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AIA Build Pittsburgh 2017
Oops, Ughh! The Intersection of Ethics and Claims
Michael J. Cremonese, Esq.
Paula M. Selvaggio, RPLU
Robert Gavin, AIC, ARM, CPCU
Credit(s) earned on completion of this course will be reported to AIA CES for AIA members. Certificates of Completion for both AIA members and non-AIA members are available upon request.
This course is registered with AIA CESfor continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner ofhandling, using, distributing, or dealing in any material or product._______________________________________
Questions related to specific materials, methods, and services will be addressed at the conclusion of this presentation.
Copyright MaterialsThis presentation is protected by US and International Copyright laws. Reproduction, distribution, display and use of the presentation without
written permission of the speaker is prohibited.
© Burke Cromer Cremonese LLC and Oswald Companies 2016
Course Description
This Course will explain how AIA Ethics may intersect with legal claims. Sometimes, the Canons of Ethics will protect Architects from liability exposure. Other times the Canon of Ethics may require action that will expose architects to liability. The course will cite case law examples of ethical lapses that led to legal liability. The course will address strategies for minimizing risks when exposure results from adherence to the canon of ethics. The knowledge gained by the participants will aid in ethical project execution and the protection of professionals and the public on construction projects.
Learning Objectives
1. Participants will obtain a refresher of AIA Ethics
2. Participants will gain an understanding of how AIA Ethics may relate to legal claims
3. Participants will learn how AIA Ethics may require architects to take action that could expose them to legal liability
4. Participants will learn how their professional responsibility includes executing projects ethically and responsibly, which involves knowledge of the various construction industry contracts, and project delivery methods, all of which aids in contract negotiations
What are the AIA ethics?
• The Code of Ethics and Professional Conduct are theguidelines for the conduct of AIA members in fulfilling the obligations of professionalism, integrity, and competence
• The Code is comprised of three tiers:
• Canons
• Ethical Standards
• Rules of Conduct (with associated commentary)
What’s the difference?
Canons• Broad principles of conduct
Ethical Standards• Specific goals toward which
members should aspire in professional performance and behavior
Rules of Conduct• MANDATORY requirements
• Violation of a Rule is grounds for disciplinary action by the Institute
• Each Rule implements one or more Canon or Ethical Standard
Commentary
• Provided for some of the Rules of Conduct
• Meant to clarify or elaborate the Rule’s intent
• NOT part of the Code
• Not used to determine enforcement of the Rules, but used to assist Members in conforming their conduct to the Code
Example
Obligations to the Profession
• Members should uphold the integrity and dignity of the profession
Honesty and Fairness
• Members should pursue their professional activities with honesty and fairness
Rule 4.101
Commentary
to Rule 4.101
CANON IV E.S. 4.1Members having substantial information which leads to a reasonable belief that another Member has committed a violation of this Code which raises a serious question as to that Member’s honesty, trustworthiness, or fitness as a Member, shall file a complaint with the National Ethics Council
Often, only an architect can recognize that the behavior of another architect poses a serious question as to that other’s professional integrity. In those circumstances, the duty to the professional’s calling requires that a complaint be filed. In most jurisdictions, a complaint that invokes professional standards is protected from a libel or slander action if the complaint was made in good faith. If in doubt, a Member should seek counsel before reporting on another under this Rule.
When and how is the Code applied?
• The Code applies to the professional activities of all classes of AIA members, everywhere
• Addresses responsibilities to:
• The general public
• The clients
• Users of architecture in the construction industry
• The art and science of architecture
National Ethics Council (NEC)
• Appointed by the AIA Board of Directors to enforce the Code
• Proposes revisions to the Code
• Proposes revisions to the NEC Rules of Procedure, which govern the process for handling complaints
• Educates the public and AIA members on ethical issues in architecture
Penalties by the NEC
• The NEC may impose four penalties:
• Admonition
• Censure
• Suspension of membership for a specific period of time
• Termination of membership
• In all cases except those in which admonition is the penalty, when an accused member has been found in violation of the Code of Ethics by a final action of the NEC, the Executive Committee, or the Board, a notice of discipline is published in a periodical publication of the Institute which is distributed to AIA members.
