Transcript LEGAL ISSUES FOR OHIO PROFESSIONAL ENGINEERS

LEGAL ISSUES FOR OHIO
PROFESSIONAL ENGINEERS
Dayton, OH – December 18, 2007
William M. Mattes, Esq.
Dinsmore & Shohl LLP
175 S. Third Street, Suite 1000
Columbus, Ohio 43213
(614) 628-6880
[email protected]
Session 1
8:30-9:30
PART ONE
Ohio Engineering Law
Dayton, OH – December 18, 2007
William M. Mattes, Esq.
Dinsmore & Shohl LLP
175 S. Third Street, Suite 1000
Columbus, Ohio 43213
(614) 628-6880
[email protected]
Current State of Professional Liability
Law for Engineers in Ohio
Key Concepts & Cases
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Engineering is defined by statue in ORC §4733.01(D) – Any
professional service – i.e. consultation, investigation, evaluation,
planning, design, inspection, compliance – deals with utilities,
structures, buildings, mechanics, equipment, processes which
require a qualified engineer. (ORC §4733.11)
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Engineering is also defined by common law – practice of functions
which education and qualifications are required to protect the
health, safety and property of the public. It is not Architecture.
Fanning v. College of Steubenville, (1963) 174 Ohio St. 343.
Statue of Limitations
•On contract in writing – fifteen
years (ORC §2305.06)
•Oral – six years (ORC§2305.07)
•Tort – two years (ORC§2305.10)
•Fraud – four years (ORC§2305.09)
•Statute of Repose – ten years (ORC§2305.13)
Key Concepts
Standard of Care – reasonable in your
geographical area - qualified to do the work
•Public Works – Must have P.E. (ORC§4733.17)
•Discipline – ORC§§4733.20
•Illegal Use of Stamp - ORC §4733.22 and
§4733.99
•Crime $100-$500 fine OR 90 days in jail OR both
Sources of Professional Liability
Breach of Contract
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Always have your contracts reviewed by an
appropriate professional
Understand/outline all duties
Know the applicable standards and codes
Cure the defect ASAP
A phone call is better than a letter/e-mail
Consider what you write, e-mail and/or say
Limit your liability
Arbitration - mediation
Sources of Professional Liability
"Malpractice"
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"[E]ngineering is a licensed profession in the layman's use of the
word 'profession', but nowhere does the law bring that profession
within the benefits or handicaps afforded law and medicine in
defining the extent to which the word malpractice may be
interpreted in a statute of limitations… the conduct complained of
may be a breach of contract but cannot be construed as
malpractice…" Wishnek v. Gulla (1953), 52 Ohio Op. 111, 67 Ohio
L. Abs. 49, 114 N.E.2d 914.
One-year statute of limitations an on action for "malpractice" is
limited to areas specifically enumerated therein and to the
common-law definition of "malpractice," which was restricted
only to physicians and lawyers; thus negligence by a professional
engineer does not constitute "malpractice" within meaning of the
statute. Hocking Conservancy Dist. v. Dodson-Lindblom Assoc.,
Inc. (1980), 62 Ohio St.2d 195, 404 N.E.2d 164 (applying the fouryear statute of limitations).
Sources of Professional Liability
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EXPERT TESTIMONY REQUIRED
Expert testimony is necessary to establish professional negligence
of design professionals - whether the designer exercises
reasonable care in preparation of his designs depends upon the
standard of care which licensed architects/engineers must follow.
Simon v. Drake Constr. Co. (1993), 87 Ohio App.3d 23, 621 N.E.2d
837; Vosgerichian v. Mancini Shah & Associates (1996), Nos. 68931,
68943, 1996 WL 86684 (Ohio App. 8 Dist., Cuyahoga County).
Simon v. Drake: A worker was injured after falling from a fixed
ladder inside a city parking garage. The worker sued the project
architect alleging negligent design in the fixed ladder. However,
the worker failed to present any expert testimony that the
architect did not meet the standard of care required of a licensed
professional architect in Ohio; thus his claim was dismissed.
Sources of Professional Liability
Expert testimony required:
Capital Dredge & Dock Corp. v. City of Avon
Lake (1978), No. 2627 & 2728, 1978 WL
215279 (Ohio Ct. App. 9th Dist., Lorain
County): Two consulting engineers to the
City could have been primarily liable for the
negligently-prepared
plans
and
for
negligently approving shop drawings for an
outfall sewer project in Lake Erie, but the
plaintiff did not retain an expert witness to
testify as to the standard of care required of
an engineer in similar circumstances. Thus,
the claim failed.
Sources of Professional Liability
Breach of Contract – Case Study
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EXPRESS: Violate terms of written contract
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IMPLED: Violate terms understood in the
contract i.e. by signing contract you imply
you have the minimum knowledge, training
and skills to complete the work. Broyles v.
Brown Engineering Co., 275 Ala.35 (1963)
PRIVITY REQUIREMENT
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Parties suing in negligence may not recover economic damages in
the absence of a direct contractual relationship, or a sufficient
nexus between the parties which could serve as a substitute for
contractual privity. Floor Craft Floor Covering, Inc. v. Parma
Community Gen. Hosp. Ass'n (1990), 54 Ohio St.3d 1, 560 N.E.2d
206.
Plaintiff entered into a floor installation contract with the hospital.
After the installation, bubbling began to appear.
After
investigation and repair, the plaintiff sued the hospital and the
architect, believing the problem was caused by improper concrete
curing and excessive moisture. However, the Court found the
plaintiff and the architect were not in contractual privity, nor was
there any nexus between the parties to substitute for the lack of
privity. "Tort law is not designed to compensate parties for losses
resulting from a breach of duties assuming only by agreement.“
PRIVITY REQUIREMENT (cont’d)
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BUT, if the supervising architect or engineer wields enough control
over a contractor, a duty arises on the part of the design professional to
perform duties without negligence as they affect the contractor. This
serves as a substitute for contractual privity. Clevecon, Inc. v.
