Opinion
FSTCV186038150S
09-11-2019
The Morganti Group, Inc. v. Stamford Phase Four JV, LLC
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Povodator, Kenneth B., J.T.R.
MEMORANDUM OF DECISION RE MOTION TO STRIKE (#110.00)
POVODATOR, JTR.
Background
Currently before the court is a motion to strike the eighth count of the plaintiff’s complaint. As the court must construe the pleadings in a manner most favorable to the non-moving party, the court largely will rely upon the plaintiff’s recitation of the background facts for context.
Plaintiff has sued ICON, Stamford Phase Four JV, LLC (generally referred to as owner or "Trinity"), and C&H Electric, Inc., seeking damages arising from a dispute in the Trinity Stamford PSW Condominium- Phase Four Unit construction project. The plaintiff, as the contractor, agreed to provide labor, materials, and services for the project. ICON is the architect for the project, with duties relating to the design of the project and preparation and administration of the contract. In the first count, the plaintiff claims that Trinity failed to make contractually required progress payments that were approved by ICON. The plaintiff’s allegations in the second through seventh counts assert other claims directed to Trinity.
For purposes of this motion, ICON, as moving party, is the only defendant of concern. Therefore, unless otherwise specified, all references to the defendant are intended as references to ICON.
In the eighth count, the sole count directed to ICON, the plaintiff alleges negligence for breach of a "duty of care in the performance of its duty under its Contract with the Owner, because Morganti’s timely, proper and efficient performance of its Contract was inextricably intertwined with, and dependent upon, the Architect’s proper performance of its ... duties under its contract with the Owner." The heart of the plaintiff’s allegation is that the defendant’s construction drawings contained errors that delayed the plaintiff’s construction activities. The plaintiff claims that as a consequence, it suffered losses consisting of significant and costly changes to its work including delayed completion and other resulting financial harm and detriment.
At this juncture, the court must stop semi-quoting and/or paraphrasing the defendant’s description of background facts- as will be discussed below, the subsequent portion of its description of the background facts relies upon its submission of a copy of its contract as an exhibit, improper in the context of a motion to strike.
The defendant claims that as to it, the action commenced by the plaintiff is barred by the economic loss doctrine/rule, generally precluding an action sounding in negligence when there is no injury/damage to person or property- when the only injury alleged is economic in nature.
Legal Standards
The standards for analyzing a motion to strike are well-established. First, [b]ecause a motion to strike challenges the legal sufficiency of a pleading and, consequently, requires no factual findings by the trial court, our review of the court’s ruling ... is plenary ... We take the facts to be those alleged in the complaint that has been stricken and we construe the complaint in the manner most favorable to sustaining its legal sufficiency ... Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied ... Moreover, we note that [w]hat is necessarily implied [in an allegation] need not be expressly alleged ... It is fundamental that in determining the sufficiency of a complaint challenged by a defendant’s motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted. (Internal quotation marks and citation, omitted.) Doe v. Cochran, 332 Conn. 325, 333, 210 A.3d 469, 475 (2019).
Discussion
Some motions to strike challenge the adequacy of the allegations of a complaint to bring the situation in dispute within the scope of a recognized cause of action, e.g., whether a required element has been asserted or a threshold has been met. Thus, a motion to strike might be used to challenge whether a CUTPA claim asserts sufficiently egregious conduct or contains an allegation of ascertainable loss; a motion to strike might be used to challenge whether a claim of intentional infliction of emotional distress describes conduct that is sufficiently outrageous.
Other times, a motion to strike is used to determine whether our courts will/do recognize a particular cause of action, where it is not so much a matter of questioning the sufficiency of allegations as whether the concept itself is legally cognizable; Doe, supra . This case falls into the latter category. The defendant claims that the economic loss doctrine/rule precludes a claim such as is asserted by the plaintiff against ICON, a claim based on negligence but asserting only economic loss without any personal injury or property damage (and no contractual basis for a recovery).
Essentially at the outset, the plaintiff raises a procedural issue that it claims requires the court to deny the motion to strike. In moving to strike the eighth count, the defendant has submitted a copy of its contract with the owner as an exhibit, which the plaintiff correctly characterizes as making this motion an improper speaking motion. The plaintiff does not explain why the court cannot simply disregard that contract and all references to the contract and its contents, much as the court does when incompetent statements of an affiant or otherwise inadmissible materials are submitted in support of a motion for summary judgment. Just as the court has disregarded the factual background recited by the defendant to the extent it relied upon that external document, so too will the court disregard the submitted contract in its determination of legal sufficiency of the eighth count.
Another somewhat preliminary issue relates to the scope of the claims being pursued by the plaintiff. In its motion and supporting brief, the defendant spends some time addressing the inapplicability of a third-party beneficiary claim to the facts of this case, as alleged. In its response, the plaintiff asserts that it is not claiming any rights as a third-party beneficiary. Although some of the cases cited by the parties and some of the cases found in the course of the court’s own research discuss implicit if not explicit claims of third-party beneficiary status, the unambiguous disclaimer of the plaintiff in this regard requires the court to accept the contention that there is no need to analyze issues relating to third-party beneficiary status, as such status is not being claimed.
