Minnesota Court Rules Architect-Client Relationship Is Not Per Se Fiduciary

Carlson v. SALA Architects, Inc.
2007 Minn. App. LEXIS 74

The of Minnesota Court of Appeals reversed entry of summary judgment in favor of a purchaser of architectural services, holding, among other things, that the relationship between an architect and its client is not per se a fiduciary relationship. Rather, the Court held that whether a fiduciary relationship exists was a question of fact which was unable to be resolved on summary judgment.

The Carlsons hired SALA Architects, Inc. to design a single family home in the cottage style. A particular architect at SALA, Mulfinger, had expertise in the cottage style. However, most of the work on the Carlson’s project was performed by an architect, Wagner, who had worked as an architect elsewhere, but was not licensed in Minnesota. Frustrated with progress on the project and having spent almost $292,000 in fees with design incomplete, the Carlsons terminated SALA’s contract services and sued for breach of contract and professional negligence.

The Carlson contended that SALA falsely held Wagner out to be a licensed architect in Minnesota, and further complained that Mulfinger, the architect to whom they were drawn, performed only minor work on the project. SALA moved for summary judgment, but the district court held there were genuine issues of material fact which precluded entry of summary judgment in favor of SALA.

The district court then sua sponte awarded summary judgment to the Carlsons, holding that it could not be disputed that SALA held Wagner out to be a licensed architect. The district court held SALA’s conduct was professionally negligent. Further, it held that in misrepresenting Wagner’s status, SALA breached a fiduciary duty owed to the Carlsons, and was therefore required to refund all fees paid by the Carlsons.

On appeal, the Court of Appeals of Minnesota reversed the grant of summary judgment. The Court concluded that genuine issues of fact and credibility existed as to whether SALA’s held Wagner out to be a licensed architect. On the issue of fiduciary duty, the Court observed that while Minnesota statutes made it unlawful for a person to practice architecture without a license, it was acceptable for an unlicensed person to engage in architectural work, so long as a licensed architect is in responsible charge of the work. It held there were genuine issues of fact as to whether Mulfinger had taken the requisite charge of the work.

The Court of Appeals also held that the district court incorrectly assumed, without authority, that the relationship between architect and client is per se fiduciary. Rather the whether a fiduciary duty exits is a question of fact. The Court also noted that since this was a case where the termination occurred at the design stage, it would appear to be a simple breach of contract case. A true negligence claim would appear to relate to stages beyond the design stage, such as the building stage. Accordingly the court suggested that, on remand, the parties and court consider whether any viable negligence claim exists for trial.

Click here to view full opinion as PDF (provided with the permission of LexisNexis).

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