Northeast Ohio Regional Sewer Dist. (1993), 90 Ohio App.3d 215, 628
N.E.2d 143 (where project architect exercised substantial control and
gave orders at a tunnel construction site); East Ohio Gas Co., Inc. v.
Kenmore Const. Co., Inc. (2001), No. CIV.A. 19567, 2001 WL 302818
(Ohio Ct. App. 9 Dist., Summit County) (where engineers exercised
direct control and supervision over location of utilities).
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Corporex Development, et al. v. Shook, Inc. (2005), 106 Ohio St.3d 412.
Plaintiff, the owner and developer of a hotel, sued a subcontractor for
breach of contract, breach of express and implied warranty and
negligence. The Ohio Supreme Court held that due to no direct
contract with subcontractor, the owner was precluded from suing for
purely economic damages based on the economic loss rule. However,
the owner could sue contractor directly, who could then sue
subcontractor. No privity or substitute for privity shown.
Contribution & Indemnity
An architect or an engineer may be made
liable for indemnity or contribution, as
where a contractor has been sued by the
landowner or a third party and, in turn, sues
the design professional. 5 Am.Jur.2d § 28
(Where the negligence of the design
professional is the primary cause of the
injury for which the owner is sued, the
owner is entitled to indemnification from the
design professional).
BREACH OF CONTRACT CASE STUDY
Breach of Contract
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Existence of a contract
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The plaintiff fulfilled his obligation(s) under the contract
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The defendant failed to fulfill his obligation(s) under the contract
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Damages resulted from the failure
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Bates & Rogers Constr. Co. v. Cuyahoga County Board of
Commissioners, 274 F. 659 (N.D. Ohio 1920): The county hired a
contractor to build the Detroit-Superior Bridge in Cleveland. The
contractor was unable to begin the project on time because the
county allegedly failed to deliver possession of the sites to the
contractor. Further, the contractor alleged that the county's
repeated alterations and modifications of the plans and
specifications caused the project great delay. The Court held there
was an implied, if not express, covenant in the contract requiring
the county to furnish and deliver the site in a condition to permit
the work to be done, and that failure was a breach of contract.
Breach of Contract Cases (cont’d)
Breach of Express Contract
Nicholson v. Turner/Cargile (1995), 107 Ohio App.3d 797, 669
N.E.2d 529: A group of construction workers were killed when the
structural steel on a project collapsed while they were installing
cantilevered beams. The project's engineers allegedly observed
the workers utilizing an unsafe leveling procedure as they were
installing the beams prior to the collapse. The workers' families
filed wrongful death actions against the engineers (the firm and
the individuals) based on negligence and breach of contract. The
Court, however, held that none of the contracts imposed a duty
upon the engineers to make the construction site safe for the
workers. (Further, the Court found the engineers had no common
law duty to the workers as well.) The Court reasoned that because
the duty to make a project safe is typically imposed upon the
general contractor, the project's design professionals have no such
duty unless the professional actually participates in the
subcontractor's work or the contract explicitly provides such a
responsibility. The Court found neither situation in this case.
Breach of Contract Cases (cont’d)
South Union Ltd. v. George Parker & Associates (1985), 29 Ohio
App.3d 197, 504 N.E.2d 1131: An apartment complex owner filed a
lawsuit against an architect after it filed a Certificate of Substantial
Completion without adequately inspecting the building.
According to its contract with the complex's owner, the architect
was required to, among other things: Review all of the Plans and
Specs for completeness and accuracy; Provide all engineering,
architectural and consulting services during construction; Determine
whether the work complied with the Plans and Specs; and Certify to the
Owner that the work had been completed according to the terms and
conditions of the contract documents. After the work had been
completed and the architect filed the Certificate, a second inspection
noted various paving and electrical deficiencies. The Court held that the
architect's actions were not only a breach of the standard of care, but also
a breach of its contract with the owner. The Court awarded the owner
$150,000 after setoffs and counterclaims to pay for the deficiencies
ignored by the architect.
Breach of Contract Cases (cont’d)
Third Party Beneficiary Liability
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Terrace Creek Ass'n v. Woolpert Engineering Co. (2002), No. 19170,
2002 WL 1832917 (Ohio Ct. App. 2nd Dist., Montgomery County): A
homeowner's association sued a retention pond designer and the
county engineer for breach of contract after having to pay for more
than 150 truckloads of silt to be removed from the retention pond
during construction of its residential complex. Conceding it was not in
privity of contract with the designer or engineer, the association
brought its action under a third-party beneficiary theory. The Court,
however, found no evidence that the association was more than an
incidental beneficiary. Rather evidence showed the contract was intended to
benefit the developer, who needed retention ponds to complete construction.
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Ohio courts have repeatedly held that only a party to a contract or an intended
third-party beneficiary of a contract may bring a contract action. CMC
Electric Co., Inc. v. J.D. Williamson Constr. Co., Inc. (1999), No. 98-A-0076,
1999 WL 1073685 (Ohio Ct. App. 11th Dist., Ashtabula County) (holding that
the plaintiff-electrical contractor had no evidence that it was an intended
beneficiary in the engineer's contract with the general contractor).
