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Professional Construction Manager is not a guarantor of work performed by a construction contractor who is under separate contract to the project owner even though it agreed to “make sure the construction work is performed properly.” The owner was entitled to recover from the CM the cost of installing new roof to replace the defective roof installed by the contractor. Manley Architecture Group, LLC v. Santanello, 2018 WL 2749344, 2018 Ohio 2200.

This litigation began when an architectural firm (construction manager) filed suit against its client for failing to pay its fees. As typically happens when a professional services firm sues its clients for unpaid fees, the client filed a counter suit. The counter suit claimed more damages against the CM than what the CM initially sued for in the way of unpaid fees.   There is a lesson to be learned about suing for fees.

The contract between the architect and owner contained several provisions detailing the services to be performed by the architect as a CM for the construction of a barn. During construction, problems arose with the barn roof leaking.   The countersuit by the owner alleged the CM breached its obligation to properly oversee the construction of the barn.

At a bench trial on the merits of the case, the judge found the CM was liable for the cost or the roof repair or replacement because even though the CM was not a guarantor of the contractor’s work, “it nevertheless had construction management obligations that were not met. The lack of thorough, timely inspection by [CM] allowed [contractor’s] substandard work to escape detection when, had work been checked, correction of deficient work would have been much easier and less costly.”

This was reversed on appeal. The court began its analysis by noting that the architect in question was not retained to perform “Construction Administration” but was in fact doing the more robust function of “Construction Management.” The project owner operated as its own general contractor. The Construction Management role was “only loosely defined” under the agreement said the court. Because of that, the trial court that the term “construction management” was ambiguous and it therefore decided to incorporate language from the architect’s cover letter into the agreement to define the role.

Courts only resort to using extrinsic or parol evidence when it is necessary to give effect to the intention of the parties because the language of the contract is unclear or ambiguous, or the circumstances surrounding the agreement invest the language of the contract with a special meaning.

The appellate court stated:

“As an initial matter, we agree with the trial court’s interpretation of the scope of those responsibilities. The trial court emphasized MAG’s assurance in the cover letter accompanying the agreement that it would “make sure the construction is performed properly.” (Nov. 18, 2016 Decision at 3.) The trial court did not construe this statement as a warranty or “guarantee” covering the work of the subcontractors. (Decision at 4.) MAG was not “an insurer of the work of trade contracts such as the contractor who erected the barn and leaking roof.” Id. Furthermore, “each contractor hired by Dr. Santanello remained responsible for their own performance, and any deficiencies in the work, ultimate responsibility for enforcing that work rested on the owner, not Manley Architecture Group.”

“We also agree with the trial court’s observation that when the parties agreed that MAG would perform “the overarching role of ‘construction manager,’ the parties plainly did contemplate that Manley would actively monitor ongoing work.” (Decision at 4.) Thus, it was MAG’s responsibility to “alert Dr. Santanello in a timely manner” when problems arose during construction, “so that the doctor could pursue appropriate remedial action with the contractor in question.”

Having agreed with the trial court concerning the role of the CM, however, the appellate court went on to disagree with the ultimate legal conclusion that the CM breached its contractual obligations by failing to monitor the barn roof installation. According to the appellate court, the owner testified that he knew about the leaking roof soon after it was completed and the CM then “worked hard at trying to figure out what the problem was” and “tried an attempt at once” to have the contractor fix it. The owner further testified that the CM then hired another contractor to look at the roof and make repairs. This testimony, says the court, demonstrates that the CM performed the “construction management” responsibilities as the parties intended under the agreement.

Comment: Several lessons can be learned from this decision. (1) Get a clear scope of services specified in the contract so that it is not necessary to go outside of the contract with extrinsic evidence to determine the intention of the parties; (2) professional consultants should endeavor to get timely paid and exercise caution with regard to filing suit against clients for unpaid invoices; (3) CM’s are not guarantors of work performed by independent contractors hired by the project owner but they do have a duty to exercise reasonable care to meet their contractual responsibilities with regard to monitoring the work performed by those contractors.

 

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. 21, No. 1 (Jan 2019).

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