A subcontractor worked on a project for five months without being paid and then sued the A/E for negligence, claiming that the A/E owed it a duty, as a third party beneficiary, to assure that the contractor maintained a payment bond or paid the subcontractor before being given his progress payments. Plaintiff, subcontractor, argued that the A/E had a professional responsibility to review the contract documents and assure compliance of the contractor with their requirements, including the procuring of a payment bond . He further argued that the A/E was negligent in not certifying pay requests before obtaining documentation to show that the subcontractor had been paid.
An AIA contract, form B 141 (1987 edition) was used as the agreement between the architect and owner. It expressly stated that there was no duty owed by the architect to subcontractors. Nevertheless, the plaintiff argued that the architect’s contract gave the architect control over the contractor’s work, and required him to verify payment bonds and to obtain lien waivers from subcontractors before approving the contractor’s payment requests.
The trial court granted summary judgment in favor of the architect. The appellate court affirmed the decision. In the court’s opinion, the subcontractor had not relied upon the architect’s actions. Instead, the subcontractor was counting on the contractor, with whom it had an ongoing relationship, to make payment. It appeared to the court that the subcontractor had attempted to preserve its relationship with the contractor “at the expense of sound business practices.”
Plaintiff worked on the project for five months with no written contract and without being paid, and then when it finally signed a contract, he did not require proof that a payment bond had been procured. Any interested party was free to ask for a copy of the bond but the plaintiff made no such request. It was not until it became obvious that he was not going to be paid that the subcontractor finally asked for a copy of the bond. Moreover, no one had been requesting lien waivers from the subcontractor (which were required pursuant to the contract), and this should have put him on notice that his interests might not be protected.
In addition to lack of reliance on the architect, the court found that the complaints by the subcontractor to the owner about the failure of being paid did not give rise to a duty of care by the architect.
The plaintiff also sued the surety that issued the bid bond on the project, arguing that it had a duty to issue a payment bond. This aspect of the case went to trial with the court finding in favor of the surety. In affirming the judgment for the surety, the appellate court found that terms of the bid bond required that the contractor obtain a payment bond, and did not create any obligation of the surety to independently obtain such a bond for the project. The surety’s obligation under the bid bond became void when the contractor failed to request a payment bond. Cullum Mechanical Construction, Inc. v. South Carolina Baptist Hospital, No. 2985, 1999 S.C. App. Lexis 71 (S.C. App. May 3, 1999).
Article Copyright ã 1999, ConstructionRisk.com, LLC – Virginia
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. 1, No. 3 (June 1999).