Breach of Contract Cases (cont’d)
Breach of Implied Contract
Columbus v. Alden E. Stilson & Associates (1993), 90 Ohio App.3d
608, 630 N.E.2d 59: The City of Columbus and Stilson entered into
a contract under which Stilson provided engineering services for
construction of a water treatment plant. After JCI entered into a
contract with the City to provide instrumentation and control
systems for the treatment plant project, disputes arose between
the parties regarding allegedly inadequate drawings, plans, and
data furnished by the City (from Stilson). After JCI sued for
inadequate performance of the contract by the City, the City sued
Stilson under an indemnification clause in the contract. This case
shows how an owner can effectively limit its liability when an
engineer falls short of meeting its design responsibilities.
Breach of Contract Cases (cont’d)
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First Nat'l Bank of Akron v. Cann (N.D. Ohio 1980), 503 F.Supp.
419: The court acknowledged that the contract did not require the
architect to make continuous, exhaustive site inspections. But the
court held that the defects in construction were such that the
architect either knew of them or should have discovered them if
the inspections were even cursory. The expectations of the
project’s owner were taken into consideration by the court in its
decision. The court determined the architect was jointly and
severally liable for the cost of repair, along with the contractor.
Engineer can be liable for breach of promise that the project will
be designed and constructed to be fit for a particular use or
particular purpose. 17 Am.Jur. POF 3d 49, 63 (1988).
Sources of Professional Liability - Negligence
Negligence
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Failure to properly design a structure
Designing a structure that is unfit for its intended use
Negligent planning of the construction phases or sequences of construction
activities
Failure to properly supervise the construction work, so that it is not completed in
substantial compliance with the plans and specifications
Delays in the project which cause economic loss (also grounds for breach of
contract)
Your actions fell below the applicable standard of care and injured another for
whom you are legally obligated to protect.
Duty on the part of the engineer to use the degree of care and skill that a
reasonably prudent engineer would use under like circumstances
 Breach of that duty
 Actual loss or damage to the plaintiff
 Proximate causal connection between the engineer's negligence
and the resulting damages to the plaintiff
Sources of Professional Liability - Case Examples - Negligence
Cincinnati Riverfront Coliseum, Inc. v. McNulty Co., et al. (1986),
28 Ohio St.3d 333: An engineering company designed an outdoor
elevated walkway, which cracked and deteriorated shortly after
construction.
The Court wrote that professional engineers
contracted to provide the design for a particular structure
generally may be held responsible for the foreseeable
consequences of a failure to exercise reasonable care in the
preparation of the design. The Court noted that a contractor's
deviation from the plans will relieve the design engineer from
liability for a negligently-designed walkway only if the deviations
served independently to break the causal connection between the
design and the damages. This would have served to completely
remove the effects of any negligence by the design professionals.
However, the Court found evidence that specifically attributed the
deterioration to defects in the design. (Engineers admitted they
did not sufficiently consider the effect of exposure to weather or
the ability to disperse surface water in designing the walkway.)
Sources of Professional Liability - Case Examples - Negligence
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Clevecon, Inc. v. Northeast Ohio Reg’l Sewer District (1993), 90
Ohio App.3d 215, 628 N.E.2d 143: The contractor who ran a large
sewer project filed a lawsuit against the project designers. One of
the project architects was hired to design the sewer tunnel,
including a two-part lining. Problems with the lining arose
during installation, but the contractor claimed it was building the
tunnel according to specifications and any problems were merely
cosmetic, not needing repair. Nevertheless, the designer ordered
the contractor to do additional work to complete the tunnel to its
satisfaction. After determining the project architects exercised
enough control to impose liability (to substitute for lack of
contractual privity), the court found the plans and specifications
were negligently prepared, drafted, and the designer negligently
administered the project in general.
Sources of Professional Liability - Case Examples - Negligence
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Valentine Concrete, Inc. v. Ohio Dept. Admin. Services (Ct. Cl. 1991) 62
Ohio Misc.2d 591: A general contractor encountered numerous
difficulties and significant delay in renovating the engineering
building at Ohio University. The contractor filed suit against the Ohio
Department of Administrative Services, alleging that the extra
expenses and delays on the project were the result of inadequate
architectural drawings and specifications, unreasonably slow
communications from the design professionals, and unclear
documents and drafting errors. The Court awarded Valentine extra
expenses incurred as a result of omissions in the architectural
drawings.
See also John P. Novotny Electric Co. v. State of Ohio (1975), 46 Ohio
App.2d 255, 349 N.E.2d 328; Bates & Rogers Constr. Co. v. Cuyahoga
County Board of Commissioners, 274 F. 659 (N.D. Ohio 1920) (holding
that because an owner is required to furnish sufficient plans and
specifications for the contractor(s), the engineer/architect is generally
regarded as an agent of the owner such that the owner is liable for any
omissions/negligence by the design professional).
Sources of Professional Liability - Case Examples - Negligence
Hines v. Kline Engineering (1998), No. 97-CA-123, 1998 WL 350592
(Ohio Ct. App. 2nd Dist., Greene County): Prior to plaintiffs
purchasing the property at issue, a company who previously
owned the land successfully sought a variance to permit the
building of a residence, so long as the structure was built at an
elevation of two feet above the 100-year flood-level. After
completion of the home, an employee of Kline measured the flood
level at 891 feet above sea level. However, after the plaintiffs
moved into the home, it became apparent that the flood level was
actually higher than the originally-measured level. The plaintiffs
brought an action against the Kline surveyor. Even though the
surveyor did not have a contractual relationship with the
plaintiffs, the court held that because surveyors or civil engineers
can foresee that subsequent purchasers of property will rely on
their representations, they will owe those purchasers a duty of
care. Thus, the claim survived the engineers’ motion for summary
judgment.
