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When Statutes Override Contracts

An Underappreciated Statute Favoring A/Es Who Contract with “Public Bodies” in Virginia

The following article was written by Stephan F. “Hobie” Andrews and J. Brandon Sieg of the law firm Vandeventer Black LLP in Richmond, Virginia. They devote a substantial portion of their practice to the representation of design professionals in the Mid-Atlantic and beyond.

We see them all the time: overreaching indemnity provisions that might compromise our professional liability insurance coverage and hold firms accountable for a catalog of frightening claims and damages. When negotiating a contract with a state agency or other public body in Virginia, have you ever encountered language such as:

The A/E, including its consultants, shall defend, indemnify and bear all loss, expense (including reasonable attorney’s fees) and damage from any cause whatsoever arising out of, incidental to, or in connection with the performance of the Contract. A/E shall defend, indemnify and hold harmless the Agency, its agents, Lenders, officers and employees from all claims, demands, expenses, penalties, costs and judgments made, claimed or recovered against the Agency from any cause whatsoever, arising out of, incidental to, or in connection with the performance of the Contract whether or not due to any act of its employees, servants or agents and whether or not due to any act of omission or commission, including negligence of the Agency.

What does it mean, and why is it a problem?

What Facts Might Trigger this Indemnity Provision?
Imagine the following scenario: the Contractor fell behind schedule early in a project, and the Owner is growing impatient with delays. Assume that a concrete subcontractor claims to have identified some ambiguity in your specifications for the concrete foundations. Unfortunately for you, these ambiguities are raised in a stack of submittals that the Contractor provides late on a Friday afternoon of a holiday weekend. The following week the Contractor tells the Owner that you are contributing to the delay by responding too slowly to submittals. You tell the Owner that you need more time to fully understand and evaluate the issues raised by the concrete subcontractor.

The Owner, tired of delays and anxious to occupy the project, instructs the Contractor to work out the issues with the subcontractor. After construction is completed, there is a structural failure resulting in personal injury and a lawsuit against your client, the Owner. Further investigation confirms that your specifications were correct and that the entire issue arose from the Contractor’s and subcontractor’s efforts to “work out” the problem and keep the project on schedule.

How might the indemnity provision above affect a claim by the owner against you under these facts?

In General, Assume that the Terms of Your Contract Will Be Enforced
In Virginia, courts will strictly enforce the language of a written agreement. By agreeing to terms similar to this indemnity agreement, you are essentially saying that the Agency can look to you to reimburse the cost of any claim or judgment awarded against the Agency, even if you can prove that the Agency was partially at fault. In the hypothetical above, the contract indicates that the Agency may have a viable indemnity claim against your firm even though your firm did nothing wrong – there is no “negligence” trigger in the indemnity provision as a link to your liability.

Furthermore, because you are agreeing to indemnify the Agency even if you are not negligent, it is likely that your professional liability insurance carrier will deny coverage for this claim.

How to Modify the Indemnity Agreement
For all of the reasons above, it is important to agree to acceptable language when you negotiate your contract with your clients. A significant problem with this particular indemnity agreement is that it applies “whether or not due to” the negligence of the A/E or any act of the Agency or its employees, servants or agents, “including negligence of the Agency.”

A practical solution is to replace this language with something along the lines of the following:

… A/E shall indemnify and hold harmless the Agency, its officers and employees from all damages, costs and expense (including reasonable attorneys’ fees and defense costs), to the extent arising out of the negligent acts, errors or omissions, recklessness or intentionally wrongful conduct of the A/E in performance of this Contract.

Such language will limit your duty to indemnify and hold harmless the Agency to claims that arise from your own negligence or wrongdoing and more nearly assure the maintenance of professional liability insurance coverage. By making these edits, you will preserve your defense in the above hypothetical to argue that you did nothing wrong.

If you have negotiated many contracts for A/E services, then the analysis above should be familiar to you. But things get more complicated if you are negotiating with a public body.

What if the Public Body Rejects Your Edits?
It is easy to feel like you have unequal bargaining power when negotiating a contract with a public body. You may still be in the honeymoon phase of having just been selected for the project, and you are concerned when the public body refuses to accept what you think is a justifiable allocation of risk on your project.

