Tag Archives: standard of care

COMPARATIVE FAULT APPLIED IN OWNER’S LAWSUIT AGAINST CONTRACTOR AND ENGINEER

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There is nothing like a good old-fashioned dispute between an owner and its general contractor and design professional relating to construction and design defects where both parties have a role in the owner’s damages.  There are arguments that both the general contractor and design professional substantially contributed to the defects and damages.  Are the contractor and design professional jointly and severally liable for the owner’s damages?  Or, does comparative fault apply where the trial of fact allocates the contractor’s and engineer’s percentage of fault for the defects and damage?    A recent case found that comparative fault applied such that the trier of fact, in this case the judge, could allocate damages based the judge’s finding of the parties’ percentage of fault.  (For more information in comparative fault, please check this article.).  Comparative fault is not what an owner ideally wants because joint and several liability would be preferred.  However, this is what the contractor and engineer would want since their liability for damages is predicated on their percentage of responsibility as opposed to being liable for all of the damages.

In Broward County, Florida v. CH2M Hill, Inc., 45 Fla. L. Weekly D1736a (Fla. 4th DCA 2020), a public owner hired an engineer for airport improvements that included a taxiway to be designed and constructed in accordance with the Federal Aviation Administration’s design requirements.   The public owner also hired (i) a program manager to serve as its on-site representative and (ii) a separate engineering firm to provide materials testing and inspection services.  The public owner also hired a contractor to construct the taxiway.

Prior to substantial completion of the taxiway, the public owner discovered indentations in the surface of the taxiway (referred to as rutting).  This discovery prompted the public owner to investigate.  The public owner directed the contractor to mill away two inches of asphalt and install new asphalt.   The contractor achieved substantial completion in September 2008 and final completion in November 2008.  The contractor then submitted its final payment application to the public owner.  The public owner notified the contractor that it would retain money to deal with repairs associated with the indentations in the surface of the taxiway.  The public owner hired a new engineer to design the repairs.  The repair design was more robust (better) than the original engineer’s design because the repair engineer believed the new design was necessary to achieve a 20-year lifespan for the taxiway. A new contractor performed the repairs.

The contractor sued the public owner for nonpayment.  The contractor also sued the engineer for professional negligence in the design of the taxiway.    The pubic owner counter-sued the contractor for breach of contract and sued the engineer for breach of contract and indemnification.  The public owner asserted that the contractor performed defective construction and the engineer committed errors, omissions, and defects in the design and was obligated to indemnify the public owner for liability arising out of the design.  The public owner also sued its program manager (on-site representative) and testing engineer; these two parties settled prior to trial.

At trial, the public owner’s expert testified that both the contractor and engineer contributed to the indentations in the surface of the taxiway.  The expert testified that the engineer’s design deviated from the Federal Aviation Administration’s requirements and was doomed to fail such that if the contractor complied with the design, it would still fail.  The expert further testified that while the contractor contributed to the indentations as it failed to construct subgrade per the engineer’s design, it was to a lesser contributing factor than the engineer.

The engineer’s expert testified that the indentations were caused by undercompaction performed by the contractor.  The expert further testified that the public owner’s program manager violated its standard of care by allowing the contractor to deviate from the engineer’s original design in numerous ways.

The contractor’s expert testified that the indentations were caused by the design and undercompaction.

The trial court found that both the engineer and the contractor’s breaches were the proximate cause of the redesign of the taxiway.  The trial court also found that the public owner’s program manager, which had settled prior to trial, was also liable.  The trial court further found that public owner’s total damages were $6,2703,303 of which $725,000 was paid to the public owner pre-suit by the program manager and testing engineer.  After deducting this amount from the total damages, the trial court allocated damages as follows: (1) 60% was allocated to the non-party program manager (that had settled pre-suit); (2) 25% was allocated to the contractor; and (3) 15% was allocated to the engineer.   The public owner appealed the allocation in the final judgment.  The public owner argued that the trial court should not have apportioned liability at all because comparative fault does not apply in breach of contract cases.  Instead, the public owner contended that the trial court should have found that the engineer and contractor were jointly and severally liable for the damage (indentations) because their separate contractual breaches caused a single, indivisible injury.

The Fourth District Court of Appeal disagreed with the public owner concluding that Florida Statute s. 768.81 dealing with comparative fault authorized the trial court to allocate fault.  While comparative fault under s. 768.81 deals with negligence actions, it defines a negligence action as a “civil action for damages based upon a theory of negligence, strict liability, products liability, professional malpractice whether couched in terms of contract or tort, or breach of warranty and like theories. The substance of an action, not conclusory terms used by a party, determines whether an action is a negligence action.”  Broward County, Florida, supra, quoting Fla. Stat. s. 768.81.

