Gary S. Wigal
Gianola, Barnum & Wigal Dennis V. Garrison, III
Morgantown, West Virginia Rist, Higgins & Associates, P.L.L.C.
Attorney for the Appellant Beckley, West Virginia
Attorneys for Appellee
JUSTICE DAVIS delivered the Opinion of the Court.
JUSTICE MAYNARD dissents and reserves the right to file a dissenting opinion.
JUSTICE STARCHER concurs and reserves the right to file a concurring opinion.
1. 'A circuit court's
entry of summary judgment is reviewed de novo.' Syllabus point 1, Painter
v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994). Syllabus point
1, Shaffer v. Acme Limestone Co., Inc., 206 W. Va. 333, 524 S.E.2d
2. 'A motion for summary
judgment should be granted only when it is clear that there is no genuine issue
of fact to be tried and inquiry concerning the facts is not desirable to clarify
the application of the law.' Syl. Pt. 3, Aetna Casualty & Surety Co.
v. Federal Insurance Co. of New York, 148 W. Va. 160, 133 S.E.2d 770
(1963). Syllabus point 1, Tiernan v. Charleston Area Medical Center,
Inc., 203 W. Va. 135, 506 S.E.2d 578 (1998).
3. In the matters of
negligence, liability attaches to a wrongdoer, not because of a breach of a
contractual relationship, but because of a breach of duty which results in an
injury to others. Syllabus point 2, Sewell v. Gregory, 179 W. Va.
585, 371 S.E.2d 82 (1988).
4. The ultimate test
of the existence of a duty to use care is found in the foreseeability that harm may result if it is not exercised. The test is, would
the ordinary man in the defendant's position, knowing what he knew or should
have known, anticipate that harm of the general nature of that suffered was
likely to result? Syllabus point 3, Sewell v. Gregory, 179 W. Va.
585, 371 S.E.2d 82 (1988).
5. The determination
of whether a defendant in a particular case owes a duty to the plaintiff is
not a factual question for the jury; rather the determination of whether a plaintiff
is owed a duty of care by a defendant must be rendered by the court as a matter
of law. Syllabus point 5, Aikens v. Debow, ___ W. Va. ___,
___ S.E.2d ___ (No. 27376 Nov. 6, 2000).
6. A design professional (e.g.
an architect or engineer) owes a duty of care to a contractor, who has been
employed by the same project owner as the design professional and who has relied
upon the design professional's work product in carrying out his or her obligations
to the owner, notwithstanding the absence of privity of contract between the
contractor and the design professional, due to the special relationship that
exists between the two. Consequently, the contractor may, upon proper proof,
recover purely economic damages in an action alleging professional negligence
on the part of the design professional.
7. When a special relationship exists between a design
professional and a contractor, the specific parameters of the duty of care owed
by the design professional to the contractor must be defined on a case-by-case
basis. However, in general, the duty of care owed by a design professional to
a contractor with whom he or she has a special relationship is to render his or
her professional services with the ordinary skill, care and diligence commensurate
with that rendered by members of his or her profession in the same or similar
8. The requirement of
privity of contract in an action for breach of an express or implied warranty
in West Virginia is hereby abolished. Syllabus, Dawson v. Canteen Corp.,
158 W. Va. 516, 212 S.E.2d 82 (1975).
9. A design professional (e.g.
an architect or engineer) providing plans and specifications that will be followed
by a contractor in carrying out some aspect of a design, impliedly warrants
to the contractor, notwithstanding the absence of privity of contract between
the contractor and the design professional, that such plans and specifications
have been prepared with the ordinary skill, care and diligence commensurate
with that rendered by members of his or her profession.