Again, the background is that the plaintiff was the general contractor on a project involving construction of a "high-rise" apartment building, and the defendant was the architect/design professional. The obligations of the defendant on the project were to prepare the plans and drawings from which the contractor and its subcontractors would obtain the information necessary to construct the building, and its obligations also included project management which, in turn, included approvals of payments as appropriate. The plaintiff contends that the defendant breached its duty to the plaintiff in numerous respects. For purposes of the economic loss doctrine, there is no question that the injuries claimed by the plaintiff are purely economic, setting the stage for consideration of applicability of the doctrine.
The parties disagree- not surprisingly- as to the applicability of the economic loss rule to these circumstances. That, in turn, requires the court to recognize that there are at least a few different conceptual areas in which the rule has been found to be applicable and/or claimed to be applicable. Some cases involve claims between parties that are parties to a contract. Other cases involve parties who do not have a direct contractual relationship, but may be perceived to have a relationship that is analogous to privity. Some cases involve parties who have no direct dealings or commonality of interest, such that the relationship either is fortuitous or comes close to fortuitous. Some cases distinguish between claims based on misrepresentation (emphasizing reliance) as opposed to other forms of negligent behavior. (Even as to misrepresentation, there is a distinction between representations made to induce a contract or other action, as opposed to those during the course of a working relationship; Ulbrich v. Groth, 310 Conn. 375, 405-07, 78 A.3d 76 (2013).) To the extent that the parties cite various cases claimed to support their respective positions, these varying categories- and potentially others- need to be recognized as potentially limiting the extent to which cases involving one of these categories can be applied to another.
Thus, in Lawrence v. O&G Industries, Inc., 319 Conn. 641, 126 A.3d 569 (2015), the court framed the doctrine in terms of the remoteness of the relationship between of the plaintiffs and the defendant, necessarily including the absence of any contractual relationship between the parties. More generally, in footnote 15, the court noted the existence of at least three types of scenarios in which the economic loss doctrine has been applied or claimed to be applicable, with the claim for relief under a tort theory in the absence of any personal injury or property damage as the only common factor.
By way of background, we note that the economic loss doctrine is a multifaceted set of principles that influence three major areas concerning recovery of purely economic losses, namely: (1) "whether purely economic losses caused by a defective product are recoverable under tort law"; (2) "whether a tort claim for economic damages is viable when there is some other contract between the parties (e.g., a service contract or a contract relating to [nondefective] goods or real estate) that allocates or could have allocated the risks of economic loss"; and (3) "all of the rest of tort law." V. Johnson, "The Boundary-Line Function of the Economic Loss Rule," 66 Wash. & Lee L.Rev. 523, 526-27 (2009); see also, e.g., D. Dobbs, "An Introduction to Non-Statutory Economic Loss Claims," 48 Ariz.L.Rev. 713, 733 (2006) ("It seems impossible to formulate a single economic loss rule. Instead, the problem of recovery for pure economic loss that is unaccompanied by physical harm to person or property occurs in a number of contexts that may invoke differing concerns of policy"). As the plaintiffs note in their discussion of Flagg Energy Development Corp. v. General Motors Corp., 244 Conn. 126, 709 A.2d 1075 (1998), overruled in part by Ulbrich v. Groth, 310 Conn. 375, 408-09, 78 A.3d 76 (2013), we previously have considered that aspect of the "economic loss doctrine [that] bars negligence claims for commercial losses arising out of the defective performance of contracts." (Emphasis omitted; internal quotation marks omitted.) Ulbrich v. Groth, supra, 399; compare id., 405 (economic loss doctrine bars plaintiffs’ negligence and negligent misrepresentation claims because "both the tort claims and the warranty claim [under article 9 of Connecticut Uniform Commercial Code] are premised on the same alleged conduct with respect to the same personal property and rely on the same evidence"), with id., 412 ("the economic loss doctrine does not bar [Connecticut Unfair Trade Practices Act] claims arising from a breach of contract, including a breach of a contract for the sale of goods covered by the [Connecticut Uniform Commercial Code], when the plaintiff has alleged that the breach was accompanied by intentional, reckless, unethical or unscrupulous conduct").
In American Progressive Life and Health Ins. Co. of New York v. Better Benefits, LLC, 292 Conn. 111, 116 n.4, 971 A.2d 17 (2009), the court noted that "In Flagg Energy Development Corp. v. General Motors Corp., supra, 244 Conn. at 153, 709 A.2d 1075, this court rejected the argument that the economic loss rule ‘does not apply to claims "for negligent misrepresentation of information provided for the guidance of others or to claims for unfair trade practices.’ " The court therein concluded: "We agree with the holdings of cases in other jurisdictions that commercial losses arising out of the defective performance of contracts for the sale of goods cannot be combined with negligent misrepresentation" such that the rule/doctrine is applicable when there is a direct contractual relationship.