The public owner’s claim against the professional engineer was predicated on the engineer breaching a contractual standard of care that required it to design the taxiway pursuant to the Federal Aviation Administration’s standards.  Although the public owner’s claims against the engineer were couched as a breach of contract, it was based on a theory of professional negligence (violation of a standard of care) warranting the application of comparative fault.

However, the public owner’s claims against the contractor were not based on a professional negligence theory.  Nonetheless, the Fourth District held that comparative fault did apply:

Applying a holistic approach to analyzing the complaint, we conclude that the contract action against [the contractor] fell under the umbrellas of the ‘negligence action’ against [the engineer], so that the circuit court’s allocation of fault was appropriate.  After all, [the contractor] was to perform the contract according to specifications designed by [the engineer], so the causes of action against each were necessarily intertwined.  To prove its case against [the contractor], the public owner was required to prove that [the contractor’s] ‘breach of its contractual responsibilities was a substantial factor in causing the [public owner’s] extensive damages.’   This is compatible with the concept of ‘fault’…and parallels the tort notion of a violation of a duty of care that is the proximate cause of damages.  Based on the evidence, the circuit court properly allocated fault among all actors whose conduct substantially contributed to the [public owner’s] damages.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

DESIGN PROFESSIONAL NEEDS A LICENSE TO BE SUED FOR PROFESSIONAL NEGLIGENCE

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“With regard to claims for professional negligence, the Florida Supreme Court has explained that ‘where the negligent party is a professional, the law imposes a duty to perform the requested services in accordance with the standard of care used by similar professionals in the community under similar circumstances.’” Sunset Beach Investments, LLC v. Kimley-Horn and Associates, 42 Fla. L. Weekly D130a (Fla. 4th DCA 2017) quoting Moransais v. Heathman, 744 So.2d 973, 975-76 (Fla. 1999).

 

When it comes to professional negligence, two things are important:

1)  the person being sued is a professional under the law (person has special education, training, experience, and skill) and

2)   the standard of care for that professional (e.g, licensed, professional engineer).

  

In a recent case, an engineering intern—not, a licensed, professional engineer–was sued for professional negligence.   The Fourth District Court of Appeal held that an engineering intern is not a person that can be sued for professional negligence, unlike a licensed, professional engineer. Sunset Beach Investments, supra.

  

The Fourth District explained that an engineering intern, by way of example, is not a professional because an engineering intern does not maintain a license.  If the court treated an engineering intern as a professional than it would be walking down a slippery slope when it came to who is a professional and who is not.   Instead of walking down that slippery slope, the court stated: “At a minimum, in a profession where a license exists, the existence of a license is a valid barometer for determining whether a person is classified as a professional. “ Sunset Beach Investments, supra.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

 

 

 

DESIGN PROFESSIONAL’S STANDARD OF CARE AND THE FIRST COST DEFENSE

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Design professionals entering into contracts need to absolutely understand the standard of care they are agreeing to in the contract. The reason being is that a design professional can agree to a heightened standard of care making them contractually liable for breaches based on an ultra-technical standard of care that cannot realistically be met.

 

Typically, the standard of care of a design professional is: “[P]rofessionals rendering professional services are to perform such services in accordance with the standard of care used by similar professionals in the community under similar circumstances.” Trikon Sunrise Assocs., LLC v. Brice Bldg. Co., 41 So.3d 315, 318 (Fla. 4th DCA 2010). Yet, “if the professional contracts to perform duties beyond those required by ordinary standards of care, the quality of that performance must comport with the contractual terms.” CH2M Hill Se., Inc. v. Pinellas County, 698 So.2d 1238, 1240 (Fla. 2d DCA 1997).

 

The School Board of Broward County, Florida v. Pierce Goodwin Alexander & Linville, 39 Fla. L. Weekly D590a (Fla. 4th DCA 2014), is a new case that discusses the significance of the standard of care the architect agrees to in conjunction with another concept known as “the first cost” defense. Both the standard of care and the first cost defense are terms and concepts that design professionals need to be familiar with!

 


In this case, the architect was retained to design changes to existing buildings and design new buildings for a public school. The public owner retained the services of a separate peer reviewer to monitor and offer opinions on the design. The architect’s initial phase was to prepare preliminary designs for bidding purposes. The peer reviewer commented on the design including that a third floor balcony needed a staircase as an emergency fire exit in order to be code-compliant. The architect disagreed and suggested an alternate fire code solution. The architect thought that the public owner, which had final authority to determine the correct interpretation of the code, orally agreed with its alternate solution and the plans were submitted for bidding.

