Davidson & Jones, Inc. v. County of New Hanover

255 S.E.2d 580 (1979) 41 N.C. App. 661

DAVIDSON AND JONES, INC., Plaintiff and Third-Party-Plaintiff,
v.
COUNTY OF NEW HANOVER, Defendant, and
Frank I. Ballard, Herbert P. McKim and Robert W. Sawyer, t/b/a Ballard, McKim & Sawyer; Waff Brothers, Inc., Raymond International, and Soil & Material Engineers, Inc., Third-Party-Defendants, and
Robert E. Lasater and Robert P. Hopkins, t/b/a Lasater-Hopkins, Additional Third-Party-Defendants.

No. 785SC685.

Court of Appeals of North Carolina.

June 19, 1979.

Manning, Fulton & Skinner by Charles L. Fulton, Raleigh, Marshall, Williams, Gorham & Brawley by Lonnie B. Williams, Wilmington, for plaintiff.

Granville A. Ryals, Wilmington, and Maupin, Taylor & Ellis by W. W. Taylor, Jr., Raleigh, for Waff Brothers, Inc., third-party defendant appellant.

Crossley & Johnson by John F. Crossley, Wilmington, for Raymond Intern., third-party defendant appellant.

Reynolds & Howard by E. Cader Howard, Raleigh, for Soil & Material Engineers, Inc., third-party defendant appellant.

Hogue, Hill, Jones, Nash & Lynch by David A. Nash, Wilmington, for Ballard, McKim & Sawyer, third-party defendant appellee.

Young, Moore, Henderson & Alvis by J. C. Moore, Jr., Raleigh, for Lasater-Hopkins, additional third-party defendant appellee.

Trotter, Bondurant, Griffin, Miller & Hishon by Luther P. Cochrane and John F. Elger, Atlanta, Ga., Miller, Johnston, Taylor & Allison by John B. Taylor, Charlotte, for Associated Gen. Contractors of America, Carolinas Branch, amicus curiae.

Wade M. Smith and Steven L. Evans, Raleigh, for North Carolina Chapter of the American Institute of Architects, amicus curiae.

ERWIN, Judge.

Architects' Liability

The question before us is whether in the absence of privity of contract an architect may be held liable to a general contractor and his subcontractors for economic loss resulting from breach of a common law duty of care. We answer, "Yes."

The law imposes upon every person who enters upon an active course of conduct the positive duty to exercise ordinary care to protect others from harm and calls a violation of that duty negligence. Council v. Dickerson's, Inc., 233 N.C. 472, 64 S.E.2d 551 (1951); Stroud v. Transportation Co., 215 N.C. 726, 3 S.E.2d 297 (1939). The duty to protect others from harm arises whenever one person is by circumstances placed in such a position towards another that anyone of ordinary sense who thinks will at once recognize that if he does not use ordinary care and skill in his own conduct with regard to those circumstances, he will cause danger of injury to the person or property of the other. Insurance Co. v. Sprinkler Co., 266 N.C. 134, 146 S.E.2d 53 (1966); Honeycutt v. Bryan, 240 N.C. 238, 81 S.E.2d 653 (1954). The duty to exercise due care may arise out of contractual relations. However, a complete binding contract between the parties is not a prerequisite to a duty to use due care in one's actions in connection with an economic relationship, nor is it a prerequisite to suit by a contractor against an architect. See Detweiler Bros., Inc. v. John Graham & Co., 412 F.Supp. 416 (E.D.Wash.1976); see also 57 Am.Jur.2d, Negligence, § 49, p. 398.

An architect, in the performance of his contract with his employer, is required to exercise the ability, skill, and care customarily used by architects upon such projects. 5 Am.Jur.2d, Architects, § 8, pp. 669-70. Where breach of such contract results in foreseeable injury, economic or otherwise, to persons so situated by their economic relations, and community of interests as to impose a duty of due care, we know of no reason why an architect cannot be held liable for such injury. Liability arises from the negligent breach of a common law duty of care flowing from the parties' working relationship. Accordingly, we hold that an architect in the absence of privity of contract may be sued by a general contractor or the subcontractors working on a construction project for economic loss foreseeably resulting from breach of an architect's common law duty of due care in the performance of his contract with the owner. It is true that neither the general contractor nor the subcontractors could maintain a cause of action against the architects grounded on negligent performance of the architects' contract with New Hanover County. See Durham v. Engineering Co., 255 N.C. 98, 120 S.E.2d 564 (1961), and Drilling Co. v. Nello L. Teer Co., 38 N.C. App. 472, 248 S.E.2d 444 (1978).

We note that plaintiff and third-party defendants seek to impose contractual duties upon the architects not expressly assumed by them in their contract. This, we refuse to do.

