The Design and Construction Management Professional Reporter: September 2008

Inside this Issue

Infrastructure Inspection Engagements: Opportunities and Perils

By David H. Corkum, Esq.

The sad state of the nation’s infrastructure is probably no surprise to anyone reading this article. While all types of public infrastructure represent significant capital investments, many—bridges, tunnels, dams, and levies—also represent significant safety hazards. The failure of these infrastructures potentially brings far-reaching ramifications, including major loss of life, and/or astronomical economic losses. In the wake of levy failures in New Orleans and California, floods in the Midwest, a fatality in a newly-constructed Massachusetts tunnel, and a catastrophic bridge collapse in Minneapolis, the public has demanded safety assurances—and the politicians have responded. Politicians have turned to the cash-strapped owners and operators of these previously-taken-for-granted facilities, and commanded their implementation of inspections, repairs, and safety upgrades.

Reaffirming the Economic Loss Doctrine in Massachusetts

By Justin M. Jagher, Esq.

The Massachusetts Appeals Court recently affirmed the Superior Court’s ruling that granted a motion for summary judgment in favor of a negligent third party (R.L. Whipple Co., Inc. v. Pondview Excavation Corp., No. 07-P-1214, D. June 4, 2008). At issue was whether or not an employer could maintain a negligence claim to recover its increased workers’ compensation insurance costs from the third party that injured its employee. The Appeals Court followed the long-standing rule, for parties not in contractual privity, that purely economic losses are unrecoverable in tort actions in the absence of personal injury or property damage (the “economic loss doctrine”). Tort law is a civil recourse to protect one’s person and property. Contract law is for the protection of an economic expectation of the contract to which parties have agreed. Because Whipple’s tort-based claim sought to recover purely economic damages, its claim was barred by the economic loss doctrine.

Action Against Architect Dismissed— Plaintiffs Failed to Comply with Statutory Prerequisite

The New York Supreme Court recently granted a motion to dismiss on behalf of defendant architect, Sear-Brown Group, Inc. d/b/a Stantec Consulting Services (“Stantec”), related to design services that were performed more than ten years past. Jordy Rabinowitz v. Great Neck Park District, et al., No. 9259/2006 (N.Y. Sup. Ct. 2008) (Short Form Order entered June 16, 2008). The case was dismissed on the grounds that plaintiffs failed to comply with certain requisite notice provisions contained within the New York Civil Practice Laws and Rules (“CPLR”) involving suits against architects and engineers.

Limitation of Liability Clauses are Still Viable in North Carolina

The North Carolina Court of Appeals recently upheld a limitation of liability clause in a professional services contract. Blaylock Grading Company, LLP v. Smith, 658 S.E.2d 680 (N.C. Ct. App. 2008). This important decision upholds the rights of architects and engineers to negotiate potential liability.

Caution Advised for Parties Relying Upon a Contract’s “Flow-Down” Provision to Procure Indemnity from a Subcontractor

It is common in the construction industry for the terms contained within a prime contract to be incorporated into a subcontract. This can be achieved by referencing, in the subcontract, the terms of the prime contract. The terms essentially “flow-down” from the prime contract to the subcontract. The objective of flow-down clauses is to ensure consistency of obligations throughout the various tiers of the contracting process. A recent decision by the Supreme Court of North Carolina addressed the issue of intent through the use of flow-down clauses, and is likely to have a significant impact on how construction contracts are drafted in North Carolina.

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