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Approximately four or five years after completion of the Hilton Hotel at the Boston Logan Airport, an employee of the airport authority was electrocuted while attempting to repair an electrical transformer that lacked required wiring diagrams and warning signs.  The family of the deceased filed suit against the owner of the hotel as well as the architect that designed it, the consultant that did the electrical engineering services, the general contractor, and the electrical subcontractor, alleging negligence, gross negligence and breach of warranty.  The hotel filed cross claims against the architect and the electrical engineer seeking indemnification and contribution.

The Supreme Court of Massachusetts held that claims for contribution were proper because the consultant owed an independent duty of care to the electrician to comply with its contractual obligations to the project owner to get the contractor to provide proper warning labels on the switchgear, and there were issues of fact to be determined by a jury as to whether the worker’s death was caused by the design firms’ failure to report that the contractors had not complied with the specifications.  LeBlanc v. Logan Hilton, 974 N.E. 2d 34 (Mass. 2012).

Under its agreement with Hilton, the consultant was to “visit the site at intervals appropriate to the stage of construction to become familiar with the progress and quality of Work, and to determine, in general, if Work is being performed in accordance with the Construction Documents.”  The agreement further provided, “[Consultant] shall promptly inform Hilton in writing of any deficiencies in Work and/or deviations from the requirements in Work and/or deviations from the requirements of the Construction Contract which come to [Consultant’s] attention.”

There was also a paragraph that acknowledged that “[Consultant] shall not be responsible to have control over or charge of and shall not be responsible for construction means, methods, techniques, sequences, or procedures, or for safety precautions and programs in connection with Work being performed at Site.”  These are clauses from a standard form document of the American Institute of Architects (AIA).

Another section of the Agreement provided that the consultant would indemnify Hilton from and against all claims “arising out of and to the extent caused by the negligent acts, errors and omissions during the performance of professional services….”

Contract specifications for the switchgear in question required that it have a stenciled “mimic bus” diagram on the face of the cabinets that showed schematically the configuration of the equipment and the switching arrangement.  Another section of the specification required a warning sign “on or adjacent to any switching equipment that read: ‘Warning – Load side of switch may be energized by backfeed.’”

Neither the mimic diagram nor the warning label was installed by the switchgear manufacturer.  This was pointed out by a subcontractor that tested and inspected the installed switchgear during project commissioning, and issued a report recommending that “Signs should be installed … that inform operating personnel that fuses can be energized from several sources, both incoming lines and tie switch.”

The electrical engineer reviewed the report and wrote a letter to the manufacturer directing him that the wording and placement of signs was to be “submitted as a show drawing.” After the switchgear was subsequently activated, the electrical engineer did a field observation and issued a report to the Consultant acknowledging the gear had been started up but making no mention of the presence or absence of warning signs.  The record did not reflect that the manufacturer ever submitted the shop drawing as it had been directed to do.

On a motion for summary judgment, the trial judge granted summary judgment for the consultant and electrical engineer, which he characterized as the “Design Team,” because he found that the limitation of responsibility set forth in the contract rendered them not responsible for the failure of the contractors to perform work according to the specifications.  The judge held that the Design Team’s duty was limited to that which they controlled, and he granted them summary judgment on the issue of causation.

An intermediate appellate court reversed that decision because it found that although the Design Team had no authority or responsibility for controlling the work, it did, pursuant to the contract, owe a duty to Hilton to provide biweekly reports of work progress and competence, and “especially of any deficiencies or deviations from contractual requirements.”

Failure to notify Hilton of the manufacturer’s failure to install the warning signage, concluded the intermediate appeals court, constituted a contractual breach that posed a “field of risk for third parties likely to come into contact with the switchgear, and summary judgment should not have been granted since there was an issue of fact of causal negligence to be decided by trial.

In addition, the court held that expert testimony against the Design Team was not required because the issue of professional negligence in this case was “comprehensible to a lay person in view of the contractual duties, the special hazards of electricity, and the evidence of insufficient monitoring and notification.” That decision was appealed to the Supreme Court of Massachusetts, which issued the decision reported herein.

Tort May Arise from a Contractual Relationship

The first point the court made was that “It is settled that a claim in tort may arise from a contractual relationship … and may be available to persons who are not parties to the contract…. [A] defendant under a contractual obligation ‘is liable to third parties not parties to the contract who are foreseeably exposed to danger and injured as a result of its negligent failure to carry out that obligation.’”  Here, said the court, there was sufficient evidence that the Design Team breached their contract by failing to report to Hilton that the manufacturer failed to comply with the specifications regarding the mimic bus and the warning signage.

Expert Testimony was not Required

No expert testimony was presented to attest that failure to report the noncompliance with the specifications constituted a breach of the professional standard of care.  The court began its analysis by citing several case precedents for the proposition that professionals “do not have a duty to be perfect in their work, but rather are expected to exercise ‘that skill and judgment which can be reasonably expected from similarly situated professionals.’”

From there, however, the court cited case precedent holding that violation of the standard of care can only be demonstrated by expert evidence.  But it went on from there to “where, as here, there was evidence that the Design Team actually knew of the deficiencies but failed to fulfill its contractual duty to report the deficiencies to Hilton, and where the deficiencies presented so obvious a risk to the safety of any person who would operate the switchgear, we [conclude] that the evidence is sufficient without expert opinion to permit a finding of negligence.”

Evidence that Third Party Harm was Caused by Professional Negligence

With regard to the question of whether summary judgment should have been granted as to causation, the supreme court concluded that “there is a genuine issue of material fact whether reporting the deficiencies to Hilton and refusing to declare the project completed until the deficiencies were corrected would have caused the mimic bus diagram and warning signage to be installed before [the maintenance worker] was electrocuted.”

In other words, the court is saying that the Design Team’s failure to do what it was supposed to do per its contract could be professional negligence as to the third party and a jury must be permitted to decide whether the negligent breach of the contract “caused” the death of the worker.

As the court put it, “Because the evidence in the summary judgment record is sufficient to support a finding that [the worker’s] death was caused by the professional negligence of the Design Team based on their failure to report known deficiencies to Hilton that posed a serious safety risk to anyone who operated the switchgear, the judge erred in granting summary judgment to the Design Team on the cross motions for contribution….”

No Prime Consultant Duty to Indemnify Hilton

The supreme court found that the prime Consultant had no duty to indemnify Hilton under the terms of its contract because even if they were negligent for failing to report the contractor’s failure to install diagrams and warning signage, the indemnity agreement stated that indemnification shall “shall not apply” where the losses “result from the negligent acts or omissions of … other parties for which [Consultant] is not responsible.”

Pursuant to the sections of the contract quoted earlier in this case note, the court found that the Consultant had no control over the work of contractors and was not responsible for their failure to install the diagrams and warning signs.  Furthermore, the court held that where Hilton’s indemnification claim of negligence against Consultant rests on the failure to report the contractor’s negligent work, “any losses resulting from [Consultant’s] negligence would also result from [contractor’s] negligence, a party “for whom [Consultant] is not responsible.”

For these reasons, the court held that the trial court motion for summary judgment should not have been granted as to the contribution claim but should have been granted as to the indemnification claim. The case was remanded for trial on the contribution claims, and this means that a jury will have to determine whether the failure of the Design Team to report the contractor’s errors to Hilton caused the death of the worker.

 

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. 15, No. 1 (Jan 2013).

Copyright 2013, ConstructionRisk, LLC