Our decision today does not conflict with our Supreme Court's holding in Durham v. Engineering Co., supra. In Durham, supra, our Supreme Court quoted Williamson v. Miller, 231 N.C. 722, 726, 58 S.E.2d 743, 746 (1950), as follows:

"`[S]ince the contract is made a part of the complaint, and is alleged as the sole basis of recovery, the Court will look to its particular provisions rather than the more broadly stated allegations in the complaint, or the conclusions of the pleader as to its character and meaning. Upon proper construction of these writings depends the propriety of the judgment overruling the demurrer.'" (Citation omitted.)

Id. at 101, 120 S.E.2d at 566. Thus, in reaching its decision, the Court did not consider the question before us, nor do we believe that this Court's decision in Drilling Co. v. Nello L. Teer Co., supra, precludes us from reaching our decision.

In Drilling Co., supra, we were reluctant to impose liability on a consulting engineer who required work exceeding plan specifications. We indicated that an architect's negligent failure to perform his contractual duty with the owner could result in a defective foundation and possible extensive liability. Such countervailing considerations are of less magnitude where an architect's negligence in performing his contract contributes to a defective building and damage to adjacent property by means of a concurrent breach of a common law duty of care arising out of the circumstances surrounding the parties. Whether or not the architects breached their duty of due care causing pecuniary loss to plaintiff and third-party defendants presents a genuine issue of a material fact. Summary judgment is proper only when the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Lee v. Shor, 10 N.C.App. 231, 178 S.E.2d 101 (1970). Since a genuine issue of a material fact exists as to whether the architects breached their common law duty of due care in the performance of their contract, summary judgment in their favor is reversed.

Soil and Materials Engineers', Inc. Liability

Plaintiff and third-party defendants allege that Soil and Material Engineers, Inc. negligently misrepresented the subsurface soil conditions and that their reliance on the soil investigative report prepared by Soil and Material Engineers, Inc. was the proximate cause of their injury.

A surveyor or civil engineer is required to exercise that degree of care which a surveyor or civil engineer of ordinary skill and prudence would exercise under similar circumstances, and if he fails in this respect and his negligence causes injury, he will be liable for that injury. R. H. Bowman Associates, Inc., v. Danskin, 72 Misc.2d 244, 338 N.Y.S.2d 224 (1972), aff'd mem., 43 A.D.2d 621, 349 N.Y.S.2d 655 (1973). Such liability is based on negligence, and lack of privity of contract does not render Soil and Material Engineers, Inc. immune from liability to the general contractor or the subcontractors for damages proximately resulting from submitting a bid or conducting work in reliance on negligently prepared soil test reports. M. Miller Co. v. Central Contra Costa Sanitary Dist., 198 Cal.App.2d 305, 18 Cal.Rptr. 13 (1961); see also Restatement of Torts, § 552 (1938).

Restatement of Torts, § 552 provides:

"§ 552. INFORMATION NEGLIGENTLY SUPPLIED FOR THE GUIDANCE OF OTHERS.

One who in the course of his business or profession supplies information for the guidance of others in their business transactions is subject to liability for harm caused to them by their reliance upon the information if

(a) he fails to exercise that care and competence in obtaining and communicating the information which its recipient is justified in expecting, and

(b) the harm is suffered

(i) by the person or one of the class of persons for whose guidance the information was supplied, and

(ii) because of his justifiable reliance upon it in a transaction in which it was intended to influence his conduct or in a transaction substantially identical therewith."

We believe that the Restatement of Torts, § 552 is in accord with the law of North Carolina. We know of no cases disavowing the recognition of a cause of action in negligence based on a negligent misrepresentation. In performing its contractual duties, Soil and Material Engineering, Inc. was under a common law duty to use due care. To the extent that plaintiff and third-party defendants have alleged a breach of that duty of due care and that the breach was a proximate cause of their injury, they have stated a cause of action. See generally Prosser, Misrepresentation and Third Persons, 19 Vanderbilt L.Rev. 231, 246-48 (1966). The agreement between New Hanover County and plaintiff, that it was to rely entirely on its own judgment in submitting its bid and was to conduct a site inspection to have a complete understanding of all existing conditions relating to the work, did not render Soil and Material Engineers immune from liability for any negligence in preparing the soil condition report. See M. Miller Co. v. Central Contra Costa Sanitary Dist., supra, and Craig v. Everett M. Brooks Co., 351 Mass. 497, 222 N.E.2d 752 (1967).

We only hold, at this point in the proceedings, that a cause of action has been sufficiently alleged. See McCloskey & Company, Inc. v. Wright, 363 F.Supp. 223 (E.D.Va. 1973).

The judgment entered below is

Reversed.

VAUGHN and HARRY C. MARTIN, JJ., concur.