The Supreme Court has declined to announce broader statements as to the scope of the rule:
The economic loss doctrine or rule, generally characterized, reflects the principle that a plaintiff cannot sue in tort for purely monetary loss unaccompanied by physical injury or property damage. See generally Lawrence v. O&G Industries, Inc., 319 Conn. 641, 661 n.15, 126 A.3d 569 (2015); Black’s Law Dictionary (9th Ed. 2009) p. 590. We have found it unnecessary thus far to decide whether we should adopt the economic loss doctrine as a categorical bar to claims of economic loss in negligence cases without property damage or physical injury. (Internal quotation marks omitted.) Raspberry Junction Holding, LLC v. Southeastern Connecticut Water Authority, 331 Conn. 364, 368 n.3, 203 A.3d 1224 (2019).(The court reversed the trial court decision and remanded for consideration of the economic loss doctrine as an alternate basis raised in the summary judgment motion that had not been addressed by the trial court.)
Conversely, as explicitly recognized in at least some states, certain well-recognized theories of liability implicitly are exceptions to the economic loss rule, most notably claims of legal and other professional malpractice.
Medical malpractice generally encompasses physical injury, although the concept of health care provider encompasses psychological and psychiatric treatment which often will not implicate any physical injury. Note that malpractice claims generally arise in cases falling within the second category as recited in Lawrence, ("a tort claim for economic damages ... when there is some other contract between the parties"), whereas this case involves parties without any direct contractual relationship.
The net effect of all these variables is the difficulty if not impossibility of relying upon authorities from other states without scrupulous attention to the detailed situation presented. Not only is there the question of overarching philosophical approach to the topic that may vary from state to state, but there also is the issue of individual decisions that may address specific areas of the claimed applicability of the rule, not necessarily being capable of generalization to other, if related, areas.
For example, the plaintiff cites Reliance Insurance Co. v. Morris Associates, P.C., 200 A.D.2d 728, 729, 607 N.Y.S.2d 106, 107 (1994) as an example of a New York case demonstrating the application of the economic loss doctrine in New York, and inferentially acceptance of a tort claim in a situation analogous to the one before the court. In what amounts to a per curiam decision ("Memorandum by the Court"), the court relied upon the existence in New York of jurisprudence recognizing an ability to sue in cases where there is something approaching privity without actual privity, relying on Ossining Union Free School District v. Anderson LaRocca Anderson, 73 N.Y.2d 417, 423, 539 N.E.2d 91, 94 (1989) where the court discussed relationships that were "so close as to approach that of privity." Absent such a relationship (or an agency relationship; Key International Manufacturing, Inc. v. Morse/Diesel, Inc., 142 A.D.2d 448, 536 N.Y.S.2d 792 (1988)); there is no ability to sue in tort for economic losses under New York law. Although Connecticut has recognized that a determination of privity may be context-sensitive, Wheeler v. Beachcroft, LLC, 320 Conn. 146, 169, 129 A.3d 677, 692 (2016), there does not appear to be authority in this state for "approaching privity" as a recognized status. Absent any analysis as to how and why Connecticut should adopt such a framework, citation to such New York decisions is of dubious value.
More recently, see discussion in Media Glow Digital, LLC v. Panasonic Corp. of N. Am., No. 16CIV7907JFKHBP, 2019 WL 2498903, at *22 (S.D.N.Y. Mar. 6, 2019), report and recommendation adopted in part, rejected in part, No . 16CIV7907JFKHBP, 2019 WL 1434311 (S.D.N.Y. Mar. 29, 2019), on reconsideration in part, No . 16CIV7907JFKHBP, 2019 WL 2281375 (S.D.N.Y. May 29, 2019), including the following: "[C]ourts apply a three-part test to determine whether the functional equivalent of privity exists: (1) awareness that the [work product was] to be used for a particular purpose or purposes; (2) reliance by a known party or parties in furtherance of that purpose; and (3) some conduct by the defendants linking them to the party or parties and evincing defendant’s understanding of their reliance. [A] plaintiff that can satisfy these requirements will ... be within the limits established under New York law for tort claims sounding in negligence that are brought by non-privy third parties." (Internal quotation marks and citation, omitted.)
The point of this exercise is not to critique New York law but rather to demonstrate the minimal value of citing cases from other jurisdictions ostensibly supporting the plaintiff’s position. The "fuzziness" of the concept is emphasized by examining treatment of privity in various cases. When there is privity of contract between parties, the rule often is applied based on the theory that the parties did, or had an opportunity to, allocate risks in the contract-formation process such that tort law should not be allowed to override risk allocation as set forth in the agreement of the parties. As noted, New York recognizes potential tort liability in connection with a relationship that approaches privity. Other states have different nuances or points of emphasis.