As to indemnity provisions, you have a strong fall-back position. The Code of Virginia appears to prohibit the kind of broad indemnity agreement identified above:

Any provision contained in any contract relating to the planning or design of a building, structure or appurtenance thereto . . . or any provision contained in any contract relating to the planning or design of construction projects other than buildings by which the architect or professional engineer performing such work purports to indemnify or hold harmless another party to the contract against liability for damages arising out of bodily injury to persons or damage to property suffered in the course of the performance of the contract, caused by or resulting solely from the negligence of such other party, his agents or employees, is against public policy and is void and unenforceable.

This section shall apply to such contracts between an architect or professional engineer and any public body as defined in § 2.2-4301. Every provision contained in a contract between an architect or professional engineer and a public body relating to the planning or design of a building, structure or appurtenance thereto . . . or relating to the planning or design of construction projects other than building by which the architect or professional engineer is performing such work purports to hold indemnify and hold harmless the public body against liability is against public policy and is void and unenforceable. This section shall not be construed to alter or affect any provision in such a contract that purports to indemnify or hold harmless the public body against liability for damage arising out of the negligent acts, errors or omissions, recklessness or intentionally wrongful conduct of the architect or professional engineer in the performance of the contract.

Va. Code § 11-4.4 (emphasis added).

This statute may have flown under the radar—there are no reported cases interpreting it. A plain reading indicates, however, that a public body cannot require you to indemnify claims arising from the public body’s own negligence. Such indemnity provisions are “void” and unenforceable. Moreover, the statute establishes limits on the scope of any A/E indemnity obligation.

Bringing this statute to the public body’s attention may help persuade the public body to narrow the scope of an indemnity provision. And even if the public body insists on broader language, you have put the public body on notice that its preferred language is not enforceable.

What Is a “Public Body”?
The term “public body” is defined in Va. Code § 2.2-4301 as:

Any legislative, executive, or judicial body, agency, office, department, authority, post, commission, committee, institution, board or political subdivision created by law to exercise some sovereign power or to perform some governmental duty, and empowered by law to undertake the activities described in this chapter [Virginia Public Procurement Act]. “Public body” shall include (i) any independent agency of the Commonwealth, and (ii) any metropolitan planning organization or planning district commission which operates exclusively within the Commonwealth of Virginia.

If you are negotiating a public contract in Virginia under Virginia’s Public Procurement Act, then chances are you are negotiating with a “public body” and the statutory limitations to indemnity agreements will apply.

Conclusion
It is always best to ensure that the written terms of your contract reflect an agreement you can live with. But if a public body in Virginia refuses to negotiate an appropriate balance of risk in its indemnity provision, Va. Code § 11-4.4 may provide an alternate argument to help prevent you from indemnifying the public body for its own negligence or for an overly broad indemnity obligation not covered by available insurance coverage.

The authors may be contacted at 804 237 8800 or by email at sandrews@vanblacklaw.com, jwalker@vanblacklaw.com, or bsieg@vanblacklaw.com.

Posted in Advocacy News

We Fight for the Profession

Qualifications-based selection.

Historic Rehabilitation Tax Credits.

Licensure.

Statutes of repose.

Taxation.

Policy.

Every practicing architect and associate is affected by these issues. And we look to the AIA to protect our interests.

AIA Virginia uses the collective power of the profession to participate in the legislative and regulatory policy-making process by educating legislators about issues that are important to us.

Through the AIAVA Political Action Committee, we can support candidates for state office who understand the profession and support our goals — without regard to party affiliation.

Our membership dues will never be used to support a candidate. And that’s why the PAC needs your support. With a contentious election year for the General Assembly on the horizon, we’ve set a goal to raise $10,000 before the general election on Nov. 7.

Join the fight to protect the profession and practice by giving today.

ABOUT THE AIAVA PAC

Where Does the Money Go?
Funds go toward supporting the campaigns of statewide candidates who support the architecture profession. The AIAVA PAC Board of Trustees, which is made up of AIA Virginia members, is responsible for approving every disbursement from the PAC. Approval for a disbursement is based on several criteria, such as the candidate’s understanding of the profession’s concerns, past voting record on key issues, committee assignments, and leadership positions. In addition, the committee seriously considers suggestions for candidate support from AIA components and current contributors.

