Using Betterment as an Effective Defense for the Design Professional
The resolution of Architect and Engineer disputes with owners routinely involves the issue of betterment as it relates to the calculation of recoverable damages. When an owner is faced with a situation involving repairs or remediation to be performed in order to resolve a design or construction error, the owner sometimes chooses to upgrade materials for the repair relative to what was originally designed/specified and built. Common issues in this regard could be implementation of a slate roof in the repair when asphalt shingles were originally specified, or the use of high end marble tile when a less expensive standard tile was originally specified. As the dispute advances, the owner commonly seeks recovery of the cost of the more expensive items as its measure of recoverable damages. However, this "betterment" is not the appropriate measure of damages to which the owner is entitled.
If you, the design professional, become involved in this type of situation prior to the institution of litigation, it is best to remain part of the remediation process, to the extent possible. If the owner has not terminated your services, then it is best to make recommendations on all aspects of the repair or remediation process, including the selection of appropriate materials. In this process, you may find that the cost of materials originally specified has increased from the time of the design phase of the project, but despite the fact that the cost has increased, this new cost for the same product is likely a recoverable damage in these disputes. The key aspect is the nature of the material chosen, not just the cost of the material chosen for the repair. Staying involved as much as possible with the owner or the owner's representative throughout this process will help to minimize the owner's tendency to upgrade materials or expand scope with the expectation that the design professional is going to pay the bill at the end of the process.
If the owner or its representative resists your recommendations concerning selection of materials or definition of repair scope, then you should document your efforts in this regard by illustrating the inappropriate nature of the owner's decisions. While it is best to stay non-confrontational in these efforts, it is important to demonstrate, during the project, the details of the owner's selections versus the appropriate "in kind" materials and/or scope relative to the original contract documents so that the issue of betterment is specifically defined. This exchange should make specific reference to the original contract documents and, if appropriate, submittals and/or cut sheets, with a discussion of how the repair is an upgrade relative to what was originally designed. This will carry greater weight than a lawyer's letter down the road should the matter proceed into litigation, particularly in situations where your recommendations are made prior to the owner's implementation of the repair.
Mr. Halstrom is a Partner in L’Abbate, Balkan, Colavita & Contini, LLP’s Garden City, NY office where he concentrates his practice in the defense of architects and engineers professional liability claims.
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