 

After construction commenced, the public owner determined that the architect’s alternate solution was not code-compliant and that the staircase suggested by the peer reviewer needed to be constructed. This resulted in a revision to the plans and a significant change order. As with any change order, this change resulted in the owner paying more for the construction. Other change orders due to design changes also increased construction costs. The public owner sued the architect to recoup these costs.

 

Two important issues were raised. The first issue was the appropriate standard of care of the architect–did the architect breach its standard of care by preparing a design that required changes to make it code-compliant. The second issue is the defense known as the first cost defense, meaning that the architect is not responsible for the costs of items left out of its original design since the owner should always be responsible for that cost based on the cost of that item if that item were included in the original design. If the cost of that item (i.e., steel or concrete) increased from the time of the original design, then the architect could be responsible only for the price increase (but not the cost of the item at the time of its original design). Or, if the omission of that item resulted in a delay, the architect could be responsible for the delay.

 

1) Standard of Care

 

The architect in this case wanted the typical standard of care jury instruction that would state that the architect is liable if it failed to perform services in accordance with the standard of care used by similar professionals under similar circumstances. The public owner, however, wanted a breach of contract jury instruction that would make the architect liable for breaching a contractual standard of care provision, in this case, for preparing a design that was not code-compliant. The public owner wanted this because this is what the architect agreed to. The contract provided:

 

“2.1.3 As to all services provided to this Agreement, the Project Consultant [the architect] shall furnish services by experienced personnel and under the supervision of experienced professionals licensed in Florida and shall exercise a degree of care and diligence in the performance of these services in accordance with the customary professional standards currently practiced by firms in Florida and in compliance with any and all applicable codes, laws, ordinances, etc. . . .

2.1.5 All professional design services and associated products or instruments of those services provided by the Project Consultant shall: .1 Be in accordance with all applicable codes, laws, and regulations of any governmental entity, including, but not limited to, [list of regulatory entities] with the Owner serving as the interpreter of the intent and meaning of . . . any other applicable code.”
The School Board of Broward County, supra.

 

Thus, the public owner wanted a jury instruction that would render the architect liable if its initial plans were not code compliant because the contract provided that the architect’s standard of care is to ensure its drawings comply with all codes, etc.

 

The Fourth District agreed with the owner and maintained:

 

“Where an express provision within a professional services contract provides for a heightened standard of care, however, the professional must perform in accordance with the terms of the contract….In other words, an architect can contractually commit to perform under a standard of care higher than the common law standard.
***
“We are satisfied that the parties unambiguously allocated to the architect the risk for costs and expenses attributable to design plans that were not code-compliant.”
The School Board of Broward County, supra.

 

*The lesson is that design professionals need to be careful and truly consider what they agree to as they can impose duties upon themselves that are more stringent than what the law otherwise imposes. This risk needs to be appreciated because more often than not architect / design professional do agree to perform a service (prepare a design) that is code-compliant.

 

2) First Cost Defense

 

Again, under the first cost defense, the architect is not responsible for the costs of items left out of its original design since the owner should always be responsible for that cost based on the cost of that item if that item were included in the original design. As the Fourth District explains:

 

“For example, if the school board would have paid a cost for construction in accordance with the code-compliant final design plans, an award of a COI [change order item] expense against the architect attributable to a change in the initial design plans for the same cost would put the school board in a better position than if the design services had been performed as agreed. Stated another way, if there had been no change between the initial plans drawn for bidding by contractors and the final construction plans, the school board would have been solely responsible for paying all construction expenses incurred for the renovation.” The School Board of Broward County, supra.

 

The Fourth District relied on and references a hypothetical stated by the Fifth District in Lochrane Engineering, Inc. v. Willingham Realgrowth Inv. Fund. Ltd., 552 So.2d 228 (Fla. 5th DCA 1989) to explain the first cost defense:

 

“[I]f an engineer negligently designed a 1000 square feet drain field, and it was subsequently determined that an adequate design required a 1200 square feet drain field, the owner, not the engineer, should pay for the additional 200 square feet of drain field because the necessity for the additional 200 square feet of drain field was caused by the owner’s need to dispose of the sewerage produced. However, the court then observed that this does not mean an engineer is never liable for damages that properly flow from his professional negligence. The court went on to say, if the cost of later installing the additional 200 feet of drain field costs more than it would have cost if installed as part of the original undertaking, the engineer would be liable for the difference as well as any other consequential damages. The School Board of Broward County, Florida, supra (internal quotations and citations omitted).