Decisions by the NEC
• NEC decisions may be appealed to AIA’s Board of Directors
• The NEC publishes redacted versions of its decisions
• In cases where termination is the recommended penalty, decisions are automatically appealed to the Board
• The NEC also issues Advisory Opinions, which illustrate how the AIA Code of Ethics applies to a particular situation
Case #1: 88-14Interpretation of Zoning/Misleading the Client
• Architect engaged to design an addition to a SFH
• Created schematic with owner’s approval for survey
• Surveyor advised architect that the setback lines were not correctly drawn but could not cite zoning code
• Architect consulted with other architects and owner’s attorney; still no clear answer
• Architect contacted township, attempted meeting, wrote letter asking for clarification, which went unanswered
• Discussed situation with client and prepared full drawings
• Submitted plan with permit application
• Application denied due to failure to conform with setback requirements
• Owner sued for fees after delays—and won
Case #1: 88-14Questions Before the NEC
• Was the architect incompetent?
• Did the architect fail to take into account zoning regulations?
• Did the architect recklessly misread the client?
• Should the architect be penalized?
Case #1: 88-14Applicable Rules
Code of Ethics and Professional Conduct
Rule
Canon I, General ObligationsRule 1.101
In practicing architecture, members shall demonstrate a consistent pattern of reasonable care and competence, and shall apply the technical knowledge and skill which is ordinarily applied by architects of good standing practicing in the same locality.
Canon III, Obligations to the Client Rule 3.101
In performing professional services, members shall take into account applicable laws and regulations. Members may rely on the advice of other qualified persons as to the intent and meaning of such regulations.
Rule 3.301 Members shall not intentionally or recklessly mislead existing or prospective clients about the results that can be achieved through the use of the members‘ services, nor shall the members state that they can achieve results by means that violate applicable lawor this Code.
Case #1: 88-14Decisions
Code of Ethics and Professional Conduct
Rule
Canon I, General ObligationsRule 1.101MAJORITY VOTE: NOT VIOLATED
Rule focuses on maintaining a “consistent pattern of reasonable care and competence.” The member should not have prepared working drawings without a clear answer to the zoning question, but it was an isolated departure from the standard of care.
Canon III, Obligations to the ClientRule 3.101EVENLY DIVIDED
The issue turns on whether the conduct was reckless or only negligent. It was wrong to prepare full working drawings for the permit application, when the zoning setback restrictions had not been ascertained. The member did not purposely or intentionally mislead the client.
Rule 3.301EVENLY DIVIDED
The dividing point is whether the member acted recklessly. A finding of recklessness is explicitly required under Rule 3.301
Case #1: 88-14NEC Decision 88-14
• Member did not act with reasonable care, but he had a long record of competent service to clients
• All agreed that it was wrong to proceed to working drawings when the setback was not ascertained
• Negligent but not reckless
• Dismissed on an even vote
Case #2: 90-2Failing to File Complaint/ Making False Statements/ Failing to Ensure Employees Conform to the Code
• Employee hired by firm – resume stated he had Bachelor of Architecture degree
• Cover letter stated all requirements completed except thesis
• Became Associate Member of AIA
• Listed in firm brochure as degreed in architecture
• Questioned months later, admitted to lie and promised to complete
• No follow up by firm; took employee 2 years to complete thesis
• Employer misrepresented additional employees as Project Architects in brochure
• Complaint filed by on of the firm’s interns
Case #2: 90-2Questions before the NEC
• Did Employee A misrepresent himself? Was the employer aware of any such misrepresentation?
• Did Employees B, C and D misrepresent themselves? Did the employer?
• Did the employer have the responsibility to report/correct any breachers?
• Should the employer be penalized?
