Definitions

Question 1

DTPA

Answer 1

• Presents little threat to DPs

- The act EXCLUDES professional services & transactions over $500,000 from its regulation(won’t apply)

Question 2

DPs way to avoid an alleged DTPA violation

Answer 2

include contract language :
“The Parties agree that all of the DPs services provided pursuant to this Agreement are professional services, which consist solely of the rendering of advice, judgment, opinion, or similar professional skill.”

Question 3

Certificate of Merit

Answer 3

• in a suit vs A/E alleging professional negligence TX requires that a certificate of merit be filed by a plaintiff along with the complaint.
• Requirements for the certificate of merit are:
  1. must be signed by a licensed A/E in same state
  2. must be in affidavit form
  3. must list atleast 1 negligent acts, error, or omission claimed to exist & the factual basis for the claim

*Typical DP defense –> any failure to file this along with the complaint can lead to dismissal of the complaint that may be with prejudice

Question 4

Breach of Contract

contract law

Answer 4

The 5 Elements definition she wants is:

Failure to perform a condition of a contract which causes the other contracting party to suffer damages

Question 5

Negligence

tort

Answer 5

The 5 Elements definition she wants is:

Failure to act as a reasonable person which causes another person to suffer damages

Question 6

Engineering Malpractice

Answer 6

Failure to act as a competent engineer practicing in the same area of engineering and in the same location which causes another person to suffer damages

Question 7

Fraud

Answer 7

A material misrepresentation
with knowledge of falsity or reckless disregard for the truth and an intent that it be acted on

** fraud is an exception to the economic loss rule; can sue for punitive damages

Question 8

Gross Negligence

Answer 8

an act or omission that amounts to more horrific negligence

Question 9

Economic Loss Rule

Answer 9

• economic losses arising out of commercial transactions are not recoverable under negligence claims. aka a plaintiff cannot recover non-contractual damages when the injury is economic loss to the subject matter of the contract
• The contract may create duties recognized in both contract and negligence law
• If the damages do not extend to persons or property beyond the scope of the contract, there is no negligence claim

Question 10

The plaintiff must satisfy four requirements to maintain an action for negligence per se

Answer 10

A violation of a statute or regulation
The plaintiff was in the class of persons intended to be protected by the statute or regulation
The plaintiff’s injury is of the nature that the statute or regulation is designed to prevent
The violation of the statute or regulation must be the proximate cause of the injury

Question 11

Limitation of Liability clause

Note: limited liability is liability restricted by law or contract

Answer 11

This clause can be used in a contract to establish a maximum sum of damages or risk the design professional will accept for rendering his/her services. HOWEVER, this clause will be invalid if sued for tort.

Question 12

Texas Statute of Limitations

Answer 12

4 years for breach of contract & breach of warranty claims
2 years for negligence

Question 13

Statute of Repose

Answer 13

bars all claims in TX relating to any cause of action against a A/E if it isn’t within 10 years of the time the project was completed

Question 14

Discovery Rule

Answer 14

• def=the means by which a plaintiff can defer the accrual date for purpose of calculating the statute of limitations period
• the discovery rule is an exception to the legal injury rule

this little guy goes with the statute of limitation rule and can delay when the time began to run for the statute of limitations if the knowledge was not discoverable/concealed from the plaintiff in any way

Question 15

What can OWNER sue DP for?

Answer 15

• Breach of Contract
• Third-Party Beneficiary (Owner v. Sub-Consultant)
• Negligence
• Breach of Warranty
• Deceptive Trade Practices Act

Question 16

“time is of the essence”

Answer 16

• In effect, atime is of the essenceclause issaying, “thetimesand dates specified in this agreementarevital and mandatory to thecontract”. As a result, any delay might be grounds for canceling thecontract
• this is an exception case to a jury having to determine with the breach is material bc deemed material as a matter of law if delayed enough

Question 17

Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc. (Tex. 2004)

Answer 17

 the court held that a contractor’s failure to meet a deadline in violation of an expressed time-is-of-the-essence clause was a material breach as a matter of law

Question 18

Third-Party Beneficiary

Answer 18

Note: in order for a 3rd party beneficiary clause to be enforceable it has to be irreversible

Question 19

Elements of Negligence (per PWPT)

Answer 19

Duty of care
Standard of care
Proof of standard of care
Negligence per se
Indemnity
Economic loss

Question 20

Texas defines negligence in architect malpractice cases as

Answer 20

The failure to use ordinary care; that is, failure to do that which an architect of ordinary prudence would have done under the same or similar circumstances or doing that which an architect of ordinary prudence would not have done under the same or similar circumstances

Question 21

Negligence per se (PWPT slides; owner vs DP)

Answer 21

The plaintiff must satisfy four requirements to maintain an action for negligence per se:

1. A violation of a statute or regulation
2. The plaintiff was in the class of persons intended to be protected by the statute or regulation
3. The plaintiff’s injury is of the nature that the statute or regulation is designed to prevent
4. The violation of the statute or regulation must be the proximate cause of the injury

Question 22

Breach of Warranty

Answer 22

DP should make sure to NOT guarantee the results of the contractor’s work to the owner under a breach of contract theory

Question 23

The exemption for professionals contained in the DTPA will not be applicable to:

Answer 23

• An express misrepresentation of a material fact that cannot be characterized as advice, judgment, or opinion;
• A failure to disclose information in violation of § 17.46(b) (23);
• An unconscionable action or course of action that cannot be characterized as advice, judgment, or opinion; or
• Breach of an express warranty that cannot be characterized as advice, judgment, or opinion.