 

*The lesson is that even if an architect erred, the owner cannot obtain a windfall by virtue of that error and be placed in a better position because of that error.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

A GENERAL CONTRACTOR NEEDS TO UNDERSTAND CERTAIN LEGAL DOCTRINES BEFORE SUING A STATE (INCLUDING AGENCY OR SUBDIVISION) AND DESIGN PROFESSIONAL THAT IT DID NOT HIRE

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The recent Florida district court case, Posen Construction, Inc. v. Lee County, et al., 2013 WL 375430 (M.D.Fla. 2013), ruling on various motions to dismiss, is an interesting case that discusses two important doctrines. In this case, a roadway contractor constructing a road project for Lee County sued Lee County and Lee County’s design professionals (hired by the County) for delays and additional costs it incurred in the performance of its work. This case, among other things, discusses a state’s (inclusive of a state agency or subdivision) sovereign immunity for claims for additional work (absent a change order) and the duty of care for purposes of a negligence claim that a design professional owes to a general contractor (when the general contractor did not hire the design professional).

 

The first doctrine is known as the Miorelli doctrine which refers to a state’s (or its agencies or subdivisions) soverign immunity for extra-contractual work claims that arise on a construction project. The Miorelli doctrine is based on the Florida Supreme Court case, County of Brevard v. Miorelli Engineering, Inc., 703 So.2d 1049 (1998). The Miorelli doctrine, as maintained by the Posen court, has evolved into the following doctrine: “A claim for damages predicated on work ‘totally outside the terms of the contract’ is barred by the doctrine of sovereign immunity [unless memorialized in a written executed change order], whereas damages caused by extra work done at the state’s behest and in furtherance of contractual covenants (express or implied) are potentially recoverable.” Posen Construction, supra at *3 citing Miorelli, 703 So.2d at 1051. In applying the Miorelli doctrine, the Posen court expressed:

 

“To be clear, if Posen’s [contractor] claim is predicated on work ‘totally outside the terms of the contract’ it will fail by application of the Miorelli decision. On the other hand, claims for damages caused by additional work performed in furtherance of either express or implied covenants of the written contract  fall within Florida’s implied waiver of sovereign immunity…”

 

If a contractor is suing a state (or a state agency or subdivision) for additional costs that are not memorialized in a written executed change order, it is important that the contractor is aware of the Miorelli doctrine in order to best craft arguments to potentially recover the additional costs. The reason being is that the contractor can almost be certain that the state will raise the Miorelli doctrine through the motion to dismiss and/or summary judgment stages to establish that the state has sovereign immunity for such claims and damages. The key is that the argument should center on the additional costs being covered by the expansive scope of work set forth in the contractor’s contract with the state versus constituting work that is materially different than what the contractor bargained for.

 

The second doctrine is known as the A.R. Moyer doctrine which refers to a design professional’s duty of care to a general contractor on a construction project (when there is no contractual privity between the contractor and design professional). The A.R. Moyer doctrine is based on the Florida Supreme Court case, A.R. Moyer v. Graham, 285 So.2d 397 (Fla. 1973). In A.R. Moyer, a contractor sued a supervising architect in negligence. The Florida Supreme Court in A.R. Moyer maintained:

 

“Each of the [following] conditions would present a cause of action [in negligence against a supervising architect or engineer]: (a) supervising architect or engineer is negligent is preparation of plans and specifications; (b) the supervising architect or engineer negligently causes delays in preparation of corrected plans and specifications; (c) the supervising architect or engineer negligently prepared and negligently supervised corrected plans and specifications; (d) the supervising architect or engineer failed to award an architect’s certificate of completion of the project; (e) the architect or engineer was negligent in exercise of supervision and control of contractor…” Posen Construction, supra, citing A.R. Moyer, 285 So.2d at 402.

 

Stated differently, the design professional must have a supervisory role or element of control (also referred to as a close nexus to the contractor) in order for the design professional to owe a legal duty to the contractor. The Posen court clarified that “supervising architects and engineers are liable for the foreseeable injuries to general contractors proximately caused by their negligent conduct even where there is an absence of contractual privity, whereas nonsupervising engineers and architects—irrespective of when they are hired—will not be.” Posen Construction, supra, at *12.

