Problem.Dispute.Swimming pool

     Sandra Rodriguez (hereafter "Rodriguez) won several gold medals for freestyle swimming at the Summer Olympics. Her success resulted in several commercial endorsement contracts generating substantial income for her. She decided to build her own home, complete with an Olympic length swimming pool (50 meters) that would allow her to prepare for the next Summer Olympics.

     First she bought a parcel of undeveloped real property. After building her home, she engaged an architect to design the pool. In a written agreement with the architect, the architect agreed to design and prepare specifications for the pool, to oversee construction of the pool, and to issue certificates of satisfaction at stages of the construction if the construction complied with specifications.

     The architect prepared a design and specifications. Specifications included Olympic length dimensions (to the inch) and one inch mosaic tile lines across the width of the bottom of the pool located precisely two feet from each end of the pool. The lines are intended to alert a swimmer to commence a precisely timed turn.

     The architect set forth the design and specifications in a 20-page document containing a blueprint and 27 numbered paragraphs. Some of the paragraphs contained specifications peculiar to this project. Some of the paragraphs contained routine specifications used in most pool construction.  Some of the paragraphs contained boilerplate, including a standard merger clause.

     Rodriguez reviewed the document.  She read the merger clause but did not understand it or ask what it meant.  She approved of the design and signed the document. 

     After soliciting bids for construction of the pool, Rodriguez engaged a contractor to build the pool. In a written agreement with the contractor, the contractor agreed "to build the pool in accordance with the 20-page document furnished by architect attached hereto and incorporated herein by this reference." Rodriguez agreed to pay a total of $150,000 for the work, $75,000 payable after completion of half of the work, upon the architect's issuance of a preliminary certificate of satisfaction, and $75,000 payable upon completion of the work, upon issuance of the architect's final certificate of satisfaction.

     A few days prior to execution of the agreement with the contractor, Rodriguez told her architect that she wanted the pool to include a system of underwater cameras built into the sides of the pool as an aid to her training.  She authorized the architect to act on her behalf in accomplishing this objective. Thereafter, but before Rodriguez and the contractor executed their written agreement, the architect had a telephone conversation with the contractor. The details of the conversation are in dispute: architect claims that contractor agreed to install the camera system at an additional cost of $15,000; contractor claims that it had suggested $15,000 as a possibility but would need to investigate costs before arriving at a final figure. Neither the written agreement between Rodriguez and contractor nor the document furnished by architect mentioned the underwater camera system.

     After execution of the agreement by Rodriguez and contractor, construction proceeded. After 1/2 of the work was completed, the architect, following inspection of the project, issued a preliminary certificate of satisfaction and Rodriguez paid $75,000 to contractor. In inspecting the construction and in issuing the preliminary certificate of satisfaction, architect failed to notice:  (1) the absence of necessary preparation for installation of an underwater camera system; (2) that the length of the pool was 3 inches short of specifications; (3) that the mosaic tile lines at the bottom of the pool were 2 yards from each end of the pool.

     Upon completion of the project, the architect failed to notice the same problems and issued a final certificate of satisfaction. However, Rodriguez did notice the problems and refused to pay the remaining $75,000 to the contractor.

     Threatened with suit by the contractor, Rodriguez has sought your advice. What are her rights and remedies against or her obligations and liabilities to contractor?  The architect has filed bankruptcy and you advise your client that there is little chance of her recovering any money from the architect for either her breach of contract or negligence.  

     You should assume that it would cost $5,000 to move the mosaic tiles to the proper location, $30,000 to install the camera system, and $50,000 to lengthen the pool to proper dimensions. You should also assume that the problems with the pool would not affect the market value of the property should Rodriguez decide to sell the property.