The court has not reviewed each of the cases in each of the 36 jurisdictions across the country identified by the plaintiff in its appendix of cases claimed to support the proposition that an architect owes the general contractor a duty of care, but the court has reviewed a number of them, and of those sampled and explored in detail, a number suggest the need for caution in accepting those authorities for the proposition claimed, as might be applicable here (in addition to New York law as discussed above). Thus, the plaintiff cites Essex v. Ryan, 446 N.E.2d 368, 370 (Ind.Ct.App. 1983) as indicating that Indiana recognizes an exception to the economic loss rule that is relevant to this dispute. That case, however, focused on privity and whether expected reliance could be a substitute for privity, and that an assignment of contractual rights could afford a basis for an action claiming rights under the contract (not a remarkable proposition). No mention is made of the economic loss rule/doctrine (and the court rejected application of the Restatement (Second) of Torts, § 552 and its definition of the tort of negligent misrepresentation as a basis for liability, an issue appearing in cases from other jurisdictions as well). By contrast and relatively recently, in Indianapolis-Marion County Public Library v. Charlier Clark & Linard, P.C., 929 N.E.2d 722 (Ind. 2010), the Indiana Supreme Court recognized the broad applicability of the rule to bar claims against architects and engineers by those not in privity, noting in the process that "the first decision under Indiana law holding that a defendant could not be held liable under a tort theory for any purely economic loss caused by its negligence came in 1984," 929 N.E.2d 727-28, suggesting that Essex predates what the state’s highest court considered to be the earliest case in economic loss jurisprudence in place in the state for the last 35 years, and seemingly in conflict with this recent articulation of the status of the economic loss doctrine in Indiana.
The plaintiff also lists Trinity Glass International, Inc. v. LG Chem Ltd., No. 09-5018RJB, 2010 WL 3219137, at *1 (W.D.Wash. Aug. 11, 2010) as supporting the proposition that a contractor can sue an architect in tort. The case does not explicitly state that proposition (and the court explicitly stated that it had been unable to determine potential applicability of the doctrine). Again, by way of contrast, in Berschauer/Phillips Construction Co. v. Seattle School District No. 1, 124 Wash.2d 816, 833, 881 P.2d 986, 996 (1994)- a case specifically cited in Trinity- the court stated: "We hold the economic loss rule does not allow a general contractor to recover purely economic damages from a design professional in tort." Consistent with at least some other jurisdictions, the Washington Supreme Court later recognized an exception in connection with matters pertaining to safety, Affiliated FM Insurance Co. v. LTK Consulting Services, Inc., 170 Wash.2d 442243 P.3d 521 (2010), but that was identified as a principle being built upon the continuing general viability of Berschauer/Phillips . No explicit claim is made here that there was a public safety issue sufficient to override the otherwise applicability of the economic loss rule.
In a footnote (footnote 1 on page 10), the plaintiff alludes to the statute of limitations pertaining to claims against architects, noting that it applies to claims sounding in tort as well as contract. The court does not believe that that is in any way instructive for purposes of this dispute- the statute of limitations as to tort claims would apply to claims of personal injury or property damage, claims for which the economic loss doctrine has no applicability. Therefore, the language of the statute (General Statutes § 52-584a) provides no guidance as to what types of tort claims might be permissibly asserted against an architect; rather, assuming that a claim can be asserted, the statute imposes a time limit to do so.
The concept of privity, in this context, is something of a double-edge sword. As discussed above, in a number of jurisdictions and contexts, privity or something approaching privity is deemed a significant factor in determining that the economic loss doctrine does not apply. Conversely, some courts have expressed concern that allowing tort claims to be pursued, when there is a contractual relationship between the parties (and therefore privity), would allow tort liability to overtake and frustrate contractual concepts, most especially the ability of the parties to a contract to explicitly or implicitly allocate risk. Thus, many of the trial court cases in Connecticut cited by the defendant in which the economic loss doctrine was determined to preclude a negligence claim, had a direct contractual relationship between the parties, a point emphasized by the plaintiff in its opposition. Conversely, a number of cases have held that the economic loss doctrine does not bar a negligence claim, and a number of those cases appear not to have had any aspect of privity.
Having identified the varying perspectives of courts around the country and the variability among courts as to which factors are important (and, with respect to privity, in which direction), the court will attempt to undertake the type of analysis appropriate for a determination of whether Connecticut courts can/should/do recognize a cause of action by a contractor arising from claimed negligence of a design professional with respect to plans prepared by that professional, absent any contractual relationship between the contractor and the design professional.
