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The engineering firm, Arcadis U.S., and several of its employees, asked the court to dismiss a contractor lawsuit against them on the basis that they were immune from suit because they were acting as agents or employees of the City government when making decisions impacting the contractor. It was held that the immunity was not available to the engineer because it performed its services as an independent contractor rather than as an employee of the City.  Trucco Construction v. Arcadis U.S., 2013 WL 494353 (Ohio 2013).

Allegations by the contractor who was building a water reservoir for the City of Freemont, Ohio, included assertions that the project was to be a “balanced site” and there would be sufficient clay on site to build the reservoir with minimal waste materials to be removed from the site.  It further alleged that the engineer concealed the necessity for either using imported clay, a liner, or mixing existing soils with a soil sealer.  In addition, the contractor alleged that when it submitted a change order request, the engineer consulted with the City on its draft responses and failed to act as an independent neutral party to resolve the issues as required by contract.

The immunity statute in question provides that “a political subdivision is not liable in damages in a civil action … allegedly caused by any act or omission of the political subdivision or an employee of the political subdivision in connection with a governmental or propriety function.”  A definition of “employee” is specified in the statute and concludes with the following sentence: “Employee” does not include an independent contractor.”

Key to resolving whether the statutory immunity would apply to protect the engineer was determining whether the engineer was acting as an “employee” of the City in that it was performing all its duties within the scope of its contract and for the benefit of the City.  After reviewing numerous court precedent decisions that found in favor of immunity in various circumstances, the court here stated that the determination of whether a party is an employee/agent or an independent contractor generally involves issues of fact for the trier of fact to determine, but where there is no conflicting evidence on the facts, the issue becomes a question of law that can be decided by the court on a motion.

In holding that the engineer was not entitled to immunity against the contractor suit under the statute, the court explained its reasoning as follows:

“The city of Fremont entered into a standard engineering contract with ACRADIS for the creation of plans and specifications to build a reservoir, supervision of the construction phase of the project, and a final inspection of the construction. Even though the contracts in this case provide that ARCADIS would act as the city of Fremont’s representative during the construction phase, those provisions do not give rise to an agency or employment relationship. These provisions simply provide that the engineers would be the city’s liaison with Trucco because the city of Fremont relied upon the professional skills of ARCADIS to ensure that the plans and specifications would be properly accomplished. For this reason, ARCADIS was named as a neutral party to interpret the requirements of the contract when disputes arose. There was no evidence presented that the city controlled any aspect of the work responsibilities of the individual appellant engineers. The engineers were selected and paid by ARCADIS and it controlled their work. Therefore, we find ARCADIS and its engineers cannot qualify as employees/agents of the city of Fremont for purposes of being afforded immunity under R.C. 2744.01(B). Appellants’ sole assignment of error is found not well-taken.”

Comment:  Ability to assert the right to immunity pursuant to statutory protections afforded to cities and governmental entities is an important legal defense and risk management tool.  To the extent this defense might be available by law under circumstances that a court might find more favorable than was the case herein, it is important that the parties not agree by contract to waive their right to the immunity.  Such contractually mandated waiver, however, seems to be getting more common. If an engineer or contractor is performing services and work within the scope of their contract with the government and for the benefit of the government, and there is statutory immunity available to them, I believe their right to assert the benefits of such immunity should be preserved and encouraged.  If the government were doing the services and work with their own staff, they could not be sued because the immunity statute would protect them.

Why should it be any different when the services and work are performed by an engineer or contractor?  Allowing immunity protection would logically decrease the risk profile by eliminating lawsuits and reducing insurance premiums.  It would result in greater completion and better pricing for the benefit of the government.  No significant harm would occur to a party (such as the contractor herein) that may be barred by the immunity statute from suing an engineer since the contractor would still have its normal legal remedies against the project owner with whom it contracted.  To the extent the contractor recovers from the project owner, the Owner might have its own potential cause of action against the engineer, depending upon the facts of the case and the law.

 

 

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. 6 (June 2013).

Copyright 2013, ConstructionRisk, LLC