A homeowner (Northridge) retained an architectural firm (JWFA) to provide design and contract administration services for the renovation of a residential townhouse complex. Leaks were found in the roofs shortly after construction was completed. It was not until several years later, however, that Northridge sued JWFA and its employee, Thomas Driscoll. The defendants filed a motion for summary judgment on the basis that a time limitation in the contract barred law suits filed more than three years after substantial completion of construction.
In opposition to the motion, Northridge argued that substantial completion had never occurred since it never signed a certificate of substantial completion or certificate for payment. The court rejected this argument and concluded that according to the terms of the contract, the architect, not the owner, was to decide when substantial completion occurred. The fact that the owner never signed a certificate didn’t show that substantial completion hadn’t occurred. If anything, it may show “the Owner’s refusal to accept the responsibilities assigned to it under the certificate.” As to the enforcement of time limitation clauses in contracts, the court stated that Massachusetts courts honor such agreements between sophisticated business entities.
At this point in the decision, it appeared that the court was going to grant summary judgment. Instead, however, the court considered the arguments of the plaintiff “that the defendants had made knowing or reckless misrepresentations to Northridge that the leaks were not caused by any significant structural problem in order to deceive Northridge into not filing a negligence action.” The court concluded that if these allegations were true, then the doctrine of equitable estoppel may prevent the defendants from enforcing the time limitations. According to the court, “Equitable estoppel is appropriate when (1) a party makes a false representation; (2) the party intends the other party to rely on that false representation; and (3) the other party does rely on that false representation to its detriment.”
Since a jury could reasonably determine that the essential elements giving rise to an equitable estoppel are present in the case, the court held that the plaintiff must be permitted to proceed with its negligence claim against the defendants. Northridge Homes, Inc. v. John W. French & Associates, Inc. and Thomas Driscoll, 10 Mass.L.Rptr. 690, 1999 WL 1260285 (Nov. 15, 1999).
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. 2, No. 7 (Jul 2000).
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