September 2008

Lanier at McEver, L.P. v. Planners and Engineers Collaborative, Inc.
2008 Ga. LEXIS 553 (Ga. June 30, 2008)
In this case, the Supreme Court of Georgia reversed a Court of Appeals’ decision, previously reported here, holding that a provision limiting an owner/developer’s damages against the project engineer to the fees paid for the engineer’s services was void and unenforceable as against public policy.
Lanier was the owner/developer of an apartment complex. Lanier hired the defendant engineering firm, PEC, to design various aspects of the apartment complex, including the storm sewer and sanitary drainage system. The engineering agreement contained a provision stating that the total aggregate liability of PEC and its subconsultants to Lanier “for any and all claims … shall not exceed PEC’s total fee for services rendered on this Project.” The clause applied not only to liability to Lanier, but also to “all construction contractors and subcontractors on the project or any third parties.” Following construction of the Project according to the plans and specifications prepared by PEC, problems arose with the storm water system that required modification and repair by the owner. As a result, Lanier sued PEC for negligent design, breach of express contractual warranty and litigation expenses.
Continue Reading Georgia Supreme Court Holds Limitation of Damages Clause in Engineering Agreement to Be an Unenforceable Indemnity Provision

Bryan’s Quality Plus, LLC v. Shaffer Builders, Inc.
2008 U.S. Dist. LEXIS 61713 (E.D. Pa. Aug. 12, 2008)
The District Court for the Eastern District of Pennsylvania was faced with a motion to dismiss a defendant’s counterclaims for fraud and negligent misrepresentation. The case arose out of a subcontract between the defendant contractor and the plaintiff subcontractor in which the subcontractor agreed to complete piling work for a commercial project undertaken by defendant (the “Project”). The contractor alleged in its counterclaim that the subcontractor represented that it would complete the work in seven days, that it could install in excess of fifty piles a day, that its performance and equipment would surpass conventional methods, that it would furnish and install pile tension brackets and fasteners, and that it had sufficient credit to purchase the materials necessary to complete the work. The parties executed a written contract, although some of the work was completed prior to execution of the subcontract.
Continue Reading U.S. District Court in Pennsylvania Holds that Gist of the Action Doctrine Bars Claims for Fraud and Negligent Misrepresentation Where a Contract is Central to the Claim

Waynesborough Country Club of Chester County v. Diedrich Niles Bolton Architects, Inc.
2008 U.S. Dist. LEXIS 45980 (E.D. Pa. July 21, 2008)
The case arose out of the design and construction of a new clubhouse for Waynesborough. Diedrich Niles Bolton Architects (“DNB”) provided professional architectural services to Waynesborough for the project and Ehret Construction served as the project’s general contractor and construction manager. Structural problems arose after the clubhouse was complete, and Waynesborough sued DNB alleging, as a result of DNB’s professional negligence and breach of contract, significant water leaks developed at various places throughout the interior of the clubhouse. DNB joined Ehret as a third party defendant. Ehret, in turn, filed a counterclaim against DNB for negligent misrepresentation, claiming that DNB’s architectural work was deficient and that Ehret’s work was delayed, disrupted and inefficient as a result of having relied upon inaccurate drawings and other architectural documents supplied by DNB during construction.
Continue Reading U.S. District Court in Pennsylvania Holds Bilt Rite Claim Subject to Discovery Rule for Limitations Purposes

Chrysler Realty Company, LLC v. Design Forum Architects, Inc.
2008 U.S. Dist. LEXIS 42721, No. 06-CV-11785 (E.D. Mich. May 30, 2008)
The United States District Court for the Eastern District of Michigan was asked to consider whether a plaintiff’s claim for professional liability against a design professional should be dismissed where plaintiffs allowed evidence to be destroyed. Finding that the plaintiff’s intentional removal and destruction of the allegedly defective HVAC system without notice to the defendant deprived the defendant of an opportunity to develop defenses to the claims, the Court dismissed the plaintiff’s claims.
Continue Reading U.S. District Court in Michigan Dismisses Plaintiff’s Claim for Professional Malpractice Against Defendant Design Professional Because of Spoliation of Evidence

Quinn Construction, Inc. v. Skanska USA Building Inc.
2008 U.S. Dist. LEXIS 45980 (E.D. Pa. June 10, 2008)
The United States District Court for the Eastern District of Pennsylvania held that no certificate of merit was required in contractor and subcontractor’s negligent misrepresentation claims against architect.
Skanska served as general contractor for two private construction projects owned by the Trustees of the University of Pennsylvania. Skanska entered into two written subcontracts with Quinn for certain concrete work on the projects. Thereafter, Quinn filed a negligent misrepresentation claim against the project Architect, alleging that it relied upon the drawings, specifications, addenda and bulletins prepared by the Architect in preparing its bids, executing its subcontracts with Skanska, planning and scheduling its work and performing its work. Quinn further alleged that the Architect’s continuous design changes, its failure to complete drawings previously represented as 100% complete and its failure to timely review and approve Quinn’s shop and coordination drawings created an unreasonably and unforeseeably lengthy submission process, which prevented Quinn from timely delivering its materials to the Project and caused Quinn to incur overtime labor expenses to adhere to the Project schedule.
Continue Reading U.S. District Court In Pennsylvania Holds Certificate Of Merit Requirement Does Not Apply To Contractor’s And Subcontractor’s Bilt-Rite Claim Against Architect

RLI Insurance Company v. Indian River School District
2008 U.S. Dist. LEXIS 43303 (D. Del. June 3, 2008)
In this case, the United States District Court for the District of Delaware held that a surety’s claim against an architect and construction manager for improper approval of payments to the principal was barred by the economic loss doctrine. Additionally, the court held that the surety was not released of its liability to the owner where the owner wrongfully paid the contractor, as the owner had made those payments in reliance on certifications from the architect and the construction manager.
Continue Reading U.S. District Court in Delaware Holds Surety’s Claims Against Construction Manager and Architect Barred by Economic Loss Doctrine; Surety Liable on Performance Bond Where Owner Overpays Contractor in Good Faith Reliance on Architect’s and Construction Manager’s Certifications