Almost trivially in this case, there is no question as to foreseeability of harm, a threshold inquiry in any such analysis. Although the owner (or someone acting for the owner) retains the design professional for purposes of preparation of plans and drawings, except in those situations where the owner is acting as the general contractor, the plans and drawings are intended for use by the general contractor and others actually performing the work. The design professional knows that if there are any material mistakes, it is likely that at a minimum, the work will be delayed while the mistakes are corrected, and in something of a worst-case scenario, work may have to be undone/demolished and redone, involving expenditure of additional time, labor and materials. In connection with a fixed-price contract, the general contractor will have to absorb these costs. If there is a completion deadline with either a penalty or bonus, again, any delays could impact adversely the net profit for the contractor. There also may be a ripple effect insofar as future jobs may have to be delayed until the current job is completed. While there may be provisions in a contract between the owner and general contractor addressing some or all of these considerations, that simply goes to whether the harm is incurred in any particular situation; the foreseeability is present whether it materializes in any given instance.
Additionally, in this case as alleged (and what is believed to be a not-unusual arrangement), the defendant-architect also performed administrative services for the owner under the contract, including inspections and the approval of payments. (Paragraph 80 of the eighth count asserts 14 types of duties that the defendant allegedly performed and/or was required to perform, relating to the contract between the plaintiff and the owner.) Untimely inspections, improper inspections, unreasonable delays in approval of payment, unreasonable refusals to approve payment, all foreseeably have adverse consequences for a contractor such as the plaintiff.
Additionally, the plaintiff asserts that it relied upon the plans and drawings prepared by the defendant, hardly a surprising allegation- it is not merely foreseeable but rather expected (required) that the contractor will rely upon a design professional’s plans and drawings for a construction project.
The court must note that some of the allegations seem to lack any causative link to any harm that might have been suffered by the plaintiff. For example, the plaintiff complains that the defendant was not licensed as an architect in Connecticut- it is far from clear as to how a lack of licensure, in and of itself, might cause any harm to the plaintiff. See, e.g., Kurtz v. Morse Oil Co., 114 Conn. 336, 158 A. 906, 909 (1932) ("There is in this case no claim, and there could be no claim, that the failure of the driver to possess a license directly contributed to cause the collision. It was merely a condition attending the collision, not a cause of it." (Internal quotation marks and citation, omitted.) While the lack of a license may have led to negligent conduct (as argued at page 5 of its brief), there do not appear to be any allegations as to how a lack of a Connecticut license, itself, caused harm to the plaintiff.
Foreseeability is but a rough filter in terms of recognizing an actionable duty.
As the trial court observed, it is undisputed that the plaintiffs’ economic losses were a foreseeable result of the defendants’ claimed negligence. This does not, however, "mandate a determination that a legal duty exists. Many harms are quite literally foreseeable, yet for pragmatic reasons, no recovery is allowed ... A further inquiry must be made, for we recognize that duty is not sacrosanct in itself ... but is only an expression of the sum total of those considerations of policy [that] lead the law to say that the plaintiff is entitled to protection ... The final step in the duty inquiry, then, is to make a determination of the fundamental policy of the law, as to whether the defendant’s responsibility should extend to such results ... [I]n considering whether public policy suggests the imposition of a duty, we ... consider the following four factors: (1) the normal expectations of the participants in the activity under review; (2) the public policy of encouraging participation in the activity, while weighing the safety of the participants; (3) the avoidance of increased litigation; and (4) the decisions of other jurisdictions ... [This] totality of the circumstances rule ... is most consistent with the public policy goals of our legal system, as well as the general tenor of our [tort] jurisprudence. Lawrence, 319 Conn. 650-51.
In their respective submissions, the parties endeavor to assess the applicability of these factors to this case. Not surprisingly, they reach opposite conclusions.
In this case, any consideration of the expectations of the participants in the activity under review substantially overlaps the discussion in the foreseeability stage/phase. The defendant’s primary task was to prepare plans and drawings, the purpose of which were to instruct the plaintiff as to what it was required to do- build a building. The plans and drawings may have been the products of a contract between the defendant and the owner/developer, but the owner/developer’s role was almost in the nature of a pass-through- the documents would be provided to city officials for approval, provided to the plaintiff/contractor for actual performance of work, etc. The defendant knew that the plaintiff was going to rely upon those plans and drawings- knew that the plaintiff was required to follow those plans and drawings. As a design professional, the defendant had to have known that any contracts involving the plaintiff (or its subcontractors) would be based on the time and materials needed to effectuate those documents- build a building. There is no attenuation such as in Lawrence ; although there is no third-party beneficiary claim and no contractual relationship between the plaintiff and defendant, again, although the plans and drawings were prepared technically/legally for the owner/developer, the ultimate user of those documents was intended to be the plaintiff.