Case #2: 90-2Applicable Rules
Code of Ethics Rule
Canon IVObligations to the ProfessionRule 4.101
Members having substantial information which leads to a reasonable belief that another Member has committed a violation of this Code which raises a serious question as to that Member’s honesty,trustworthiness, or fitness as a Member, shall file a complaint with the National Ethics Council.
Canon IVRule 4.201
Members shall not make misleading, deceptive, or false statements or claims about their professional qualifications, experience, or performance and shall accurately state the scope and nature of theirresponsibilities in connection with work for which they are claiming credit.
Canon IVRule 4.202
Members shall make reasonable efforts to ensure that those over whom they have supervisory authority conform their conduct to this Code
Case #2: 90-2Applicable Rules - Decisions
Code of Ethics Decision
Canon IVObligations to the ProfessionRule 4.101
VIOLATED
Even granting the employer the benefit of the doubt about its compassion for Employee A, the firm had a duty to file a Complaint with the Council after being notified a second time that Employee A still had not completed his degree.
Canon IVRule 4.201
VIOLATED
For misrepresenting Employee A’s degree status and for misrepresenting Employees B, C, & D as registered architects, the Council finds that the employer violated Rule 4.201
Canon IVRule 4.202
VIOLATED
It was the employer’s duty to make a reasonable effort to ensure employees conformed their conduct to the code.
Case #2NEC Decision 90-2
• Several violations by the employer
• Failed to report the architect that claimed he had a degree
• Represented employees in firm brochure as registered architects
• Failed to take any action to educate himself or employees about the AIA Code
• Letter of Admonition for each violation
Case #3: 2010-07Wanton Disregard of the Rights of Others/
Failure to Give Appropriate Credit
• Architect hired for design and CA on new home construction
• Owner hired interior designer, who engaged the services of her regular consulting architect
• Eventually decided that the interior designer’s consulting architect take over interior room elevations as the “Interior Architect”
• Interior Architect developed millwork drawings, used to produce shop drawings
• Residence featured in Architectural Digest, identifies Prime and Interior Architects
• The Prime’s website displayed interior photo with no reference to Interior Architect
Case #3: 2010-07Questions Before the NEC
• Did the Prime Architect disregard the rights of the Interior Architect?
• Did the Prime Architect make misleading, deceptive or false statements about its own performance?
• Did the Prime Architect accurately portray its role in the project?
• Should the Prime Architect be sanctioned?
Case #3: 2010-07Applicable Rules
Code of Ethics Decision
Canon IIObligations to the PublicRule 2.104
Members shall not engage in conduct involving fraud or wanton disregard of the rights of others
Canon IVObligations to the ProfessionRule 4.201
Members shall not make misleading, deceptive, or false statements or claims about their professional qualifications, experience, or performance and shall accurately state the scope and nature of their responsibilities in connection with work for which they are claiming credit.
Case #3: 2010-07Applicable Rules- Decisions
Code of Ethics Decision
Canon IIRule 2.104
VIOLATED
The Prime Architect violated Rule 2.104 by failing to credit the work of others when displaying on his website a photograph of the main entry of the residence. Because that failure was knowing and deliberate, it was in wanton disregard of the Interior Architect’s right to receive credit for his substantial responsibilities for the interior architecture depicted
Canon IVRule 4.201
VIOLATED
The Prime Architect violated Rule 4.201 because his firm’s website displayed an image of the Interior Architect’s design without any attribution of credit to the Interior Architect, which resulted in a misleading statement of the Prime Architect’s scope of responsibility for the project.
Case #3NEC Decision 2010-07
• Prime Architect violated Rule 2.104 by wanton disregard of the rights of the Interior Architect
• Prime Architect violated Rule 4.201 by implying credit for work which it did not do, misleading others, and denying the Interior Architect proper share of credit
• Imposed the penalty of censure
Case #4: 96-15Admitted Violation of Licensing Law
• Architect engaged to design a residence
• Owner/architect relationship broke down during design
• Architect terminates relationship after delivering CDs to contractor chosen by owner
• Project completed at greater cost and difficulty than owner anticipated
• Owner filed a complaint with state licensing board for malpractice
• Licensing board found the architect prepared incomplete and deficient plans
• While the architect believed the charge was untrue, consented to a finding of a violation
Case #4: 96-15Questions Before the NEC
• Did the Architect fail to take into account applicable laws and regulations?
