Construction contractor entitled to summary judgment where project owner failed to present adequate expert witness testimony to demonstrate the applicable standard of care and that contractor negligence caused damages. Owner argued that Contractor can be held liable for negligence for failing to measure up to its contractual promise to ensure that all work is performed in a “thoroughly first-class and workmanlike manner.” Under Arizona law, the courts identify the standard of care in a negligence action against a professional as “the duty to act as a reasonable professional would under the circumstances.” A plaintiff must establish by expert testimony the standard of care and in this case the single expert presented by the Plaintiff didn’t offer standard of care testimony because he was not qualified to do so. Macy’s, Inc. v. H&M Construction Company, Inc., 843 Fed. Appx. 841 (California 2021).
In this case, Macy’s, Inc. appealed the federal district court’s summary judgment order in favor of the Contractor on Macy’s negligence claims regarding a fire protection system sprinkler leak. Seven years before the suit was filed, the contractor oversaw the construction by its subcontractor, which Macy’s asserts was defective and caused a leak to occur. The trial court judge concluded that case could not go to the jury because Macy’s failed to present sufficient expert evidence.
To establish a claim for negligence, the court explained that a plaintiff must prove these four distinct elements: “(1) a duty requiring the defendant to conform to a certain standard of care; (2) a breach by the defendant of that standard; (3) a causal connection between the defendant’s conduct and the resulting injury; and (4) actual damages.”
Although a contractor may be liable in both contract and tort (negligence) for its negligent actions, the claims are fundamentally different, says the court. “In the context of property damage, contract law focuses on standards of quality as defined by the contracting parties; tort law on the objective reasonableness of certain conduct and the actual harm it causes.” This objective reasonableness of conduct can only be presented through expert testimony because “the average juror lacks experience in construction and thus does not have general knowledge of the standard of care for a general contractor installing, constructing, or inspecting fire protection systems or supervising subcontractors performing the same.”
The court noted that the facility’s sprinkler failure occurred seven years after installation and that Macy’s own expert had difficulty diagnosing the leak’s cause and had changed his opinion as to how corrosion had impacted the head [of the sprinkler]. It is thus not grossly apparent that [subcontractor] negligently installed the sprinkler system,” as alleged by Macy’s. Macy’s expert testified that “insufficient tightening of the sprinkler head caused corrosion and the leak, and that industry standards and the manufacturer’s instructions require wrench tightening to a specific torque level.” This testimony was not adequate concluded the court, because even “assuming the accuracy of that opinion, it still leaves open the question of whether a general contractor or a fire installation subcontractor, operating with due care, is expected to prevent this from happening and, if so, how.”
For these reasons, the appellate court sustained the lower court’s granting of the summary judgment.
Risk Management Comment: Expert witnesses are essential to proving negligence in construction disputes. In litigation, courts will grant summary judgment motions like this one where a party fails to present adequate expert testimony. In contrast, matters that are resolved through arbitration may be more difficult to obtain a summary judgment in similar circumstances. As an example, a few years ago, I was defending an engineer serving as subcontractor to a design-build contractor. The contractor made a claim in arbitration to recover money it claimed it lost due to relying upon inadequate designs during the bid-phase of the project and thereby underpricing its Guaranteed Maximum Price (GMP) contract to the project owner.
To prove those allegations, any court would have required detailed expert evidence establishing the standard of care and showing how the engineer had violated that standard and thereby caused the alleged damages. But this was arbitration not litigation. Because is was expensive complex construction, there was a three person arbitration panel under the Rules of the American Arbitration Association (AAA). The anticipated fees to be paid to the arbitrators for a multi-week arbitration was in excess of $200,000. When I filed a motion to dismiss the contractor’s case for failure to present sufficient expert evidence, the arbitration panel dismissed my motion one week later without even requiring the contractor’s counsel to file an opposition. That is just plain wrong!
I won’t theorize here on why this could happen, but since that horrible event, my office always recommends striking the arbitration clauses from design and construction contracts, and choosing litigation instead. Litigation is also the preferred position in the form contracts issued by the American Institute of Architects. And I believe I can safely say that most major insurance carriers prefer that their design and construction insureds litigate rather than arbitrate.
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. 23, No. 5 (August 2021).
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