of contract” means that only the parties involved in a contract have the right to sue one another to claim a breach of the contract and demand restitution for damages arising from the alleged breach.)

Lawsuits alleging a breach of the implied warranty of habitability often allege a variety of defects in the construction of a property, including building deficiencies, improper design, or other claims of substandard workmanship.[8]  One recent case example showing the correlation between violations for building codes, substandard workmanship regulations, and its interplay with Arizona statutes is the Arizona Court of Appeals opinion Forsyth v. Four Crown Construction, LLC.[9] In Forsyth, a contract was entered into between an owner and builder for construction of a residential property.  During the course of the home’s construction the owner discovered construction defects as well as other improprieties, halted construction, and later filed a Complaint with the Arizona Registrar of Contractors (ROC) alleging defective workmanship (noncompliance with the code) along with other allegations against the builder.[10] The owner subsequently filed a lawsuit alleging, among other things, breach of contract for the implied warranty of workmanship and habitability.

The subsequent ROC proceedings found that the builder had violated his duties pursuant to regulation and A.R.S. § 32-1154(A)(2).[11]  The trial court granted Summary Judgment against the contractor concluding that the ROC decision proves a breach of the implied warranties of workmanship and habitability had occurred.  The builder appealed.  The Arizona Court of Appeals utilizing the concept of res judicata[12] affirmed the trial court’s decision on this subject, concluding that a violation of the applicable statute also proved a violation by the contractor of the implied warranty of workmanship and habitability and was therefore a breach of the contract.[13]

Although the odds of litigation substantially decrease when the builder has complied with the building codes and other regulations of its work, continued diligence is the key.   Sometimes issues will present themselves months, if not years, after a construction project has been completed.

[1] Continental Townhouses East Unit One Ass’n v. Brockbank, 152 Ariz. 537, 542, 733 P2.d 1120, 1125 (Ariz. App. 1987).

[2] Id.

[3] Id. n.5.

[4] See Hill v. Jones, 151 Ariz. 81, 84, 725 P.2d 1115, 1118 (Ariz. Ct. App. 1986).

[5] Lofts at Fillmore Condominium Ass’n v. Reliance Commercial Construction, Inc., 218 Ariz. 574, 190P.3d 733, 735 n. 2 (2008); See Metropolitan Property and Casualty Insurance Co. v. Del Webb’s Coventry Homes, Inc., 2007 WL 5448133 (Ariz. Ct. App. 2007)(unpublished opinion).

[6] Privity of contract – only the parties involved in a contract have the right to sue one another to claim a breach of the contract and demand restitution for damages arising from the alleged breach.

[7] Richards v. Powercraft Homes, Inc., 139 Ariz. 242, 678 P.2d 427 (1984).

[8] See also Stephanie Wilson, Business Law Deskbook, Advanced Topics in Business Law,  Brent Olsen and Lisa Thompson eds.,  9A Arizona Practice Series § 38:5 (2012).

[9] 2010 WL 2403755 (June 15, 2010).

[10] Id. at *1-2.

[11] Id. at *6.

[12] Res judicata – once a case has been adjudicated by a competent court, the parties may not continue to litigate.

[13] Id.

© 2016 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

DOES VIOLATION OF A BUILDING CODE CONSTITUTE A BREACH OF CONTRACT?

 

In modern law, the duties with which the contractor or design professional must conform to the building codes are typically outlined in the construction contract.  The construction contract will include a number of terms including the price, reference to the design plan and specifications, as well as a clause stating that the builder must perform the work in a “workmanlike manner”, by following building codes, and the following the standards of care in the construction industry.[1]

A contractor often warrants that his work will be performed in a workmanlike manner.[2]  “Workmanlike manner” has been defined as “doing the work in an ordinarily skilled manner as a skilled workman should do.”[3]  In order to determine if the structure was completed in a workmanlike manner, the courts will examine “established usage, procedures, and acceptable industry practices prevailing when such work was performed.”[4]  If a contractor does not perform his work in a workmanlike manner, besides the violation of the Registrar of Contractor standards, the contractor has more than likely breached the contract with the owner and will be liable for the damages that result. 

