Hard Hat Case Notes
| Author | By Christopher M. Burke and Lauren P. McLaughlin |
| Pages | 42-45 |
THE CONSTRUCTION LAWYER42 Winter 2020
Christopher M. Burke Lauren P. McLaughlin
Published in The Construction Lawyer, Volume 40, Number 1 Winter 2020. © 2020 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion
thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
HARD HAT CASE NOTES
By Christopher M. Burke and Lauren P. McLaughlin
Christopher M. Burke is a partner with Varela, Lee, Metz
& Guarino, LLP in Tysons Corner, Virginia. Lauren P.
McLaughlin is a partner with Smith, Currie & Hancock
LLP in Tysons Corner, Virginia.
Design-Builder’s Contract Claim Against Architect
Dismissed
In the world of construction litigation, claims are driven
by contractual privity. While parties to a contract can sue
for breach of the duties owed to them, often a construction
litigant will sue another party with whom it has no contract.
Among the legal theories permitting parties to pursue design
professionals with which they have no contractual privity is
the third-party beneciary (TPB) doctrine. In a recent case
from Massachusetts, a federal court determined whether a
design-builder could bring a TPB action against an architect
that was involved in the initial stages of the project design but
with which the design-builder did not have contractual privity.
After Tropical Storm Ida devastated El Salvador
in November 2009, the U.S. Agency for International
Development (USAID) provided $25 million in funding to
rebuild damaged infrastructure in the area, including roads,
bridges, schools, and health clinics. CDM International Inc.
(CDM), a Massachusetts engineering rm, was under a
master contract with USAID to serve as the architect and
engineering rm for USAID projects worldwide.
In 2011, CDM entered into a Task Order with USAID
specifying CDM’s duties for the El Salvador project. The Task
Order required CDM to conduct studies and assessments of
each project site and create preliminary designs and technical
specications that would constitute at least 30 percent of the
nal designs for each facility. The Task Order also required
CDM to participate in procuring the design-build contractor,
who was to use CDM’s preliminary designs to create nal
designs and then reconstruct the facilities. As part of CDM’s
Task Order, CDM was also to eventually supervise the work
of the design-build contractor. In late 2013 and early 2014,
CDM reported that it had completed preliminary designs for
various facilities. USAID then engaged Arco Ingenieros, S.A.
(Arco), one of the country’s largest construction companies,
to serve as the design-builder for eight schools and one clinic.
The solicitation explained that Arco’s nal designs were to be
based upon CDM’s 30 percent preliminary designs.
After starting work on the projects, Arco believed that
CDM’s preliminary designs contained numerous errors
and constituted substantially less than 30 percent of the
nal designs. Specically, Arco alleged that the plans for
the schools were not code compliant and did not account
for soil conditions and subsurface problems. Additionally,
Arco alleged that the designs for the clinic did not address
ooding requirements and bio-infectious waste disposal, and
failed to note that the annex to the clinic was structurally
unsound. Arco alleged that these errors caused it to spend
signicant time redrawing the designs; obtaining new permits;
conducting additional excavation, soil compaction, and
hydrogeological studies; and demolishing more structures
than planned.
Additionally, Arco claimed that CDM and USAID
allegedly interfered with Arco, making it harder for Arco
to perform its contractual duties. These allegations included
CDM purportedly not responding to concerns about the
design, failing to approve technical documents, and using
outdated technical specications. Arco also contended that
USAID avoided paying it for its work by determining that
it had not substantially completed the projects, resulting in
additional costs and unpaid invoices of almost $9 million.
Arco led suit against CDM asserting multiple causes of
action, including a breach of contract claim that asserted
Arco was an intended beneciary of the CDM Task Order
with USAID and that it suffered damages due to CDM’s
preliminary designs. CDM moved to dismiss this breach
of contract claim on the theory that there was no contract
between CDM and Arco. On a motion to dismiss, the District
Court of Massachusetts considered whether Arco was an
intended beneciary of the CDM Task Order.
To answer this question, the court rst looked to the
language of the contract to see if the parties intended to
benet any third parties. Typically, if the language is unclear
on this point, courts look to other evidence. In the case of
CDM and Arco, the court found that the express purpose of
the contract stated that CDM would “provide professional
architecture and engineering services for the technical tasks”
associated with USAID’s reconstruction project. The court
held this did not indicate that the CDM/USAID contract
intended any benet to Arco. While the contract required
CDM to carry out various studies and create designs, the
court found that these tasks were only intended to benet
USAID and that any benet Arco derived from the tasks
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