Who are these people and why are they suing me?
The changing landscape of lawsuits against design professionals.
By: Matthew F. Dolfi
It used to be that only a person with privity of contract could sue a professional for breach of contract or professional negligence. But that is no longer the case. Now, contractors, subcontractors, and even third-parties can sue design professionals for professional negligence, negligent misrepresentation, or general negligence. What happened?
In Guy v. Liederbach, 459 A.2d 744 (Pa. 1983), the Court held that intended beneficiaries under a will who lost their legacy were permitted to sue the lawyer who prepared the will even though the beneficiaries had no contract with the lawyer. In that case, the Court found it was foreseeable that the third-party beneficiaries would be injured as a result of the lawyer’s negligence. Thus, they were allowed to sue the lawyer even though they had no contract with him. Then, in Bancroft Life & Cas. ICC, Ltd. v. Intercontinental Management Ltd., 2012 WL 2150744 (W.D. Pa. 2012), the Court permitted a claim to proceed against an accountant, in the absence of contractual privity, on the basis that the accountant was specifically hired to prepare financial statements for the plaintiff and did so negligently, resulting in financial damages to the plaintiff. Again, it was a question of foreseeable harm to the third-party. In these cases, the courts opened the door to third-party claims against professionals in the absence of privity.
These days, not only is it possible for a third-party other than your client to sue, but you can also be sued by your client for breach of contract and professional negligence, separately. In Bilt-Rite Contractors, Inc. v. The Architectural Studio, 866 A.2d 270 (Pa. 2005), the Pennsylvania Supreme Court permitted a negligence claim to survive alongside a breach of contract action where, previously, negligence claims were not typically permitted to be filed with breach of contract cases. The Bilt-Rite Court also held that a design professional may be sued for “negligent misrepresentation” if, in the course of his or her work, the professional supplies inaccurate information for the guidance of others, again including those who had no privity of contract with the professional.
Recently, in Bruno v. Erie Insurance Exchange, 106 A.3d 48 (Pa. 2014), the Court permitted a claim to proceed against an engineer retained by an insurance company to evaluate mold in a residence where the third-party homeowners were allegedly injured as a result of the engineer’s representation that the mold was not harmful. The mold turned out to be toxic. The homeowners’ claim for personal injury was allowed to proceed against Erie’s engineer on the basis of an alleged breach of a social duty imposed by the law of torts, and not a breach of a duty created by the underlying insurance contract. Therefore, the negligence was outside the scope of the contract itself, and the plaintiffs, again, were not direct clients of the engineer. Notably, the Bruno Court also held that a Certificate of Merit was not required because the homeowners were not clients of the engineer. This holding confirmed that a Certificate of Merit is only required when the plaintiff is your client.
So, who are these people and why are they suing you? Courts have broadened the scope of potential lawsuits a design professional may face by: (1) re-defining who can sue a design professional, (2) permitting negligence claims to survive with breach of contract claims, and (3) changing the requirements for the action to be filed. If a third-party can show that your alleged negligence resulted in some kind of damage, they can sue you even though they have no contract, and they don’t need a Certificate of Merit to do it.
As a professional, providing high quality services is not always enough to protect you from being sued. You can further minimize your risk of litigation by following these principles:
Establish the scope of work. Then, stick to it.
Problems arise when your work or services go beyond the scope explicitly set forth in the contract. Unfortunately, this typically occurs when the design professional tries to go the extra mile for a client. To protect yourself from claims, execute a well-defined scope of services and stick to it.
Announce what it is that you are not doing.
When problems arise on the job site, contractors and sub-contractors – or, at least, their counsel – attempt to pass blame back to the design professional. You can reduce this type of finger-pointing by including a well-defined disclaimer clearly stating what services you have not agreed to provide in your contract and on your plan drawings.
Build a solid relationship with your client.
When something goes wrong on the job, your chances of being sued go down when you have a great working relationship with the client. Keep the client well-informed throughout the progress of the project and establish a strong relationship with the principal of the company. Do this and your client may agree to indemnify you if and when something does go wrong resulting in delay, damages, or injury to a third-party.
Contact a lawyer.
The attorneys at Robb Leonard Mulvihill can examine the terms and conditions of your contracts, indemnity agreements, scope of services, and disclaimers before every job. Additionally, in the event you do get sued, we have years of trial experience and can represent you and your company in court.