Can Design Professionals in Washington Effectively Limit Their Liability Anymore?
With the evolution of the Independent Duty Doctrine comes more uncertainty for design professionals and, arguably, the entire construction community in general. Until recently, claims for damages resulting from delay or construction defects were typically considered breach of contract claims and were limited by and subject to any liquidated damages provisions or liability limitations in that contract. Whether that is now the law in Washington is uncertain.
As commented on by other bloggers, the Washington State Supreme Court abolished what was called the “Economic Loss Doctrine.” The doctrine acted to bar parties from suing others under tort theories and limited who they could sue (that being the party they contracted with), when their damages were “economic” and derived from breaches of contract. Much litigation ensued over what that actually meant. For instance, confusion arose as to whether property damage caused by defective construction should be considered “economic” damages or not. To help clarify the law, in a very split opinion, Justice Fairhurst announced the Independent Duty Doctrine. Affiliated FM Ins. Co. v. LTK Consulting Serv., Inc., 170 Wn.2d 442, 453 (2010). Under the new doctrine, in short, if the complained damage was caused by a breach of an independent tort duty, a duty owed whether a contract existed or not, the injured party may have the right to sue in tort. Why is this important? Arguably, a waiver of consequential damages provision or a limitation of liability provision may not act to bar those damages when they are claimed under a tort theory. And now this issue is already working its way through the courts.
In Donatelli v. D.R. Strong Consulting Engineers, Inc. 2011 WL 3056564 (Wash.App. Div. 1, 2011) (unpublished), the Court of Appeals upheld a trial court decision refusing to summarily dismiss claims of negligence and misrepresentation against an engineer (both tort claims). The plaintiff alleged the engineer allegedly breached its duty "to complete the Project in a timely, competent, and cost effective manner" and misrepresented the duration of the work and its cost. The engineer's delays caused the owners to miss the market and their project was ultimately foreclosed. Under prior law, these "economic damages" would likely have been summarily dismissed. Now, the plaintiff may continue with the claims in the trial court.
This case is particularly interesting because the contract limited the engineer's damages to the contract price or the fee charged, whichever is greater. However, since the tort claims remain viable, the plaintiff may be able to skirt that contract provision by successfully prevailing upon the tort claims, depending on the language in the limitation. If the parties don't settle, this issue may go to the Supremes, with amicus coming from the engineer associations.
