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New Jersey Superior Court Grants Summary Judgment in Favor of Engineering Firm and Refuses to Expand Scope of Firm’s Duty Beyond that Set Forth in its Contract for Services

The New Jersey Supreme Court recently dismissed an engineering malpractice subrogation action filed against an engineering firm on a motion for summary judgment. The claim was based upon the fact that the firm’s Standard Baseline Conditions Assessment had not disclosed that the commercial property at issue lacked a curb stop shut-off valve. Despite the fact that the claim sounded in negligence, the court relied, in part, on the engineering firm’s contract with another non-party entity which limited the use of the firm’s assessment and refused to extend the engineering firm’s duty to a subsequent purchaser of the property.

To read a full, expanded version of this article, click here.

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In Nevada, as in many other states, mechanic’s lien filed by contractors, subcontractors and suppliers attach to the real property when “work is commenced.” In other words, all the mechanic’s liens filed—even the liens of subcontractor or supplier that performed or provided the last work or materials to the project—attach to the real property on the day the first work was performed. This date is important because the liens have priority over any other lien, mortgage or other encumbrance which is recorded after that date.

Recently, the Nevada Supreme Court addressed this critical date (the day “work commenced”) in Byrd Underground LLC v. Anguar, LLC, 130 Nev. Adv. Rep. 62, 333 P.3d 273 (2014). The Byrd, case involved a situation where unrelated third party contractors hauled and spread fill dirt on the subject property prior to the general contractor being hired or the permits being pulled for the construction of the project.

To read a full, expanded version of this article, click here.

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Gordon & Rees Team Obtains Summary Judgment Dismissal for Engineering Firm

Florham Park partner, Ronald Giller, and associate, Sarah Wieselgren, obtained the complete dismissal of an engineering malpractice subrogation action filed against their client, an engineering firm, on a motion for summary judgment. The plaintiff insurance company, as subrogee of the owner of a commercial property, claimed over $1 million in damages as a result of a flood of the property for which the engineering firm had previously conducted an assessment for a nonparty. At the time of the assessment, the property was going to be purchased by a different entity, and plaintiff’s subrogor was the subsequent purchaser. The plaintiff claimed that its subrogor had been given a copy of the engineering firm’s assessment from the seller of the property, that the assessment improperly failed to disclose that the property lacked a shut off valve, and that it had relied upon the assessment when it purchased the property. The plaintiff asserted that the engineering firm owed plaintiff’s subrogor a duty because the defendant knew that the prior owner of the property was going to resell the property shortly after its purchase.

The New Jersey Superior Court rejected the plaintiff’s contention that the engineering firm owed plaintiff’s subrogor a duty of care. The court agreed with Gordon & Rees and found that the imposition of a duty was not warranted since the engineering firm’s contract specifically stated that its authorization was needed for reuse of its assessment by another. The court further determined that it would be unreasonable to impose a duty upon the engineering firm when the firm had never authorized reuse of its assessment by the subrogor owner, and the owner had the opportunity to conduct its own full inspection prior to purchasing the property but instead chose to rely upon the engineering firm’s assessment, which had been prepared for another entity. The court granted the motion for summary judgment and dismissed the complaint against the engineering firm.
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Phoenix Partner John Condrey, with assistance from Partner Leon Silver, Senior Counsel Jamie Mayrose, and Of Counsel Andy Jacob, authored the chapter on “Alternative Project Delivery Methods (APDM)” for the Arizona State Bar publication, Construction Law Practice Manual, 2016 edition.

San Francisco Partner Bryce Carroll provided a lunchtime presentation to Clark Construction on the role of claims in the construction process.

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Gordon & Rees's Construction Group consists of more than 80 lawyers covering the nation in 37 offices. In 2015, the firm opened offices in Harrisburg, Penn., Boston, Mass., Wheeling, W. Virg., and Columbus, Oh.

Gordon & Rees’s construction attorneys focus their practice on the comprehensive range of legal service required by all participants in the construction industry – architects, engineers, design professionals, design joint ventures, owners, developers, property managers, general contractors, subcontractors, material suppliers, product manufacturers, lenders, investors, state agencies, municipalities, and other affiliated consultants and service providers.

We serve clients who design, develop, or build all types of structures, including commercial buildings, single and multifamily residential projects, industrial facilities, universities, hospitals, museums, observatories, amusement parks, hotels, shopping centers, high-rise urban complexes, jails, airports, bridges, dams, and power plants. We also have been involved in projects for tunnels, freeways, light rail, railway stations, marinas, telecom systems, and earth-retention systems. Our experience includes private, public, and P3 construction projects.

If you have questions about this issue of the Construction Law Update or our nationwide construction practice, click here to visit our practice group page or contact partner Tom Cronin.

Thomas G. Cronin
Gordon & Rees, LLP
1 North Franklin
Suite 800
Chicago, IL 60606
(312) 980-6770
tcronin@gordonrees.com

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