The Pennsylvania Superior Court Makes it Easier for Contractors to Sue Design Professionals for Faulty Plans and Specifications

Accurate and comprehensive design plans are critical to preparing competitive bids and to successfully building safe structures that meet owner expectations. Because contractors rely on these designs, Pennsylvania law provides a remedy against design professionals whose negligent design causes unanticipated costs on a project. Based on this principal, the Pennsylvania Superior Court in Gongloff Contracting, LLC v. L. Robert Kimball & Associates, Architects and Engineers, Inc. recently held in favor of a subcontractor on its claim against an architect for providing poor and faulty design plans on a university construction project, even though the subcontractor did not identify in its complaint the particular aspect of the design that was false. The Court’s decision makes it easier for contractors (and subcontractors) to initiate a direct claim against a design professional for negligent misrepresentation, often referred to as a “Bilt-Rite” claim.

Negligent Misrepresentation Under Bilt-Rite

To fully appreciate the impact of the recent Gongloff case, it is helpful to understand the 2005 Pennsylvania Supreme Court’s decision in Bilt-Rite Contractors, Inc. v. The Architectural Studio. In Bilt-Rite, the Court held that a contractor was permitted to pursue claims for negligent misrepresentation directly against a design professional if the contractor was damaged by relying on faulty design plans and specifications.

The Bilt-Rite decision was the first of its kind in Pennsylvania to provide an avenue for contractors to obtain relief directly against design professionals with whom they had no direct contract. Prior to Bilt-Rite, contractors were generally unable to bring actions against design professionals for faulty plans.

The facts of Bilt-Rite are typical in construction: The owner, East Penn School District, hired the design professional, The Architectural Studio (TAS), to prepare the design for the construction of a new school. The design included plans, drawings, and specifications. These were submitted to contractors for the purpose of preparing bids for the project. Bilt-Rite submitted its bid for general construction work based upon TAS’s design and was ultimately awarded the general construction contract by the School District as the lowest responsible bidder.

During the project, Bilt-Rite discovered that TAS’s design for the aluminum curtain wall system could not be constructed using normal and reasonable construction methods. Instead, Bilt-Rite had to employ special means and methods to construct the curtain wall, resulting in increased construction costs.

Bilt-Rite sued TAS, arguing that it had a right to rely upon the representations in TAS’s plans that Bilt-Rite could perform the curtain wall work using normal and reasonable construction methods. This representation, according to Bilt-Rite, was false and constituted a negligent misrepresentation.

The Pennsylvania Supreme Court agreed with Bilt-Rite and decided that a design professional who supplies design plans and specifications makes a representation that he or she has used reasonable skill and care in preparing the design that contractors may rely upon when submitting their bids. When the design professional knows that the design will be used by contractors but fails to use reasonable care in supplying the design, the design professional may be liable for negligent misrepresentation.

According to the Court, a contractor states a Bilt-Rite claim for negligent misrepresentation by alleging and proving the following:

1. The defendant [design professional] is one who, in the course of his business, profession, or employment, or in any other transaction in which he has a pecuniary [financial] interest, supplied false information for the guidance of the plaintiff [contractor] in its business transactions;
2. The design professional failed to exercise reasonable care or competence in obtaining or communicating the information;
3. The contractor was one of a limited group of persons for whose benefit and guidance the design professional intended to supply the information, or through whom the design professional intended the information to be supplied;
4. The contractor relied upon the information in connection with a project or transaction and the design professional intended the contractor to rely upon the information;
5. The contractor justifiably relied upon the design professional’s information; and
6. The contractor suffered monetary loss as a result of its reliance upon the design professional’s false information.

An important issue left unaddressed by the Supreme Court in Bilt-Rite was whether a contractor was required to identify with particularity the aspects of the design professional’s design that were false or faulty in order to state a claim. This is the issue recently taken up by the Superior Court in Gongloff.

The Gongloff Case

Gongloff was a sub-subcontractor hired to erect a steel structure as part of the construction of a convocation center at the California University of Pennsylvania, located in California, Pennsylvania. The project was designed by L. Robert Kimball & Associates, Architects and Engineers, Inc. (Kimball). Like the contractor in Bilt-Rite, Gongloff did not have a direct contract with the design professional. During the project, Gongloff learned that Kimball’s never-before-utilized roof system design was not adequate to bear the specified construction loads. Gongloff submitted 81 change order requests during the project to address structural inadequacies and incurred thousands of dollars in costs performing additional work beyond the scope of its original bid. When Gongloff was not paid for all of its additional work, it eventually left the job and filed a complaint against Kimball for negligent misrepresentation pursuant to Bilt-Rite.

Kimball sought to dismiss the lawsuit, arguing that the Bilt-Rite rule requires contractors to identify a particular express negligent misrepresentation, such as a false statement made by the design professional, directly to the contractor. When Gongloff struggled to do that, Kimball claimed that the failure to identify a specific false communication made by Kimball prevented Gongloff from pursuing a negligent misrepresentation claim against it. The trial court agreed with Kimball and granted judgment on the pleadings in Kimball’s favor.

On appeal, the Pennsylvania Superior Court reversed the trial court’s ruling and held that a design professional’s design can itself be construed as an “actual representation” to the contractor that its design will result in a successful project if followed. Therefore, the contractor is not required to identify a specific misrepresentation in the design professional’s design documents or communications. Instead, it was sufficient that Gongloff alleged that Kimball’s design drawings regarding the roof system were inadequate, faulty, improperly designed and false.

What is the importance of Gongloff?

The Court in Gongloff clarified the requirements set forth in Bilt-Rite and made it easier for contractors to initiate claims against design professionals. Now, it is unnecessary for the contractor to identify in its complaint a particular negligent communication or representation made by the design professional to the contractor, which is something that can be difficult to articulate and fully appreciate at the commencement of litigation. Although it is ultimately the burden of the contractor, with the help of an expert, to prove that the design was false or faulty, the Superior Court provided some relief to contractors who are unable at the time of the filing of their complaints to identify the exact false elements of the faulty design with specificity.

While Bilt-Rite and Gongloff provide a direct remedy against design professionals, it is not the exclusive remedy for contractors who suffer losses on a construction project. A Bilt-Rite claim is but one of many claims that can — and often should — be asserted in litigation or arbitration against potentially responsible parties.