COURT CLARIFIES REQUIREMENTS FOR A CONTRACTOR’S MISREPRESENTATION CLAIM AGAINST A DESIGN PROFESSIONAL

Posted by: Andy Cohn (acohn@kaplaw.com)

In a recent decision, the Pennsylvania Superior Court clarified the legal requirements for a contractor's direct claim for economic losses against a design professional caused by defective design. In Gongloff Contracting v L. Robert Kimball & Associates, a sub-subcontractor steel erector brought an action directly against a public project design professional (Kimball) for "misrepresentations" in the design documents. Gongloff claimed that the architect/engineer's structural design was inadequate in that the steel roof structure and trusses could not safely sustain all required construction loads. As a consequence of those deficiencies, project shutdowns ensued, and multiple change orders were issued resulting in substantial additional cost to Gongloff. When the steel subcontractor and general contractor refused to pay those additional costs, Gongloff commenced an action against the design professional.

In 2005, the Pennsylvania Supreme Court had held (for the first time) in the Bilt-Rite Contractors case that a contractor could bring a direct claim for purely economic losses against a design professional caused by design defects based on a theory of "negligent misrepresentation" in the design documents, even if the contractor did not have a direct contract with the design professional. But decisions subsequent to Bilt-Rite had suggested that the negligent misrepresentation needed to be "explicit" in order to support such a claim.

In Gongloff, the design professional claimed that the subcontractor's claim against it did not allege an "actual" or "explicit" misrepresentation. In other words, the design professional claimed that an allegation only that the design itself was deficient was alone legally insufficient to assert a Bilt-Rite claim.

However, in Gongloff, the Superior Court held that to bring a Bilt-Rite claim, it is sufficient to merely allege that a design professionals had negligently included faulty information in the design documents, as long as the claimant was intended to rely on such information. In its complaint, Gongloff had alleged that Kimball's design "explicitly or implicitly" represented to the contractors that the structural design was adequate and that the structure could safely sustain all required construction loads. It also alleged that the structural design "contained materially false information" in that the structural design was in fact not adequate to safely sustain all required loads. The Superior Court determined that these allegations were adequate to state a Bilt-Rite claim, and allowed the case to proceed.

The teaching of Gongloff is that a contractor's claim for economic losses against a design professional under Bilt-Rite may be asserted simply based on an allegation that a defective design included faulty information in the design documents in that the defective design itself can be construed as a misrepresentation by the design professional that the plans and specifications, if followed, would result in a successful project.

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