The defendant, somewhat circularly, emphasizes that its expectation is that it could not be sued, based on its understanding of existing Connecticut law. The expectation factor not only encompasses existing legal principles- and not just the one sought to be vindicated- but also requires consideration of the conduct and relationship between the parties as may be guided by other legal principles. See, e.g., Doe v. Cochran, 332 Conn. 325, 366, 210 A.3d 469, 493 (2019) ("A patient who seeks medical attention to be tested for a disease, any disease, has a reasonable expectation that the test results will be reported accurately, by whatever means"); see, also, Jarmie v. Troncale, 306 Conn. 578, 605, 50 A.3d 802, 818 (2012). By analogy, a contractor constructing a multi-million dollar high-rise apartment building has a reasonable expectation that the plans and drawings furnished for its use will allow it to do so.
Note that in determining whether a new cause of action or new duty should be recognized, consideration of the pre-existing state of law would almost always justify an expectation of no liability, precisely because such duty/liability had never been recognized in the past.
Moving on to "the public policy of encouraging participation in the activity, while weighing the safety of the participants," the plaintiff notes that there are statutory and regulatory provisions relating to architects intended to ensure responsible behavior, and construction of a building has significant safety components, both in the construction phase and occupancy phase. It is unlikely that there will be any level of deterrence of architects engaging in their profession should there be a recognition of liability to contractors who actually are intended to use their plans and drawings and whose payments are dependent on approval from the architect; there already is or would be the potential for liability to the owner/developer, and any incremental deterrence of the activity (performing architectural functions) likely would be minimal. Conversely, architects effectively would be out of business if they declined to engage in the activity of providing construction plans and drawings out of concern about potential liability.
In the course of reading numerous decisions in preparation of this decision, the court recalls seeing the pointed observation that when there are safety implications as in a construction project, one should not have to wait for someone to be hurt before there is legal accountability.
The defendant explicitly argues that there are no safety concerns. The complaint asserts that the plans failed to comply with building code requirements, and the complaint also specifically alleges problems with structural steel design for the upper floors (18th and 19th). Reading the complaint in a manner most favorable to the non-moving party and giving it the benefit of reasonable favorable inferences, those allegations imply safety issues.
While perhaps not fitting precisely into the category of "public policy of encouraging participation in the activity, while weighing the safety of the participants," there is another public policy-type consideration that should be identified. As already identified, the plaintiff has denied any intent to pursue a claim of third-party beneficiary, but the court must note the similarity of third-party beneficiary status to the relationship between a design professional and a contractor. While the preparation of plans and drawings by an architect may not be intended to "benefit" the contractor, those documents are clearly intended for use and reliance by the contractor, without which the construction phase of the project could not be completed. This conceptual similarity may account for those decisions that find an implied third-party beneficiary quality in the architect-contractor relationship, and why the defendant in this case felt compelled to address the possibility that the plaintiff was asserting a third-party beneficiary claim. In both situations, the failure of the non-contractual-party to receive that which had been promised by the promisor deprives the other contract-party (the promisee) of the benefit of its bargain, with the extent of its loss measured by the impact of the promisor’s breach on the non-contractual party.
The court suspects that there will be only a limited increase in litigation should the economic loss doctrine be deemed not to bar this type of action. Architects already are potentially liable to the owner/developer for breach of the contract, and potentially liable under a professional malpractice theory. If the contractor has no direct recourse against the architect, then (as here) the contractor likely would sue the owner/developer, and if the architect were not already a party the owner/developer likely would seek to add the architect as a party (unless the architect already had taken over the defense under an indemnification or hold-harmless contract provision). In other words, there would be little or no net increase in litigation, just a more direct route to holding the architect responsible (if it were, in fact, the cause of harm). Thus, there may be changes in how lawsuits are brought and the completeness of identification of parties at the outset, but it seems unlikely that there would be a substantial net increase in litigation itself.
As to decisions in other jurisdictions, the court already has observed the difficulty in sorting through the multiple variations of applicability and non-applicability of the economic loss rule. For example, in Media Glow, supra, the court interpreted New York law as allowing an exception in limited circumstances: "The Court is persuaded that the ‘functional equivalent of privity’ exception to New York’s barrier against recovery of economic loss exists for negligent misrepresentation claims, but not for negligence or professional malpractice claims. See Stapleton v. Pavilion Bldg. Installation Sys., Inc., 09-cv-934S, 2017 WL 431801, at *5 (W.D.N.Y. Feb. 1, 2017) (applying the functional equivalent of privity test to a professional negligence claim only after converting it to a claim for negligent misrepresentation)." Other exceptions may well exist- but that uncertainty itself is part of the problem. The catch-all third category of economic loss doctrine cases as identified in Lawrence - "all of the rest of tort law"- is sufficiently broad, and the cases around the country are sufficiently nuanced, that the most that can be said is that there probably are a number of cases supporting each side of any variation that might be imagined.
