U.S. District Court in Kentucky Holds that Contractor Which Proposed Design Solution During Construction Might Be Liable for Failure Notwithstanding Owner’s Obligation to Provide Designs and Instructions

American Towers LLC v. BPI, Inc., 2014 U.S. Dist. LEXIS 106724 (E.D. Ky. Aug. 4, 2014)

American Towers LLC (“American Towers”), which operates wireless and broadcast communications towers, undertook a project to construct a cell tower in Prestonburg, KY, along with a tower compound and access road.  American Towers selected BPI, Inc. (“BPI”) as general contractor for the project, and the parties executed a contract.

The contract contained a number of provisions that allocated the parties’ responsibilities with respect to design and construction.  In particular, the contract provided that American Towers was to provide BPI with drawings, specifications, and instructions.  BPI, for its part, was responsible for “all construction means, methods, techniques, sequences, and procedures[.]”  Moreover, BPI was to complete its work in a “workmanlike manner and with the highest degree of skill and care exercised by reputable contractors performing the same or similar services[.]” In performing its work, if BPI recognized any problems with American Towers’ design, the contract provided that BPI was to stop work and inform American Towers of the problem.  American Towers would then “issue written instructions” to BPI about how BPI should proceed.

After the project commenced, BPI encountered a flaw in American Towers’ design plans for the access road.  Consistent with its obligations under the contract, it stopped work and notified American Towers of the problem.  However, rather than waiting for instructions from American Towers, BPI proposed a design solution, which American Towers ultimately approved.  Therefore, BPI commenced construction of the road.  Less than one year after the project was completed, however, the road collapsed in a landslide and the project was rendered inaccessible.  Litigation ensued between American Towers,  BPI and numerous subcontractors, among others.

American Towers asserted a claim for breach of contract against BPI, alleging that BPI had breached the contract by, among other things, failing to consult a geotechnical engineer, and that these breaches of the contract resulted in the collapse.  BPI defended on the grounds that American Towers, and not BPI, was responsible for issues related to design.  Specifically, BPI argued that it was American Towers’ responsibility to consult with an engineer before it “issue[d] written instructions” to BPI regarding BPI’s proposed design.  BPI moved for summary judgment, asserting that, based upon the contractual allocation of responsibility, BPI could not, as a matter of law, be responsible failing to consult an engineer with respect to design.

The Court disagreed and denied BPI’s motion.  The Court reasoned while BPI could only act pursuant to American Towers’ “written instructions”, a jury could find that BPI undertook more than required of it under the contract by proposing a design for the access road and that, in so doing, BPI was required to consult a design engineer.  Indeed, expert testimony suggested that BPI’s promise to perform its work with the “highest degree of skill and care” required it to consult an engineer before proposing the design.

Therefore, the Court held that BPI was not entitled to summary judgment.  Under the facts of this case, a jury could find that, in undertaking to propose a design to American Towers’, BPI was obligated to consult with an engineer to ensure the design’s feasibility.

To view the full text of this decision, courtesy of Lexis ®, click here.

Kristopher Berr

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