As explained in my last column (January 2009), too many owners, architects, civil engineers, and structural engineers fail to treat geoprofessionals—geotechnical, geoenvironmental, and construction-materials engineering and testing (CoMET) firms—with the professional courtesy and respect they merit. As a result, for the last four decades, problems stemming from engineered construction beneath the surface of the earth remain the most common source of construction disputes.
But the failure to accord professional courtesy and respect to geoprofessionals has even more damaging consequences because it discourages the same owners, architects, civil engineers, and structural engineers from asking geoprofessionals for project risk-evaluation guidance—insight that addresses far more than geoprofessional issues alone. Not all geoprofessionals possess these seasoned risk-management abilities. But those who have been forced to learn the hard way, those who have learned from others’ mistakes, and the 1,500 or so who have been through programs, such as ASFE’s Fundamentals of Professional Practice, certainly know what they’re talking about, and it would be worthwhile to listen.
For example, what do you know about the economic loss doctrine (ELD)? Want a lawyer to explain it to you? No problem, especially when it comes after the fact and you’re defending a negligence claim brought by a contractor claiming economic loss.
"What? Contractors can’t do that," you might claim. "If errors in my plans or specs cause contractors to bid too low, they can’t sue me. They have to sue the owner, because the Spearin Doctrine says, in essence, an owner that submits instruments of professional service to contractors for bidding purposes warrants that those instruments are error-free, even though the professional who prepared the instruments does not warrant that they’re error-free and cannot be held liable for errors, depending on the nature of what they are. Right?"
"No," is the answer. What’s involved—what knowledgeable geoprofessionals have taught me—shapes the context in which you practice. And you need to be familiar with that context to develop an effective scope of service and a contract that contemplates what often goes wrong.
The ELD serves to separate contract law from tort law. A contract is an agreement between (usually) two persons or entities that make promises to one another. Failure to fulfill a promise can be dealt with in a court of law, based on the precedential rulings that comprise contract law.
A tort is a civil wrong (such as professional negligence) that damages or injures a person or entity. When the damage involves a physical injury, the injured or damaged person or entity can seek compensation in a court of law, citing the precedent rulings that comprise tort law. When the damages resulting from the alleged tort are purely economic, however, most courts will not allow professional liability (tort) claims to proceed. Instead, claims must be based on breach of contract, meaning that in the case of design professional negligence, only clients can sue to recover purely economic damages (such as delay damages). But that’s changing.
The new theory holds that, while third parties (contractors, for example) cannot file professional negligence claims to recover their purely economic (alleged) losses, they can file negligent misrepresentation claims, given that, for example:
- a special (albeit noncontractual) relationship exists between design professionals and contractors engaged on the same project;
- design professionals know or certainly should know that contractors will rely on the design professionals’ instruments of professional service to prepare bids;
- design professionals are required to abide by the standard of care and perforce represent (tacitly or otherwise) that their instruments of professional service are free of negligent errors;
- the presence of negligent errors would mean that design professionals negligently represented that their plans and specifications were free of negligent errors; and
- the contractors that relied on the plans and specs would have a right to recover from negligent design professionals the difference between what the contactors bid (because of the design professionals’ negligent representation) and what they would have bid had the plans and specs included in the contract documents been buildable.
In essence, states that permit cases of negligent misrepresentation to move forward have more or less abandoned the ELD, even though they say they have not. And in those states, what the courts have done can have a profound effect on what you should be doing.
John P. Bachner is the executive vice president of ASFE, a not-for-profit association that provides programs, services, and materials to help geoprofessional, environmental, and civil engineering firms prosper through professionalism. Visit ASFE’s website at www.asfe.org.