Sources of Professional Liability - Case Examples - Negligence
Scott Hutchinson Enterprises, Inc. v. Rhodes, Inc. (2005), No. C-101-776, 2005 WL 2000661 (Fed. Dist. Ct., S.D. Ohio): Rhodes and its
engineers conducted land surveys and environmental assessments
on a land parcel purchased by the plaintiffs. Under their contract,
Rhodes engineers were to provide specific information regarding
the environmental aspects, geographic area, and geologic and
hydrologic conditions present on the property. Plaintiff bought
the property specifically in reliance of such consultation, advice
and warranties provided by Rhodes engineers. While the Court
found the engineers liable for professional negligence, it also held
that the breach of warranty claims were indistinguishable from
the negligence claim and ruled that it was not a separate cause of
action.
Misrepresentation/Liability
Misrepresentation – intentional or negligent
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You misrepresented facts, code, law and are thereby liable for
damages caused to another.
Liability for Negligent Misrepresentation will attach if
 One who, in the course of his business or in any other transaction in
which he has a pecuniary interest,
 Supplies false information for the guidance of others in their
business transactions
 Causing to them pecuniary loss
 By their justifiable reliance upon the information,
 If he fails to exercise reasonable care or competence in obtaining or
communicating the information.
Misrepresentation/Liability Case Examples
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Ohio Plaza Associates, Inc. v. Hillsboro Associates (1998), No.
96CA898, 1998 WL 394370 (Ohio Ct. App. 4th Dist., Highland County):
The Court dismissed the landowner's negligent misrepresentation
claim against the project engineer of a shopping center development
project because there was no privity between the parties and because
the engineer did not exercise sufficient control to warrant a
substitution for privity. However, the court did not dismiss owner's
fraud claim, citing evidence that the engineer told the owner the
project was not in a flood plain when he knew a Federal Emergency
Management Agency map showed otherwise.
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Stults & Associates, Inc. v. United Mobile Homes, Inc. (1998), No. 9-9766, 1998 WL 720471 (Ohio Ct. App. 3rd Dist., Marion County): In order
to expand a mobile home park, United Mobile contacted Stults for
engineering and design services in the park's construction. After the
need for several new proposals and changes for which United Mobile
did not pay, Stults sued for breach of contract. United Mobile
counterclaimed for misrepresentation. However, the court found that
United Mobile failed to prove that Stults made any untrue statements
regarding the design services in the various agreements between the parties.
Misrepresentation/Liability Case Examples
Todd County v. Barlow Projects, Inc., 2005 U.S. Dist. LEXIS 8648
(D. Minn.): Fraudulent misrepresentation claims against an
engineer fail when they do not establish that the engineer
misrepresented past or present facts at the time of creating a
feasibility study. The city hired an engineer to conduct a
feasibility study concerning the retrofit of a waste facility to
comply with environmental regulations. The study showed that
the facility could be operated at a financial gain but the city lost
money, and fees for waste delivery increased each year. The city
sued the engineer for fraudulent misrepresentation. However, the
court found that despite the engineer's projections being
erroneously underestimated, the city could not show the engineer
knew or should have known the projections were false.
Sources of Professional Liability
Strict Liability
NON-DELEGABLE DUTY: Duncan v. Missouri Bd. for
Architects, Prof. Engineers & Land Surveyors, 744 S.W.2d 524
(Missouri Ct. App. 1988): A walkway in the Hyatt Regency hotel
collapsed in 1981, killing 114 and injuring nearly 200 others. The
structural engineers were found to have approved a change in the
shop drawings without conducting tests to determine soundness
and safety. Shop drawing review by the engineers "was
contractually required, universally accepted, and always done as
party of the design engineer's responsibility." Additionally, they
attempted to delegate the walkway's steel connections to the
structural steel fabricator, who designed a faulty support system
that was never tested by the engineers. The engineers were found
to have breached nondelegable duties and lost their certificates.
Sources of Professional Liability – Case Examples –Strict Liability
General Rule - No strict liability for professional services. Furthermore,
strict liability is ordinarily not applied to architects because negligence
can be proved. Jackson v. City of Franklin (1988), 51 Ohio App.3d 51,
554 N.E.2d 932.
Exceptions in other jurisdictions.
Serna v. N.Y. State Urban Dev. Corp., 586 N.Y.S.2d 413 (N.Y. App.
Div. 1992): Builders and architects of defective buildings can be
held liable in strict products liability if the building contains a
latent defect or a concealed danger which injures a plaintiff. (NY
now uses a "failure to exercise due care" analysis).
Abdul-Warith v. Arthur G. McKee & Co., 488 F.Supp. 306 (E.D. Pa.,
1980): Engineer may be held strictly liable where he enters into a
design-build contract, and he participates in the manufacture or
assembly of the project, as well as its building components.
Sources of Professional Liability
PRODUCTS LIABILITY
Engineering Product Liability: The manufacturer or seller of a
product is liable for all injuries caused by an unreasonably
defective product.
Any person or entity in the chain of
distribution can be held liable.
Sette v. Benham, Blair & Affiliates (1991), 70 Ohio App.3d 651, 591
N.E.2d 871: An injured worker sued an architect-engineer for negligence
and product liability in connection with alleged malfunction of a hot
water system designed by the engineer. The Court acknowledged the
threat of product liability to the engineer, but dismissed the case for
violating the statute of limitations.
Sources of Professional Liability
PRODUCTS LIABILITY (Continued)
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Ohio Products Liability Act: ORC § 2307.71-75
§ 2307.71(9): "Manufacturer" means a person engaged in a
business to design, formulate, produce, create, make, construct,
assemble, or rebuild a product or a component of a product.
(16) "Unavoidably unsafe" means that, in the state of technical,
scientific, and medical knowledge at the time a product in
question left the control of its manufacturer, an aspect of that
product was incapable of being made safe.
