Werner Sabo is a partner at the construction law firm of Sabo & Zahn in Chicago. He is also a licensed architect, having practiced architecture for a number of years prior to establishing his law practice in 1981. He is a member of the AIA and CSI, has been an officer and director of the Chicago Chapter AIA, President of the Chicago Chapter, Construction Specifications Institute, and writes a monthly construction law column for The Construction Specifier. He is also a founding member of the Society of Illinois Construction Attorneys. In 1997, the AIA elected him to the College of Fellows. His book, Legal Guide to AIA Documents, published by Aspen Publishing, is in its fourth edition. Mr. Sabo is also a construction arbitrator and mediator for the American Arbitration Association and is admitted to the federal trial bar.
James K. Zahn is a licensed architect and attorney in the State of Illinois. He is a partner in the law firm of Sabo & Zahn, concentrating in construction law and representing owners, contractors, architects, developers, engineers and other parties in the construction process. He received a Bachelor of Architecture from the University of Illinois and his JD from Chicago-Kent College of Law. Mr. Zahn is a member of the American, Illinois and Chicago bar associations, American Institute of Architects, Association of Licensed Architects, Construction Specifications Institute and has NCARB Certification. He was a past president of the Illinois Council of the American Institute of Architects and is a Fellow of both the American Institute of Architects and the Association of Licensed Architects. He is currently a resource member of the AIA National Documents Committee.
Shawn E. Goodman is a partner with Sabo & Zahn. He concentrates in litigation of all types. A graduate of the Northwestern University School of Law, he was admitted to the bar 1993. Since that time, he has practiced before local and outlying circuit courts, U.S. District Court, and various administrative tribunals. He has acted on behalf of a variety of clients including small to mid-sized businesses and individuals. He has handled all facets of litigation from pleading to motion practice to discovery to trial. The cases with which he has been involved are varied and wide-ranging and include personal injury, breach of contract, criminal defense, commercial disputes, and consumer fraud. He has represented both plaintiffs and defendants and has practiced before juries as well as judges. Mr. Goodman has also worked on appeals and has assisted in the drafting of appellate briefs.
A recent bankruptcy case discusses copyright issues in the context of an adversary proceeding to have certain debt declared to be non-dischargeable. In re Olson, 2005 WL 993026 ((Bankr.N.D.Iowa) April 21, 2005).
Olson was a developer who met Dr. Sneller, president of Integrated. Sneller wanted to have a new clinic constructed, and Olson convinced Dr. Sneller to hire him to manage the project. During the initial stages, Olson obtained a set of architectural plans, which he ultimately had copied without permission. This court proceeding followed Olson's bankruptcy. Dr. Sneller convinced the court that Olson had acted fraudulently concerning the architectural plans ....
Highlights from the case:
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Sometime in November 2001, Olson took Dr. Sneller to Correctionville in the evening and gave him an after-hours tour of the clinic. Olson had with him a few sheets of architectural drawings, including a floor plan and elevation views. The latter drawings showed what the outside of the building would look like on each side. Olson represented to Dr. Sneller that he owned the full set of blueprints and that the plans were those he had used in construction of the Correctionville clinic. Olson told Dr. Sneller that it would take from $50,000 to $100,000 in architectural fees to design "from scratch" the type of medical building that Dr. Sneller wanted to have built. Olson represented that Dr. Sneller would be able to use the full set of blueprints for his clinic, saving a significant sum of money. Olson said the only necessary changes would be to the inside walls, which would cost Dr. Sneller "next to nothing" in architectural fees.
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In about late 1999, Olson obtained architectural drawings for a clinic that had been built in Mapleton. Olson testified that he obtained the plans from a Dr. Hesse, but the evidence did not reveal Dr. Hesse's connection to the clinic or the specific circumstances of Olson's acquisition of the plans. Olson wanted to use the plans for the clinic he was planning to build in Correctionville. He tried to have copies of the plans made at Sioux City Blueprint. He was told that the plans could not be copied because they were owned by the architectural firm now known as Cannon, Moss, Brygger & Associates.
Olson met with Jim Ruble and Jim Brygger of the firm. Olson told the architects that he liked the floor plan of the Mapleton clinic and wanted to use it in the clinic he was planning to build in Correctionville. Ruble and Brygger told him that their design would have to be modified before Olson could use it. They explained that the clinic was designed for a particular client, and that the design could not be used directly in another building. Ruble testified that controls over the copying of blueprints are matters of safety concerns, ethical conduct toward the previous client, and protection of the architect's copyrighted interest in the work.
Olson expressed his intention to omit part of the Mapleton clinic design in the design for his building in Correctionville. Ruble's firm made a proposal to make the modifications for Olson for approximately $30,000. This amount was more than Olson wanted to spend.
Olson then took the Mapleton clinic blueprints to Wil Gerking, a draftsman. Olson asked Gerking to make changes to the plans for use in the Correctionville clinic. Olson led Gerking to believe that Olson's firm owned the prints. Gerking was initially reluctant to make the changes, because he was aware of copyright law. Gerking was persuaded that he would not be "plagiarizing" the drawings, because he would be making substantial changes to the plans. Olson paid Gerking $500.00 to do the drawings.
