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Summary Judgment for Subcontractor on Engineer’s Attempt to Shift Liability for Owner’s Claims that Engineer Breached Contract and Committed Professional Negligence

In Univ. Cmty. Hosp., Inc. v. Prof’l Serv. Indus., No. 8:15-cv-628-T-27EAJ, 2017 U.S. Dist. LEXIS 26298 (M.D. Fla. Feb. 24, 2017) Florida Hospital Tampa (Owner) had consulting agreements with Professional Service Industries, Inc. (Engineer) to perform soil analysis and recommend for a specific type of foundation in the construction of a new emergency department.  Engineer completed the soil analysis and recommended using an auger cast pile system. In its final report making the recommendation, Engineer identified the potential for sinkholes.

Owner also contracted with a construction manager to perform the work.  The CM subcontracted with Geotechnical Foundation Systems, Inc. (Subcontractor) to install the auger cast pile system.  Engineer provided monitoring and supervision pursuant to its agreements with Owner.  Construction was halted when Engineer noted ground surface collapse caused by sinkholes. The collapse caused damage to an existing building owned by Owner.

Owner sued Engineer for breach of the consulting agreements and professional negligence.  Engineer blamed Subcontractor for the damages sought by Owner and sued Subcontractor for common law indemnity and negligence, alleging that Subcontractor negligently performed the auger pile installation.  To win the claim for common law indemnity, Engineer had to prove that it was completely without fault for Owner’s damages.  To win the negligence claim against Subcontractor, Engineer had to prove that Subcontractor owed a duty of care to Engineer.

Engineer and Subcontractor moved for summary judgment against one another.  On Engineer’s claim for common law indemnity, the Court found that Owner’s claim against Engineer was founded upon allegations that Engineer failed in its professional analysis, by recommending the auger cast piles system, and in not reporting Subcontractor’s alleged negligent installation work.  The Court granted summary judgment in favor of Subcontractor on the common law indemnity claim reasoning that, if Owner prevailed against Engineer, it would be because Owner proved Engineer’s fault and, therefore, Engineer could not “expect indemnification for its own negligence or breach of contract.”

On Engineer’s claim for negligence, Subcontractor defended by arguing it did not owe a duty of care to Engineer.  Engineer responded by arguing that the duty Subcontractor owed to the construction manager who hired Subcontractor extended to others who foreseeably could be injured by Subcontractor’s negligence, including Engineer.  The court granted summary judgment in favor of Subcontractor, explaining that it was not foreseeable that the Engineer, as Owner’s consultant, could be damaged economically by Subcontractor’s negligent installation; that there was no privity between Engineer and Subcontractor; that Subcontractor had no economic, supervisory, or other control over Engineer; and that, even if Subcontractor negligently installed the auger piles, that did not cause Engineer’s “damages” which were the amount Engineer had (or would have) to pay to resolve Owner’s claim for Engineer’s own failures.

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