In the recent case of State Ready Mix, Inc. v. Moffatt & Nichol, the California Second District Court of Appeal declined to extend liability under a concrete supplier’s equitable indemnity claim to a civil engineer hired by the general contractor. The case arose from a general contractor’s breach of contract action against a concrete supplier to recoup the cost of replacing defective concrete used to construct a harbor pier. The concrete supplier filed a cross-complaint against the civil engineer hired by the general contractor to draft the pier plans because the civil engineer also reviewed and approved the concrete supplier’s concrete mix design. The cross-complaint included equitable indemnity and contribution causes of action.
The Court of Appeal declined to extend liability to the civil engineer under an equitable indemnity theory because the general contractor’s claim against the concrete supplier was purely contractual and did not involve claims of personal injury or property damage. With only contractual damages for economic loss at issue, the Court held the concrete supplier’s equitable indemnity claim against the engineer was barred under the long-standing economic loss rule.
More importantly, even if property damage claims were at issue, the Court found that the civil engineer did not owe a legal duty to the concrete supplier on public policy grounds. Under limited circumstances, design professionals may owe a duty of care to a third party with whom there is no contractual privity based on a “special relationship” to the third party. This duty is based on multiple common-law factors, including the extent to which contractual duty to others was intended to affect the third party and the foreseeability of harm to the third party.
The Court found that that the civil engineer’s review of the concrete supplier’s concrete mix design was gratuitous and for the sole benefit of the project manager. Furthermore, the Court found that the concrete supplier’s misapplication of the design was the primary cause of damage rather than the design itself. Accordingly, the Court found the civil engineer’s actions did not support a finding that duty of care was owed to the concrete supplier on public policy grounds.
Despite the recent California Supreme Court decision in Beacon Residential Community Assn. v. Skidmore, Owings & Merrill, LLP, the State Ready Mix decision demonstrates that certain policies limiting liability of design professionals to third parties with no contractual privity remain firmly in place. Unless it can be shown that the design professional’s conduct was clearly intended to affect a third party and harm to the third party would be a foreseeable result, tort liability to a third party not under contract with a design professional remains unlikely.