The Claims-Free Architect

How a Fire Hydrant Upgrade Led to a Million-Dollar Lawsuit

• Season 3 • Episode 2

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How reliable is a survey? When a fire hydrant used as a survey benchmark is replaced by a new fixture, and a site is over-excavated as a result, who is responsible, and how does a seemingly minor 20 cm error in site levels lead to a massive $1.2 million lawsuit?

You’ll discover how a small, unnoticed alteration in a survey datum point can snowball into a major headache. This story illustrates the importance of obtaining accurate information, and keeping scrupulous records, especially for complex buildings 

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This episode involves a missing survey, a new fire hydrant and far too much gravel. These may seem trivial matters, but the threatened 1.2 million-dollar lawsuit was anything but. This story is called “The level made me do it.”

The Pleasant Valley Hospital Board had engaged Reader & Schwaffer Architects, an old established firm located just outside of Ottawa, to provide architectural and engineering services for the design and construction of a brand-new regional hospital.

It was the kind of project that the Architects were quite experienced with, and it progressed smoothly through design, contract documents and tendering. But soon after construction began, problems appeared. Delivery of drawings was slow and when they did arrive, they contained errors and inaccuracies that required further delays to correct. One glaring error stood out from the rest, and it was this error that festered into an expensive lawsuit.

It was a simple enough error: Incorrect levels were shown on the site plan. But as a result of this error, the Contractor Saranto Construction Inc. had over-excavated the site by 20 centimetres.

When the mistake was discovered, it was necessary to bring the site back up to the intended levels. This required hundreds of truckloads of crushed stone to be placed under the car parks and driveways. In several areas, the additional excavation had exposed poor subsoil conditions that would otherwise have been undisturbed. This required even more loads of fill.

The whole exercise of excavating and refilling had involved additional expense, for which the Contractor Saranto had been paid. But, combined with other errors, the additional site work had created a delay, which pushed the construction into the following spring. For this costly three-month delay, the Contractor had not been paid.

Although the project was already seriously over budget, Saranto was left with little choice but to claim against the Hospital Board for the accumulated costs of the delay—1.2 million dollars, excluding legal and other costs. The Board third-partied the Architects, whom it blamed for the error, and the Architects fourth-partied the Engineers.

The question troubling the Pro-Demnity Claims Specialist—and the Hospital Board as well—was: How did a 20 cm error occur in the first place, and how did 20 cm of gravel end up costing 1.2 million dollars?

Pro-Demnity and legal counsel interviewed Aaron Ladros, the project’s job captain. Ladros was an elusive character. He seemed uncomfortable, as though he believed that he would be blamed for the fiasco. He was also extremely clever—perhaps too clever. Seeing every question as a trap, he went to extreme lengths not to give factual answers. The Claims Specialist’s usually successful attempts to extract the facts had little success.

But we did learn one important fact. The tiny but significant 20 cm error had been caused not by an architectural mistake, but by an unreliable figure in the survey data.

The full, surprising story—was only revealed after subsequent research and questioning of the Surveyor, the Engineers and the Architects. It came to light that the Architects’ site plan had been based on a survey that was, as expected, precise in every respect . . . except that the level of the top of a fire hydrant on the side street adjacent to the property, which had been selected as the reference datum, was inaccurate.

It's usually assumed that a fire hydrant is a permanent fixture. However, the march of progress touches all areas of technology, and between the time that the site was surveyed, and the time that the contract drawings were prepared, the local fire department had replaced the old fire hydrant with a new and improved version—20 cm shorter than the old one.

The Contractor had based his excavations on the hydrant that was in place when he arrived on the job, as noted on the site plan. The survey had been based on this previous fixture, which no longer existed. Twenty cm. of earth had been scraped away from the site that now had to be carefully replaced and compacted.

The Architects and the Civil Engineer claimed that they had noticed the problem on their very first site visit, and a Job Instruction to correct this discrepancy had been issued immediately. This Job Instruction was never found, and the Contractor denied ever receiving it. The Architects’ employee who was said to have delivered the instruction to the site had since left the firm and when they were located—just prior to Discoveries—they flatly denied delivering any such instruction.

The Architects further stated that the problem of the levels arose from the Survey given to them by the Board. Unfortunately, neither the Architects nor the Board had retained a copy of the outdated survey.

The Discovery session, held in a local hotel meeting room, did our case no good whatsoever.

In this small-town environment, there were accusations of collusion between various parties. The Chief Building Official was accused of having a grudge against the Architects Reader & Schwaffer, who had “taken the job away” from a local Architect, who happened to be a relative of the official.

We understood right away that the case would be dramatic—more like TV than real life—and that our defence would be complicated.

The General Contractor, who was the plaintiff, had an “open-and-shut case” documented in waybills, trucking invoices, timesheets and memos.

