Sticky Situation: Advice Appreciated and Judgement Expected 4

[DaBear51]

Morning all,

I'll preface this by saying I do acknowledge my own accountability in how I got in this situation. I won't reject any criticism or judgement I receive her, but I do hope I can get some good advice. As a young engineer, I like to focus on learning from every mistake I make.

Brief Background: Civil P.E. for 2 years, have worked in the heavy civil, infrastructure sector for firms. I freakin' love engineering. Worked for a GC during summer internships and four years after getting B.A. My mantra is the best engineer has field experience as there are many things one can not learn or observe from a desk that they can being on-site of an actual project.

Situation: I have stamped two residential projects for family/close family friends. I only took the work giving full disclosure to the Owner and GC's that it's not my bread and butter, but I am confident in my abilities to design an acceptable residential project. And because I knew the GC and these projects were not complicated, I knew I could rely on the quality and expertise of the GC.

Side note, I did take a residential design course in college and have a lot of great, older civil engineers I used for advice and help during my work.

Of the two I've stamped, the latter one is currently under construction, foundation was poured last week. Last week, the bank financing the project (or at least we, we as in myself and the GC, thought they were) notified the GC to cease all work as the loan was never closed. The client led us to believe financing was secure and they were eager to get started. From what we gathered, the client failed to meet one requirement for the loan closing and it was never finalized.

As of now, work has halted and we are waiting for the client to let us know that the financing is good to go.

BUT, this is not the first issue we (myself and GC) have had with the client and it is possible the GC ends up refuses to finish the work. IF this happens, I will not feel comfortable with my stamped drawings being used by a new GC.

What are my rights and options here if my preferred GC bails out and I don't want my stamped drawings being used anymore?

Added info: The foundation is a post-tension slab designed by another firm. So my stamp is on all pages except that one.

TLDR: I designed and stamped a residential project knowing that my preferred GC would be building it. They potentially may bail now after just finishing the slab because bank notified GC the loan was never finalized. Client led us to believe it was. I don't want another GC building my design. Can I rescind my stamp preventing my drawings from being used by another GC?

 

[Celt83]

Strongly recommend you talk to a lawyer about this. You've got a few things stacking up that gives you some exposure.

1. Your friend is trying to get a loan for a new build, the bank may request your credentials acting as the EOR as part of a contingency to release the funds. This may land you in a claim situation from your friend as it's their only recourse if the loan falls through. Also remember your friend doesn't own the home until the loan is payed off so the bank has an interest in the property.
2. You practiced engineering without insurance (some jurisdictions require this), I'm not familiar with the laws in LA so this is a big question to clear with a local attorney.
3. You have not protected yourself with an LLC so you personally have full exposure, again not sure if you can do anything about that now but another question for the attorney.
4. You have no contract for the work (this might be your salvation), make sure the attorney knows this.

"Added info: The foundation is a post-tension slab designed by another firm. So my stamp is on all pages except that one." You may still be considered the EOR for the project so would be responsible for the delegated design of the PT slab on grade.

If you plan to keep doing side projects get insurance and form an LLC. On the insurance side I don't believe it is likely that they would apply your policy to work prior to the start of your contract with the insurer.




I'm making a thing:

http://www.thestructuraltoolbox.com

(It's no Kootware and it will probably break but it's alive!)

 

[Rabbit12]

I'll agree with Celt83. I don't think you understand the risk you may be at personally here. You need legal advice.

Seems to me the GC tried to save a buck and "hired" you. Even if this had worked out personally YOU are taking a TON of risk. You are tied to the design of this structure for an awful long time and if a subsequent owner has an issue that might be a design error you're going to be in the crosshairs.

Celt83, can a licensed engineer hide behind the cloak of an LLC? I still think you're liable personally which is where the professional liability insurance comes in right?

 

[phamENG]

can a licensed engineer hide behind the cloak of an LLC?