§ 2307.74: A product is defective in design or formulation if, at the
time it left the control of its manufacturer, the foreseeable risks
associated with its design or formulation… exceeded the benefits
associated with that design or formulation
Sources of Professional Liability
PRODUCTS LIABILITY (Continued)
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Engineers are liable for injury caused by defective products to the
extent they are "seller" in the stream of commerce that place the
product in the hands of a consumer.
As innovators, engineers are at the very beginning of the process
that places a product "for sale" in the stream of commerce.
Inventors holding patents make the first "sale" in the commercial
chain when they transfer their technical know-how. Engineers and
inventors are also in a good position to understand the utility of
their inventions and the extent to which that utility balances
potentially unsafe characteristics.
If the courts find that engineers are "sellers" of technology
embodied in hardware products, engineers may be personally
liable for technology "defects" in products that harm users,
regardless of whether or not their conduct is negligent.
Sources of Professional Liability
PRODUCTS LIABILITY (Continued)
State-of-the-art Defense: A defendant may avoid
product liability if, in keeping with its superior ability
to remain current with evolving scientific and medical
knowledge, it fulfilled its duty to use reasonable design
and give an adequate warning of any unsafe nature or
dangers of its products to the foreseeable user. Steinfurth
v. Armstrong World Industries (1986), 27 Ohio
Misc.2d 21, 500 N.E.2d 409.
Sources of Professional Liability
INSPECT AND KEEP A SAFE JOBSITE
Chemstress Consultant Co., Inc. v. Cincinnati Ins.
Co. (1998), 128 Ohio App.3d 396, 715 N.E.2d 208:
Allegations that an engineering firm had breached
its duty to insure safety of other workers at job site
stated a claim that did not come within the
professional liability exclusions in the firm's
commercial insurance policy, and thus, triggered the
insurer's duty to defend in worker's action against
firm. The Court also noted that in addition to its
duty to perform professional or supervisory services
at a construction site, an engineering firm has a
general, nondelegable duty of reasonable care
toward the safety of other workers.
Sources of Professional Liability
INSPECTING JOBSITE (Continued)
Grogan v. U.S., 341 F.2d 39 (6th Cir., 1965): Tecon
Corporation was constructing a lock in a
government dam project on the Cumberland River
in Kentucky when a large, elaborate scaffold
collapsed and injured several Tecon workmen. The
plaintiffs sued the government and Tecon for
several alleged violations, including negligent
failure to discharge its duty of inspecting the
scaffold. While the Court acknowledged the Army
Corps of Engineers, as agents of the owner, had a
nondelegable duty to see to the safety of the jobsite,
there was not enough evidence to show a breach of
that duty by the Corps of Engineers (the contract
with Tecon imposed the duty upon the Corps).
Sources of Professional Liability
Duty to Purchasers to Exercise Reasonable Care (Developer)
Point East Condominium Owners' Assn. v. Cedar House Assoc.
(1995), 104 Ohio App.3d 704, 663 N.E.2d 343: A condominium
association sued several parties, including the developer for damage
caused by a leaking sprinkler system. The developer prepared the
plans and the specifications for the project, retained the general
contractor, and was intimately involved in the construction's progress.
The court held that a developer could not avoid its duties to exercise
good workmanship and reasonable care simply by delegating
construction work to contractors and subcontractors who are not in
privity with the purchaser. ("Given the current trend of expanding the
exceptions to the rule of nonliability of one who has employed an
independent contractor, and given the policy considerations favoring
the imposition of at least initial liability upon the person who sits at
the top of the pyramid of those who create the improvement, a strong
argument may be advanced in favor of the recognition of a
nondelegable duty on the part of the developer…"). This is a possible
developing trend.
Sources of Professional Liability
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Follow Construction Industry Regulations
(Prime Contractors)
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Maynard v. Flanagin Brothers, Inc., 484 N.E.2d 71 (Ind. 1985):
During the excavation of a sewer project the sides of a 16-foot
trench, which had not been shored or sloped, collapsed upon an
excavation laborer. Thereafter, the laborer sued three contractors
including the prime contractor. The Court found in favor of the
laborer, holding that the construction industry regulations
imposed a specific, nondelegable duty upon prime contractors to
insure that the safety regulations are followed.
Sources of Professional Liability
Site Conditions
Schwarz v. General Elec. Realty Corp. (1954), 99
Ohio App. 191, 132 N.E.2d 133: The duty of a
person in possession of land or other fixed property
to take reasonable care to keep the premises in such
a state as not to unduly expose an invitee to danger
is not delegable. (an employee of an independent
contractor was injured while unloading steel beams at the
defendant's premises underneath high tension electrical
lines when the crane used for unloading the beams came
into contact with the lines).
Sources of Professional Liability
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Keep highways safe for travel (Duty of the State)
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Lattea v. City of Akron (1982), 9 Ohio App.3d 118, 458 N.E.2d 868:
The plaintiffs filed wrongful death actions against the State, the
City and the contractor after a bridge project collapsed upon a
group of travelers. After judgment was granted against the
contractor, the contractor sought indemnity from the state for
furnishing inaccurate plans. The contractor argued that state had
a nondelegable, statutory duty to see that the highway was safe
for travelers, and that the state breached that duty by supplying
on plans it should have known were inaccurate. The court agreed
that if the state had constructive knowledge that the plans were
inaccurate, it violated its nondelegable statutory duty to the public
to keep its streets open, in repair and free from nuisance.
Sources of Professional Liability
 An engineer is a not a guarantor of a
structure's "perfect" fitness/usability, but the
engineer should prepare plans and specs that
will give the project reasonable fitness for its
intended use. 17 Am.Jur. POF3d 49, 67.
