From time to time, in the midst of a project, it becomes apparent that design mistakes may significantly increase a contractor’s costs of completion. One’s natural response may be to seek relief from the culpable architect or engineer. In Idaho, however, the courts have consistently rebuffed direct claims by contractors and others with whom the design professional does not have a direct contractual relationship. Idaho’s current legal position is not universal, as an increasing number of jurisdictions permit direct claims against design professionals.
Recently, the state Supreme Court in Pennsylvania expressly held that general contractors could directly sue an architect for additional construction costs caused by the architect’s defective plans. The court held that an architect who makes a negligent misrepresentation (defective drawings) can be found liable to a contractor who is likely to rely upon the misrepresentation. In support of this expansion of tort liability, the court noted that design professionals, who are “in the business of providing information to others, should expect contractors to rely on this information, and it is reasonably foreseeable that economic damages are feasible if the representations were defective.” These expectations, reflecting “modern business realities” where there are less “generalists” and businesses are compelled to rely on experts, were sufficient, the court reasoned, to impose liability on architects (and engineers) for economic harm resulting from a reliance on their designs-regardless of the parties’ relationship.
At this point, outside the “narrow confines of a professional relationship involving an accountant,” Idaho does not recognize a cause of action for negligent misrepresentation and has, in recent years, declined to expand its scope.
Idaho courts have yet to make many exceptions to the rule that there can be no recovery for “economic loss” against a party with whom one has no contractual relationship. While exceptions are made for “special relationships,” including those with architects, the Idaho Supreme Court has stated they will only apply deviations to “an extremely limited group of cases.”
The ramifications of this rule in Idaho create the possibility for inconvenient consequences. Since contractors are currently precluded from bringing suit against the design professionals at fault, they are compelled to sue the owner directly regardless of whether the owner caused the damages. As a result, the owner can be compelled to answer for claims which are not of their making.
Under the circumstances, in order for an owner/developer to more fully protect itself, certain measures should be taken to ensure that the design professionals remain responsible. Among other things, a design professional should agree to appear in the same forum (court or arbitration) as the owner and contractor if a dispute should develop. Many pre-printed contracts with design professionals provide that in the event of a dispute they will not be a party to a dispute with the contractor, but will only agree to arbitration solely with the owner. Owner/developers should also insist that their design professionals carry malpractice insurance with adequate coverage, both in dollars and in time (malpractice coverage is usually limited to claims made within a certain time after substantial completion of a project). Additionally, owner/developers should review their contracts, as sometimes design professionals attempt to limit their liability to the amount of their fee.
In conclusion, unless and until Idaho contractors are able to bring direct actions against design professionals who are responsible for additional projects costs, owner/developers will remain the targets of claims which may ultimately be the fault of others. As such, it will remain necessary for owner/developers to take appropriate measures to protect themselves.
Geoff McConnell is a partner at McConnell, Wagner, Sykes + Stacey PLLC, focusing his practice in the areas of construction law, commercial litigation and business law. He has been recognized each year since 2008 by Best Lawyers in America and Mountain States Super Lawyers for his legal expertise in construction law, litigation and government contracts. Mr. McConnell can be contacted at (208) 489-0100.
Share this Post