In construction projects, it’s not unusual today for engineers, consultants, and other specialists to be asked for advice even on seemingly minor aspects of the work. If something later goes wrong, how should responsibility be apportioned among what may be the many consultants who were in some way involved?

That was the issue presented in a case recently decided by the California Court of Appeal (Lynch v Peter & Associates.)

In 2015, Cheryl Lynch decided to remodel her hillside, ocean-view home in San Clemente. She hired architect Benjamin Stevens to prepare the plans and Hutton Construction to perform the work. The project, budgeted at over $400,000, included updating, repairing, and expanding the house, underpinning some of the foundation, adding a retaining wall, building a new deck, and adding other improvements.

By the spring of 2018, Lynch had replaced the general contractor, Hutton, with Grover Construction. Grover engaged Peter & Associates, an engineering and geology consulting firm, to do a geotechnical inspection of a footing trench for the planned addition to the home.

The Peter firm charged just $360 for the inspection. Peter’s contract stated that its work did not include “subsurface exploration, laboratory testing, settlement analysis and/or slope stability calculations.” It also said the firm would not be “responsible for potential settlement and/or slope failure, if any,” nor for “geotechnical review of grading plan, foundation plan, and/or structural design calculations” or the “adequacy of [these] plans/calculations.”

The contract did not mention the Lynches and contained no clause pertaining to third-party beneficiaries. It did contain a clause limiting Peter’s liability to twice their fee.

Grover paid Peter $360 on April 25, 2018, and on the same day the firm sent Lan Pham, a licensed civil and geotechnical engineer, to the property. Pham inspected the footing trenches and used a three-foot steel rod to probe the soil.

He prepared a one-page handwritten memo summarizing his findings, addressing it to Mike Grover, the head of the construction firm, and to Gregory and Cheryl Lynch, the homeowners. He wrote that the soil in the trenches was “considered geotechnically acceptable and suitable for the intended use.”

Grover poured the footings and the work proceeded. However, after the remodeling work was completed the footing collapsed and that part of the house subsided, sliding toward the slope. The Lynches had caissons and a grade beam installed to support the collapsed addition, but eventually the house deflected by nearly five inches, with cracks in the floor and foundation and other damage.

The Lynches filed a lawsuit in Orange County Superior Court against Hutton, Coastal, Stevens, Peter, and other subcontractors, alleging breach of contract, negligence, nuisance (meaning harmful to health, offensive, or preventing the use of property), and other claims.

After several delays in the proceedings, during which Mr. Lynch passed away, the Peter firm filed a motion for summary judgment, meaning it asked the court to rule in its favor without a trial. It argued that it had “no legal liability to” the homeowners “under any negligence or nuisance theory.”

It noted that it was “a small engineering firm” hired only to inspect a single footing “for a fee of $360,” that its contract specifically disclaimed responsibility for slope failure or for reviewing the adequacy of the planned foundation work, and that it had no contract with the Lynches.

The trial court granted the summary judgment.

Mrs. Lynch appealed, arguing to the Court of Appeal that the Peter firm owed her a duty of care because she and her late husband were “the intended direct beneficiaries” of its work. She also said the trial court erred twice, first by ruling that there were no triable issues of fact regarded her nuisance cause of action, and then by sustaining Peter’s objections to declarations filed by Lynch and by an expert testifying on her behalf.

The appellate justices agreed with Lynch on all three points.

The fact that Peter was paid only $360 to inspect a single excavated trench does not invalidate Lynch’s claim of negligence, they said.

Traditionally, they acknowledged, courts had ruled that there is no liability for negligence in the performance of a contract in the absence of “privity” – a legal relationship between the parties. Today, however, courts often hold that there is a duty of care even without formal privity. Factors courts may weigh include the connection between the alleged action and the injury that results, the “moral blame” linked to the defendant’s conduct, and the goal of preventing future harm.

In cases involving negligence by construction professionals, the justices noted, courts “often take a harder line” with experts who are “sought because of their special skill.”

Because the Peter firm held itself out as able to perform the necessary soil tests while asserting that it was not qualified to do the tests, it “did not exercise the ordinary skill and competence of those in the business of soil testing.”

The justices reversed the summary judgment and remanded the case to the trial court for further proceedings and awarded Lynch her costs on appeal.

The holding in this case should make small engineering companies or one-person shops very wary of providing “opinions” to contractors or owners on projects they know little about.

By Laurie Murphy