The Design and Construction Management Professional Reporter: June 2009

Inside this Issue

Indiana Appeals Court Holds Economic Loss Doctrine Bars Negligence Claims Against Professional

By John W. Dennehy, Esq.

The Indiana Court of Appeals recently held that design professionals were not responsible for $40,000,000 in remediation costs and consequential damages associated with structural repairs to a public library renovation and addition project where the design professionals had not contracted with the municipality. The court reasoned, in part, that remediation work to the project itself did not constitute property damage. Indianapolis-Marion County Public Library v. Charlier Clark & Linard, P.C. et al., 900 NE.2d 801 (Ind.App. 2009).

Colorado Court of Appeals Recently Interpreted the Economic Loss Rule as Barring a Fraud Claim

By Sa’adiyah Masoud, Esq.

In a positive ruling for design professionals, the Colorado Court of Appeals recently interpreted the economic loss rule as barring a fraud claim. This is good news for design professionals as many attorneys representing contractors and other third-parties have been alleging claims of fraud, negligent misrepresentation and other intentional torts against design professionals in an effort to avoid the economic loss rule and unfavorable contractual provisions.

Acting Beyond the Scope of One’s Contract May Confer Liability for Project Safety

By Michelle L. Moshe, Esq.

Despite contract provisions to the contrary, design professionals can unknowingly be charged with voluntarily assuming safety duties under certain circumstances. As a general rule, in New York, a design professional incurs no statutory or common law obligations to another absent contract language to the contrary.

Claims of Professional Negligence Must Be Asserted in a Timely Manner and Be Supported by Expert Testimony

By Jordan S. Rattray, Esq.

In its decision in Tin Cup County Water and/or Sewer District (“Tin Cup”) v. Garden City Plumbing & Heating, Inc. (“Garden City”) and Druyvestein Johnson & Anderson, Inc. (“DJA”), the Supreme Court of Montana upheld precedent helpful to the defense of professional negligence claims. The Court ruled that the appropriate statute of limitations is determined by the gravamen of the allegations alleged and not the causes of action identified by a plaintiff. The Court also upheld existing case law that requires expert witness testimony to support allegations of professional negligence when understanding of the issues presented is beyond the trier of fact. Both of the Court’s rulings uphold a standard which a plaintiff must satisfy in order to be successful in a claim for professional negligence.

Changes to the AIA Agreements Regarding Statute of Limitations

By Justin M. Jagher, Esq.

The change in the AIA accrual period was highlighted in a recent case in the First District Court of Appeals of Illinois. In Federal Insurance Company v. Konstant Architecture, an insurance company brought a subrogation action against an architect alleging breach of contract with respect to its design of a residence. The parties agreed that the residence was built in 1997. Water and mold damage was discovered in 2002, and remediation costs exceeded $300,000. In its complaint, the insurer alleged that the architect failed to properly design and supervise the building of the home, specifically the roof, and that the architect failed to warn the homeowners about possible ice damming, water infiltration, and possible mold infestation.

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