Whether third parties who have no contractual relationship with a design professional may assert negligence claims for economic loss against the design professional has been a controversial issue over the last fifty years. Courts have struggled with whether or not the law should impose a duty upon the design professional to act with due and reasonable care for the benefit of third parties, notably contractors. Should third parties be allowed to pursue negligence claims against design professionals without regard for limitations of liability or other risk allocation provisions contained within the owner/design professional contract?

Conversely, while the Spearin implied warranty doctrine has typically been utilized in the context of a competing claim between the project owner and contractor, the project owner may assert a negligence claim against the design professional arising out of the contractor’s underlying claim, regardless of whether or not the design professional is a direct party in the implied warranty claim. The controversy, and uncertainty, in Spearin arises when the contractor claims that it incurred delays and additional costs due to defects in owner-furnished design and construction documents.

The pendulum has begun to swing back in favor of the design professional. Recent court decisions indicate a positive trend to limit the negligent misrepresentation exception to the economic loss doctrine and the Spearin doctrine.

David Hatem, PC, Founding Partner of Donovan Hatem LLP and Chair of the firm’s Professional Practices Group, reviewed these recent court decisions, the trend they represent, and the potential impact on design professionals and third-party liability.