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Brasfield & Gorrie LLC (Brasfield) was a general contractor (GC) hired by Fritz Farm Retail Company, LLC to construct The Summit at Fritz Farm, a multi-use development.  Brasfield entered into a subcontract with Harrod Concrete and Stone Co. (Harrod), for Harrod to furnish concrete for the development.  Brasfield sued Harrod for alleged defects in the performance of the concrete it supplied.  Harrod in turn filed a Third-Party Complaint against Nimrod Long & Associates, Inc. (Nimrod) who the court states “provided landscape architectural and design services for the Fritz Farm Project.”  Unfortunately, the Court fails to state whether Nimrod was under contract to Brasfield (perhaps as a design-builder) or to the project owner under a design-bid-build project.  This is an important distinction that should have been specified in order to understand the court decision.

The subcontractor made third-party claims against the architect for negligence, negligent misrepresentation, and common law indemnity. Specifically, Harrod alleged that “the specifications prepared by Nimrod were inferior and inadequate for the production of concrete to be utilized for exterior hardscape and other improvements of the Fritz Farm Project, among other reasons, because concrete is exposed to severe weather with freeze/thaw cycles in Kentucky.” The Architect filed a motion to dismiss the third-party claim based on lack of privity of contract.  It basically argued that it had no contractual duty to the subcontractor, and the subcontractor was not entitled to any third-party beneficiary rights.  This would also lead to argument that the “economic loss doctrine” prevented this claim for purely economic losses.  In rejecting that argument, the court stated “Contrary to what Nimrod contends, an architect, such as Nimrod, may be found liable under a contractor’s claim for negligent misrepresentation in the absence of privity.” The court also stated, “In addition, the Kentucky Court of Appeals has expressly recognized that architects can be held liable by third parties for negligent misrepresentation by supplying faulty design plans and specifications.”

Therefore, concluded the court, “Nimrod owed a duty to Harrod separate from its contractual duties to Brasfield. Specifically, Harrod asserts that the designs prepared by Nimrod, which Harrod reasonably and foreseeably relied upon, were negligently prepared because the mix design specifications were inadequate. However, Nimrod represented to Brasfield and Harrod that they were suitable for use at the Fritz Farm Project.”

The architect also moved to dismiss the subcontractor’s common law indemnity claim. The court concluded that, “the present facts sufficiently allege a claim of common law indemnity against Nimrod. Harrod states that their claim for common law indemnity “concerns Nimrod’s preparation of faulty specifications that were inadequate for exterior hardscape at the Fritz Farm Project.”  The court stated:

 “According to the Complaint, Harrod alleges that if Harrod is to be held liable for delivering a product that did not meet Nimrod’s prescribed specifications, it is at the fault of Nimrod for failure to provide adequate design specifications for Kentucky’s climate and the project’s intended use. [Id.] Harrod is responsible for any defects in the performance of the concrete supplied to the Fritz Farm Project.”

Editor’s Comment:  The above sentence makes no sense.  The court seems to be buying the subcontractor’s argument that is excused from meeting the specifications because those specifications were allegedly defective.  Under the well known Spearin doctrine, a contractor that meets the specifications is excused from liability in the event the project fails to perform as intended due to defects in those specifications.  If the designs were prepared by the architect directly for either the project owner, the owner would have potential liability to the subcontractor for defective specifications under what is known as the Spearin doctrine, which creates a type of warranty of design as between the project owner and the contractor who relies on the specifications provided to the contractor by the owner.  In contrast, if this was a design-build contract, the architect’s client would have been the GC in which case the GC would have made the Spearin doctrine warranty of design when it provided the specifications to its subcontractor, and the subcontractor would be able to make a claim directly against the GC for the allegedly defective specifications.  To receive the benefit of the Spearin doctrine, a contractor must first meet the specifications even if they are defective.

 

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 ConstructionRisk 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 Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk Report, Vol. 22, No. 8 (Oct/Nov 2020).

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