By Gwen P. Weisberg, Esq.

In the April 2016 edition of the Design & Construction Management Professional Reporter, Donovan Hatem LLP reported that the Court of Special Appeals of Maryland, Maryland’s intermediate appellate court, issued a ruling that, in the absence of a contractual relationship on a public construction project, a design professional does not owe a duty of care to a contractor for purely economic losses. The Court declined to apply a “privity equivalent” analysis or impose an extra-contractual duty on the design professional since, as is the case with design-bid-build contracts, both the design professional and the general contractor were sophisticated businesses which had ample opportunity to define and allocate their risks in their contracts with the government owner.

Maryland’s highest appellate court, the Court of Appeals of Maryland, recently affirmed the Court of Special Appeals’ ruling and held that, in government construction projects, design professionals do not owe a tort duty to contractors where the damages are purely economic and there is no contractual privity; nor do they owe a duty of care that would otherwise be required to support a negligence claim.

As a reminder, this claim was asserted by the contractor retained by the City of Baltimore (“City”) to construct two related projects as part of an upgrade to a wastewater treatment plant (“WWTP”). The engineer had a separate contract with the City provided for both design and construction phase responsibilities. The contractor constructed the cells in accordance with the engineer’s design, but when the water retention integrity of the cells was tested, they leaked due to cracks in the expansion and contraction joints.

The contractor filed suit against the engineer alleging that (1) the leaks resulted from the engineer’s defective design which required additional time and funds to remediate the problem; (2) the engineer’s design for a pipe support system was similarly defective; and (3) the engineer delayed completing the design for a second contract for a companion project knowing that it would result in delaying the contractor’s ability to complete work under the first contract. The contractor’s claims included professional negligence, information negligently supplied for the guidance of others under Restatement (Second) of Torts § 552, and negligent misrepresentation. The damages claimed were solely economic, and there was no privity of contract between the contractor and the engineer.

As previously discussed, this opinion, now affirmed by Maryland’s highest appellate court, greatly benefits design professionals involved in public, design-bid-build contracts. Again, it highlights a court’s unwillingness to permit a sophisticated plaintiff to employ tort claims to circumvent its contractual remedies.