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Under very similar the facts, the North Carolina Court of Appeals (“COA”) recently said “yes” in the unpublished Beck Electric, LLC v. Neighboring Concepts, PLLC decision.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