 In City of Cincinnati v. Stanley Consultants,
Inc. (1984), No. C-930815, 1984 WL 6597
(Ohio Ct. App. 1st Dist., Hamilton County),
the First District Court of Appeals held there
was no recognized implied warranty of
suitability claim in Ohio.
Sources of Professional Liability
Fraud
A material false representation or a concealment
Knowingly made or concealed
With the intent of misleading another into relying upon it
Justifiable reliance upon the representation or concealment
by the party claiming injury, and
Injury resulting from the reliance
Case Examples
Gold v. National Savings Bank, 641 F.2d 430 (6th Cir. 1981): A landowner filed
actions against a bank and its retained architect after the architect determined that
an apartment complex was not constructed according to plans and specifications
as required under terms and conditions of permanent loan commitment. The
owner sued for breach of a financing agreement and alleged bad faith (fraud) on
the part of the architect. The Court found that decisions of a design professional
on whether work complied with plans and specifications will be upheld absent
evidence of bad faith or gross negligence. The Court found no such evidence;
further, the contract provided that the decisions of the architect on these issues
would be final.
Palmer v. Brown, 127 Cal.App.2d 44: A design professional who commits fraud in
certifying a project's substantial completion is liable for damages.
Tortious Interference With A Contract






Tortious Interference with a Contract:
The existence of a contract
The wrongdoer's knowledge of the contract
The wrongdoer's intentional procurement of the contract's breach
Lack of justification
Resulting damages
Oliver Design Group, Inc. v. Allen-Bradley Co. (2000), No. 75502,
2000 WL 235769 (Ohio Ct. App. 8th Dist.): An architect’s contract
to provide an initial analysis of the owner's design needs, with
hourly compensation and no express provision for the duration,
was terminable at will by either party after reasonable duration
and upon reasonable notice. Accordingly, the architectural firm
could not recover from another firm, which was hired to design
the project, for interference with contract rights or for
misappropriation of intellectual property, or for breach of contract
against the owner.
Tortious Interference With A Contract
Cleveland Central Excavating, Inc. v. City of Westlake (1981), No.
48482, 1981 WL 4263 (Ohio Ct. App. 8th Dist., Cuyahoga County):
A contractor was hired to construct a parking lot for a larger
nursing home project designed by the city architect. The architect
also served as the project engineer, with the responsibility to
supervise construction. After the contractor completed the
parking lot during the Fall of 1981 at the architect's request, the
parking lot deteriorated during the winter months. While the
architect blamed the contractor for poor workmanship, the
contractor blamed the architect for defective design. Both parties
conducted significant investigation, which ultimately led to the
architect writing a letter to the city recommending termination of
the contractor.
After noting credible evidence suggesting
improper conduct on the part of the architect, the court affirmed
the jury verdict against the architect for intentional inference with
the contractor's performance of the contract by inducing the city to
terminate.
Professional Liability Insurance Issues
Errors & Omissions Insurance
 You must have specific insurance for an insurable
risk
 Review with your insurer semi-annually
 Claims made v. occurrence
 General Liability
 Commercial Liability


If unsure, have a professional review it with you,
then have your attorney review it.
State and Federal bids – know insurance
requirements.
Professional Liability Insurance Issues

An E & O policy will not necessary cover a design professional for
all services rendered. Heckert v. Stauber, 106 Wis.2d 545, 317
N.W.2d 834 (1982). In Heckert, the architect's policy was not
obligated to indemnify when the claimed losses were the result of
the architect's failure to obtain government financing and
governmental approval for a housing project. The political and
financial activities were not within the policy's definition of
"professional services.“

Several significant exclusions in the typical design professional E
& O policy:
inaccuracies in cost estimates
advising or counseling in environmental issues (asbestos,
hazardous waste)
failing to complete drawings in a timely fashion
•
•
•
Professional Liability Insurance Issues
Fortney & Weygandt, Inc. v. Am. Mfrs. Mut. Ins. Co. (N.D. Ohio, 2005),
No. 1:04 CV 48, 2005 U.S. Dist. LEXIS 13431. Insurers do not have a
duty to defend a contractor against damage discovered during
construction under a products-completed operations hazard exception
to a CGL policy exclusion. The contractor built a restaurant, and in the
process, oversaw the completion of the foundation. After completion
of all construction and inspection of the foundation, the owner
concluded the foundation was improperly designed and defectively
constructed, and had the restaurant demolished. After a series of
claims and counterclaims, the contractor notified its insurer regarding
the lawsuits. The insurer refused to defend the contractor. The
contractor carried a commercial general liability policy; among the
policy's terms was an exception to a term exclusion, insuring all
property damage arising out of the contractor's work, except for work
that had not yet been completed. The pleadings alleged the damage
was discovered during construction, making the operative exception
inapplicable. Therefore, the insurer had no duty to defend against the
owner's claims.
Professional Liability Claims Process
 Demand letter – involve the insurer ASAP
 Arbitration/mediation requirements
 Lawsuit filed – seek professional help
Strategies for Avoiding Professional
Liability Claims
1. Practice Safe Engineering
Know your limits – only accept work in your area of
expertise OAC §4733-35-03
Partnerships and joint ventures
Avoid conflicts of interest OAC §4733-35-05
2. Peer Review
Key to catching prior to Rev. 1
3. Time
Must have sufficient time to reflect and review
Must have schedule and manpower
Strategies for Avoiding Professional
Liability Claims
4. Clean Set of Eyes Prior to Submission
Hire an outsider if you must, but it needs to be someone
who has not seen the drawings, the specifications, and/or
the contract
5. Assign the Appropriate Expert
You are liable for assigning the wrong person
6. Non-delegable duties
Must know them
7. Review Timesheets Prior to Stamp
If you don’t, I will
Strategies for Avoiding Professional
Liability Claims
8. STAMP
Must have personal professional knowledge and direct
supervisory control and responsibility. OAC §4733-35-07
9. Correct mistakes in field ASAP
Don’t let a series of small mistakes turn into a lawsuit
10. Involve Owner & Architect
Gain their input
Seek their approval
Strategies for Avoiding Professional
Liability Claims
11. Monitor Current State of Law
National, state and local trade organizations
Insurance seminars
Legal seminars – CPD Seminars
Appoint one person if large organization
Review state board decisions (decisions on website)
12. Record Retention
Keep it forever and a day
Conclusion
The only way to prevent claims is to view
each job – and each task associated with each
job - as a potential lawsuit. Your work must
be treated with perfect hindsight. Do your
professional best, document everything, and
cover yourself with layers of insurance.