Yes and no. If you set up an LLC (or PLLC in some jurisdictions) but you don't bother to get insurance, then the other guy's lawyer is likely to come after you. But if you set it up, use it properly (such that the corporate veil cannot be pierced), get insurance that aligns with industry norms, and you aren't a repeat offender, most lawyers will leave personal assets alone. It seems most information on this relates more to medical malpractice, but there are lots of cases where a doctor gets sued and they leave their (considerable) personal assets alone and settle for the insurance amount - even if the original suit was for far more than the insurance max. That changes if the doctor is repeatedly in court - the attorneys will notice it and turn the screws on them to take a pound of flesh and "teach them a lesson." Of course that's no guarantee and, as a licensed engineer, you can be held personally liable for anything you design. I used to have a good article about it - I'll see if I can find it.

But yeah - legal advice would be more than prudent.

 

[EnergyProfessional]

No lawyer here, but I heard and read often that an LLC does not always protect your personal assets. And even if it does, they can come after the assets of the LLC. Chrysler (the car company) is or at least was at some point an LLC. But you still can sue them and claim against the millions of assets they have. The protection an LLC gives you, if set up properly, that all damages are limited to what the LLC is worth and can go bankrupt without affecting your personal assets. Again, I'm no lawyer, but I imagine some inventive lawyer could claim your personal home belongs to your LLC because you worked from your home. This may be a bad example, but if you are not careful, you still can lose (and again, I'm no lawyer and every jurisdiction may differ).

As for license, no LLC protects you. License is between you and the licensing board. If you do things that cause one to lose the license, you will lose it, not your LLC. Same way you loose your divers license if you speed too often, even if you do so in a company car for business reasons.

 

[IRstuff]

Those with professional licenses cannot hide behind LLCs because E&O is a PERSONAL liability, which cannot be assumed or displaced by the LLC. This also applies to doctors, lawyers, etc.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

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[MotorCity]

Why are you not comfortable with a new GC building from your plans? Your design and drawings should have the same high level of quality, accuracy, and completeness regardless of who builds from them. In my opinion, there is no rationale to tailor your design to be used by one specific contractor because as you have discovered, we as engineers have no control over who the contractor is.

 

[DaBear51]

I've gotten a lot of great feedback on this and I appreciate everyone's time and advice.

However, I still feel my main question is unanswered, which is:

Do I have the ability to take back my design if the current project is thrown out due to the construction loan falling through AND my preferred GC refuses to build when/if the client reestablishes financing and starts a new project to complete the job?

Keeping in mind that the client never directly paid me a cent for the design, and there is no existing contract stating otherwise, I feel I have the right to do so.

Side note, everyone's experiences are different. But I can tell you this for a fact, it is not uncommon for a licensed engineer to design and stamp residential projects for friends and family even if they themselves don't have an official firm or otherwise that does residential design.

 

[phamENG]

It's probably going to take a lawyer to figure that out. You've gotten yourself into a sticky mess with this. No contracts, no clear indication of who your client is or to whom you granted license to use your design. It'll take a lawyer to unravel it all and figure out where you stand. The alternative is to go to your friend (the homeowner) and tell them that you don't want them using the design. Maybe they'll say "oh, well okay then." Or maybe they'll be pissed and say too bad.

You can withdraw yourself as EOR, but you need a reason. Each jurisdiction has a different procedure, so talk to the building official and find out what it will take. But be prepared to defend the decision. "I don't think my design has sufficient detail for another GC to do it properly" could set you up for a disciplinary referral.

My standard contract has a provision where I can withdraw all design documents and work product for reason of non-payment. Goes back to the "I own my design" rights that I don't give up. But again, you don't have a contract, so...

 

[phamENG]

Another option: tell your friend that if another GC is doing it you need payment upfront for your services to date plus the amount required to fix your design.