Arizona courts have found that failure to comply with an applicable building code implies that work is not performed in a workmanlike manner.[5]  For example, in Dillig v. Fisher a builder-vendor sold a house to a purchaser.  Immediately following the date when the purchaser occupied the house, the purchaser “began to encounter numerous problems with the construction of the house, the most significant of which pertained to an allegedly improperly constructed roof which permitted water to leak into the house.”[6]  The trial court awarded the purchaser damages for their costs to repair the roof.[7]

The builder-vendor appealed the trial court’s decision claiming that, because the house was habitable, the builder-vendor could not be found liable for damages.  The appellate court disagreed, stating that the builder was liable for damages as long as the purchaser proved that “the roof was not constructed in a workmanlike manner and that [the purchaser] was thereby damaged.”[8]  The court held that the purchaser had proven that the roof had not been constructed in a workmanlike manner in part because the construction method utilized “was contrary to the Uniform Building Code,” which was the code in force in the city where the home had been constructed.[9]  Therefore, the failure of the contractor to comply with building code requirements resulted in the construction not being workmanlike. 

In addition, construction contracts will often contain a clause stating “the contractor will carry out the work with reasonable skill, care, and diligence pursuant to all applicable standards and industry practices and in compliance to all relevant building regulations and statutory requirements.”  Also, a contract will often contain a clause where the builder warrants that the work performed is “free from defects and in compliance with the contract documents.”  However, even in circumstances where the contract may not directly state the builder’s obligations to comply with building codes, courts have concluded that compliance with codes governing construction work or services performed is an obligation implied in every construction contract.[10]  In fact, a code violation which reduces an owner’s use and enjoyment of his building or property that is not corrected in a timely manner may also be considered a material breach of the contract and grounds for termination with cause.[11]

Not only is a violation of various building codes considered a possible breach of contract, it also runs afoul of Arizona Statues, which would lead to other allegations of breach.  For example, as outlined in A.R.S. § 32-1154(A)(2), a “departure from or a disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have a particular construction project or operation completed in accordance with such plans and specifications of the code” is both considered grounds for revocation or suspension of the contractor’s license and another breach of the contract and grounds for the builder to be terminated with cause.[12]

As is often the situation involving breach of contract litigation, the contract itself will dictate whether the contractor complied with all building codes, permits, variations, and building circumstances.  Most contracts will also include an agreement that the contractor will supply its building in compliance with all local, city, state, and other code regulations involving health and safety.  Additionally, most contracts will include a clause stating that any derivations from these codes must be approved by the owner in writing before the contractor can proceed.  Under these circumstances, most contracts contain these provisions which allow for a breach of the contract if the contractor does not meet these obligations.

[1] Stephanie Wilson, Business Law Deskbook, Advanced Topics in Business Law, Brent Olsen and Lisa Thompson eds., 9A Arizona Practice Series § 38:8 (2012).

[2] Kubby v, Crescent Steel, 105 Ariz. 459, 460, 466P.2d 753, 754 (1970).

[3] J. W. Hancock Enterprises, Inc. v. Registrar of Contractors, 126 Ariz. 511, 514, 617 P.2d 19, 22 (1980).

[4] Id.

[5] See, e.g., Dillig v. Fisher, 142 Ariz. 47, 688 P.2d 693 (App. 1984).

[6] Id. at 48, 688 P.2d at 694.

[7] Id. at 49, 688 P.2d at 695.

[8] Id. at 50, 688 P.2d 696-97.

[9] Id. at 50-51, 688 P.2d at 696-97.

[10] Philip Bruner and Patrick O’Conner, 5 Bruner and O’Conner on Construction Law, § 18:10 (2015); citing Tips v. Hartland Developers, Inc., 961S.W. 2d 618 (Tx. Ct. App. 1998) (design-builder impliedly assumed the duty that the project complied with all municipal building codes so that the owner could receive a certificate of occupancy); Baltimore Neighborhoods, Inc. v. Rommel Builders, Inc., 3 F. Supp. 2d 661 (D. Md. 1998).