Eastern Steel Constructors, Inc., a contractor, appeals an order of the Circuit Court of Harrison County granting summary judgment in favor of Kanakanui Associates, a design professional, as to Eastern Steel Constructors' claims for professional negligence, implied warranty of plans and specifications, and as a third-party beneficiary to a contract between Kanakanui Associates and the City of Salem, West Virginia. The circuit court rejected the claim for professional negligence based upon its conclusion that, because Eastern Steel Constructors' sought only economic damages, this cause of action could be maintained only as a cause of action in contract. With respect to the implied warranty claim, the circuit court reasoned that absent a contract between the parties, there was no duty owed. Finally, the circuit court found that Eastern Steel Constructors' was not a third-party beneficiary of the contract between Kanakanui Associates and the City of Salem. After reviewing the parties briefs, the record submitted on appeal, and the relevant law, we find that a contractor may assert a negligence cause of action against a design professional seeking purely economic damages even in the absence of privity of contract, that there exists an implied warranty of plans and specifications that inures to a contractor in the absence of a contract, and finally, that Eastern Steel Constructors' failed to establish any evidence supporting its third-party beneficiary claim.
Eastern contends that after beginning construction
on the project, it experienced significant delays caused by sub-surface rock
conditions and existing utility service lines that had not been disclosed in the documents prepared by Kanakanui.
Kanakanui submits that under the contract between Salem and Eastern, Eastern
was to be responsible for the installation of the facilities regardless
of the type, nature, or quantity of subsurface conditions, including rock, on
the Project. (Emphasis added).
As a result of the delays encountered in the project,
Eastern asserts, it incurred substantial actual and consequential damages. In
addition, Eastern maintains that Kanakanui failed to properly administer and
manage the project, which, according to Eastern, caused it further financial
Eastern subsequently filed tort actions against both
Salem and Kanakanui for its damages. Eastern's complaint contained three allegations
that involved Kanakanui: (1) that Kanakanui had been negligent in its provision
of construction engineering services, consultation, project inspection, project
management, and project administration; (2) that both Salem and Kanakanui breached
an implied warranty of plans and specifications; and (3) that the Eastern was
entitled to damages as a third-party beneficiary of the contract between Salem
Kanakanui responded with a motion for summary judgment
pursuant to Rule 56(b) of the West Virginia Rules of Civil Procedure. Following
a hearing on Kanakanui's motion, the Circuit Court of Harrison County, by order entered November 2,
1999, granted the motion. In reaching its conclusion that summary judgment should
be awarded in favor of Kanakanui, the circuit court found that Kanakanui's motion
presented two issues of law. First, whether the execution and rendering of a
contract between an engineer/architect and an owner for the design, plans, and
specifications of a project imports a duty from the engineer/architect to a
contractor constructing part of the project under a separate contract with the
owner. If the answer to this legal question is affirmative, the circuit court
observed, then subsequent questions of whether such a duty conveys to the contractor
a right to maintain actions against the engineer/architect for negligence in
performing its contract obligations and for breach of an implied warranty of
plans and specifications must be addressed. The second legal issue identified
by the circuit court was whether a construction contractor hired by an owner
has a third-party beneficial interest arising from a contract between an engineer/architect
and the owner, to which the construction contractor was not a party, such that
the construction contractor may institute an action against the engineer/architect
for its failure to properly render the services contracted. After identifying
these issues, the circuit court concluded, as to the first issue, that
the prevailing law in West Virginia limits the recovery of a building contractor to an action for economic damages against the owner as an action in contract only, and that there is not a duty owed by the engineer/architect to the building contractor regarding the plans, drawings and specifications, the adequacy or inadequacy of any or all of them and for the administration of the contract, under the engineer/architect's contract to and for the owner.
With regard to the second issue, the circuit court concluded that the building contractor is precluded by West Virginia Code §55-8-12See footnote 2 2 from maintaining any claim as a party with a beneficial interest in the contract between the Owner and the Engineer/Architect because the contractor was not specifically identified and the action instituted was in tort. (Footnote added). It is from this order that Eastern now appeals.
de novo review of the circuit court's ruling, we must consider the following
standard for granting summary judgment in the first instance:
A motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law. Syl. Pt. 3, Aetna Casualty & Surety Co. v. Federal Insurance Co. of New York, 148 W. Va. 160, 133 S.E.2d 770 (1963).
