J. Kent Holland
A professional employed by a town to inspect the construction of a subdivision does not owe a duty of care to a developer or its contractor with whom the professional has no contractual relationship where it was not foreseeable and reasonable for the developer to rely on the services provided by the professional to the town, and the professional had no knowledge that the developer or contractor were relying on its services, since its contract with the town expressly stated the services were for the sole benefit of the town.
In this case, an engineering firm was hired by the town as a consultant to conduct subdivision reviews and inspections. This entailed inspecting the work performed by a contractor on a developer’s housing project. The developer filed suit against the engineer, alleging that the engineer was negligent in failing to identify deficiencies in the contractor’s work and that this resulted in the developer having to correct the work and considerable additional cost. The developer was not a party to the contract between the town and engineer, but was required pursuant to town rules and regulations to reimburse the town for the entire cost that the town paid to the engineer.
Evidence was presented at trial showing that although the engineer was only required to give its inspection reports to the town, it actually provided copies of the reports to the developer as well. There was also evidence that the engineer interacted regularly with the developer and developed a close working relationship, and was the only engineering firm on site that was carrying out inspections during approximately two years of construction.
It turned out that the contractor improperly installed water lines, fire hydrants, granite curbing, manhole covers, and other features of the infrastructure. There was evidence presented that the engineer in some cases did not identify shortcomings and deficiencies in the contractor’s work.
Both the trial court and appellate court concluded that the engineer owed no duty to the developer and that summary judgment for the engineer was properly granted. In arguing that the engineer was liable, the developer sought to have the court apply what is known in Massachusetts as the “Craig principle of foreseeable reliance” that was established in a previous court decision. That case held that where an engineer working for a town knew that “offset stakes” it laid down would be used by a third-party contractor, the contractor to sue the engineer based on its justifiable reliance on those stakes. In the current case, however, the court stated that the key is not whether the contractor thought the engineer was aware the contractor was relying on its services but rather whether the engineer had “actual knowledge” of the plaintiff’s reliance on its services.
Among the reasons given by the court for why the developer could not have reasonably relied on the services of the engineer were the following: (1) The contract stated the engineer would have no “authority or responsibility for the methods and procedures of construction selected by the Contractor,” (2) At the outset of the project the engineer issued a memorandum to the developer stating that any deviation from the approved subdivision plans without prior approval of the engineer would be performed at the contractor’s risk, and (3) the developer hired its own engineer for the project and “The fact that the project engineer may have failed to honor its contractual obligations to [the developer] does not, standing alone, justify [Developer’s] reliance on the work performed by the [town’s engineer]”.
For these reasons, the court held the engineering firm owed no duty of care to the developer. Meridian at Windchime v. Earth Tech, Inc., 960 N.E. 2d 344 (Mass. 2011).
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. 14, No. 7 (July 2012).
Copyright 2012, ConstructionRisk.com, LLC
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