A/E Tort Liabilty Extended To Negligent Construction Manager

Tuesday, January 30, 2018 8:50 am
February 2018 - Volume 40 Number 2

Negligence --- Liability

Lathan Co. v. State, 2017 La. App. Lexis 2277, 2016 0913 (1st Cir. Dec. 6, 2017)

In what appears to be a first in Louisiana, a court has held a construction manager liable for causing economic harm---primarily through faulty design and late payments---to a general contractor with whom it had no contract.

The Lathan Company, Inc. (Lathan) performed as a contractor on a State of Louisiana Department of Education, Recovery School District (RSD) public works project to renovate a New Orleans school. According to Lathan, during its work, it incurred additional costs due to inadequate quality control, late review/approval of contract payments, and drawings that failed to disclose mold conditions and an underground obstacle---all instances of alleged negligence on the part of Jacobs Project Management Company/CSRS Consortium (Jacobs), the project’s construction manager.

Lathan had no contract privity with Jacobs (who performed under its own contract with RSD). Nevertheless, Lathan asserted that it was entitled to damages---under tort law, as well as under the Louisiana Unfair Trade Practices Act---for Jacob’s negligence. A trial court dismissed Lathan’s claim against Jacobs with prejudice on a summary judgment motion. This appeal followed.

Lathan argued that Jacobs owed it a duty because of "the high degree of control and power that [the construction manager], as a learned professional, held and had exercised (or failed to exercise) over Lathan" on the project.

Professional duty: It’s not just for A/E

Louisiana law "imposes a duty on professionals to perform in accordance with the generally accepted standards of their respective industry"---and, as a result, a third party who has no contract privity with the professional may nevertheless have a tort action against it for breach of that duty. See Calandro Development, Inc. v. R.M. Butler Contractors, Inc., 249 So. 2d 254, 265 (La. App. 1 Cir. 1971).

Importantly, in Louisiana, as in other jurisdictions, that professional duty has extended to architects and engineers (A/E), specifically and exclusively. That’s because, on a construction project, third parties often must "rely on the architect or engineer to produce a completed project comformable with the contract plans and specifications" Id.

Here, Lathan argued that this duty should extend to construction managers as well---and it succeeded.