Syl. pt. 1, Tiernan v. Charleston Area Med. Ctr., Inc., 203 W. Va. 135, 506 S.E.2d 578 (1998). With these standards as our guide, we now consider the issues raised in this appeal.
This Court previously addressed the question of whether
a claim for negligence may lie in the context of the construction industry where
there is no contract between the parties to a dispute in the case of Sewell
v. Gregory, 179 W. Va. 585, 371 S.E.2d 82 (1988). Sewell involved
homeowners (the Sewells) who discovered latent defects in their home that allegedly
resulted from negligence on the part of the construction contractor who had
built the home. The defects manifested themselves in substantial flooding of
the home. The Sewells had not purchased the home directly from the contractor,
however. Instead, the home had initially been sold by the contractor to another
family who subsequently sold it to the Sewells. Consequently, there was no contract
between the Sewells and the contractor. The Sewells nevertheless sued the contractor,
in part, for his alleged negligence in building the house. The circuit court
dismissed the Sewell's negligence claim against the contractor, presumably based
upon a lack of privity between them. In reversing the circuit court's dismissal,
this Court held: [i]n the matters of negligence, liability attaches to
a wrongdoer, not because of a breach of a contractual relationship, but because
of a breach of duty which results in an injury to others. Syl.
pt. 2, Sewell (emphasis added).
For the purposes of the instant case, then, Sewell
instructs us that Eastern may properly assert a cause of action for negligence
against Kanakanui if it can be established that Kanakanui owed a duty of care
to Eastern. See also Syl. pt. 3, Aikens v. Debow, ___ W. Va.
___, ___ S.E.2d ___ (No. 27376 Nov. 6, 2000) ('In order to establish
a prima facie case of negligence in West Virginia, it must be shown that
the defendant has been guilty of some act or omission in violation of a duty owed
to the plaintiff. No action for negligence will lie without a duty broken.
Syl. Pt. 1, Parsley v. General Motors Acceptance Corp., 167 W. Va.
866, 280 S.E.2d 703 (1981).' Syl. Pt. 4, Jack v. Fritts, 193 W. Va.
494, 457 S.E.2d 431 (1995).).
With regard to the existence of a duty of care, the
Sewell Court further held, in Syllabus point 3,
[t]he ultimate test of the existence of a duty to use care is found in the foreseeability that harm may result if it is not exercised. The test is, would the ordinary man in the defendant's position, knowing what he knew or should have known, anticipate that harm of the general nature of that suffered was likely to result?
179 W. Va.585, 371 S.E.2d 82. The Sewell Court concluded that it was foreseeable to the contractor when he constructed the house that there would be subsequent purchasers. Therefore, the Court reasoned, the contractor had 'a common law duty to exercise reasonable care and skill in the construction of a building . . . [and a] subsequent
homeowner can maintain an action against a builder for negligence resulting
in latent defects which the subsequent purchaser was unable to discover prior
to purchase.' Id. at 588, 371 S.E.2d at 85 (citing Johnson
v. Graham, 679 P.2d 1090 (Colo. Ct. App. 1983), rev'd on other
grounds, Tri-Aspen Constr. Co. v. Johnson, 714 P.2d 484 (Colo. 1986)).See
footnote 4 4 In reaching its conclusion, the Sewell Court
was not, however, required to address the general rule precluding economic damages
in a cause of action, such as the case at bar, where negligence is claimed in
the absence of either physical injury, property damage or a contract.