To the extent that the plaintiff argues that there is a clear majority of jurisdictions that have adopted the position advanced by the plaintiff- claims of negligence by a general contractor against an architect with whom there is no contractual privity are not barred by the economic loss doctrine- the court has, as implicit above, reservations. Indeed, a recent decision of the Maryland Court of Appeals specifically identified the absence of any prevailing position on this issue. In the course of an extensive discussion of the two sides of the issue, in Balfour Beatty Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP, 451 Md. 600, 621-26, 155 A.3d 445 (2017), the court stated at page 624: "Both sets of cases provide good policy reasons to expand or limit tort liability in the construction industry, and there is no clear majority position " (emphasis added). Given the reservations identified in this decision as to the accuracy of the plaintiff’s contention that an overwhelming majority of states have adopted its position, the court is more inclined to rely on the Maryland court’s assessment of an absence of a clear majority position.
The court has not examined every authority cited by the plaintiff in the table attached to its brief, but has done sufficient spot-checking to be concerned about the accuracy of at least some of the characterizations of positions taken in various jurisdictions, at least based on the cases cited, in addition to cases discussed in the body of this decision. In Nota Const. Corp. v. Keyes Assocs., Inc., 45 Mass.App.Ct. 15, 15, 694 N.E.2d 401, 402 (1998), a case identified by the plaintiff in its table, the court was addressing claims not present here: "The plaintiff (Nota), a subcontractor, filed an action in the Superior Court against the defendant (Keyes), an architectural firm, for deceit, negligent misrepresentation, and violation of G.L.c. 93A, based upon alleged misrepresentations made by Keyes in the plans and specifications for the construction of an elementary school for the Blackstone-Millville Regional School District in which Nota was the site subcontractor and Keyes the school’s architect." This case does not have claims of misrepresentation or deceit; the plaintiff has not suggested much less cited any other case in Massachusetts that would allow litigation absent claims of misrepresentation and deceit. Plaintiff’s reliance on California case law may be correct, but the cases cited are of questionable persuasiveness as to articulating the current state of jurisprudence- both cases identified are U.S. District Court decisions, one some 60 years old. In one, Rafael Town Ctr. Investors v. Weitz Co., No. C 06-6633 SI, 2007 WL 1577886, at *2 (N.D.Cal. May 31, 2007), the court effectively deferred any definitive ruling ("At this preliminary stage of the litigation, the Court cannot conclude as a matter of law that Macdonald did not owe a duty to Weitz, and accordingly DENIES Macdonald’s motion to dismiss this claim. See Wesoloh Family Limited Partnership v. K.L. Wessel Construction Company, 125 Cal.App.4th 152, 22 Cal.Rptr.3d 660 (2004) (emphasizing factual nature of duty inquiry)"). The 60-year-old decision, U.S. for Use & Benefit of Los Angeles Testing Lab. v. Rogers & Rogers, 161 F.Supp. 132, (S.D.Cal. 1958), relied in part upon a claim of misrepresentation. More recently, the case was discussed in the context of a claim of third-party beneficiary status, Control Air Conditioning Corp. v. WSP Flack & Kurtz, Inc., No. G045500, 2012 WL 1899794, at *4 (Cal.Ct.App. May 25, 2012). Rogers & Rogers relied upon the "life and death" quality of an architect with supervisory authority over a contractor, whereas the allegations of this complaint simply state that the architect’s conduct affected the plaintiff’s performance (¶80 of eighth count). Thus, in Olson & Co. Steel v. Nestor + Gaffney Architecture, LLP, No. F063292, 2012 WL 5332041, at *10 (Cal.Ct.App. Oct. 29, 2012), the court stated: "Despite the holding in [Rogers & Rogers ] and the number of other jurisdictions that have concluded that contractors or subcontractors can bring a negligence claim against a supervising architect for economic loss, we will remand in this case and direct the trial court to grant Olson leave to amend its pleading to include allegations that address the Biakanja factors as well as the Bily factors." In other words, certain minimum allegations appear to be required in California to state a proper cause of action, beyond mere recitation of an architect-contractor relationship.
The court recognizes that this may be attributable, at least in part, to the court’s insistence on recognizing a distinction- that a double negative often if not usually is not actually the equivalent of an affirmative statement. A refusal of a court to say that there is no duty, especially on an interim or preliminary basis, is perceived not to be the equivalent of a statement that such a duty does exist. In Connecticut, the denial of a motion to strike does not necessarily mean that the plaintiff has asserted a legally sufficient cause of action; it may mean nothing more than that the defendant has not sufficiently identified the basis for a finding of insufficiency; see, Meredith v. Police Commission, 182 Conn. 138, 140, 438 A.2d 27 (1980).