Some time after making the drawings for Olson, Gerking was contacted by an attorney for the Cannon, Moss, Brygger firm. The firm claimed that Gerking's use of the Mapleton clinic blueprints was an infringement of its rights in the prints. Gerking testified that the firm initially sought to impose on him a $20,000 "fine." The matter was resolved without a lawsuit.
Dale McKinney is an architect with InVision Architecture. McKinney first met Olson when McKinney was asked by St. Luke's to do some work at the Correctionville clinic. Olson later asked McKinney to be the design architect for Dr. Sneller's clinic. In late 2001, McKinney made a verbal agreement with Olson to do the work for $20,000. A written agreement, using an American Institute of Architects form, was entered into on January 11, 2002. The agreed compensation for the architect's services was a lump sum of $32,000. Exhibit 28, Article 1.5.1. Olson was designated "construction manager" in the contract document. McKinney testified that under an AIA contract, the architect owns the architectural plans for a project, unless otherwise specified.
When he first met with McKinney about the Sioux City project, Olson brought two pages of drawings with him. See Exhibit 29, pages 2, 3. Olson testified that these two pages were the work he had paid Wil Gerking to do. McKinney understood from Olson that the drawings were based on plans for a building in Ida Grove and that Wil Gerking had modified the plans for use in constructing the clinic in Correctionville. Olson hoped to use the same plans for the clinic in Sioux City. McKinney was led to believe that Olson owned the plans. He later learned that another architect was involved in the design of the plans.
The architectural work began with the two pages provided by Olson, a floor plan and a sketch of part of the floor plan drawn to a different scale. McKinney's firm used these drawings to produce a full set of architectural drawings to be used in the bidding and building processes. The architectural work required much input from Dr. Sneller as the owner. McKinney stated that communication was accomplished more efficiently by dealing directly with Dr. Sneller, rather than going through Olson. He believed Olson's involvement delayed the project.
Olson told Dr. Sneller that he had taken a full set of blueprints to the architect to make changes to the floor plan. In a letter dated January 8, 2002, Olson again represented to Dr. Sneller that his clinic would be based on the architectural drawings used in the Correctionville clinic. Exhibit 10.
On February 26, 2002, Dr. Sneller discovered that another architect was involved with the architectural drawings that he had been shown by Olson. He believed Olson was using "plagiarized" drawings. Dr. Sneller asked InVision to redesign his clinic. He did not explain to McKinney why he wanted the changes. The locations of footings and entryways were changed. The building shape was changed from an L-shape to a squared-off shape. Architectural fees for the project ultimately totaled approximately $62,000.
Dr. Sneller believed Olson had lied to him and could no longer be trusted. On March 1, 2002, Dr. Sneller fired Olson from the job. Dr. Sneller hired his father, Elmer Sneller, to act as project manager and paid him $50,000. Elmer Sneller has worked for many years as an electrical contractor.
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Although it is unnecessary to this decision to identify precisely the architectural drawings shown to Dr. Sneller during the tour of the Correctionville clinic, the court finds they were something more than the two pages prepared by draftsman Wil Gerking. A reasonable inference is that the drawings were those prepared by the Cannon, Moss architectural firm for the Mapleton clinic. Olson had possession of the Mapleton clinic drawings. The only evidence that Olson acquired other drawings prior to November 2001 was the testimony relating to Gerking's work. Even assuming the drawings were not those for the Mapleton clinic, the court finds that Olson misrepresented the manner in which existing architectural drawings would be used to construct the Multi Care clinic.
Olson knew from his discussions with Jim Ruble that architects retain a controlling interest in their drawings. Ruble had explained to Olson that an architect may not copy one client's design for use in another client's building. Olson knew the use of architect's drawings in the manner he was proposing to Dr. Sneller would be unethical, if not in violation of copyright law.
Olson also knew that modification of the existing drawings for use in another building would involve a substantial cost, in addition to the costs for design changes and change orders. When he budgeted $20,000 for architectural prints, Olson represented this amount was a high estimate of what would be needed to pay for the design of an added section and future change orders. Although he had taken only two pages of drawings to architect McKinney, Olson told Dr. Sneller that he had given the architect a full set of blueprints.
Olson made this series of misrepresentations regarding the architectural drawings in order to deceive Dr. Sneller. Olson made false statements regarding his rights in the drawings in order to induce Dr. Sneller to enter into the project management agreement for the Multi Care clinic. Olson made other false statements to conceal the manner in which the clinic was actually being designed and to cover up his prior false statements.
There was no evidence that Dr. Sneller had reason to believe Olson's representations regarding the architectural drawings were false. The court concludes that Dr. Sneller justifiably relied on these representations to his detriment.
The misrepresentations were material to the contract. ... Dr. Sneller was led to believe he would save costs and gain efficiency by use of the architectural drawings. He fired Olson from the project when he came to believe that another architect's work was involved in the design of the drawings. The court concludes Olson obtained $152,000 from Dr. Sneller by fraud. Olson's debt should be held nondischargeable to this extent.
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The court concludes that compensatory damages of $152,000 should be excepted from Olson's discharge. This amount is approximately 33 percent of the total award for compensatory damages. Thirty-three percent of the awards for attorney fees ($10,500) and punitive damages ($1,500,000) is $498,465. The court will find this amount nondischargeable as well.
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