• Did the Architect violate the Code of Ethics?
• Should the Architect be sanctioned?
Case #4: 96-15Applicable Rule
Code of Ethics and Professional Conduct
Rule
Canon III, Obligations to the ClientRule 3.101
In performing professional services, Members shall take into account applicable laws and regulations. Members may rely on the advice of other qualified persons as to the intent and meaning of such regulations.
Case #4: 96-15Applicable Rule
Code of Ethics and Professional Conduct Rule
Canon III, Obligations to the ClientRule 3.101
VIOLATED
While the Architect faced a difficult choice when presented with a settlement offer from the licensing board, she voluntarily chose to admit to the charges to terminate the proceeding. There is no evidence that the Architect was deceived or misunderstood the content of the Consent Order, which states facts that establish a violation of the Code of Ethics.
Case #4NEC Decision 96-15
• By consenting to a finding of violation and accepting discipline imposed by the state licensing board, the Architect also violated the Code of Ethics
• Imposed the penalty of admonition
Lawyers can question during depositions about AIA ethics:
These questions can compare your conduct
to the conduct required by the
ethics codes
Cases where professional ethics rules have been relevant
Vigneau v. Storch Engineers1995 WL 767984 (Conn. Super. Dec. 4, 1995)
• In an unpublished Connecticut Superior Court case, the court ruled against an architect who worked for engineering firm in his claim against the firm seeking recovery of his partnership interest.
• The engineering firm counterclaimed on the grounds that the architect committed fraud, breach of fiduciary duty, breach of contract, negligence, and violated the Connecticut Unfair Trade Practices Act (CUTPA)
• The architect engaged in self-dealing, and the court looked to the common law to determine this was a breach of fiduciary duty
• The court found that the architect violated Rules 3.201 and 3.202 of the AIA Code of Ethics when he appeared before zoning boards in the role of a disinterested architect certifying plans, while hiding his role as part-owner of the projects.
• “The court finds that such conduct, by offending public policy established by the ethical rules of the profession of architecture and by violating settled principles of common law, constitutes a breach of CUTPA.”
BUT Connecticut later decided that an AIA ethics violation cannot give rise to a cause of action
• Two years later, the Connecticut Superior Court wrote another unpublished opinion that referenced the AIA code of ethics – Woodbridge Care v. Englebrecht & Griffin Architects, 1997 WL 162808 (Conn. Super. Mar. 27, 1997).
• Developer hired architecture firm to design an assisted care facility, but the firm soon pursued a similar project in the same town with a second developer. The firm did not seek the first developer’s approval, but it also did not conceal its relationship with the second developer
• The developer sued, claiming this action violates a state regulation ,the AIA Code of Ethics, and the CUTPA
Woodbridge Care v. Englebrecht & Griffin Architects1997 WL 162808 (Conn. Super. Mar. 27, 1997)
• The Court held that while a violation of the AIA Code of Ethics may subject an architect/firm to sanctions by the profession, the Code does NOT create a cause of action upon which a civil remedy may be based.
• However, this decision did not overrule the prior case – possibly because the violation of the ethics code in Vigneau was one of several factors leading to the court’s decision that the architect violated the CUTPA
“
”
The AIA Code of Ethics, like the Rules of Professional Conduct for attorneys,states that the Code's provisions are meant to constitute standards forimposition of disciplinary standards within the profession: they are “broadprinciples of conduct” and “goals toward which members should aspire inprofessional performance and behavior.” The preamble to the AIA Codeindicates that violation of the rules of conduct is mandatory “…for disciplinaryaction by the Institute”, not that they give rise to civil liability.
