Departments — May/June 2005

Design Defect Claims

Contractors Can Sue Designers Directly

By Mason Avrigian

Mason Avrigian ATTORNEY AT LAW Mason Avrigian Jr. is a partner in the Blue Bell, Pa., law firm of Wisler Pearlstine LLP. His practice is concentrated on construction law and construction litigation. Avrigian was lead counsel for Bilt-Rite Contractors Inc. the plaintiff in the case that is the subject of this article.

Pennsylvania joins several other states in allowing contractors to recover damages for design misrepresentation even though there is no contract.

The Pennsylvania Supreme Court recently issued a decision granting contractors a major victory to recover monetary damages in claims against architects and engineers.

In Bilt-Rite Contractors v. The Architectural Studio, the court ruled for the first time that contractors can sue design professionals directly in state court for monetary losses and damages resulting from misrepresentations and errors in design information, even when the contractor does not have a contract with the design professional.

The case involved a public school construction project near Allentown. The school district hired the architect, The Architectural Studio, Easton, to prepare plans, drawings and bid specifications. The plaintiff, Bilt-Rite Contractors Inc., Telford, obtained the architect's plans and, based on those design specs, bid for the general construction contract. Bilt-Rite was the successful low bidder and signed a contract with the district for a base amount of $16,238,900.

Once the project started, Bilt-Rite found that at least three aspects of the work detailed in the architect's design documents could not be built as specified-the aluminum curtain wall system, slope glazing system and metal support system. Bilt-Rite claimed that the work and materials required to build these systems was dramatically different from that represented in the architect's plans and specifications. It also claimed to have incurred substantial additional time and costs to perform the work as a result of the alleged misrepresentations. After completing the work, Bilt-Rite sued the architect directly to recover its increased costs and damages.

After two lower courts rejected Bilt-Rite's claims, the Pennsylvania Supreme Court on appeal upheld the contractor's right to sue the architect for misrepresentations in its plans and specifications. The court adopted a new cause of action in Pennsylvania-negligent misrepresentation against design professionals.

The court's said that the architect was "well aware" that its design information would be provided to and utilized by others and that the prospective harm to third parties therefore was foreseeable. Because the contractor relied on the design information in preparing its bid and entering into the contract with the school district, the contractor could sue the architect directly for monetary losses and damages resulting from misrepresentations and errors in the architect's design, the court concluded.

The Impact

The Bilt-Rite decision should be taken into consideration by any contractor that suffers monetary damages because of defective design. Design problems are a major cause of additional time and costs incurred by contractors on both public and private projects. To maintain this kind of legal action, contractors must be prepared to establish that the architect was aware that contractors would receive and rely on the architect's plans and specifications and that the contractor did in fact rely on the information to its financial detriment.

This provides the required foreseeability and reliance elements necessary to maintain the lawsuit. Because of these requirements, the new action applies most directly in the public, design-bid-build project delivery systems where the architect knows that the work must be put out to public bid.

In adopting the new cause of action for negligent misrepresentation against design professionals, Pennsylvania joins a growing trend of courts allowing direct suits by contractors against architects and engineers for defective design information. Other states include Massachusetts, Arizona, Georgia, Montana, North Carolina, South Carolina and Tennessee.

Although this new action does not replace the contractor's right to sue the owner for deficient design information in accordance with the principles announced in U.S. v. Spearin, the Bilt-Rite case and others across the country give contractors another avenue to recover the substantial damages often incurred because of defective information in project plans and specifications.