District Court in Illinois Holds that Warranties of AIA Doc. A201/CM Incorporated in Owner/Contractor Agreement Written on AIA Doc. A101/CM Even Though Agreement Did Not Expressly Incorporate A201/CM

Resurgence Properties., Inc. v. W.E. O’Neil Construction Co., et. al.,
1995 U.S. Dist. LEXIS 11633 (E.D. Ill. August 11, 1995)

Incorporation by Reference – AIA standard form of agreement between owner and contractor, AIA Document A101/CM, incorporated general conditions, AIA Document A201/CM, by reference even though agreement never specifically identified AIA Document A201/CM. Contractor’s warranty to developer also protects Architect as a third-party beneficiary.

Resurgence, a successor-in-interest to a developer, brought an action against the architect, Daly, and the prime contractor, O’Neil, on a shopping center project. Resurgence alleged that the defendants permitted the use of an unspecified and unapproved backfill material around the foundation walls and column footings of the structure which expanded causing substantial damage to the concrete floor. Daly subsequently filed a cross-claim against O’Neil contending that the general conditions of O’Neil’s contract with the developer (AIA Documents A201/CM and A101/CM respectively) contained a warranty against the use of defective materials and that this warranty also protected Daly as a third-party beneficiary. In response, O’Neil filed a motion to dismiss Daly’s cross-claim on the basis that the contract never expressly incorporated the general conditions (which contained the warranty) by reference and, therefore, the warranty was not part of the contract.

The District Court held that the plain language of AIA Standard Form of Agreement Between the Owner and Contractor (AIA Document A101/CM) manifested the parties intent to incorporate the General Conditions (AIA Document a party protected by the warranty provisions.

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