-Woodbridge Care v. Englebrecht & Griffin Architects
The court compares the AIA ethics code to the Rules of Professional Conduct for attorneys, and relies on prior case law that “held repeatedly, in a closely analogous context,” that the Rules that apply to attorneys do not give rise to a cause of action
Pennsylvania law regarding attorneys’ violation of ethical rules
• In Pennsylvania, the Rules of Professional Conduct for attorneys do not create a cause of action for damages or equitable relief in malpractice actions
• However, a person may have an actual claim pursuant to an underlying principle of common law that was codified in a particular rule of professional conduct
• Maritrans GP, Inc. v. Pepper, Hamilton & Scheetz, 602 A.2d 1277 (Pa. 1992)
• But it is worth noting that the PA Supreme Court has relied on the Code of Professional Responsibility in evaluating the nature of an attorney’s conduct on a claim for tortious interference
• Adler, Barish, Daniels, Levin and Creskoff v. Epstein, 393 A.2d 1175 (Pa. 1978)
Pennsylvania has no definitive case law onwhether violations of the AIA Code ofEthics will be treated the same asviolations of the Rules of ProfessionalConduct for attorneys
If PA were to follow and analogize to case law regarding attorneys, then architects’ violation of the AIA Code of Ethics would not give rise to a cause of action, and probably could not be
relied on to prove liability.
But Pennsylvania courts could rule differently for architects than for attorneys.
Other courts have not given legal weight to professional ethics violations
• Texas appellate court decided that the AIA code of ethics cannot be considered when determining the duty of care owed to the public by architects.
• Dukes v. Philip Johnson/Alan Ritchie Architects, P.C., 252 S.W.3d 586 (Tex. App. 2008)
• North Carolina, in a decision from the same year, decided similarly with regard to the engineering code of ethics
• Michael v. Huffman Oil Co., 661 S.E.2d 1 (N.C. App. 2008)
• Colorado has determined that the code of ethics for certified planners does not establish a legally enforceable professional standard of care for land planners
• Stan Clauson Assoc., Inc. v. Coleman Brothers Const., LLC, 297 P.3d 1042 (Colo. App. 2013)
Violations of the AIA Code of Ethics can also have implications with the PA Licensure Law
• The Pennsylvania Architects Licensure Law – 63 P.S. Ch. 2 – created the Architects Licensure Board
• Among other things, the Board “may establish, by regulations consistent with the policy contained in this act, standards of professional conduct for architects.”
• The Board has the power to take disciplinary action against architects, as well as to “take appropriate actions to initiate injunction and criminal prosecution proceedings in connection with the unlawful and unauthorized practice of architecture or other violations of this act.”
PA Licensure Law:Standards of Professional Conduct
• 49 Pa. Code 9.151 sets out a non-exhaustive list of unprofessional conduct that would subject an architect to disciplinary action under the Act
• These standards closely mirror certain AIA Ethics standards
AIA Code of Ethics PA Licensure Board Standards of Professional Conduct
Principle
Rule 2.101 9.151 (3) Violate the law in practice of architecture
Rule 2.104 9.151 (5) Fraudulent activity
Rule 2.103 9.151 (7) Accepting gifts intended to influence judgment
Rule 3.201 9.151 (8) Conflict of interest, disclosure
Rule 3.301 9.151 (9) Misleading about professional capabilities
Rule 4.201 9.151 (12) Misleading about professional qualifications
The AIA rules implicate various common law legal principles
AIA Ethics standard Legal principle implicated
R 1.101 Negligence
R 2.104 Fraud
R 3.202 Fiduciary duty
R 3.301 Misrepresentation
R 4.101 Libel/ slander
R 4.103 & R 4.201 Promissory estoppel
R 4.202 Respondeat superior
Some rules may require conduct that can give rise to a legal claim by the client or a third party
Rule 2.105• If, in the course of their work on a project, the
Members become aware of a decision taken bytheir employer or client which violates any lawor regulation and which will, in the Members’judgment, materially affect adversely thesafety to the public of the finished project, theMembers shall: (a) advise their employer orclient against the decision, (b) refuse toconsent to the decision, and (c) report thedecision to the local building inspector or otherpublic official charged with the enforcement ofthe applicable laws and regulations, unless theMembers are able to cause the matter to besatisfactorily resolved by other means
Commentary to Rule 2.105• This rule extends only to violations of the
building laws that threaten the public safety. The obligation under this rule applies only to the safety of the finished project, an obligation coextensive with the usual undertaking of an architect.