William M. Mattes, Esq.
Dinsmore & Shohl LLP
Session 2
9:30-10:30
LEGAL ISSUES FOR OHIO
PROFESSIONAL ENGINEERS
Appearing as a Witness
In a Civil Case
William M. Mattes, Esq.
Dinsmore & Shohl LLP
CIVIL LITIGATION
LAWSUIT
1.
2.
Plaintiff files – Complaint
Defendant files – Answer
Counterclaims @ Plaintiff
 Crossclaims @ Co-Defendant
 Third-Party Claims @ Others
3.
Answer has admissions, denials & affirmative
defenses
4.
Motions to Dismiss
Discovery
1.
INTERROGATORIES – written questions answered under oath
2.
DOCUMENT REQUESTS – produce all documents relevant to
litigation or that may lead to the discovery of relevant information
3.
REQUESTS FOR ADMISSION – fact and law based questions
answered under oath
4.
REQUESTS FOR INSPECTION – property, land, things
5.
DEPOSITION – oral testimony under oath
Summary Judgment
1.
Based on:
undisputed facts
issues of law
one conclusion
2.
May submit:
affidavits
depositions
legal arguments
expert testimony
Trial
Plaintiff:
 burden of proof on all claims
 must present all evidence first
Defendant:
 cross-examines all evidence
 burden of proof on all affirmative defenses
 call witnesses and put on evidence at close of
Plaintiff’s case
Jury Trial:
 8 jurors
 2 alternates
 decide all issues of fact
 judge instructs on law
Bench Trial:
 judge decides entire case
Arbitration
Mini-trial
 1 or 3 Arbitrators
 Contractual provision
 Can be laypersons, engineers, lawyers,
judges, etc.
 Cost concern
 Time concern
Mediation
Neutral party hears both sides of story and
tries to informally settle a case
 Cost is low
 Willing parties usually good results will occur
Depositions
Fact Witness – testify as to facts within your
knowledge on any given project
Expert Witness – testify as an expert on facts, standard
of care, causation, damages
Key Difference – experts, based on testimony,
education and experience may offer opinions to
help judge/jury decide issues i.e.:
 cause/origin of fire
 cause of failure of metal
 state of art – product liability
 whether plans, drawings and specifications were buildable
 code compliance.
Depositions
What is it?
 Statement under oath
Everything is recorded
How is it used?
 to assess you as a witness
 to gather all of your opinions/knowledge
 as evidence in summary judgment
 to limit your area of expertise
 to limit your opinions
 to blow up your case
 to strengthen your case
Preparation
1.
You must prepare for your deposition as if the entire
case depends on your testimony…it does!
2.
Meet early and often with counsel to prepare
3.
To be prepared, understand, review and discuss the
same things the lawyers will review:
complaint
answer & affirmative defense
contract
key documents
expert reports
literature
internet
all documents sent/received
time-line
all of your publications
all of your company’s advertising/promotional material
4. Time
you must be more prepared than opposing counsel
take several days to review and reinforce
no distractions
expert v. fact witness (more time needed and expected)
5. Set date, time & place – when and where you
are most comfortable
clear your schedule days before and after
A.M. or P.M.
early or late in week
6. Eat, Drink & Sleep
all affect how you will testify
do not change any routine
a well rested witness is a good witness
Deposition Day
1. On the Record: remember it is all recorded
2. Dress: business casual
3. Discussions off Record: nothing about the case
4. Routines: keep them
5. Breaks: early and often
no more than 1 hour without a break
insist on a lunch break
no more than 7 hours of testimony in a day
6. Video Deposition: if you know video – practice
7. Objections: listen carefully
Deposition Rules
Rule #1
Rule #2
Rule #3
Rule #4
Rule #5
Rule #6
Rule #7
Rule #8
Rule #9
Rule #10
Be 100% honest
Yes, No or I do not know
Answer the question and only the question
Do not assume anything
Take your time
Wait until the question is complete
It is an interrogation, not a conversation
Ask to see the document – then READ it
Do not help opposing counsel
Never forget rule #1
After the Deposition
1. Get copies of all exhibits
2. Read, correct and sign deposition
transcript
3. Keep copies
“Acting” as an Expert
Rule #1
Never Act. Either you are an expert or you are
wasting everyone’s time and money.
Juries and judges know actors and fools
Rule #2
Limitations are Good – limit your area of expertise
The Ohio Administrative Code that regulates
Professional Engineers requires that any expert
opinion be founded:
-upon adequate knowledge of the facts
-with technical competence in the subject matter
-honest conviction of accuracy and propriety of the expert opinion
Rule #3
Know what you have done
Publications – remember public statements and certification
are limited by the Ohio Administrative Code in a manner
similar to expert opinions.
Prior testimony
Prior reports
Draft reports
Rule #4
Read all expert reports
Rule #5
Draft, edit and review your report as if the case
depended on it – it does.