How Can You Contribute?
You can make a contribution online at www.aiavapac.org. You may also mail a donation to:
AIAVA PAC
c/o AIA Virginia
2501 Monument Avenue
Richmond, VA 23220

There are no contribution limits in Virginia. The AIAVA PAC can accept contributions from any individual, corporation, union, association or partnership. It is required that all contributions received by the committee, and that required information identifying the contributor, be reported on the committee’s campaign finance reports. Federal law prohibits accepting contributions from a foreign national or foreign corporation.

For more information on how to get involved, send an email to rgeorge@aiava.org.

 

Posted in Advocacy News

Speak Up

AIA SpeakUp | Denver, Colorado | July 19-21, 2017

The AIA’s second annual SpeakUp Event was held last month in Denver. SpeakUp is the AIA’s flagship advocacy training event. Influencing government policy is one of the AIA’s primary responsibilities, one of the primary reasons our AIA exists. Advocacy is about teamwork. Working together, AIA members carry a unique and respected voice to city halls, statehouses, and Congress. Working together at AIA Virginia we advocate for issues that are important to members. Working together we advocate for legislators to enact policies that stimulate the demand for architecture and invigorate members’ capacity to practice.

SpeakUp 2017 provided advocacy training for approximately 100 architects from around the country. The AIA Advocacy team put together a fantastic, well-organized and lively event consisting of compelling talks, roundtable discussions, breakout workshops and the highlight of the event, a “campaign exercise”. Attendees gained insights and skills to enhance advocacy efforts in their respective states.

Several interesting speakers provided useful perspective and insights on successful advocacy. We heard from seasoned veterans about the elements of a winning legislative advocacy program – from member engagement to coalition building. Just to highlight a few, Senator Chris Holbert (R-CO30) implored advocates to start with questions when engaging legislators: Are you familiar with (fill in the blank)? Have you taken a position with it? How will you vote? Veteran Colorado Lobbyist Jerry Johnson, Hon. AIA spoke to the value of having a strong lobbyist at the state capital who builds reliable, long-term relationships with legislators. Caitlin Reagan, AIA National gave a thought-provoking presentation on how architects can communicate more effectively. We heard from seasoned experts Sue Brown, Principal 4Front Strategies and Bev Razon, Vice-president Public Affairs, COPIC on PAC fundraising best practices.

SpeakUp attendees participated in a multi-phased group campaign strategy and team building exercise. Organized in teams of 20, participants were able to apply knowledge gained in the workshops to build a multi-faceted campaign plan that was presented to a jury of political and policy professionals on the final day. This intense, collaborative group work demonstrated that winning legislative and political victories requires a strong plan, teamwork and the ability to deal with the unexpected.

As a profession, we are a relatively small group that has the potential to bring tremendous value to people and their aspirations for a better, healthier life. Architects are not guaranteed a critical role in society. Advocacy allows us to strengthen our profession to the benefit of AIA members and society. The AIA gives us that voice. Through member engagement and coalition building the Government Advocacy team at AIA Virginia continues to build a culture of influence with an annual legislative agenda that fosters the design of healthy, vibrant communities, including: job creation and a growing economy; environmentally sustainable buildings that use resources wisely; public health; systems of mass transit; and responsible land development and urban infill. The Government Advocacy team at AIA Virginia continues to work hard to advance pro-architect policies before government decision-makers and help ensure that architects remain vital to society for generations to come.

Sean E. Reilly, AIA
AIA Virginia Director
Government Advocacy Advisory Council

Photos: Sean Reilly, AIA

Posted in Advocacy News, Featured

AIA Virginia Adopts Directory of Public Policies and Position Statements

In response to a directive in AIA Virginia’s Strategic Plan to “create an annual legislative agenda that drives the design of healthy and vibrant local communities,” the Government Advocacy Advisory Council determined that is was critical to first develop a comprehensive document outlining all of our existing public policies and position statements. Not only would a directory of this kind inform the development of our annual legislative agenda, it would also help ensure members and policy-makers understand the rationale behind our legislative and regulatory advocacy efforts.

