Historically, courts have generally declined to impose liability for negligence in the performance of a contract unless the plaintiff is a party to the contract. Therefore, whenever a contractor performs services at a particular facility, only the party that hired the contractor can be held liable for the contractor’s negligent performance of those services. In many cases, the party that hires the contractor is not the property owner (such as a general contractor). The lack of contractual privilege between property owners and negligent contractors has historically been a barrier for property owners to sue contractors for negligence.
This trend has changed direction, and courts are beginning to recognize the right of property owners to sue in many situations despite the lack of contractual confidentiality with contractors. In a recent case called Lynch v. Peter & Associates, Engineers, Geologists and Surveyors, the court explored and furthered that trend.
Lynch v. Peter & Associates Facts, Engineers and Geologists, Surveyors, Inc.
Property owner Cheryl Lynch hired a general contractor to perform major home improvements and repairs on her property, according to plans drawn up by an architect. The project included plans for a renovation of the existing home, a building addition, a site retaining wall, a foundation for the existing foundation, a new deck, and hardscape improvements.
Before construction began, the general contractor asked Peter & Associates to conduct a geotechnical inspection of the scaffolding trenches that had been excavated for additional construction on the site. The contract for this work was written on Peter & Co.’s letterhead and provided that Peter & Co. would pay $360 for the job. The contract made no mention of the homeowner and contained no provisions regarding third-party beneficiaries. It contained several provisions limiting the scope of the proposed inspection, including a clause limiting Peter & Co.’s liability to twice the fee.
The general contractor paid Peter $360, and Peter sent qualified civil and geotechnical engineers to inspect the foundations on the property. The inspection consisted solely of visual inspection and the use of a steel probe to drill into the trench and feel the soil. After the inspection, the technician wrote a memo summarizing the findings and addressed it to both the homeowner and the general contractor. The memo indicated that the soil was suitable for the intended project.
A general contractor, with the goodwill of Peter’s office, poured the foundation, but the soil proved insufficient to support it. The foundation for the extension collapsed, causing the house to sink in that area.
Trial Court: Contractor Peter Farm did not owe a duty of care to the homeowner.
The property owner filed a lawsuit against the general contractor, Peter Co., and others, alleging negligence against Peter Co. for failing to conduct proper inspections. Peter’s Firm argued that it did not have a duty of care (a necessary element for negligence) because it did not have a direct contract with the homeowner. Peter’s Firm also points out that it is a small engineering firm hired to inspect a single foundation for a nominal fee of $360, as stipulated in the contract with the general contractor. It was pointed out that the scope of the work was limited. The trial court agreed and granted summary judgment in Peter’s favor, concluding that Peter’s Office lacked a confidential contract with the homeowner and owed no duty of care to the homeowner. Ta.
Court of Appeals: Reversed. Lack of contractual privacy did not preclude Peter Farms’ duty of care to homeowners
On appeal, the Court of Appeals reversed the trial court’s decision and concluded that Peter Firm owed a duty of care to the homeowner, even though it had not entered into a contract with the homeowner. . The court began its analysis by recognizing that:[i]Many times in the past it has been generally accepted that in non-privacy situations there is no liability for negligence in the performance of a contract. ” However, the court explained that over time “the rules have liberalized considerably” and have begun to allow plaintiffs who are not parties to a contract to award damages for breach of contract in many circumstances. In analyzing each situation, courts will balance a number of factors, including: (1) The degree of impact of the transaction on the plaintiff. (2) The foreseeability of the damage to the plaintiff. (3) The degree of certainty that the plaintiff sustained the injury. (4) The closeness of the relationship between the defendant’s conduct and the injury sustained. (5) the moral responsibility associated with the defendant’s conduct; (6) Policies to prevent future harm. As applied here, these factors weigh in favor of recognizing a duty of care owed by Peter Farms to the homeowners, even though there was no contract between Peter Farms and the homeowners. That’s what I did.
lesson
In the context of complex construction projects and other real estate services, it is easy to assume that liability is limited to the contracting parties. However, the lynching incident exposed the danger of that assumption. Both service providers and property owners should be aware of the six factors listed above. The first element, the extent to which the transaction was intended to affect the plaintiff, appears to be particularly noteworthy in the residential real estate context. The Lynch court stated that “contractors working on housing projects certainly know that their work directly impacts people’s homes, and that changes the analysis significantly.” Historical trends indicate that courts are increasingly willing to recognize a path to tort liability despite the absence of a contractual relationship. In addition to expanding the pool of potential plaintiffs, non-contractual tort liability is often subject to contractual limitations on liability (such as the Peter Firm’s cap on doubling fees). means.
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