Question 24

What can CONTRACTOR sue DP for?

Answer 24

Breach of Contract
Third-Party Beneficiaries
Negligence
Fraud
Negligent Misrepresentation
Breach of Warranty

Question 25

privity

Answer 25

a relationship btw persons who successively have a legal interest in the same right or property
ex) a third party beneficiary

Question 26

DP Defense for Contractor claim of Third-Party Beneficiaries

Answer 26

Include the following contracting language to ensure no privity(aka no 3rd parties can go after you):
Nothing contained in this agreement shall create a contractual relationship with or a cause of action in favor of a third party against either the owner or architect.

Question 27

DP Defense for Contractor claim of Negligence

Answer 27

1st Issue is proving A/E owed a duty. If that is done the next hurdle is to establish damages

1. no duty to supervise contractor’s work
2. some duty to prepare accurate plans and specs (A cause of action exists in favor of a contractor against an owner or architect who furnishes defective plans and specifications)
3. duty not to negligently undertake service? some is suggested *unclear

Question 28

Section 324 of the Restatement (Second) of Torts

relates to Contractor claiming Negligent Undertaking against a DP

Answer 28

“One who undertakes, gratuitously or for consideration, to render service to another, which he should recognize as necessary for the protection of a third person(contractor) or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if

a) his failure to exercise reasonable care increases the risk of such harm, or
b) he has undertaken to perform a duty owed by the other to the third person, or
c) the harm is suffered because of reliance of the other or the third person on the undertaking”

***NOTE:if the DP does a bad job he arguably could fit under this scenario; a) & c) would best fit the A/E
CHALLENGE=physical harm

Question 29

Chapter 130 of the Texas Civil Practice & Remedies Code

Answer 29

A DP cannot be held harmless by a contractor for damage that:
(1) is caused by or results from:
(A) defects in plans, designs or specifications prepared, approved, or used by the architect or engineer; or
(B) negligence of the architect or engineer in the rendition or conduct of professional duties called for or arising out of the construction contract and the plans, designs or specifications that are a part of the construction contract; and
(2) arises from:
(A) personal injury or death;
(B) property injury; or
(C) any other expense that arises from personal injury, death, or property injury

Question 30

Elements of Tort of Fraudulent Misrepresentation

Answer 30

1. The defendant willfully or recklessly made a false representation concerning an existing material fact;
2. The plaintiff relied upon that false representation; and
3. The plaintiff suffered injury as a proximate result of the false representation.

Question 31

Negligent v. Fraudulent Misrepresentation

Answer 31

The tort of fraudulent misrepresentation, as opposed to negligent misrepresentation, requires actual knowledge, or reckless lack of knowledge, that the fact misstated is false.

Question 32

Tort of Negligent Misrepresentation,Restatement Second, Torts § 552

Answer 32

One who in the course of his business, profession, or employment, or in any other transaction in which he has a pecuniary(economic) interest

• Supplies false information for the guidance of others in their business transactions
• Is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information
• If he fails to exercise reasonable care or competence in obtaining or communicating the information

Limits liability to the person or class of persons whom the maker of the representation intends to benefit
Or who can foreseeably be expected to rely on the information

Question 33

Common theory that can be applied to bypass the privity requirement and the Economic Loss Rule is

Answer 33

the tort theory of negligent misrepresentation

Question 34

Can a contractor establish an independent duty and overcome economic loss rule challenges by suing for negligent misrepresentation?

Answer 34

yes

aka Does a negligent misrepresentation claim avoid the road blocks that exist for negligence?

Question 35

Lonergan v. San Antonio Loan & Trust (1907) TX Supreme Court

->Liability for Defective Design

TX Supreme Court Case

Answer 35

Absent contractual guarantees or assumption of liability for defective design by an owner, the contractor bears the risk. In Lonergan, the Texas Supreme Court held that the contractor’s risk for design ends at the completion of the project.

Holding in case: in the absence of express contractual language, contractors accept a contract and its plans and specifications at their peril and, as a matter of law, the specifications are not guaranteed by the owner. The Court reasoned that, since the contractor contracted to construct the building in accordance with the specifications, the contractor implied that it understood them and, therefore, was in the same position as the owner to know if they were sufficient.

Question 36

U.S. v. Spearin Holding (Federal Case)

->Liability for Defective Design BUT contrary to Lonergan

Answer 36

the U.S. Supreme Court held that the

owner implied warranted the sufficiency of the plans and specifications. The Court also stated that this implied warranty could not be overcome by boilerplate terms requiring the contractor to check the plans and the job site. In reaching its holding, the Court stated, “if a contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of the defects in the plans and specifications.”

**Texas is in the minority of states that do not follow this case.

Question 37

TX Supreme Court cited Lonergran in 2012

EL Paso Field Services v. MasTec

Answer 37

Texas appellate cases have split on an owner’s implied covenant; however, the Supreme Court cited Lonergan with approval in the 2012 case of El Paso Field Services v. MasTec North American, Inc

Question 38

Economic Loss

Answer 38

economic loss refers to
most financial loss other than damages for
physical injury and property damages; those
two categories are not purely economic loss

Question 39

What is the Economic Loss Rule?

Answer 39

in cases involving negligent
services or negligent performance of contract,
the specific test is whether the claim is
independent from contract. You look beyond
the pleadings to the substance of the claim,
and examine (1) the source of the duty
allegedly breached and (2) the nature of the
plaintiff’s loss.