Chicago Housing Authority v. DeStefano & Partners, Ltd.
Ill. Court Shields Architect Firm From Suit Over ADA Violations
By Diana Novak Jones Law360, Chicago (December 14, 2015, 4:48 PM ET) -- The Illinois Appellate Court agreed with a lower court's ruling in an opinion published Friday that the Chicago Housing Authority can't sue an architect firm for breach of contract over the mangled design of some handicapped-accessible units because the authority is ultimately responsible under federal disability laws.
The affordable housing agency's appeal of the Cook County Circuit Court's dismissal of its suit against now-defunct DeStefano & Partners Ltd. brought up an issue that hadn't been considered in the state appellate courts: Whether federal disability laws preempt state contract laws where terms of the contract require one party to meet standards set by the federal laws.
The authority spent more than $4.3 million retrofitting apartments in seven buildings it contracted DeStefano to design after it received a formal warning from the U.S. Department of Housing and Urban Development that the DeStefano units did not meet federal standards, according to the opinion.
In the opinion authored by Illinois Appellate Court Judge Bertina E. Lampkin, the appellate panel found a developer's obligation to adhere to disability laws like the Uniform Federal Accessibility Standards and the Americans With Disabilities Act can't be transferred to the builder it hires.
"Allowing CHA to seek indemnification from defendant effectively would insulate it from liability," Judge Lampkin wrote. "Such an outcome is contrary to the goal of the ADA of preventing and remedying discrimination against disabled individuals. Because allowing the state-law claim would interfere with Congress' goal, CHA's breach of contract claim is preempted under the obstacle preemption doctrine."
Soon after HUD's warning, the authority attempted to sue DeStefano for failing to adequately design accessible apartments the authority is required to have under HUD guidelines, according to the opinion.
HUD told the authority it would be coming to the construction sites to check for compliance in 2003, a year before construction was completed, Judge Lampkin wrote. HUD told the authority some of the sites did not meet ADA requirements before DeStefano was done working, but it wasn't until 2006 that the authority entered into an agreement with HUD to make the changes.
At that point, they had to hire new architects and redo some of the construction for $4.3 million, a cost the authority sought to recoup through its suit against DeStefano.
The authority amended its complaint three separate times, but each time the Cook County Circuit Court ruled that the federal disability laws preempt the rights the authority had protected in the contract, according to the opinion.
DeStefano attorney Jon Masini of Vanek Vickers & Masini PC told Law360 Monday the judges' decision was the right one.
"It's appropriate based upon the public policy considerations that have been identified by all the various courts," Masini said.
He said the parties had settled the two other charges of the latest amended complaint, claiming breach of contract unrelated to the federal accessibility standards and requesting indemnity for a lawsuit brought against the authority by a third-party general contractor.
A spokesman for the Chicago Housing Authority declined to comment Monday.
Judges Bertina Lampkin, Jesse Reyes and Robert E. Gordon sat on the appellate panel.
The Chicago Housing Authority is represented by Donohue Brown Mathewson & Smyth LLC.
DeStefano & Partners is represented by Jon Masini, Scott Ruksakiati and Nathan Hadsell of Vanek Vickers & Masini PC.
The case is The Chicago Housing Authority v. DeStefano & Partners Ltd., case number 08 L 8376, in the Appellate Court of Illinois, First Judicial District.