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LEGAL PROTECTION BY NORMAN BROWN IV, ESQ., ASSOCIATE ATTORNEY, CORWIN & CORWIN

It Was the Design! Subcontractors’ Rights to Claims Against Design Professionals for Negligent Misrepresentation

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ubcontractors, general contractors and owners can often find themselves embroiled in lawsuits over payments for extra work by the subcontractor that has little to do with the conduct of the parties. Rather, these increased change order costs result from design errors, such as significant differences between what is shown on the project documents and what actually exists in the field. Yet, even when this appears relatively clear to the parties, owners and general contractors often balk at bringing the design professionals into the lawsuit. This can be for a number of reasons. Certain owners do significant business with their design professionals and do not want to disrupt that relationship. Some contracts between owners and design professionals have provisions which may hinder an owner’s ability to bring these claims. On a more macro scale, owners, in general, may fear that if they sue their design professionals it will result in increased design costs to cover the increased risk of litigation. General contractors, on the other hand, either do not want to upset their relationship with owners or, in what has more often been the case, general contractors find themselves involved early in the design process and open themselves up to liability for faulty design documents as well. Regardless of the reason, it can put the parties in a difficult situation where the subcontractor is rightfully due monies and the most culpable party is not present to contribute to a settlement. Faced with this scenario, what is a subcontractor to do? If subcontractors find themselves in such a scenario, they should consider the rights they have directly against the design professionals for negligent representation. Normally, under Massachusetts law, the economic loss doctrine prohibits the recovery of a plaintiff against a defendant for negligence where the damage was purely monetary and did not also result in some form of personal injury or property damage. However, the Supreme Judicial Court in Craig v. Everett M. Brooks Co., 351 Mass. 497, 499-501 (1967) recognized an exception to the economic loss doctrine in Massachusetts where the monetary losses are result of negligent misrepresentation, such as errors in project plans and specifications, that result in extra work or possibly lead to labor impacts. As a design professional contracts, most often, directly with the owner, or sometimes the general contractor, subcontractors do not have a direct contractual relationship with the design professional, thereby denying them a right to sue under contract. However, the Supreme Judicial Court in Craig also held that liability can be imposed against a defendant in Massachusetts for the negligent perfor-

mance of services to an entity not a party to the contract where the defendant knows that the third-party entity will rely on these services. Craig, at 501. This decision has created the foundation for a subcontractor’s right to sue design professionals directly without having to rely on the general contractor’s, or the owner’s, willingness to bring the design professionals into a lawsuit. In Massachusetts, a subcontractor’s right to sue design professionals directly was squarely addressed in the Massachusetts Appeals Court decision in Nota Constr. Corp. v. Keyes Assoc., 45 Mass. App. Ct. 15 (1998). The court in Nota, relying on the foundation of the Craig case, found that a subcontractor had a right to sue a design professional for negligent representation despite the economic loss doctrine or a lack of a contractual relationship. Nota, at 21-22. The court found that because the architect, Keyes, contracted to supply information that it knew would be relied upon by Nota, the subcontractor, in the performance of its work, Keyes could be directly liable to Nota for negligent misrepresentations in the design. Additionally, the court further held that Keyes could be liable to Nota under M.G.L. c. 93A, which gives rise to possible multiple damages and attorneys’ fees. The Court found that Keyes was the administrator of the contract and that Nota put forth a potentially viable claim which could show that Keyes acted unfairly and in bad faith when it failed to properly resolve Nota’s disputes for change orders and a required redesign of the project. Id. at 21-22. This is useful, as there would otherwise be no ability to recover attorneys’ fees in such a claim, unlike a claim against a general contractor and its surety for the same costs. Massachusetts case law, highlighted by the Nota decision, has created a valuable tool for subcontractors to use when enforcing their rights to equitable adjustments to their contracts resulting from the design professionals’ failure to use the proper standard of care when discharging its role on any given project. It is important for subcontractors to understand that they have the right to rely upon the drawings and specifications they are provided with when bidding on a project. It should be noted that it remains extremely important for a subcontractor to do its own due diligence and properly assess any project before bidding it. Prevention of a problem remains far better than curing a problem through a lawsuit. But at the same time, it is important for subcontractors to understand their rights to rely upon the contract documents and the assurance that the design professionals are doing their jobs properly and adhering to the proper standard of care when discharging their duties. Utilizing this tool afforded to subcontractors under Massachusetts law is often the only way to bring the responsible party to the table in certain cases and can greatly aid a subcontractor in getting what is rightfully theirs.  s

Norman Brown IV, Esq., is an associate attorney at the Woburn-based law firm Corwin & Corwin LLP. He can be contacted at nbrown@corwinlaw.com.

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Spring 2018

The Professional Contractor - Spring 2018  

In this issue, get to know ASM’s 2018 president; Cannistraro moves into bigger digs; and ways to save money with your ASM membership.

The Professional Contractor - Spring 2018  

In this issue, get to know ASM’s 2018 president; Cannistraro moves into bigger digs; and ways to save money with your ASM membership.