Law Alerts

Architectural, Engineering & Construction Defect

Florida
By Michael Decandio, Esq. (mjdecandio@mdwcg.com or 904-358-4203)

The court examined a suit brought by Vesta against Lotspeich and their employee Michael Howe. Vesta contracted with Lotspeich to perform an ecological/environmental assessment of a large piece of property that Vesta wished to purchase and develop. Howe, an ecologist, prepared a report in which he identified most of the property as wetlands and opined that it would take $75,000 per acre to mitigate sufficiently for development. Vesta decided not to pursue the purchase. They subsequently learned that Howe was incorrect in his assessment and brought suit to recover economic losses, raising claims of negligent misrepresentation. Lotspeich and Howe both moved to dismiss, citing the ELD and privity of contract that limited the action to breach of contract rather than tort. Vesta argued that Howe could be sued individually as an employee of Lotspeich and further argued that "negligent misrepresentation" was an exception to the ELD.

The court held that Howe could not be sued individually as he was not "professional" as defined by Florida law and that only suits for "professional negligence" would defeat the application of the ELD as a defense where privity existed. They further explained that privity with Lotspeich constituted privity with their employee unless he was in the class of a professional. More importantly, the court addressed and rejected the attempt to use a claim for "negligent misrepresentation" under Section 552 of the Restatement of Torts to bring a tort action rather than one for breach of contract. They distinguished between misrepresentations that are directly related to the breaching party's performance and those which are independent of the contract itself (for example, a misrepresentation which induced a party to enter the contract, rather than a misrepresentation in the performance). The DCA held that the misrepresentation by Howe was directly related to his performance of the contract and a cause of action existed only for breach. The court went on to say that, if the Section 552 Negligent Misrepresentation theory were applied to cases in which contractual privity existed, they would "swallow" the ELD for a large body of contracts, meaning that no one in the business of supplying information to others could ever allocate losses by contract. Thus, Section 552 of the Restatement of Torts does not apply as an exception in contractual privity cases.

This case has amended the definition of new residential construction as it relates to home improvements under Consumer Fraud Act. Here Czar, Inc. was contracted to install custom cabinetry in a new construction. Heath hired Czar, Inc. personally. Heath had previously retained a general contractor, but Czar, Inc. was not retained as a sub-contractor, but rather, Heath hired Czar, Inc. personally.

The Appellate Court found that since Czar, Inc. was not retained to construct the new residence, Czar, Inc.'s work would fall under the Home Improvement Act. Therefore, consumer fraud was a viable pleading given that Czar, Inc.'s work fell within the definition of a "home improvement."

In February 2002, the plaintiff was arrested by the Lansford Police in Carbon County, Pennsylvania, and incarcerated after a domestic dispute with his wife. Later that evening the plaintiff removed his shoe lace, tied it to a ventilation grate above the toilet, and tied the other end around his neck. He then strangled himself by kneeling in front of the toilet and applying pressure to his neck. The plaintiff instituted the instant action against both the county defendants and the architects who designed the prison. Marshall, Dennehey, Warner, Coleman & Goggin represented the architect.

Since the claims against the county defendants were for civil right violations under 42 USC § 1983, the case was filed in the United States District Court for Middle District of Pennsylvania. The architect filed a Motion for Summary Judgment and argued that an architect cannot be held liable in tort for the suicide of a prisoner in a prison the architect designed. The issue was a matter of first impression in the Commonwealth of Pennsylvania. The general rule under Pennsylvania law, however, is that liability cannot be imposed upon third parties for another's suicide. McPeake v. Cannon, 381 Pa.Super. 227 (Pa.Super. 1989). Several exceptions to the general rule exist. For example, a hospital, mental health institution or mental health professional with a custodial relationship with the decedent has a recognized duty of care. If the decedent was not associated with a hospital, then a clear showing of a duty to prevent the suicide by a direct connection between the alleged negligence and the suicide must be demonstrated. Another exception is a wrongful death action brought under the worker's compensation statute.

The court held that the architect did not have a custodial relationship with the decedent. The case also did not involve a wrongful death action brought under the worker's compensation statute. Finally, the court determined that a clear showing of a duty to prevent the suicide existed or that a direct causal connection between the alleged negligence and the suicide existed. The court pointed out that other jurisdictions have held that an architect cannot be held liable for a prison suicide. Courts have held that any other approach besides the "no liability" approach would risk exposing prison architects to endless suicide liability despite county, state or federal administrators' own decisions about design and placement of prisoners in particular cells within a facility.

Based upon these cases and the absence of authority from the Pennsylvania courts, the District Court held that the plaintiff had failed to establish a clear duty on the part of an architect to prevent the decedent's suicide or that the architect's actions directly caused the suicide. As a result, none of the exceptions to the general rule that prohibits recovery from third parties for the suicide of another applied, and summary judgment for the architect was held appropriate.

The plaintiff, Excavation Technologies, Inc. (ETI), is an Ohio contractor in the business of providing excavation services. ETI was hired to perform excavation work for a waterline extension project in North Bethlehem Township, Pennsylvania. Pursuant to the One Call Act, ETI timely requested that the defendant, Columbia Gas, mark any gas lines in the vicinity of the various work sites. ETI alleged that Columbia Gas improperly marked several lines which caused ETI to strike the gas lines and resulted in damages of approximately $74,000. ETI filed a cause of action against Columbia Gas for purely economic damages under a negligent misrepresentation theory pursuant to § 552 of the Restatement Second of Torts. ETI alleged that Columbia Gas, which is under a statute of duty to provide information concerning the location of underground lines, should be subject to liability for negligently supplying that information in the same manner that an architectural firm was held subject to liability for economic losses in Bilt- Rite Contractor's Inc. v. Architectural Studio.

Columbia Gas' preliminary objections argued that utility companies responding as compelled by the One Call Act cannot be equated with design professionals who are engaged to prepare plans, drawings and specifications and do so for their own pecuniary gain. Columbia Gas also asserted that the expansion of tort liability as advocated by ETI would be contrary to the policy considerations that underline tort law and would be against the purposes of the One Call Act.

The court held that it would not expand the negligent misrepresentation tort as outlined in Bilt-Rite to hold utility companies liable for losses when they misrepresented the location of gas lines. The economic loss rule states that no cause of action exists for negligence that results solely in economic damages unaccompanied by physical injury or property damage. In Bilt-Rite, the Pennsylvania Supreme Court had carved out an exception to the economic loss rule and held that design professionals can be held liable for information they negligently provide because they have a contractual relationship with some party to the construction project, typically the owner, from which a duty flows to a foreseeable third party to that contract. In this matter, the court held that a utility responding pursuant to its obligation under the One Call Act is completely different from an architectural firm or other design professional as its only contractual relationship with any party to the project is to supply gas to its customers, not information for the guidance of others in their business. The court also felt that expanding the tort of negligent misrepresentation to utility companies would be against public policy considerations of the Act. The court's decision makes clear that the tort of negligent misrepresentation that has recently been applied to design professionals was a narrow exception to the economic loss rule and will not be expanded without clear public policy reasons.