When the Plans & the Code Don’t Mix, Can a Sub Sue a Design Professional for Negligence?

Photo by CGehlen via Flickr

Photo by CGehlen via Flickr *

Talk about being stuck between a rock and a hard place.

You’re an electrical sub who notices during your performance that installing certain light fixtures per plans would run afoul of the manufacturer’s instructions and violate the building code.  You bring the issue to the attention of your general contractor, who submits an RFI.  The architect’s response directs you to proceed per plans.  The system later malfunctions, and you incur significant cost researching the problem, ultimately concluding that the installation method directed by the architect is the culprit.  The architect refuses to pay your costs for researching the issue.

Might you have a claim for negligence against the architect?

Under very similar the facts, the North Carolina Court of Appeals (“COA”) recently said “yes” in the unpublished Beck Electric, LLC v. Neighboring Concepts, PLLC decision.

The COA’s decision reiterated the North Carolina rule that architects can be sued by general contractors and subcontractors for economic loss foreseeably resulting from a breach of the architect’s common law duty of care in the performance of its contract with the owner.  Davidson and Jones, Inc. v. County of New Hanover, 41 N.C. App. 661, 667, 255 S.E.2d 580, 584 (1979).  This rule is arguably contrary to the traditional “economic loss rule” applied in other jurisdictions that bar GCs and subs from suing design professionals in negligence for “purely economic losses” (i.e., none of the loss arises from bodily injury or damage to property), but it has stood the test of time here in the Old North State, and nothing in Beck Electric alters it.

The bigger question in Beck Electric was whether the trial court correctly found that the electrical sub was contributorily negligent as a matter of law.  That finding served as the basis for the trial court’s entry of summary judgment in favor of the architect and its electrical subconsultant.

Contributory negligence is a defense available in negligence actions when the plaintiff contributes to its own harm.  It’s a particularly potent defense in North Carolina, because it constitutes an absolute bar to a plaintiff’s recovery, meaning that even if a defendant is 99% responsible for a plaintiff’s damage and the plaintiff is only 1% responsible, the plaintiff is barred entirely from recovering any damages.

The trial court in Beck Electric agreed with the defendants that the electrical sub’s installation of the light fixtures in violation of the manufacturer’s directions constituted contributory negligence as a matter of law.  On appeal, the COA reversed, ruling that “plaintiff could not have mounted the fixtures consistent with the manufacturer’s instructions without refusing to adhere to the plans, thereby risking litigation for breaching its contract.”  Since the only reason the electrical sub improperly installed the fixtures was because it was ordered to do so by defendants, the COA concluded the trial court erred in finding the sub contributorily negligent as a matter of law, and sent the case back to the trial court for a jury to consider the evidence and draw its own conclusions.

My take?  I think the COA got it right.  On a strictly visceral level, it strikes me as inherently unfair that a sub would be put in the position of having to choose between following its subcontract on the one hand and the manufacturer’s directions and building code on the other.  This gut reaction may have a theoretical basis.  As a general rule, any given construction risk should be allocated to the party best able to manage that risk.  On a design-bid-build project, the architect is the party responsible for making sure its design is sufficient, and is therefore in the best position to manage the risk of building system failure arising from a code violation.  That’s particularly true on the facts alleged in Beck Electric, which, if true, reveal that the contracting team did everything it could to inform the design team of a design issue, and was told to proceed in violation of the building code anyway.  Why should a sub bear the financial consequences of that erroneous direction?

Unfortunately for GCs and subs in North Carolina, the COA elected not to publish the Beck Electric decision in the state reporter, which means it cannot be cited as binding authority in future cases involving similar facts.  Still, a trial court might find the decision to be persuasive in a future case where a contractor is put in the unenviable position of choosing between its contract and the code.  If you find yourself in such a position, be sure to reach out to an experienced construction attorney to discuss your options.

* Photo Credit: You can see this and other works by CGehlen at the artist’s Flickr Photostream.  I have modified the image with the yellow text and arrow.

3 Comments

Filed under Building Codes, Construction Risk Management, NC case law, Subcontractors

3 responses to “When the Plans & the Code Don’t Mix, Can a Sub Sue a Design Professional for Negligence?

  1. Matt:
    Interesting case. Since I tend to represent architects and engineers, I am not so sure the COA got it correct(!). If I were advising the electrical sub, I would certainly tell them to either (1) walk away or (2) put it in writing that they are doing this, against the Code, at specific direction. Number (1) is hard to do, economically, I know. But Number (2) is also a risk. If you *know* something is not according to Code but agree to build it that way anyhow? Seems like you are setting yourself up for a contrib. defense. The “only following orders” defense is often not a winner. Nice post!
    Melissa

    • Matthew C. Bouchard, Esq.

      Great comments, Melissa; sorry to be so tardy in responding to them.

      The Beck Electric case certainly presents an interesting dilemma. On the one hand, an argument can be made that it’s never negligent to follow one’s contract. On the other, how could it NOT be negligent to disobey the Code? Both perspectives strike me as meritorious.

      The only way I can think of to approach that dilemma, particularly at the dispositive motion stage, is by using traditional construction risk allocation principles. If such an approach is reasonable, then to my mind, the licensed professional owning responsibility for Code-compliant design should not prevail on a motion for summary judgment when a contractor, in full compliance of its contractual obligations (assuming its contract has a clause resembling Subsection 3.2.2 of the AIA A201-2007), submits an RFI after noticing a discrepancy, but is told to proceed per plans. I completely agree that when presented with such a situation, a contractor should put its disagreement with the RFI response in writing, and that’s advice I wouldn’t hesitate to offer my clients. I’m just not convinced that if a contractor doesn’t take that extra-contractual step, it should be found contributorily negligent as a matter of law. Better in my view to let a jury make that determination.

      I’ve heard someone else embrace the “just walk away” theory. Again, should declining to take that step be considered contributory negligence as a matter of law? Once more, I say at a minimum it’s a genuine issue of material fact for a jury to decide. Any other rule would put way too onerous of a burden on the shoulders of a contractor. The decision to walk off a project has more than just economic implications for a contractor; it also carries enormous legal risk for itself, its surety (if any), all of its other subcontractors and the owner. Those aren’t calls I want my clients making, and consistent with Spearin and Gilbert Engineering, I don’t think it’s their responsibility to make them. At least not as a matter of law; let a jury hear the evidence and reach a conclusion.

      The owner/design team can utilize various tools to ensure a project’s plans and specs are Code compliant; peer review and meeting with a code official come to mind. In light of these options, once direction is given to a contractor to proceed in a certain manner, I just don’t think it’s fair to consider compliance with the design professional’s interpretation of the sufficiency of the plans and specs to be contributory negligence as a matter of law.

      It will be very interesting to see how all this plays out if and when the case is tried. One thing appears certain: both sides will have something to talk about!

      Thanks again for your comments; I hope your year is off to a great start.

  2. Reblogged this on South Carolina Construction Defect Law and commented:
    Great article by Matthew Brouchard, Esq. on the rights of a subcontractor to sue design professionals for inadequate plans

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