ADA claims: The buck stops with developers

Eric Grasberger, The Daily Record Newswire

Project owners and developers may not allocate liability for ADA claims to architects, contractors or any other project participants. Though this reality defies common notions of contract law — and fairness — several courts across the country have refused to let developers seek indemnity from those most directly liable for ADA defects.

The Americans with Disabilities Act is a federal statute enacted in 1990. It generally is viewed as pre-empting any conflicting state laws, including contractual or common law indemnity.

The goal of the ADA is not only to provide remedies for discrimination against disabled individuals, but also to prevent discrimination in the first place. As stated in the latest case to address the issue, Rolf Jensen & Associates Inc. v. Mandalay Corporation:

Congress “specifically designed the provisions of the ADA to prevent discrimination stemming from neglect and indifference. As such, regardless of the intent of an owner … when, as here, a facility is not constructed to be readily accessible to individuals with disabilities, the owner is liable for unlawful discrimination.”

All courts having considered attempts by developers to seek indemnity from architects or others have employed reasoning similar to the court in the Mandalay case:

“Permitting an owner to, in essence, circumvent responsibility for its violations of the ADA and the Fair Housing Act through an indemnification claim would lessen the owner’s incentive to ensure compliance with the ADA and FHA.”

In today’s commercial construction industry, it is surely an owner such as Mandalay – a highly sophisticated entity with ultimate authority over all construction decisions – that is in the best position to prevent violations of the ADA.

The courts have rejected developer arguments to the contrary, including that allowing indemnity claims would encourage developers to hire expert ADA firms and delegate responsibility and liability to them, thus increasing the involvement of ADA experts in the design and oversight of projects.

Courts also reject any attempt by developers to label their claims against architects as “negligence,” “breach of contract” or “breach of warranty,” because at their core each of these claims is still seeking indemnity from the ADA plaintiff’s claims.

While the courts note that architects, contractors and others who play a direct role in the discrimination may themselves be sued by the ADA plaintiffs, the reality is that owners and developers will be targeted as the deepest (if not only) pocket.

Liability for ADA defects ranges from personal and bodily injury, constructive eviction, loss of use of property, and physical injury to real property, including the cost of remediation of the defects themselves. In the Mandalay case, the owner settled with the Department of Justice by agreeing to install retrofits costing more than $20 million before seeking indemnity from the architect.

Project participants potentially liable for ADA defects should consider taking on mitigation efforts.

First, hire vendors with a track record of compliance and competence (if not expertise) in ADA requirements. This may include hiring a third-party reviewer at the design and/or
construction phase for early detection.

Second, all participants should verify that their insurance policies provide coverage for ADA defects. Coverage is available under professional liability policies and some commercial general liability policies with the proper language and endorsements. The insurance should be maintained not only during construction, but for at least several years thereafter — when claims are more likely.

Third, although owners cannot seek indemnity once a discrimination claim is brought, they can file suit before the discrimination claim is brought, seeking damages to retrofit the project and make it compliant. Upon completion or purchase of a project (if not during due diligence), owners should engage a consultant to review ADA features and report any shortcomings.
Fourth, some developers are attempting creative clauses in their contracts to avoid the ban on indemnity. For example, a clause stating that an owner and an architect share 50/50 any liability might hold up under the ADA, because the owner is seeking only partial contribution, not complete indemnity. Such clauses might be helpful, but they cannot be relied upon given the current case law.

Finally, a national legislative solution may be in order. The language of the ADA does not expressly prevent indemnity claims, so the ban on indemnity is a creature of the courts construing the ADA.

Holding the developer primarily or jointly liable is more than enough incentive for compliance. In most construction defect cases where indemnity is allowed, the developer ends up bearing significant liability for the mistakes of others, if only because the contractors and designers have inadequate resources to pay the plaintiff’s claims.

Disallowing developers in the ADA context to recover at least some of the damages from responsible downstream parties seems more punitive than incentivizing.


Eric Grasberger is an attorney in the construction and design practice group of Stoel Rives LLP. Contact him at 503-294-9439 or