Claims Against Design Professionals: Is It Too Late?
Weighing the options of whether or not to bring a lawsuit against another entity involved on a project is a question that is all too familiar for those involved in the construction industry. One common dilemma involves how to handle a dispute which arises in the middle, or even towards the beginning, of a project. Of course, it is often a wise business decision not to initiate a lawsuit during an ongoing project, but contractors should be advised that there are certainly risks in waiting to see how a dispute plays out, particularly with respect to the timeliness of a lawsuit against a design professional.
In Louisiana, a contractor may bring a direct action against a design professional in connection with a construction project even absent a contract between them on the basis that the design professional owes a professional duty to the contractor to perform its services within a standard of care. In other words, a contractor can generally bring a lawsuit directly against a design professional if errors or omissions in the plans or specifications or substandard project administration results in damages to the contractor. However, the time period to bring this negligence claim is limited to one year, and this relatively short period (known as the prescription period) can be troublesome in the context of a lengthy construction project.
The recent case of MR Pittman Grp., LLC v. Plaquemines Par. Gov't, 2015 WL 7783693 (La. App. 4 Cir. 12/2/15) illustrates this difficult scenario. The lawsuit was initiated by a general contractor who was the successful bidder on a public works project for the repair of a drainage pump station. In April of 2010, the contractor recognized design deficiencies with respect to the wing walls and brought those deficiencies (among others) to the attention of the engineers and project owner. In February 2011, the contractor was directed to perform work on the wing walls pursuant to a forced account provision in the contract. Approximately four months later, in June 2011, the contractor filed a lawsuit against the owner and the three engineering firms involved in the design of the project. The project was still under construction at the time the suit was filed. While the contractor subsequently received some payment from the owner for extra work performed, the contractor contended that the payment was less than what it was actually owed. The lawsuit alleged that the design team was negligent in failing to include the necessary details in the design for the project and that this failure, coupled with a failure to respond in a timely manner, contributed to the damages.
In response to the lawsuit, the engineering firms asserted an exception of prescription (arguing that the contractor waited too long to file suit against them). The court confirmed that the one year prescription period was applicable and dismissed the contractor’s claims against the design team. Specifically, the court found that when the contractor initially informed the owner and design team of the deficiency in April 2010, the contractor was aware that there was “going to be an issue” which the court found was sufficient to commence the one year period. The Court of Appeal emphasized that the ruling was not the only view of the evidence, but affirmed the dismissal of the engineering firms.
The potential consequence to the understandable hesitation against filing a lawsuit during the course of a construction project is exemplified in the aforementioned case. The contractor filed its lawsuit while the project was still under construction and only four months after being directed to perform work on a forced account basis. The contractor even filed its lawsuit prior to receiving payment from the owner for the extra work, and thus, prior to knowing whether the owner’s force account payment would provide full compensation thereby alleviating the need for any lawsuit. Even so, the lawsuit was considered untimely with respect to the contractor’s attempt to recover the shortfall from the engineers.
Hence, it is advisable to remain aware of the fact that a court may rule that a lawsuit against another entity is untimely one year after the date that an issue is first raised on the project, which could be documented by a request for information or similar correspondence. This means that on any project lasting more than a year, it could be necessary to initiate a lawsuit during the project to ensure that all avenues of recovery are preserved. (Note that the one year prescription period is not applicable to parties which have a direct contract between them, such as a lawsuit by a general contractor against an owner).
Since the commencement date of prescription is a factual question, there is not a set rule that the time period must always begin on the date that a design issue is initially recognized on a project. Some courts may rely on an event later than the first recognition of an issue as the date of commencement. Nonetheless, if a contractor finds itself waiting until construction is complete to see how a dispute plays out with an owner, it could potentially already be too late to recover from the design professional.