More recently, in a case that did involve a plaintiff
seeking purely economic damages as a result of the defendant's negligence, this
Court conducted an elaborate review of the determination of the existence of
a duty of care. See Aikens v. Debow, ___ W. Va. ___, ___ S.E.2d
___ (No. 27376 Nov. 6, 2000). The Aikens Court began by noting that the question of whether a duty exists is a question of law for
the court to resolve: [t]he determination of whether a defendant in a
particular case owes a duty to the plaintiff is not a factual question for the
jury; rather the determination of whether a plaintiff is owed a duty of care
by a defendant must be rendered by the court as a matter of law. Syl.
pt. 5, Aikens. In defining the proper considerations for ascertaining
the existence of a duty, we observed in Aikens that, in addition to the
primary question of foreseeability of risk in discerning the existence of a
duty, consideration must also be given to 'the likelihood of injury, the
magnitude of the burden of guarding against it, and the consequences of placing
that burden on the defendant.' Aikens, ___ W. Va. at ___,
___ S.E.2d at ___, slip op. at 6 (quoting Robertson v. LeMaster, 171
W. Va. 607, 301 S.E.2d 563 (1983).
The Aikens Court cited numerous cases wherein
causes of action for negligence were rejected where the injury was purely economic,
thereby evidencing that courts have generally declined to allow the recovery
of solely economic damages in negligence actions. In this regard, the Aikens
Court observed that allowing plaintiffs to recover economic damages resulting
from another's negligence, in the absence of physical injury, property damage
or a contract, may result in an over-expansion of the concept of duty thereby
subjecting defendants to virtually limitless liability that, in addition to
being disproportionate to a defendant's negligent act or omission, may increase
litigation to a level that courts would be unable to manage.
Having established the existence of a well settled
general rule against permitting recovery in negligence for purely economic damages,
however, the Aikens Court acknowledged that a minority of jurisdictions
have permitted such recovery under certain limited circumstances.
___ W. Va. at ___, ___ S.E.2d at ___, slip op. at 22. After a thorough
review of case law from jurisdictions strictly adhering to the general rule
of no economic recovery, as well as that from jurisdictions that have developed
and applied exceptions to that general rule in order to permit economic recovery,
we expressed our belief that a hybrid approach must be fabricated to authorize
recovery of meritorious claims while simultaneously providing a barrier against
limitless liability. Aikens ___ W. Va. at ___, ___ S.E.2d
at ___, slip op. at 29. We went on to explain that [t]he common thread
which permeates the analysis of potential economic recovery in the absence of
physical harm is the recognition of the underlying concept of duty. Absent some
special relationship, the confines of which will differ depending upon
the facts of each relationship, there simply is no duty. Id. (emphasis
added). The Court further explained that
[t]he existence of a special relationship will be determined largely by the extent to which the particular plaintiff is affected differently from society in general. It may be evident from the defendant's knowledge or specific reason to know of the potential consequences of the wrongdoing, the persons likely to be injured, and the damages likely to be suffered. Such special relationship may be proven through evidence of foreseeability of the nature of the harm to be suffered by the particular plaintiff or an identifiable class and can arise from contractual privity or other close nexus.
Id. at ___, ___ S.E.2d at ___, slip op. at 28. While the economic loss asserted in the Aikens case involved a disruption to commerce,See footnote 5 5 and the case did not involve the construction industry, we nevertheless adhere to our belief, expressed in that opinion, that recovery of economic damages should be allowed in certain meritorious claims when an adequate barrier against limitless liability, such as the existence of a special relationship, can be identified:
[W]here a special and narrowly defined relationship can be established between the tortfeasor and a plaintiff who was deprived of an economic benefit, the tortfeasor can be held liable. In cases of that nature, the duty exists because of the special relationship. The special class of plaintiffs involved in those cases were particularly foreseeable to the tortfeasor, and the economic losses were proximately caused by the tortfeasor's negligence.
Aikens ___ W. Va. at ___, ___ S.E.2d at ___, slip op. at 30. To this end, we note that, for reasons similar to those we expressed in Aikens, numerous courts have allowed the recovery of economic damages by a contractor for the negligence of a design professional where there was no contract between the two and where there was no physical injury or property damage.
