In Hawaii, architect liability is generally limited to that which is recoverable by contract. Id. This is called the “economic loss rule”. Id. In City Exp. Inc v Express Partners, 87 Hawaii 466, 469 (1998) the Hawaii Supreme Court discussed this rule as follows:
In the context of construction litigation, where a party is in privity of contract with a design professional, economic loss damages are limited to contractual remedies, and a [tort] negligence action may not be maintained.
The Hawaii Supreme Court defined economic loss as “those that pertain solely to the costs relating to the operation and value of the building itself” including but not limited to “additional costs, lost rent, the cost of remedying the alleged building defects, and the difference between the value of the building as designed and the value it would have had it had been properly designed.” Id.
Design professionals may incur additional risk by also agreeing to act as a project supervisor. There is no general duty of an architect to supervise or inspect a project. Whether a contract imposes a duty on an architect to supervise a project depends on the terms of the contract. Moundsview Independent School District v Buetow & Associates Inc, 253 N.W.2d 836, 839 (Minn. 1977) (consideration whether architect breached duty of supervision requires initial examination of contract between architect and owner of construction project to determine scope of architect’s supervisory obligation). See also Miller v Broken Arrow, 660 F.2d 450, 458 (C.A. Okl., 1981) (depending on contract of employment, architect may be held liable for failure to exercise care in execution of plans).
Often the scope of duties of a design professional are not well defined in the contract. In such cases, courts may examine other provisions in the contract to attempt to determine if the parties bargained for supervision of the project. For example, if the amount of the architect’s fee is large enough, or the architect is given a lot of authority over the project, then it may indicate that the defendant was to assume duties with respect to inspection or supervision of construction that normally would not be required in a standard architect’s agreement. See, e.g., Duncan v Pennington County Housing Authority, 283 N.W.2d 546, 548 (S.D., 1979); Loyland v Stone & Webster Engineering Corp, 514 P.2d 184, 188 (Wash App 1973) disapproved on unrelated grounds by Bayne v Todd Shipyards Corp., 568 P.2d 771 (Wash., 1977).
If there is no contract between an owner and the architect, then courts have turned to other contracts or practices between the parties to determine whether the architect owes a duty to the owner to supervise the project. Dickerson Construction Co. v Process Engineering Company, 341 So.2d 646, 650-51 (Miss 1977). See also Weill Construction Co. v Thibodeaux, 491 So.2d 166, 170-71 (La. App., 1986) (architect’s duties were specified in standard contract between owner and general contractor).
Finally, construction specifications contained in a contract may include language indicating the scope of the architect’s inspection or supervisory responsibilities. Moreover, the construction specifications may require the design professional’s presence or approval before certain steps in the construction process may be commenced. Dickerson Construction Co., 341 So.2d at 650-51. Further, building specifications could require the architect to give approval before fill work is undertaken or concrete poured. The contract also could require that the architect is present at certain stages of construction and to perform a final inspection.
In general, while strictly performing design services liability may be limited by contract to the “economic loss rule”. However, once the professional undertakes construction project supervision, entirely new potential liability arises.