 

If a contractor is suing a design professional in negligence, it is important for the contractor to understand the A.R. Moyer doctrine and that the required legal element of “duty” is based on the supervisory status of the architect or engineer. This will allow the contractor to best phrase legal theories knowing that the design professional will raise this doctrine at the motion to dismiss and/or motion for summary judgment stages. However, absent this supervisory status or close nexus between the design professional and general contractor, the design professional will not be deemed to owe a legal duty to the contractor.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

A CONSULTING ENGINEER / ARCHITECT’S PROTECTION FROM A NEGLIGENCE CLAIM BY A CONTRACTOR

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The case of Recreational Design & Construction, Inc. v. Wiss, Janney Elstner & Associates, Inc., 2011 WL 5117163 (S.D.Fla. 2011), is a recent case discussing whether an independent engineering firm hired as a consultant by an owner can be liable to the general contractor for professional negligence under Florida law.  In this case, the City of North Miami Beach (“City”) hired a contractor to perform all design and construction services for a water slide project (“Contractor”).  The City also hired a separate engineering firm to evaluate and perform inspections of the contractor’s work (“Engineer”).  The engineering firm hired another engineering firm as a subconsultant to perform the engineering inspections (“Subconsultant”).

 

 

The Subconsultant issued a report to the Engineer that was provided to the City explaining that the water slide the Contractor designed and started to construct was structurally unsafe.  The report recommended repairs to be implemented on the slide.  The City rejected the Contractor’s work based on the Subconsultant’s recommendation and required the Contractor to implement the repairs before completing the work.

 

 

The Contractor, instead of suing the City, sued the Engineer and Subconsultant for professional negligence (also known as professional malpractice) to recover its costs in reconstructing the slide and implementing the repairs recommended to the City.  Both the Engineer and Subconsultant moved to dismiss the Contractor’s complaint arguing that they did not owe a duty of care to the Contractor; therefore, they could not be liable in negligence to the Contractor under the law.  The Southern District of Florida agreed with the Engineer and Subconsultant and dismissed the Contractor’s complaint with prejudice.

 

 

In order to be liable for professional negligence, a plaintiff must prove the following elements against the defendant-professional: 1) the defendant owed a duty of care to the plaintiff; 2) the defendant breached its duty of care; and 3) the breach of the duty of care proximately caused damages to the plaintiff.  See Recreational Design & Construction, 2011 WL at *2 citing Moransis v. Heathman, 744 So.2d 973, 975 n.3 (Fla. 1999).   The element of duty, however, is a question of law in Florida and must be determined by the court before a negligence case proceeds to the jury or trier of fact.  See Wallace v. Dean, 3 So.3d 1035, 1046 (Fla. 2009).

 

The Contractor relied on the Florida Supreme Court’s ruling in A.R. Moyer, Inc. v. Graham, 285 So.2d 397 (Fla. 1973), in arguing that the Engineer and Subconsultant owed the Contractor a duty to perform its work and issue recommendations to the City with reasonable care and due diligence.  In A.R. Moyer, the Florida Supreme Court held that a general contractor can maintain a cause of action against a supervising architect for the architect’s negligent performance of a contractual duty (even though the contractor has no contractual privity with the architect).  Particularly, the Florida Supreme Court found that the following circumstances would present a professional negligence cause of action by the contractor against a supervising architect or engineer:

 

“(a) supervising architect or engineer is negligent in preparation of plans and specifications; (b) the supervising architect or engineer negligently causes delays in preparation of corrected plans and specifications; (c) the supervising architect or engineer negligently prepared and negligently supervised corrected plans and specifications; (d) the supervising architect or engineer negligently failed to award an architect’s certificate upon completion of the project; (e) the architect or engineer was negligent in exercise of supervision and control of contractor.”  A.R. Moyer, 285 So.2d at 402.

 

 

Of importance, the “professional defendant [in A.R. Moyer] was an architect whose responsibilities on the relevant project were to prepare the designs and plans for the project, approve the overall structural components or framework for the project, and supervise the general contractor’s execution of those plans, including having the authority to halt the contractor’s work.”   Recreational Design & Construction, 2011 WL at *4.   In other words, A.R. Moyer dealt with more of a traditional architect or engineer that, among other things, served as the architect / engineer-of-record for the project and had detailed contract administration services that enabled them to make decisions that could effect the contractor, which is why the Court described the professional as a supervisory architect or engineer.

 

 

But, in Recreational Design & Construction, the Engineer and Subconsultant, were really nothing more than a consultant providing expert-related services issuing recommendations, advice, or suggestions to the City in which the City could accept or reject.  The Engineer and Subconsultant did not serve as the engineer-of-record.  They did not design the plans for the City’s project. They did not issue specifications for the project.  They were not performing supervision to ensure that the Contractor’s construction complied with their design (since they were not the designer).  And, they did not have authority to halt the construction of the project or issue corrective details directly to the Contractor.  Instead, as previously mentioned, their services were truly within the realm of consulting services in which it was up to the City to determine how it wanted to utilize any suggestions, advice, or recommendations.   For these reasons, and because the role of the Engineer and Subconsultant in this case was substantially different than the role of the architect in A.R. Moyer, the Southern District held they did not owe a duty of care to the Contractor.  See also McElvy, Jennewein, Stefany, Howard, Inc. v. Arlington, Elec., Inc., 582 So.2d 47 (Fla. 2d DCA 1991) (finding that architect did not owe duty to subcontractor because architect was required to issue advice to owner regarding interpretation of architect’s design, but it was the owner responsible for making the ultimate decision based on the advice of the architect).

