COMPARATIVE FAULT APPLIED IN OWNER’S LAWSUIT AGAINST CONTRACTOR AND ENGINEER

There is nothing like a good old-fashioned dispute between an owner and its general contractor and design professional relating to construction and design defects where both parties have a role in the owner’s damages.  There are arguments that both the general contractor and design professional substantially contributed to the defects and damages.  Are the contractor and design professional jointly and severally liable for the owner’s damages?  Or, does comparative fault apply where the trial of fact allocates the contractor’s and engineer’s percentage of fault for the defects and damage?    A recent case found that comparative fault applied such that the trier of fact, in this case the judge, could allocate damages based the judge’s finding of the parties’ percentage of fault.  (For more information in comparative fault, please check this article.).  Comparative fault is not what an owner ideally wants because joint and several liability would be preferred.  However, this is what the contractor and engineer would want since their liability for damages is predicated on their percentage of responsibility as opposed to being liable for all of the damages.

In Broward County, Florida v. CH2M Hill, Inc., 45 Fla. L. Weekly D1736a (Fla. 4th DCA 2020), a public owner hired an engineer for airport improvements that included a taxiway to be designed and constructed in accordance with the Federal Aviation Administration’s design requirements.   The public owner also hired (i) a program manager to serve as its on-site representative and (ii) a separate engineering firm to provide materials testing and inspection services.  The public owner also hired a contractor to construct the taxiway.

Prior to substantial completion of the taxiway, the public owner discovered indentations in the surface of the taxiway (referred to as rutting).  This discovery prompted the public owner to investigate.  The public owner directed the contractor to mill away two inches of asphalt and install new asphalt.   The contractor achieved substantial completion in September 2008 and final completion in November 2008.  The contractor then submitted its final payment application to the public owner.  The public owner notified the contractor that it would retain money to deal with repairs associated with the indentations in the surface of the taxiway.  The public owner hired a new engineer to design the repairs.  The repair design was more robust (better) than the original engineer’s design because the repair engineer believed the new design was necessary to achieve a 20-year lifespan for the taxiway. A new contractor performed the repairs.

The contractor sued the public owner for nonpayment.  The contractor also sued the engineer for professional negligence in the design of the taxiway.    The pubic owner counter-sued the contractor for breach of contract and sued the engineer for breach of contract and indemnification.  The public owner asserted that the contractor performed defective construction and the engineer committed errors, omissions, and defects in the design and was obligated to indemnify the public owner for liability arising out of the design.  The public owner also sued its program manager (on-site representative) and testing engineer; these two parties settled prior to trial.

At trial, the public owner’s expert testified that both the contractor and engineer contributed to the indentations in the surface of the taxiway.  The expert testified that the engineer’s design deviated from the Federal Aviation Administration’s requirements and was doomed to fail such that if the contractor complied with the design, it would still fail.  The expert further testified that while the contractor contributed to the indentations as it failed to construct subgrade per the engineer’s design, it was to a lesser contributing factor than the engineer.

The engineer’s expert testified that the indentations were caused by undercompaction performed by the contractor.  The expert further testified that the public owner’s program manager violated its standard of care by allowing the contractor to deviate from the engineer’s original design in numerous ways.

The contractor’s expert testified that the indentations were caused by the design and undercompaction.

The trial court found that both the engineer and the contractor’s breaches were the proximate cause of the redesign of the taxiway.  The trial court also found that the public owner’s program manager, which had settled prior to trial, was also liable.  The trial court further found that public owner’s total damages were $6,2703,303 of which $725,000 was paid to the public owner pre-suit by the program manager and testing engineer.  After deducting this amount from the total damages, the trial court allocated damages as follows: (1) 60% was allocated to the non-party program manager (that had settled pre-suit); (2) 25% was allocated to the contractor; and (3) 15% was allocated to the engineer.   The public owner appealed the allocation in the final judgment.  The public owner argued that the trial court should not have apportioned liability at all because comparative fault does not apply in breach of contract cases.  Instead, the public owner contended that the trial court should have found that the engineer and contractor were jointly and severally liable for the damage (indentations) because their separate contractual breaches caused a single, indivisible injury.

The Fourth District Court of Appeal disagreed with the public owner concluding that Florida Statute s. 768.81 dealing with comparative fault authorized the trial court to allocate fault.  While comparative fault under s. 768.81 deals with negligence actions, it defines a negligence action as a “civil action for damages based upon a theory of negligence, strict liability, products liability, professional malpractice whether couched in terms of contract or tort, or breach of warranty and like theories. The substance of an action, not conclusory terms used by a party, determines whether an action is a negligence action.”  Broward County, Florida, supra, quoting Fla. Stat. s. 768.81.

The public owner’s claim against the professional engineer was predicated on the engineer breaching a contractual standard of care that required it to design the taxiway pursuant to the Federal Aviation Administration’s standards.  Although the public owner’s claims against the engineer were couched as a breach of contract, it was based on a theory of professional negligence (violation of a standard of care) warranting the application of comparative fault.

However, the public owner’s claims against the contractor were not based on a professional negligence theory.  Nonetheless, the Fourth District held that comparative fault did apply:

Applying a holistic approach to analyzing the complaint, we conclude that the contract action against [the contractor] fell under the umbrellas of the ‘negligence action’ against [the engineer], so that the circuit court’s allocation of fault was appropriate.  After all, [the contractor] was to perform the contract according to specifications designed by [the engineer], so the causes of action against each were necessarily intertwined.  To prove its case against [the contractor], the public owner was required to prove that [the contractor’s] ‘breach of its contractual responsibilities was a substantial factor in causing the [public owner’s] extensive damages.’   This is compatible with the concept of ‘fault’…and parallels the tort notion of a violation of a duty of care that is the proximate cause of damages.  Based on the evidence, the circuit court properly allocated fault among all actors whose conduct substantially contributed to the [public owner’s] damages.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.