[11] Id.; citing Attardo v. Petosa, 240 A.D.2d 607, 659 N.Y.S.2d 294 (New York 1997), abrogated on other grounds by, Brushton-Moria Cent. School Dist. v. Fred H. Thomas Assoc., P.C., 91 N.Y.2d 256, 692 N.E.2d 551 (New York 1998) (construction of a home below standard outlined in the code caused city to refuse to issue certificate of occupancy was determined to be a substantial variance in performance and a material breach of the contract); see also 5 Bruner and O’Conner at § 18:25.

[12] Philip Bruner and Patrick O’Conner, 5 Bruner and O’Conner on Construction Law, § 18:30 (2015).

© 2016 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

THE IMPACT OF VIOLATING THE BUILDING CODES

 

Once a potential building code violation occurs, it has the potential for ripple effects throughout the construction project.  In accordance with the directives of the International Building Code (“IBC”), it is unlawful to “erect, construct, alter, extend, repair, move, remove, demolish or occupy” any building “in conflict with or in violation of any of the provisions of the code.”[1]  The primary avenue for the discovery of a violation of the code occurs when a building official inspects the construction project, either at random intervals or when a certain segment of construction is nearing completion.  If a code violation is apparent during inspection, the building official is obligated to provide a notice of the code violation in writing to the parties involved.[2]  In typical circumstances, the building official will issue a stop work order to either prevent an unsafe work environment or to halt the construction operating in violation of the building codes from continuing.[3]  If the work is continued after receipt of the written stop work order, the construction is considered unlawful and subject to penalties.[4]  The municipality in which the construction project is located may also begin an action at law or in equity to restrain or correct the violation as well as require the removal or termination of the violation.[5]

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A building code violation has the potential of impacting several areas of a project far beyond the stop work notice.  Building code violations are relevant to a contractor’s license, breach of contract litigation between a contractor and owner, indemnity actions, and negligence actions.  The party responsible if a code is violated is also a frequent topic of litigation, which will include the use of both common law legal doctrines and legal interpretation of contract language.

Effect of Building Code Violations on a Contractor’s License and Bonds

A violation of the building code can have negative ramifications on a contractor’s license status and bonding capability.  All contractors must be licensed by the Arizona Registrar of Contractors.[6]  One of the conditions of a contractor’s license is that a contractor must maintain a bond in a specified amount set by statute.[7]  If a contractor performs work that is “not in compliance with the requirements of any building code applicable to the construction work,” any party having a direct contract with the contractor who is injured by that failure can make a claim against the contractor’s license bond.[8]  Generally, the owners of property can make claims against a general contractor’s license bond if the work performed does not conform to the applicable building code.  For subcontractors, the claim usually comes from a general contractor who is forced to perform corrective work.   If a claim is made against a bond, and a surety pays it, a contractor must either replenish the bond or provide a new bond within thirty days to avoid his or her contractor’s license being automatically suspended.[9]

In addition to liability on a license bond, failure to comply with a building code may subject a contractor to discipline.  A.R.S. § 32.1154(A)(2), states that a contractor shall not commit:

“departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.” (Emphasis added).

If any contractor violates the provisions of A.R.S § 32-1154(A)(2), his or her license can be suspended or revoked.[10]  In addition, the Registrar has the authority to order restitution to repair any building code violation or to issue a corrective work order directing the contractor to complete the listed work within a specified time period.[11]  If a licensed contractor fails to correct any violation of a building code after ordered to do so by the Registrar, the Registrar may impose a civil penalty of not more than $500, which if not paid within thirty days after imposition, results in the automatic revocation of a contractor’s license.[12]  In a residential setting, if a contractor is unwilling or unable to correct a violation of a building code as found by the Registrar, the Registrar may order payment from the residential contractor’s recovery fund, after which the contractor and his or her license bond may be required to reimburse the Registrar.[13]

[1] IBC § 113.1.

[2] IBC § 113.2.

[3] IBC § 114.1.

[4] IBC § 114.3.

[5] IBC § 113.3.

[6] A.R.S. § 32-1151.

[7] A.R.S. § 32-1152.

[8] A.R.S § 32-1152(E).

[9] A.R.S § 32-1152(F).

[10] A.R.S § 32-1154(B).

[11] A.R.S § 32-1154(A).

[12] A.R.S. § 32-1154 (D).

[13] A.R.S § 32-1154(F).

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