The Defendant Hospital Board, had also suffered a loss, having been saddled with the extra costs of making temporary arrangements, due to the delay, which they attributed entirely to the inefficiency of the Consultants, or the Contractor, or both. Their counsel had an easy task in mounting their defence—injured and innocent is always a good posture. They were counterclaiming on behalf of the Board to the tune of $350,000.

The Board denied supplying incorrect survey information and, in any event, the Architects and their Engineers should have verified site conditions. They had paid the Architect for a site plan, on the assumption that it was accurate. And anyway, if an error had been made, it was a tiny one and should have been corrected immediately, instead of leading to this ridiculously large claim.

The Civil Engineer Zarec had, regrettably, “lost” the digital files containing all her evidence, but swore that she had made no mistakes. The correct levels had been recorded on the missing survey. How the wrong levels had found their way onto the Architects’ site plan was a mystery to her. In the absence of any documents, she felt it necessary to start making things up—a self-serving tactic which the plaintiff’s counsel easily dismantled. She was a thoughtful and civilized professional, but a total disaster for our defence.

The architects Reader & Schwaffer, defending against the third-party claim of the Hospital Board, were having none of it. They believed that the “levels fiasco” had been grossly overblown and that the extra costs of fill had already been covered by the Change Orders. As for the “three months delay,” this had been unnecessary, but had actually benefited the Contractor by saving in winter costs. So, a credit was actually due. And, anyway, the levels error made by the civil engineer and compounded by the structural engineer had been caught in time to avoid the over-excavation claimed, and they continued to claim that corrected drawings had been delivered to the site. 

The architects came off worst in this proceeding. Staff member Ladros, who represented them, had been painstakingly coached by Pro-Demnity counsel, but when cross-examined, he reverted to his previous aggressive and elusive posture. Even though he had an impressive compendium of facts in front of him, he got confused, and his memory of events failed him entirely. Unwilling to admit to the memory lapse, he frequently contradicted himself with heated conviction. His testimony was an utter catastrophe.

To support our defence, we had hired a well-known civil engineering firm to re-calculate the excavation and fill costs. Their much more realistic figures provided us with excellent ammunition to attack the Contractor’s claim figure. But our experts could not, for the life of them, find any explanation for the bumbling behaviour of all the professionals.

With the trial date scheduled and approaching, we made a last-minute attempt at settlement through mediation.

The mediation was conducted by a retired mechanical engineer—a mature and wise professional with a great deal of personal charm, in sharp contrast to the disputants in the case. This mediator proved to be a very beneficial influence.

The plaintiff’s counsel launched the proceeding by pleading the contractor’s case with self-righteous emotion, backed up with diagrams, charts and piles of receipts for trucking and fill.

On behalf of the architects and the engineer, we presented our own experts’ figures, which demonstrated that the quantities claimed could not possibly have been delivered, since they represented almost twice as much as our experts had calculated. To this, the Contractor responded with a graphic account of how truckloads of crushed stone had disappeared into the liquid mud that had been exposed by the over-excavation. Saranto himself was smooth and persuasive. And his argument was convincing. 

Taking each group aside individually, the mediator injected some reason into the discussion. Gradually, the numbers grew closer together. The Board agreed that the extra fill had conferred a degree of betterment, and the Contractor conceded that he had benefited from a little winter cost savings. After a week or so of subsequent telephone bartering, a number was finally arrived at that was within available insurance limits, and the matter settled.

Small numerical errors are known, from time to time, to cause huge problems and to generate large claims. It’s best to avoid such paradoxes by heeding the lessons contained in this story. 

Lesson No. 1: First and foremost, be aware that technical information can change. Before you commit yourself to any design solution, budget, schedule or contract stipulation, be certain that you have current facts at your disposal. In this instance, no shovel should have hit the dirt without a current survey being supplied and carefully preserved. Since the site information appeared to be no one’s responsibility, no one kept records, and a fiasco resulted.

Lesson No. 2: The Architects made the common mistake of believing that the payments for “extras” covered all costs, including delay. The law is settled on this: “Downstream” costs of delay can only be calculated at the end of the work, and are payable where proven.

Lesson No. 3: Fire hydrants are dependable fixtures in the landscape, but as datum points, they are notoriously unreliable, and have been responsible for several claims. In one case known to Pro-Demnity, a street—and consequently a fire hydrant and a 42-storey tower—was mistakenly lowered by 5 cm. In a seismic zone, this was cause for considerable alarm.

Lesson No. 4: Some Architects may be guilty of “selective professional enjoyment.” The best parts of a project are: getting the job, negotiating the fees, hiring the engineers and sketching out schematic designs. When less glamorous work is involved—the nuts and bolts of a project— too often the project gets handed over to less seasoned staff. Pro-Demnity has dealt with many claims where the lack of an experienced Architect’s guiding hand throughout the job has caused the project to hit the rocks. It’s best to be hands-on. Resist the temptation to leave everything to semi-qualified or inexperienced staff.

This is doubly true of having unqualified and uncooperative staff represent you in court.