 

 

An architect or engineer that is serving as the architect / engineer-of-record for a construction project may want to implement certain language in their contract with the owner that while it will render certain advise, recommendations, or suggestions to the owner regarding its design and specifications and interpretations thereof, it is the owner that is required to render the ultimate decision regarding the advice, suggestions, and recommendations.  This way, if the contractor does pursue a professional negligence claim against them, they can argue they were not a supervisory architect or engineer and should not be deemed to owe a duty to the contractor because it was the owner that made the ultimate decision that affected the contractor.

 

 

Also, owners on construction projects sometimes hire other consultants or experts to assist in the construction of their project.  For instance, sometimes owners hire a building envelope consultant or a glazing consultant, etc.  These consultants sometimes worry about the contractor asserting a negligence claim against them based on their advice, suggestions, and recommendations made to the owner.  These consultants, however, should be able to rely on the arguments in Recreational Design & Construction to support they do not owe a duty to the contractor.  These consultants can also employ the same contractual language suggestions above so that their contract specifically expresses that it is the owner that is required to act on the advice, suggestions, and recommendations of the consultant so that it remains understood that the owner, and not the consultant, has ultimate control over the contractor’s work.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

CLARIFYING TERMS OF A RELEASE AND STANDARD OF CARE WHEN SUING A DESIGN PROFESSIONAL — BOTH TOUCHED UPON IN NEW FLORIDA CASE

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The recent decision of Alderman v. BCI Engineers & Scientists, Inc., 2011 WL 3862094 (2d DCA 2011), implicitly underscores two important concepts.  First, it underscores the importance of clarifying releases of claims applicable to construction issues, especially if a party wants to be protected from the release down the road.  Second, it underscores what is required to hold a design professional—engineer or architect—liable for breach of contract.

 

 

Both of these concepts are important for different reasons.

 

 

A release is important because if a party (or non-party as Is the case in Alderman) wants to be truly protected by the language of a release, the release should be unambiguous.  Any ambiguity will simply foster a potential argument that the release does not protect the party being sued or the types of claims being asserted.

 

 

It is important to understand the legal burden / standard associated with finding a design professional liable for breach of contract.  Not understanding this burden could prevent otherwise colorable claims for design errors or omissions, etc. against a design professional from properly being asserted.

 

 

In Alderman, an owner’s residence sustained settlement damage  believed to have been the result of a sinkhole.  The owner retained an engineer to investigate the sinkhole and corresponding settlement damage.  The owner and the engineer entered into a contract for the engineer to perform a geotechnical investigation which included an inspection, testing, and the preparation of a report with the findings and appropriate repair protocol.  In the report, the engineer recommended for a contractor to perform subsurface compacting grouting to stabilize the residence against further settlement.  The report also recommended for the engineer to be retained during the remediation work to provide monitoring and oversight.

 

 

Based on the report, the owner hired a foundation contractor to perform the subsurface compaction grouting. The engineer’s budget for the monitoring and oversight during the repair work was approved by the owner’s homeowner’s insurer.  (The owner, like most owners with a homeowner’s insurance policy, was looking to recoup covered costs under the policy associated with the settlement damage/problem resulting from the sinkhole.)

 

 

During the grouting, septic tanks ruptured causing sewage to seep into the residence.  Additionally, once this grouting work was fully completed, the residence continued to experience settlement damage.

 

 

The owner settled the sinkhole claim with his property insurer and gave the insurer a release.

 

 

The owner, however, contended that the subsurface compaction grouting recommended by the engineer was not a suitable recommendation (and/or was not monitored correctly) since the work did not remedy the settlement problem.  The owner sued the engineer for negligence arguing that the engineer was negligent in the supervision and monitoring of the remediation work.  It also sued the engineer for breach of contract arguing that the engineer failed to recommend a suitable remediation protocol.   The trial court granted summary judgment in favor of the engineer as to the owner’s negligence and breach of contract claims and the owner appealed to the Second District Court of Appeals.

