Where the project architect knew there was no payment bond and that subcontractor was not being paid, yet continued to certify payments to the general contractor and reduced the amount of retainage, it could be liable for breach of duty to use reasonable care to ensure payment was being made to subcontractors.
The architect’s responsibilities under its contract included reviewing the general contractor’s payment applications, certifying the amounts due, and determining whether work had been performed according to the requirements of the contract. It had the ability to withhold the certification of payments if the contractor failed to properly pay the subcontractors. Although the general contractor was required to obtain performance and payment bonds it failed to do so. In addition, the contractor was contractually required to submit to the architect with each payment application satisfactory evidence that all indebtedness connected with the part of the work for which application for payment was made had been paid, and submit a subcontractor waiver of lien for that work. The general contractor never submitted the lien waivers with its payment applications. Despite knowing all of this and knowing that the subcontractors were not being paid, the architect continued to certify payments to the general contractor.
On the question of whether an unpaid subcontractor had a cause of action against the architect, the court stated that where there is a special relationship between the design professional and the contractor, the design professional may owe a duty to the contractor. In this case, the appellate court held that this is a factual issue to be determined by a jury and that the trial court erred in granting summary judgment in favor of the architect. The case was, therefore, remanded so that a jury may decide whether such a special relationship existed and whether the architect’s actions constituted negligence. Callum Mechanical Construction, Inc. v. South Carolina Baptist Hospital, 344 S.C. 426; 544 S.E. 2d 838.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk.com Report, Vol. 3, No. 6 (Sep 2001).
Copyright 2001, ConstructionRIsk.com, LLC