Minimizing risk when designing for climate change: Source of risk

Discus risk with clients - minimizing risk when designing for climate change

Before evaluating the different ways in which architects can manage the risks associated with resilient and sustainable design resulting from climate change, it is important to understand the potential sources of such risks.

Most claims against architects are “first-party” claims, meaning that they come from the party with whom the architect has a contractual relationship. Therefore, the first — and probably most obvious and likely source of risk related to resilient and sustainable design — is contractual risk. Contractual risk is not unique to sustainable and resilient design, and includes that risk arising from an architect’s contractual obligations with its client to, among other things, adhere to the standard of care.

Generally, to succeed on a claim for breach of contract, an owner must prove, first, that the architect owed a duty to the owner via its valid contractual obligations. Second, the owner must prove that the architect breached its obligations (which could be, but are not necessarily  equal to the standard of care). Third, the owner must prove that it suffered damages as a result of the architect’s breach.[1]

An example of contract liability for resiliency and sustainability could be issues related to floodplains. Typically, design professionals consult floodplain maps when performing site design work. If an architect fails to consider a recent flooding history suggesting that current floodplain maps were inaccurate or out of date and a project sustains flooding, an owner could claim that by failing to appreciate current flooding history, the architect breached its contractual duties to adequately perform its contracted-for design services.

Because the vast majority of client-initiated claims relate to the architect’s professional services, typically an owner must show that the architect breached the “standard of care” in order to bring a successful claim. The standard of care can be described as “that level of skill and care employed by architects, practicing in the same or similar circumstances and geographical area.” You can review this article published by the AIA for more information regarding the concept of standard of care, but it is important to understand that the architect’s standard of care is an evolving benchmark. As more design professionals become familiar with the issues presented by climate change, and the typical amount of resilience and sustainable due diligence increases, more will be expected of all architects. But how much more? In the example above, how much independent research is an architect required to do to confirm the accuracy of floodplain maps?

Second, a related source of risk for architects is tort liability, which is also referred to as professional negligence. As discussed in this article published by the AIA, there are generally four elements to a professional negligence claim. First, there must be a duty owed by the architect to the party bringing a claim against the architect. Second, there must be a breach of the duty owed — meaning there must be a failure on the part of the architect to act or perform its services within the applicable standard of care. Third, there must be actual damages. These damages may be purely economic, or they may involve personal injury or property damage. Without damages, even when there is a violation of the standard of care, there is no harm, no foul, and no liability. Fourth, there must be a causal connection between the architect’s failure to perform in accordance with the standard of care and the actual damages incurred. The damage must be a direct and proximate result of the architect’s breach of the standard of care. If the damages did not occur as a result of the architect’s breach of the standard of care, there can be no liability.

One way in which tort differs from contract liability is that third parties can file tort claims, but they cannot file breach of contract claims because they have no contract with the architect. Common examples of tort claims by third parties are lawsuits filed in the wake of structural failures. Those third-party claimants are not parties to any contract with the architect, yet they may be able to bring claims against architects based upon a negligence theory.

An example of tort liability related to sustainability and resiliency issues could originate from a building’s inability to weather a prolonged winter storm. Imagine a severe winter storm that causes a prolonged electrical outage to a building. The architect may have planned for a limited amount of emergency power supply, but this storm is particularly bad and the power outage lasts for days or longer. If the architect does not plan for a sufficient supply of backup electrical power, then a building occupant could be injured while walking down a dark hallway or stairwell.

Because both are quickly evolving, tort liability in the area of sustainability and resiliency when combined with the concept of standard of care becomes even more complicated. The application of the standard of care to a rapidly evolving area of the practice will not be consistent/certain, which is very different than the more settled areas of the practice. Left unaddressed, this lack of certainty creates increased risk exposure. This risk is difficult to fully mitigate because of the exposure to third-party claims via tort liability. That being said, most claims are first-party claims, and the architect can use contract terms to better set expectations and the standard by which it will be judged.

Third, statutes and regulations can potentially trigger liability for architects.[2] For example, as highlighted by Andrews & Selman, supra, in the case of Conservation Law Foundation, Inc. v. ExxonMobil Corp., et al.,[3] the Conservation Law Foundation claimed that ExxonMobil violated the Clean Water Act when it failed to take into account the effects of climate change in designing its Everett, Massachusetts, oil terminal. The lawsuit alleges, among other things, that climate change will cause the oil terminal to flood, which will release toxins into the local water supply. For those statutes intended to protect the health, safety, and welfare of the community, design professionals could potentially face liability risk if they violate those statutes by failing to consider the effects of climate change.

The next article in this series examines how design professionals can evaluate and determine risk associated with sustainable and resilient projects triggered by climate change.

Read more from this series

View the introduction of the series >

Part 2: Evaluate and determine the scope of risk. View the article >

Part 3: How to mitigate the risk and discuss recommendations with your client. View the article >

AIA has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice. The Risk Management Program posts new materials and resources periodically.

[1] Nicdao v. Chase Home Fin., 839 F. Supp. 2d 1051, 1068 (D. Alaska 2012).

[2] Stephan F. (Hobie) Andrews and Andrew P. Selman, Climate Change and its Impact on the Standard of Care for Design Professionals (excerpted from the Proceedings of the 58th Annual Meeting of Invited Attorneys) (2019).

[3] U.S. District Court for the District of Massachusetts Case No. 1:16-cv-11950-MLW.

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Discus risk with clients - minimizing risk when designing for climate change

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