Contract’s ambiguities win homeowners a reversal

May 31, 2016

Owners of a shabbily built house will get another chance to hold their architects accountable for the construction headaches after the Indiana Court of Appeals found there are questions of material fact that should be considered.

Edward and Rebecca Rusnak filed a third-party complaint against Brent Wagner Architects after the builder of the couple’s home sued them for failure to pay the $376,448.44 promissory note in full. The Rusnaks hired BWA to design their house in Valparaiso’s Pepper Creek subdivision and then contracted with Alan R. Sommers Construction Co. to build the residence between 2008 and 2010.

Under an agreement signed by BWA and the Rusnaks, the architects had specific responsibilities during the construction of the home including visiting the building site and rejecting any nonconforming work. The Rusnaks assert the architectural firm breached its duty by failing to correct substandard work. Problems with the construction included poor drywall finish, leaks in the roof and gas line, sewer backups, damage to wood trim and poor concrete installation.

BWA countered the agreement makes clear the architects cannot be held liable to any alleged defects or mistakes done by the contractors. Porter Superior Court agreed and granted summary judgment in favor of architectural firm.

The Court of Appeals reversed in Edward Rusnak and Rebecca Rusnak v. Brent Wagner Architects, 64A03-1510-PL-1741.
Writing for the court, Judge Margret Robb agreed with the Rusnaks’ assertion that “the clause relieving BWA of liability for the contractor’s performance of the work does not excuse BWA from meeting its own obligation to reject work it knows fails to conform to the contract documents, plans, and specifications. If the exculpatory clause were interpreted to mean that BWA cannot be held accountable for failing to reject non-conforming work because the work itself is the province of the contractor, then BWA’s clearly stated responsibility to reject non-conforming work is essentially meaningless.”

However, the Court of Appeals acknowledged the term “reject” as used in the contract is ambiguous, which should be addressed by a factfinder. Also, the court noted there is a question of fact as to what BWA should have done when it found work that did not meet the homeowners’ specifications.  

The appellate court remanded for further proceedings.


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