 

 

A. The Owner’s Negligence Claim Against the Engineer

 

 

The trial court granted summary judgment in favor of the engineer finding that the release the owner gave to his property insurer to settle the sinkhole claim was broad enough to cover the engineer.  The release the owner gave to his property insurer included the following language:

 

 

“1. . . . By executing this General Release, Releasor . . . does hereby fully and completely release and discharge STATE FARM FLORIDA INSURANCE COMPANY (and all parent and subsidiary companies affiliated with it in anyway [sic]), hereinafter referred to collectively as “Releasees,” from any and all current or future claims, rights[,] and actions whatsoever, whether ripe or contingent, arising in relation to the filing of insurance claims by Releasor relative to or associated with insurance coverage for the [Alderman residence].

 

2. NOW THEREFORE in consideration of the payment [of the settlement amount], the receipt and sufficiency of which is hereby acknowledged, the Releasor agrees as follows:

(a) The Releasor does hereby . . . release, discharge, acquit, and indemnify Releasees, and their officers, directors, shareholders, executors, administrators, insurers, insureds, suppliers, distributors, attorneys, contractors, subcontractors, successors, privies, assigns, associations, parents, subsidiaries, holding companies, or partnerships of and from any and all claims . . . whatsoever including but not limited to any coverage dispute, complaints regarding claims handling or bad faith, or the termination of insurance of the Property by the Releasees which the Releasor now has or which may hereafter accrue on account of or in any way growing out of any and all known or unknown, foreseen and unforeseen, property damage and any consequences of the activities listed in paragraph 1 above. The parties agree that the terms of this Release do not impact any rights of either Releasor or Releasees from seeking damages (either tort, contract, or subrogation) against unrelated entities.”

Alderman, 2011 WL at *3.

 

 

The engineer further argued (and the trial court agreed) that the insurer approved the engineer’s budget for the monitoring and oversight services performed during the subsurface compaction grouting.

 

However, the Second District Court disagreed  for two reasons.

 

 

First, the Second District expressed that the contract was between the owner and the engineer, not between the insurer and the engineer.  The court also expressed that the fact that the insurer may have approved the engineer’s budget and may have paid the engineer from insurance proceeds (that arose between the insurance policy between the insurer and the owner), and not because of any separate contract between the insurer and engineer.  The court gave an appropriate analogy: “Here, the circumstances are comparable to an automobile insurer’s approval of a body shop’s estimate for the costs of repairs to an insured’s automobile. Despite the insurer’s approval of the repair estimate, the contract for the repairs remains between the automobile owner and the body shop, not between the body shop and the insurer.” Alderman, 2011 WL at *4.

 

 

Second, the Second District expressed that the release NEVER referenced or named the engineer. “Thus for the instrument to be effective to release BCI [engineer] or other parties not specifically named, such intent must be clearly expressed.” Alderman, 2011 WL at *5.

 

 

The Second District’s ruling makes sense in that it was the owner, the insured under the property insurance policy, that negotiated and executed the release with his insurer.  It would seem inequitable for the engineer to get the benefit of the release unless of course it was specifically involved in the negotiation of the release and was an engineer that the insurer specifically authorized the owner to retain (which are unknown from the facts recited in the case).  If, however, the owner hired the engineer and the engineer simply worked with the insurer to ensure that payments would be covered by insurance proceeds, it would seem inequitable for the engineer to reap the benefits of a release that certainly did not involve it.

 

 

B. The Owner’s Breach of Contract Claim Against the Engineer

 

The trial court also granted summary judgment for the engineer on the owner’s breach of contract claim finding that the owner failed to establish that the engineer violated any standard of care based on the investigation of the problem and recommendation of the subsurface compaction grouting. The owner relied on deposition testimony of his trial expert to support that the engineer violated its standard of care and therefore breached its agreement with the owner.

 

 

The Second District maintained: “Under its contract to render professional engineering services on behalf of Mr. Alderman [owner], BCI [engineer] was obligated ‘to perform such services in accordance with the standard of care used by similar professionals in the community under similar circumstances.’” Alderman, 2011 WL at *6 quoting Lochrane Eng’g, Inc. v. Willingham Realgrowth Inv. Fund, Ltd., 552 So. 2d 228, 232 (Fla. 5th DCA 1989).  The Second District found that a question of fact remained as to whether the engineer met or breached the required standard of care.

 

The Second District’s ruling makes sense because whether a design professional specifically breached a standard of care should be a question of fact, especially if there is a testifying expert that will render expert opinions supporting the breach.  The standard of care is an an important term when determining the liability of an architect or engineer for design errors, omissions, recommendations, etc.  If an opposing party has an expert that will say the architect or engineer breached their standard of care based on a design error, omission, recommendation, etc., then a factual issue exists.

