Signs of the times

By GUY LORANGER, Staff Writer

A Mecklenburg County jury has rendered a verdict in favor of an architect who was sued for $3 million by the developer of a Raleigh shopping center over a signage snafu that nearly cost the center its anchor tenant.

An issue that never went before the jury, however, could become a central focus as the case makes its way to the Court of Appeals.

The jury rendered the verdict on Jan. 22 in the case, Faison-Alexander Place III, LLC v. Finley Design, P.A., exonerating the architect and his firm of breach of contract and awarding the firm $54,838 in a counterclaim for unpaid fees.

The dispute arose from the developer's claim that the architect had provided incorrect information about the total building-mounted signage that could go on a Best Buy store a mistake the electronics chain used in an attempt to escape its lease.

In the last week of February, however, the developer filed notice of appeal from the jury verdict as well as from a December 2009 summary-judgment ruling in which the trial court threw out the developer's professional-negligence claim.

According to Kimberly House, a Winston-Salem lawyer representing the architect, that ruling was consistent with Kaleel Builders, Inc. v. Ashby, 161 N.C. App. 34 (2003), which held that a professional-negligence claim could not be asserted where an underlying contract governed the rights and duties between parties.

"That's why you will see homeowners sue design professionals for negligence because [the homeowners] didn't have the contract with the architect, they had it with the builder or developer," House said.

But an attorney for the developer said reliance on Kaleel would not make sense in this case, where the lawsuit was against both the architect and his firm.

The existence of a contract between the developer and the architecture firm should not relieve the individual architect of his professional duty of care, said the attorney, D. Blaine Sanders of Charlotte.

"Think of it the same way with doctors and lawyers. If there's a contract and there always is, whether it's verbal or written you would tend to think that the professional still owes that professional duty of care anyway," Sanders said.

"But the court's ruling is saying that there's not. There's nothing outside of the contract. If there's a contract, there's no independent tort duty of care."

Sign of the times?

As a result of the summary-judgment ruling, the only issue before the jury during the two-week trial was the developer's breach-of-contract claim.

The developer, Faison-Alexander Place III, contended it had contracted with the architect's firm, Finley Design, to provide design services in connection with a 107,000-square-foot retail development in northwest Raleigh.

The contract called for the architect's design to "comply with all governmental authorities having jurisdiction," and to include a "common signage plan" that was in compliance with the city's regulations.

According to the developer, it relied on the architect's statement that Best Buy could legally install 700 square feet of building-mounted signage when it negotiated a lease that called for the construction of a 30,000-square-foot "prototype" Best Buy store.

However, after the lease was signed and construction began, the architect learned that a city ordinance would allow for only 500 square feet of signage. He immediately notified the developer, who informed Best Buy.

Based on that disparity in signage, Best Buy tried to terminate its lease with the developer in the fall of 2008, leading to litigation that ultimately resulted in a settlement in which the developer agreed to a reduction in Best Buy's rent.

When the developer sued the architect and his firm in October 2009, it sought to recover the economic loss it suffered from the reduced rent as well as the costs of going through litigation with Best Buy and other problems.

During trial, the defense counsel Steve Pharr and House framed the dispute as more a sign of the times than a result of trouble caused by signs.

House said the attorneys cast Best Buy's attempt to get out of the lease as a bid to get out of a shopping center at a time when the economy was reeling.

They drew on the developer's previous case with Best Buy, she said.

"That was their theme in their litigation with Best Buy, and so we took their theme and turned it on them," House said.

"They claimed that it was pretextual and that it wasn't a breach of the material term of the lease the signage," House said. "We made it look like they were saying one thing against Best Buy and then saying another thing now."

According to House, the defense counsel also argued that the architect had no contractual duty to provide a certain amount of signage, and that any error he made in misinterpreting the city's regulations was corrected early on and in the appropriate stage of the design process.

"With architects and design professionals, their first drawing is not what is built," she said. "You go through approval after approval, and change after change, until you come up with the final product. So, what [the architect] finally submitted to the city was approved."

In addition, the defense counsel argued that the architect was not to blame for terms of the developer's lease with Best Buy.

"They had asked Mr. Finley a question about signs, but they didn't rely on his answer when they went to draft the lease," House said.

After the jury rendered its verdict on Jan. 22, Judge Jesse B. Caldwell III entered judgment upon the jury verdict on Feb. 10.

Sanders, the developer's counsel, said the developer had made an oral motion for judgment notwithstanding the verdict, which the trial court denied.

Verdict Report

Type of action: Breach of contract

Injuries alleged: Lost rent, lost value and attorney fees

Case name: Faison-Alexander Place III, LLC v. Finley Design, P.A.

Case number: 09 CVS 8686

Court: Mecklenburg County Superior Court

Judge: Hon. Jesse B. Caldwell III (Hon. Richard D. Boner at summary judgment)

Verdict or settlement: Verdict (jury)

Date: Jan. 22, 2010

Amount: $0 on plaintiff's claim; $54,838 on defendant's counterclaim

Demand: $3 million

Insurer: Beazley USA

Experts: Ross Adams, AIA, architect (Mooresville) and Robert Caron, retired developer (Raleigh)

Defendant's attorneys: Steve M. Pharr and Kimberly A. House of Pharr Law (Winston-Salem)