Ultimately, this court concludes that the numerous decisions of trial courts in Connecticut, involving similar situations (construction project cases with no contractual privity), are correct. See, e.g., A.M. Rizzo Contractors, Inc. v. J. William Foley, Inc., No. X 05CV10 6004577S, 2011 WL 1105799, (Conn.Super.Ct. Jan. 13, 2011) ; United Steel, Inc. v. Spiegel, Zamecnik & Shah, Inc., No. X 09CV065001846, 2007 WL 1532726, at *1 (Conn.Super.Ct. Mar. 27, 2007) ; Loureiro Contractors, Inc. v. City of Danbury, No. CV 096002650, 2010 WL 4942983 (Conn.Super.Ct. Nov. 18, 2010). Many of these cases explicitly rely on Insurance Co. of North America v. Town of Manchester, 17 F.Supp.2d 81, 82 (D.Conn. 1998), in turn discussed below.
While all of these cases pre-date Lawrence, as already noted, the court in Lawrence eschewed any categorical statements as to applicability of the economic loss rule to situations beyond that which was present in that case (or similar situations). (Even so, some of the pre-Lawrence cases appear to have assumed that in connection with a contractor’s tort claim for economic damages when there is no contract between the parties (a situation outside category #2 in Lawrence ), the economic loss doctrine does not apply; see, e.g., Loureiro Contractors, Inc. v. City of Danbury, No. CV 096002650, 2010 WL 4942983, at *3 (Conn.Super.Ct. Nov. 18, 2010)). Here, there is no concept of attenuation or remoteness- there was a discrete project, with essential reliance among parties who were contractually obligated to work together albeit without a direct contractual relationship between them. Further, there is something of an agency flavor to the relationship between the architect and the owner/developer- the architect provided direction to the construction contractors as to the work to be done via the plans and drawings, performed inspections and monitoring of work on behalf of the owner/developer, and acted as an intermediary for the owner/developer with respect to certifying that work had been done so as to warrant payment to the plaintiff contractor. To the extent that this case involves claims of defective plans and drawings having been prepared by the defendant as the design professional, the contractor as the construction professional is far more likely to identify and seek remediation of such defects than would an owner/developer who is less likely to be aware of technical problems. Absent any possible right of the contractor to proceed directly against an architect, a design professional might be tempted to "tough it out" by assuring the owner that there are no such problems, putting a contractor in an untenable position- build with defective plans or refuse to build without corrections made- without any direct legal recourse against the ultimately-responsible party.
From an alternate perspective, the court does not deem it productive to force contractor-claimants to "be creative" in order to get through the courthouse doors- claiming third-party beneficiary status or some form of misrepresentation or some form of agency relationship between the architect and owner or some "almost privity" relationship or a safety exception or ... This is not a type of foreseeability or causation that requires some level of imagination or the legal equivalent of a Rube-Goldberg device (such as the facts in Palsgraf v. Long Island Railroad Co., 248 N.Y. 339, 347, 162 N.E. 99, 101 (1928))- this is a claim asserted by the intended (if nominally indirect) end-user of the plans and drawings prepared by an architect.
Given the absence of any controlling appellate decision, this court joins those courts that have concluded that the economic loss doctrine does not bar a contractor from suing an architect with whom it has no contractual privity, based on a theory of tort (negligence) liability.
Conclusion
In a case such as this, the court’s task is to determine the legal sufficiency of the claim being asserted. In a sense, the court is required to predict what the Appellate Court or Supreme Court would do were the issue to come before it. This court is bound by the decisions and controlling language of an appellate court; non-binding statements (dictum) and what the court does not state can sometimes be suggestive. In this regard, the court finds the language used in the analysis in footnote 13 in Lawrence to be instructive. In that footnote, the court distinguished the District Court decision in Insurance Co. of North America, supra, (as well as a trial court decision, A.M. Rizzo, supra, involving a claim by a subcontractor against the owner who allegedly had provided defective plans) from the situation before it. The facts in the District Court case were analogous to those present here- a suit against a design professional by a party involved in a construction project without contractual privity. The District Court determined that the economic loss doctrine did not bar the claim against the architect. The Supreme Court identified two reasons why it did not find the District Court decision (and A.M. Rizzo ) to be persuasive. The second reason given was that the Supreme Court felt that the District Court had not engaged in a full public policy analysis such as was required for recognition of such a claim, and which the Supreme Court was undertaking in the case before it. The first reason, however, was that the court saw a distinction based on remoteness- the plaintiffs in the case before it were at least one step further removed from the allegedly negligent party, whereas the District Court had dealt with a situation where "the contractors alleged that the tortfeasor’s negligent planning directly caused them to suffer economic losses in connection with their performance of their own contracts on the same projects." In other words, the court recognized that the construction project scenario, involving interlinked contractual obligations, potentially if not actually was legally distinguishable from the more indirect case before it. There is no suggestion- no dictum- hinting at a rejection of the concept that the interdependence of contractual obligations on a construction project presented a scenario requiring distinctive treatment.
While this court’s analysis may not be as thorough and comprehensive as typically is present when such an analysis is undertaken by the Supreme Court, it does point in the direction of recognition of such a cause of action, and attempts to cure the omission identified in Lawrence as present in cases such as A.M. Rizzo.
For all these reasons, the court denies the motion to strike.