The work to incorporate the principles of the Virginia Accord and existing national and state policies and positions into one document began in December 2016. Since then, the Advocacy Council, Board, and AIA general counsel worked collaboratively to compile and carefully review existing materials.

At the June 16, 2017, Board of Director’s meeting, AIA Virginia adopted a Directory of Public Policies and Position Statements.

The board also adopted a triennial sectional review process intended to coincide with — and inform — National’s review process. Each year, one of the three sections will be evaluated. Suggestions for refinements to existing statements or new proposed policies will be shared with National during their parallel policy review cycle, increasing the opportunities for AIA Virginia members to influence national policy.

If you would like to get more involved in AIA Virginia’s advocacy efforts, please contact Rhea George at rgeorge@aiava.org.

Posted in Advocacy News

Work on 179D Continues

AIA Virginia and our friends with ACEC Virginia have been working for years to address issues surrounding the Internal Revenue Code Section 179D, Energy-Efficient Commercial Buildings Tax Deduction.

Many of our firms realize significant tax savings in exchange for spending increased design time incorporating energy-efficient solutions into building designs and we’re working to preserve this benefit on multiple fronts.  Beyond our efforts to get 179D extended at the federal level, we’ve been working to curb a practice that firms are encountering in Virginia.

Some public bodies solicit payments or request fee reductions in exchange for signing the required allocation letter. The AIA and other stakeholders have consistently opposed this practice at the federal, state, and local levels. Last legislative session we worked to add language to the Virginia budget which would prevent a public entity from refusing to sign the allocation letter or make the signature contingent on any transfer of value from the designer to the public entity.

Though this effort failed in the end, we haven’t given up. We worked closely with AIA National, ACEC National, and ACEC Virginia to seek Senator Warner’s assistance and support in gaining more clarity surrounding congressional intent relative to section 179D of the IRC. We’re hoping for that guidance issued at the Federal level can be used to strengthen and complement our work at the state level to clarify legislative intent — and put a stop to public bodies asking for a reduced fee or “kickback” from the deduction.

Posted in Advocacy News

AIA Virginia Affirms Commitment to Principles of Paris Climate Agreement

Though the administration announced that the United States will withdraw from the landmark Paris Climate Agreement, AIA Virginia recognizes that the creation and operation of the built environment requires an investment of the earth’s resources — and that many planning, design, construction, and real estate practices can contribute to patterns of resource consumption that will inhibit the sustainable future of the Earth.  The agreement, signed in late 2015 within the United Nations Framework Convention on Climate Change (UNFCCC), commits the international community to fighting harmful greenhouse gas emissions.

At the June 16, 2017, Board of Director’s meeting, AIA Virginia reaffirmed its support for policies, programs, and incentives that encourage energy conservation in the built environment. “AIA Virginia is committed to advocating for resource-efficient building practices and to fostering a more sustainable built environment by helping architects gain the necessary skills and expertise to design better buildings,” said 2017 AIA Virginia President Bill Brown.

“We’re going to continue our work to raise public awareness about the role that buildings can play in combating climate change because we believe that architects can help their clients and communities build a more sustainable, resilient, and prosperous world,” continued Brown.

To see how you can get involved, click here.

Posted in Advocacy News, Featured

AIA Position Statement on Pre-licensure Titling: Guidance for Virginia Architecture Firms

The AIA recently issued a statement on their new public policy regarding pre-licensure titling. The new policy seeks to move architecture beyond the use of the term “intern” as a title for those on the path to licensure.

The newly approved statement suggests that “intern” remain a supported title for students working in an architectural office while pursuing an architecture degree and endorses two titles: “architectural associate” and “design professional” for graduates pursuing their license.

In Virginia, and in most states, both suggested titles run counter to regulations. “Architectural” is among the protected “titles” and “design professional” indicates that the individual is licensed or certified in one of the APELSCIDLA professions and by the Virginia Construction Code. As Title and Practice laws protect the “title” architect or any derivative thereof, AIA Virginia recommends against using either “architectural associate” or “design professional” as titles in the Commonwealth. “Design associate” has been suggested as an alternative that would not violate Virginia law or regulation.

