Section 23 Liability of the Design Professional for Economic Loss

• Library: Prof Liability 2005

The liability of the design professional is often related to construction problems arising out of changes in the work, acceleration or delays on a project, cost overruns, contract ambiguities, and a host of other sources of construction disputes. Consequently, construction litigation often involves claims to recover “economic damages.” For example, contractors file suit against owners and design professionals, owners sue architects and engineers on whom they rely for professional services, architects cross-claim against engineers, contractors sue subcontractors, and suppliers sue contractors, subcontractors, and owners. The design professional can be brought into a multitude of construction disputes involving economic loss, including mechanic’s lien suits.

Several states have addressed the limitation of recovery under a tort theory when there has been personal injury or damage to property other than the project or building in question. In a number of states, the plaintiff has been precluded from pursuing a negligence cause of action for recovery of economic loss alone. The United States District Court for the Eastern District of Missouri concluded that a plaintiff can recover economic loss alone against a design professional based on the negligent performance of professional services. See Bryant v. Murray-Jones-Murray, Inc., 653 F. Supp. 1015 (E.D. Mo. 1985). In other words, the court distinguished between negligence of a professional and negligently manufacturing or providing a defective product and held that a negligence action against a design professional for economic loss states a cause of action under Missouri law.

In Business Men’s Assurance Co. v. Graham, 891 S.W.2d 438 (Mo. App. W.D. 1994), the court rejected an argument that recovery in tort for purely economic damages should be limited to cases involving personal injury or damages to property other than that sold or destruction of the property sold because of a violent occurrence. But there was a contract in place between the plaintiff and defendant being sued in Graham. The court cited as persuasive authority Bryant, 653 F. Supp. 1015, and Aetna Insurance Co. v. Hellmuth, Obata & Kassabaum, 392 F.2d 472 (8^th Cir. 1968), and further reasoned that, when a contractual relationship exists between the parties, there also exists a duty of the architect to provide professional services in a manner consistent with the skill and competence of other members of the profession. The court concluded that the trial court was...