For example…
• When a client has hired an architect to design a public office building, it must meet the building code requirements regarding fire safety
• If an architect learns that the firm has designed the building without meeting all proper fire safety requirements, Rule 2.105 would be triggered
• That architect must “cause the matter to be satisfactorily resolved”, or else must report this issue to the building inspector
• Either option likely would result in the client learning of the issue
• If the resolution or reporting causes new plans to be drawn and an economic loss to the client or third party contractor, a suit may be filed against the architecture firm for professional negligence in designing the building without meeting fire safety building code requirements
Some rules may require conduct that can give rise to a legal claim by the client or a third party
Rule 4.201
• Members shall not make misleading, deceptive, or false statements or claims about their professional qualifications, experience, or performance and shall accurately state the scope and nature of their responsibilities in connection with work for which they are claiming credit.
Commentary to Rule 4.201
• This rule is meant to prevent Members from claiming or implying credit for work which they did not do, misleading others, and denying other participants in a project their proper share of credit.
For example…
• Architect designed almost an entire set of plans for a building over the course of 6 months, but leaves the project for non-payment when 9/10th of the plans were completed.
• The owner hired a new architect, who obtained a building permit only one month later
• The new architect had used the original architect’s drawings, created only last 1/10th of the design, and submitted them in their entirety as his own without asking the original architect for permission.
• Aside from disciplinary action from the NEC, this action by the new architect gives rise to a potential copyright claim by the original architect
Some rules may require conduct that can give rise to a legal claim by the client or a third party
Rule 4.101
• Members having substantial information which leads to a reasonable belief that another Member has committed a violation of this Code which raises a serious question as to that Member’s honesty, trustworthiness, or fitness as a Member, shall file a complaint with the National Ethics Council
Commentary to Rule 4.101
• Often, only an architect can recognize that the behavior of another architect poses a serious question as to that other’s professional integrity. In those circumstances, the duty to the professional’s calling requires that a complaint be filed. In most jurisdictions, a complaint that invokes professional standards is protected from a libel or slander action if the complaint was made in good faith. If in doubt, a Member should seek counsel before reporting on another under this rule.
For example…
• If an architect within a firm has substantial information leading to a reasonable belief that a fellow architect in the firm has violated the AIA Code of Ethics in a manner that raises questions of her honesty or trustworthiness, it must be reported to the National Ethics Council
• However, a client may learn of these circumstances
• If this occurs, the client would potentially have grounds to sue the architecture firm on theories of negligent hiring, negligent supervision, or vicarious liability
Insurance Coverage
• Under you professional liability insurance policy, you may be able to obtain insurance coverage for administrative “problems” like the ones discussed today
• For example, insurance may be able to cover you for expenses and legal fees incurred in responding to any disciplinary, regulatory or administrative action commenced against you
• Caveats:
• Action must arise out of a wrongful act alleged to have been committed
• Insurance company needs timely notice
• Maximum payment often capped at $30,000
Tying it all together
• Have a formal, well-implemented ethics program that incorporates the AIA Code of Ethics
• Train on the Code and company standards
• Implement a mechanism for seeking ethics-related advice and reporting misconduct
• Be aware of the legal implications of both violating and following the AIA Code of Ethics
• Talk to your insurance company about obtaining coverage for these issues
This concludes the American Institute of Architects Continuing Education Systems Course
Michael J. Cremonese, Esq.
Burke Cromer Cremonese,LLC
Paula M. Selvaggio, RPLU
Oswald Companies
Robert Gavin
Oswald Companies
