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CONTRACTOR FAILED TO RECOVER $1M FROM ENGINEERS FOR FAULTY PLANS

Thursday, February 28, 2019 02:16 pm

 

Professional Negligence — Liability

Domson, Inc. v. Kadrmas Lee & Jackson, Inc., 2018 S.D. Lexis 110 (S.D. September 19, 2018)

A contractor sought to recover more than $1 million in damages resulting from faulty engineering plans, but it failed to prove the documents lacked the appropriate “standard of care.”

In July 2012, the Oglala Sioux Tribe (the Tribe) executed a contract with Domson, Inc. (Domson) for a road reconstruction project on the Pine Ridge Indian Reservation in South Dakota. The contract designated Dakota Engineering, Inc. and Kadrmas, Lee and Jackson, Inc. (together, Dakota /KLJ) as the “engineer” and the Tribe’s representative. Domson did not substantially complete the project on time, and KLJ assessed $103,950 in liquidated damages against the contractor.

In January 2015, Domson filed suit against Dakota/KLJ, claiming $1,138,027 in damages for professional negligence related to design and contract administration. Dakota/KLJ claimed that their “interpretation and application of the project documents met their professional responsibilities and was appropriate under the circumstances.” The design firms moved for summary judgment on the grounds that a clause in the Tribe-Domson contract insulated them from liability for negligence to Domson. A circuit court agreed and separately granted each firm summary judgment.

Domson appealed, and the Supreme Court of South Dakota affirmed the decision.

Clause precluded engineer’s duty to contractor

For their position, Dakota/KLJ relied on Paragraph 9.09 of the standard general conditions of the subcontract documents, which stated: “Neither Engineer’s authority or responsibility under this Article 9 or under any other provision of the Contract Documents nor any decision made by Engineer in good faith either to exercise or not exercise such authority or responsibility or the undertaking, exercise, or performance of any authority or responsibility by Engineer shall create, impose, or give rise to any duty in contract, tort, or otherwise owed by Engineer to Contractor, or any Subcontractor, any Supplier, any other individual or entity, or to any surety for or employee or agent of any of them.” (Emphasis added.)

The circuit court concluded that: (1) Dakota, which provided “initial design work” only and did not administer the contract, was not an appropriate party to [...]

 
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