Rule #6
Review everything opposing counsel reviews
Pleadings: complaint, answer, discovery responses
Time-line: know it
Key documents: know them
Your report: typically the attorney knows it better than you
do – do not let that happen
Rule #7
Admit the obvious – do not attempt to deny everything
Rule #8
Do Not Help Opposing Counsel
Rule #9
Meet with the real client and the attorney
Know the case better than they do
Seek input and help early and often
Do not delegate if at all possible – do it yourself
Rule #10
Know your own billing records
Expert Testimony
Daubert
 Supreme Court case on admissibility of
expert testimony
 The theory or technique must be reliable (i.e
tested), peer reviewable, error rate must be
known and there must be some scientific
basis (i.e. generally accepted methodology in the
scientific community)
 To help, your opinions must be admissible
 Must keep in mind when drafting your
expert report
Rules of Evidence
In Ohio, to testify as an expert your testimony must:
•
•
•
Relate to matters beyond knowledge of
common man or dispel a common
misconception; and
You must possess knowledge, skill, training,
education and experience that qualify you;
and
The theory must be based on scientific or
technical information that is reliable, can be
tested or verified, and if a test was
performed – it must be proper with accurate
results.
SEMINAL ENGINEERING EXPERT CASES IN OHIO
Miller v. Bike Athletic Co. (1998), 80 Ohio St.3d
607, 687 N.E.2d 735: This is a products liability
case involving the design of a football helmet. The
Court found the plaintiff's expert testimony –
consulting engineer in the field of mechanical and
biomedical engineering - was sufficiently reliable,
as the opinion was based on tests that measured the
helmet's compliance with nationwide standards
governing the manufacture of athletic equipment,
and evidence showed those standards existed to
prevent head and neck injuries.
SEMINAL ENGINEERING EXPERT CASES IN OHIO
The Court used four factors to evaluate the
reliability of scientific evidence: (1) whether the
theory or technique has been tested; (2) whether
it has been subjected to peer review; (3) whether
there is a known or potential rate of error; and
(4) whether the methodology has gained general
acceptance. (using Daubert as a framework).
SEMINAL ENGINEERING EXPERT CASES IN OHIO
The Court expanded the scope of analysis,
writing, "a trial court's role in determining
whether an expert's testimony is admissible
under 702(C) focuses on whether the opinion
is based upon scientifically valid principles,
not whether the expert's conclusions are
correct or whether the testimony satisfies the
proponent's burden of proof at trial."
SEMINAL ENGINEERING EXPERT CASES IN OHIO
Shreve v. United Electric & Construction Co.,
Inc. (2002), No. 01CA2626, 2002 WL 1677491
(Ohio Ct. App. 4th Dist., Ross County): An
employee sued his employer after the wall of a ditch
collapsed on his shoulder. In finding for the
employer, the court held that the employee's expert
testimony regarding the soil's propensity to slide
was not sufficiently reliable to be admissible. The
expert stated his testimony was based on the
assumption that the soil was clay-based; however,
the expert never tested the soil in question, nor did
he provide an explanation as to why the clay-based
soil carried a propensity to slide.
SEMINAL ENGINEERING EXPERT CASES IN OHIO
In sum, the court found that because the
expert did not adequately examine the
soil or adequately explain and support
the theory underlying his opinion, and he
did not set forth an objectively verifiable
theory to support that opinion, his
testimony did not meet the Daubert
reliability test.
SEMINAL ENGINEERING EXPERT CASES IN OHIO
Radford v. Monfort (2004), No. 10-0408, 2004 WL 1961674 (Ohio Ct. App. 3d
Dist., Mercer County): A pedestrian sued a
restaurant owner and the owner of a
construction company, alleging he was
injured when he slipped on a wet sidewalk
outside the restaurant.
SEMINAL ENGINEERING EXPERT CASES IN OHIO
Before granting summary judgment
in favor of the defendants, the court
excluded the pedestrian's expert
testimony. The pedestrian's expert
was a civil engineer and licensed
surveyor hired to determine whether
the walkway outside the restaurant
was safe.
SEMINAL ENGINEERING EXPERT CASES IN OHIO
He measured the coefficient of
friction of the walkway in
accordance with the nationally
recognized standards; however, he
then deviated from those procedures
by factoring in the degree of slope on
the surface.
SEMINAL ENGINEERING EXPERT CASES IN OHIO
Such a deviation was not set forth in
the standards, nor was it supported
by any other recognized industry
standard. So the court found his
testimony was inadmissible because
it was not based on a reliable method
or industry standard.
EXPERT TESTIMONY
- CONCLUSION-
1.
2.
3.
4.
5.
6.
7.
8.
Meet regularly with counsel
Do not delegate
Test accurately
Use standards – no deviations
Peer Review
Edit carefully
Meet with client before finalizing report
Understand your opponents position
Trial Testimony -- Key Tips
1. Be a Teacher - judges & juries want to be
spoken to and taught.
2. Never talk down to the judge, jury or
opposing counsel.
3. KISS – Keep it Simple Stupid
4. Relate to judge/jury - use everyday concepts
5. Dress the Part
Expert: Suit & tie for men, business attire for women
Fact: Business casual – fly the colors of the company
6. Honesty is still the best policy
7. Do not change your demeanor on cross and
questions from the judge
8. The eyes of the world are following you
9. Confidence is key
10. RESPECT
the process
 the parties
 the judge
 the jury
 opposing party/counsel
Conclusion
When called as a witness, please review
what we discussed here today, meet with
an experienced trial attorney, and be
prepared.
William M. Mattes, Esq.
Dinsmore & Shohl LLP
Appearing As A Witness
In A Civil Trial
12/18/07