 

 

For more information on a design professional’s standard of care, please see:

https://floridaconstru.wpengine.com/a-consulting-engineer-architects-protection-from-a-negligence-claim-against-a-contractor/

and

https://floridaconstru.wpengine.com/a-general-contractor-needs-to-understand-certain-legal-doctrines-before-suing-a-state-including-agency-or-subdivision-and-design-professional-that-it-did-not-hire/

 

For more information on the scope of releases, please see:

https://floridaconstru.wpengine.com/the-scope-of-a-release-in-a-settlement-and-contractual-indemnification/

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

ASSERTING NEGLIGENCE AGAINST A CONSTRUCTION-MANAGER OR OWNER’S REPRESENTATIVE

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Cannon v. Fournier, 57 So.3d 875 (Fla. 2d DCA 2011) is an interesting personal injury case that touches upon whether a contractor’s qualifying agent can be individually liable for acts and omissions of the limited liability construction company he/she qualifies and whether a construction company can be held liable for negligence to a third party.

 

In this case, an owner wanted to build a new house. The owner hired a licensed construction company to essentially serve as a construction manager-agency (not-at-risk), although this case does not use this term. In other words, the owner would contract directly with all of the trade subcontractors, but it was the construction company that helped the owner obtain a residential permit, referred trade subcontractors directly to the owner, and supervised, consulted, and coordinated the trade subcontractor’s work, and assisted with inspections at the project. The construction company undertook many of the tasks a general contractor would ordinarily undertake except for obtaining the residential permit and contracting directly with the trade subcontractors.

 

One of the trade subcontractors the owner hired was a framer. This happened to be the only, or one of the only, subcontractors that did not come referred to the owner by the construction company. During construction, it was discovered that a beam had been incorrectly installed on the second floor. The construction company (through its qualifying agent) met with the framer to discuss a solution to this issue, and it was during the correction of this issue that a carpenter working for the framer fell from the second floor severely injuring himself.

 

The injured worker sued the construction company and its qualifying agent under a negligence theory saying, among other things, they had a duty to perform all work in a competent, safe and workmanlike manner and they breached this duty which resulted in the injured worker falling. The construction company and its qualifying agent moved for summary judgment and the trial court granted summary judgment in favor of the qualifying agent dismissing him from the lawsuit, but declined to enter summary judgment in favor of the construction company.

 

On appeal, the Second District held that the trial court denying summary judgment in favor of the construction company but granting it in favor of its qualifying agent was inconsistent. The Second District held that:

 

“[O]fficers or agents of corporations may be individually liable in tort if they commit or participate in a tort, even if their acts are within the course and scope of their employment. The same rule applies to limited liability companies. Thus, to the extent that the LLC could be held liable for its acts or omissions in connection with the construction of the Hoffmans’ [owner] residence, Mr. Fournier [qualifying agent] may be held liable as well.” Cannon, 875 So.2d at 881 (internal citations omitted).

 

Under the Second District’s rationale, if the construction company owed a duty of care to the plaintiff injured worker, then presumably, so did the qualifying agent. To determine whether the company owed a duty of care, the Second District focused on whether the construction company was serving in the role of the general contractor. The Court focused on many of the facts previously mentioned that a construction manager-agency would undertake, specifically, the coordination, communication, and supervising of construction workers and activities at the job site (despite not contracting with any of the trade subcontractors). To that end, the Court expressed:

 

“The circuit court continued by correctly identifying the critical point as the extent of the LLC’s control over and supervision of the job site. A person or entity that controls a supervises the job site has a duty to provide workers on the job with a safe place to work. If the LLC assumed such a duty voluntarily or by contract, it may be held liable to workers who sustain injuries on the job caused by a breach of that duty without regard to whether the LLC was acting as a general contractor.” Cannon, 875 So.3d at 882.

 

Accordingly, the Second District reversed the summary judgment entered in favor of the qualifying agent (because if his construction company could be negligent, then so could he under the Court’s rationale.)

 

Outside of the personal injury context, this case can be used to support a negligence argument against an owner’s representative or construction manager-agency by a non-privity subcontractor, etc. The duty owed would be that the entity is essentially acting as a general contractor (or has similar job-related functions), but just without the title. Therefore, the entity owes a duty to ensure that construction is properly supervised, coordinated, and managed in a competent, safe and workmanlike manner.

 

Furthermore, this case can be used to support an argument against a qualifying agent to hold that the qualifying agent should be held individually liable for the torts of the construction company he/she qualifies. This argument would carry more weight if the company, similar to the company in Cannon, was a sole-owned company with the qualifying agent serving in the role of the owner, qualifying agent, and lone employee of the company. However, even if this were not the case, if the qualifying agent is the one overseeing construction activities, then arguably, if their company commits a tort, they too can be held liable for participating in the tort, especially considering companies can only act through people.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.