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Appeals Court Affirms That Subdivision Developer Has No Negligence Claim Against Town's Consulting Engineer

Subdivision developers should think twice about relying on engineering firms/consultants retained by planning boards to disclose any deficient work. Even if that failure to disclose problems later leads to costly re-construction and repairs, there may be no legal recourse against the town's engineer.

In Meridian at Windchime, Inc. v. Earth Tech, 81 Mass. App. Ct. 128 (2012), the residential subdivision developer (Meridian) retained the services of a project engineer (for site and engineering plans), a project manager, and a contractor (infrastructure construction). In accordance with the town's subdivision rules and regulations, the planning board retained an independent engineering firm (Earth Tech) to conduct "subdivision reviews and inspections", including of underground utilities, during the project. The developer was not a party to the contract between the town and the independent engineering firm, but was required to pay for the services pursuant to the subdivision rules and regulations.

Prior to construction, Earth Tech informed Meridian that it would conduct inspections as needed and when requested by the planning board, and that any field changes deviating from the approved definitive plans would require prior approval by Earth Tech or otherwise be performed at the contractor's risk. Meridian was also advised that Earth Tech would "provide a written report of the inspection to the Planning Board, noting completions and deficiencies. Any deficiencies will be immediately brought to the contractor's attention in the field for correction." Id. at 130.

The town's engineering firm visited the construction site frequently (sometimes daily) and generated over fifty reports throughout the construction, a practice that (according to evidence offered by Meridian) was not necessarily authorized or requested in advance by the planning board. Later, it was discovered that the "contractor had improperly installed water lines, fire hydrants, granite curbing, manhole covers, and other features of the infrastructure. The contractor's work had to be redone, and in some cases, ground had to be dug up to gain access to the improperly constructed infrastructure." Id. at 130.

The developer claimed that had the town's engineer identified the deficiencies sooner, some could have been corrected at less expense. The developer sued the town's independent engineer under tort and contract claims. The sole issue for summary judgment and on appeal was whether the independent engineer owed a duty of care to the developer as a professional under contract with a third party (the town).

The Appeals Court said no. In its decision, the Appeals Court first explained "the Craig principle of foreseeable reliance" espoused in Craig v. Everett M. Brooks Co., 351 Mass. 497 (1967), and refined by later cases. At the end of the Meridian decision, the Appeals Court affirmatively states the rule:

Under the Craig principle of reasonable reliance, a professional employed by a town to inspect the construction of a subdivision does not owe a duty of care to a developer or its contractor with whom the professional has no contractual relationship unless it was foreseeable and reasonable for the developer or its contractor to rely on the services provided to the town by the professional, and the professional had actual knowledge that the developer or its contractor was relying on the professional's services.

Meridian at 135.

Applying the facts at bar to the Craig principle, the Appeals Court determined that Earth Tech owed no duty to Meridian in this case, and therefore there was no negligence. The three reasons given by the court were:

(1) the town's and Earth Tech's contract stated that Earth Tech had no "authority or responsibility for the methods and procedures of construction selected by the Contractor";

(2) Earth Tech's memorandum to Meridian indicated that any deviation from the approved plans without approval from Earth Tech was at Meridian's risk; and

(3) Meridian hired its own project engineer for the project, and even if it failed to honor its contractual obligations to Meridian, it did not, on its own, allow Meridian to justifiably rely on Earth Tech instead.

See Meridian at 134.

If nothing else, this case highlights the importance for developers to retain and rely upon competent and qualified contractors and engineering firms to oversee the project, regardless of any reviews, inspections and/or reports that may be undertaken by independent engineers acting on behalf of the municipality. Moreover, this case suggests that notwithstanding the independent contractor's and planning board's actual practices and conduct during construction, if any field changes are necessary, it is worth considering obtaining written approval first.

For another take on this case and its ramifications, see the blog entry by Attorney Peter Feuerbach at Rubin & Rudman at the Mass Legal Alerts blog.

Written by Kristen M. Ploetz, Blog Editor

Copyright (c) 2011-2012 by Jeffrey T. Angley, P.C. All rights reserved.

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