 

[Enable]

Issues with design ownership aside, I think you might want to look into E&O insurance that specifically covers previous work. Your situation sounds tenuous at best, and owners who muddle with banks have a general proclivity to sue more than most. It doesn't matter if the suit has merit or not, you'll be out of pocket defending yourself with the overhang of uncertainty about ultimate judgement.

Trust me when I say that is not a fun place to be. Go get some retroactive insurance. Pay a premium for it and sleep easy. Will be the best $2000 you ever spent.

 

[Rabbit12]

I'll answer your question: You need to contact a lawyer.

 

[gte447f]

To the OP, there are a few lessons to be learned within all this. First and foremost is this. When choosing to get involved in $#itty little residential projects for people with no money, get a substantial partial payment up front, then do not turn over any valuable stamped documents until 100% payment is received in full. I've been there, done that, and I have arrived at a pretty staunch position as a result of my own unpleasant experience at times.

Actually, first and foremost is have a solid written contract for all work, period, regardless who the client is.

Now, regarding this little pickle of a situation in which you perceive yourself to be stuck, have you been paid a red cent by anyone, either the owner or the general contractor? If not, then I would have no problem telling them both that they have no rights to use your drawings for anything, and you do not need a lawyer to tell them that. You could stop there, but if they push back, I would go further and tell them to return all original versions and hard copies of your drawings and to destroy/delete all copies in digital format. I would also inform them that your drawings are protected by copyright laws, no rights have been transferred to them because full payment was not received by you, and to use your drawings without your express written consent may be subject to civil and/or criminal prosecution. If they continue to push, then you may need a lawyer.

Now, other than the intellectual and copy rights issues, which seem to me to be in your favor if you have not been paid for your services, you should be careful about wanting or needing to rescind your stamped drawings just because a "friendly" GC will not be the one building from them. Forgive me for saying this, because you may very well be perfectly competent or exceptional, and I hope that you are, but that stinks a little of incompetence and/or failing to meet professional standards. I mean, how bad are these drawings? If it is the possibility of a few RFI's that you are worried about, don't worry about it. I have seen older sets of drawings for commercial buildings that were built from little more than brief general notes and plan sheets.

 

[Rabbit12]

The last comment by gte447f is a good one. Whether it's true or not asking to rescind your stamp due solely to a change in GC appears shady.

Also, I'd add that I wouldn't say that designing homes on the side for friends and family is a common thing to do. I've never done it and I can't say as if I know anyone who has and I've been an engineer a lot longer than 2 years. I can think of one instance where I helped a friend of a friend size a beam to open up an area in his basement. He made it clear he didn't care how big the beam was he just didn't want to damage his house. I didn't stamp anything and there is no record of me helping him like emails or drawings.

IMO, what you are did is foolish. There are lots of guys on here that are VERY VERY good engineers with much more than 2 years experience that have been involved in lawsuits that will tell you it's absolutely no fun. Couple that with the fact you have zero protection in the event of a lawsuit and your situation makes me cringe.

 

[kipfoot]

I think you've gotten plenty of input on where you went wrong so I'm going to try to find the bright side here:

1) Nothing has been built yet. That's good news because your liability is generally tied to constructed buildings. So far, nobody is harmed, nobody is hurt, and the solution is entirely in front of you..

2) You (I think) have a good relationship with the parties and nobody's out to bury you. The owner understands what they were getting, right? I think your first step is a conversation with the owner/friend/family to let them know that you were leaning on the contractor and produced a 'light' set of drawings....and that you're nervous about potentially working with a contractor with less experience and that with a new contractor, the owner would need to either a) let you add detail to the drawings, or b) find an engineer more fully versed in residential.

4) Lastly, if necessary: I believe that, as a practical matter, you can tell the building department that you realized some mistake or omission in your drawings (I'm not clear on what is wrong with them) and that they need to be either re-filed with an addendum or withdrawn. This step would be embarrassing perhaps, but much better than something being built that's unsafe or otherwise effed up. A building department is not going to tell you, "sorry, it's already approved and we're going forward with a faulty structure." I'd recommend that you don't let it get this far.