Posted in Advocacy News, Featured

AIA Opposes Withdrawal from Climate Agreement; Suggest Next Steps for Architects

On June 1, the American Institute of Architects reaffirmed its commitment to climate change mitigation and announced it was opposing the Administration’s decision to withdraw the United States as a signatory to the Paris Agreement. That accord, signed in late 2015 within the United Nations Framework Convention on Climate Change (UNFCCC), commits the international community to fighting harmful greenhouse gas emissions.

“The AIA will not retreat from its long-established efforts to conserve energy and to deploy renewable resources in buildings,” said AIA President Thomas Vonier, FAIA. “We will continue to lead in efforts to curb the use of fuels and technologies that needlessly pollute our atmosphere and harm our environment. This makes good sense economically, and it is in the best interests of those we serve: our clients and the public.”

The AIA has long been committed to fostering a more sustainable and resilient built environment by helping architects gain the skills and knowledge to design better buildings; advocate for policies that promote sustainability; and raise public awareness about the role of buildings in combating climate change. (Read all the ways you can help address climate change here.)

What can you do to help design a more sustainable built environment and speak up for good design? Here are four easy steps:

  1. Send a letter to the editor of your local paper expressing your support for sustainable design.
  2. Sign on to the 2030 Commitment program to eliminate carbon emissions from your projects by the year 2030.
  3. Join the AIA Legislative Action Network, to help advocate for policies that foster a more sustainable built environment.
  4. Learn more about incorporating energy conservation and resilience into design via the AIA’s climate change resource page.

Together, architects can help their clients and communities build a more sustainable, resilient and prosperous world.

6/15/17 Update: AIA Virginia Affirms Commitment to Principles of Paris Climate Agreement.

Posted in Advocacy News

Virginia Press Association Launches Statewide Public Notice Website

Beginning May 8, 2017, architects will have a way to find and read public notices from anywhere in Virginia through a new statewide public notice website being launched by the Virginia Press Association.

The free website, www.publicnoticevirginia.com, is keyword searchable and will provide access to all local, state and federal government public notices. This includes notices for public meetings, zoning permits, government contracts, court hearings, unclaimed property, foreclosures and other government, business and judicial information.

“Right now, public notices are published only in the area they impact,” said Betsy Edwards, executive director of the Virginia Press Association.  “But the new website will allow someone to quickly and easily look at public notices in another part of the state or to set up a statewide search to find all of the public notices on a particular topic.”

“Virginia’s newspapers are excited to be able to offer the public a way to stay better informed about what is going on in local, state and federal government,” said Edwards.

Posted in Advocacy News

Virginia Town Hall Regulatory Action Notice

The Virginia Department of Professional and Occupational Regulation has made us aware of the opportunity for public participation and comment during a period for regulatory review.  APELSCIDLA Executive Director Kate Nosbisch advises that this is offered on a very limited basis.  Please see, below, the “Virginia Regulatory Town Hall Action Notice” and respond as you deem appropriate.  Note that the deadline for their receipt of comments is April 19, 2017:

The following regulatory stages have been submitted for publication in the Virginia Register

Board for Architects, Professional Engineers, Land Surveyors, Certified Interior Designers, and Landscape Architects
 Agency Department of Professional and Occupational Regulation
 Chapter Board for Architects, Professional Engineers, Land Surveyors, Certified Interior Designers, and Landscape Architects Regulations (18 VAC 10-20)
 Action General Review 2017
 Stage NOIRA
 Comment Period 03/20/2017 – 04/19/2017
More details on this stage

Please address any questions or comments to Melanie.West@dpb.virginia.gov.

Posted in Advocacy News

Membership News

Professional Development News

  • Young Architects Forum Regional Director

    Are you an AIA Member interested in the issues confronting young architects? Would you like to help the Young Architects Forum (YAF) address these issues? Then, you may be just the person we’re

Government Advocacy News

  • When Statutes Override Contracts Document swirl

    We see them all the time: overreaching indemnity provisions that might compromise our professional liability insurance coverage and hold firms accountable for a catalog of frightening claims and damages.

Virginia Accord

  • The Virginia Accord

    Bringing together the planning and design disciplines to examine two key themes critical to the future — job creation and environmental sustainability — on Sept. 19-20, 2014 at the Virginia Accord.