5) I don't foresee any of these players notifying an engineering board to tell them that your house design is iffy.

6) I think the most likely outcome if another contractor is hired is that you'll tighten up your drawings, the contractor will be competent, the project will go forward without a hitch, and you'll be paid for your efforts. You said it's a simple house, right?

 

[TigerGuy]

I've always taken the approach that a signed and sealed report, plan set, etc. cannot be taken back. It can be amended, with additional or corrected information. Once that document or plan is submitted to the client or building department, it's a forever item.

It doesn't matter who is doing what on this project. You issued a set of design documents. All you can do going forward is to issue supplemental information to cover any of your perceived omissions.

 

[gte447f]

kipfoot and TigerGuy have got me thinking, why don't you just prepare a drawing revision/supplement that includes all of the information that you think might have been missing from your original set and be prepared to issue or go ahead and issue the revisoin/supplement. In my opinion there is no reason for a mea culpa or admission of anything when you issue the revision/supplement. Just do it, and probably no one will ask any questions. Ordinarily this is the sort of thing that will piss off owners and contractors because they have priced the construction based on your drawings, but in your case, it sounds like this project is basically dead, so when/if it comes back to life, there may be a reset of sorts, and maybe no one will notice or care. Plus, if this is pretty basic residential construction, then most contractors would have known the costs and quoted the job without any input from an engineer or reliance on engineered drawings anyway, which begs the question, why do they need engineered drawings for this residential project? Is this a high-end, custom, McMansion?

 

[Settingsun]

The contractor surely has a contract, or the wrong word is being used. That might actually set out who your client is in the absence of a contract that you're a party to. ie everyone else involved agreed who you were working for.

It will surely be complicated though if that doesn't match who you were issuing the drawings to. Contractor or home owner?

 

[djs]

Just my opinion and experience. I work on the construction side of Municipal water and Wastewater facilities. It is my experience that the sealed contract documents are always "light" on details, and many are left for the contractor to fill in. This usually results in a very large number of RFIs. This is especially true on the Instrument and Controls parts of the sealed contract documents. Almost all are "performance" specifications where we do all of the engineering.

 

[alchemon]

DaBear, if we strip this down a bit, you noted in the original post that you did not seal the foundation.

If your primary concern is the foundation, you are free of liability as that was not your seal.

Second, for the other areas: if I am reading correctly, your agreement (be it verbal or otherwise) is that you would be paid by the GC for the design you provided. Your client is the person who pays you directly. For example, an owner hires an architect, who then hires a structural engineer: the structural engineer's client is the architect.

With that all being said - you sure as hell can withhold the drawings. You created a product, provided a service, and were not compensated. The original contract, verbal or otherwise, contained a provision for you to be paid. A new GC is then not under obligation to do this, which is to say, no agreement has been made by you and the new party.

I would say that your client is ipso facto in breach of contract, and you would then retain rights to your intelligent design.

As a side bar, NEVER admit a perceived or known flaw in your design. You are ethnically responsible to safe guard the public, but there are potentially infinite number of design flaws which do not affect the public's well being.

So yes, in my opinion, you can ask for drawings back for which you've not been paid. The primary issue you have is that a family friend is involved. Therefore, this is more of a soft skills, smoothing things over problem. You need to find a way to tell your friend that you were comfortable with the old GC and not the new one without admitting any liability for a design issue.

 

[ukengineer58]

can you just explain to the home owner the design, while fundementally sound, had some things you were planning on workign through with the GC prior to start on site and as such, they do not represent a fully buildable set of drawings and should not be adopted by themselves or another GC without this exercise being completed or fully reviewed and updated by another engineer who takes responsibility if it ever restarts. You can also note to them you havent been paid so that may reduce the likelehood they will be annoyed with you as worst case, they have had part design for free. If they have any sense they wont build of plans you say are not final. If they do you can point to fact you warned them.