For example, in the South Carolina case of Tommy
L. Griffin Plumbing & Heating Co. v. Jordan, Jones & Goulding, Inc.,
320 S.C. 49, 463 S.E.2d 85 (1995), a contractor filed an action, which included
charges of negligence, against a design engineer seeking only economic damages.
The Supreme Court of South Carolina concluded that the rule against economic
recovery applied only 'where the duties are created solely by contract.'
Griffin, 320 S.C. at __, 463 S.E.2d at 88 (quoting Kennedy v. Columbia
Lumber & Mfg. Co., Inc., 299 S.C. 335, 347, 384 S.E.2d 730, 737 (1989)).
Where there is no contract between the parties, the court explained, a cause
of action in tort may lie when there is a special relationship
between the alleged tortfeasor and the injured party giving rise to a
duty that is subsequently breached by the defendant. Id. at __-__, 463 S.E.2d at 88 (emphasis added).See footnote
6 6 The court concluded that [i]n the case sub judice,
Engineer designed the project specifically for the [Owner]. Engineer supervised
the construction. Engineer had the right, among other rights, to inspect the
construction and to halt construction. Under these facts, Engineer owed a duty
to the contractor not to negligently design or negligently supervise the project.
Id. at __, 463 S.E.2d at 89.
Guardian Construction Co. v. Tetra Tech Richardson,
Inc., 583 A.2d 1378, 1381 (Del. Super. Ct. 1990), is also analogous to the
case sub judice. In Guardian, contractors asserted a negligence
claim against a design engineer alleging that miscalculations by the engineer
resulted in additional labor and equipment costs and lost profits. In concluding
that the contractors' negligence claims were cognizable, the court commented:
Where . . . the relationship or nexus between the supplier and the user of certain types of information is, in one way or another sufficiently close, some Courts have been willing to extend liability for economic loss in the absence of direct contractual privity. These cases suggest that the controlling question is whether it was foreseeable to the negligent supplier of information that the injured party would rely on the information. Under this line of cases, if reliance was foreseeable, a legal duty was found to exist which would support liability for economic losses even in the absence of contractual privity. . . .
Other cases take the foreseeability
requirement a step farther and require that the faulty information be intended
by its negligent supplier to be specifically relied upon by a particular party
or a settled class of parties before economic damages are recoverable on a negligence
theory. . . .
Guardian, 583 A.2d at 1382 (citations omitted) (first emphasis added). The Guardian Court ultimately relied on the Restatement (Second) of Torts § 552 (1977),See footnote 7 7 as well as case law from other jurisdictions, to conclude that, under the circumstances of the case before it, the contractor's action in negligence was not barred by a lack of privity notwithstanding the fact that the damages sought were purely economic. The Court explained:
Modern legal authority supports the proposition that if, in the course of its business, [a design professional] negligently obtained and communicated incorrect information specifically known and intended to be for the guidance of [contractors], and if it is specifically known and intended that [the contractors] would rely in calculating their project bids on that information, and if [the contractors] rely thereon to their detriment, then [the design professional] should be liable for foreseeable economic losses sustained by [the contractors] regardless of whether privity of contract exists.
Guardian, 583 A.2d at 1386. The Court further observed the close nexus between the negligence and the economic harm suffered: the use of the information negligently supplied was not an indirect or collateral consequence . . . it was the end and aim of the transaction. Id.
Another like case is Donnelly Construction Co.
v. Oberg/Hunt/Gilleland, 139 Ariz. 184, 677 P.2d 1292 (1984). In Donnelly
a construction contractor sued a design professional for negligence. The contractor
claimed that it had relied upon plans, specifications, and a site plan prepared
by the design professional to calculate its bid on a project. The contractor was awarded the project based upon its bid amount.
However, once construction began, the contractor discovered that the aforementioned
documents contained substantial errors that resulted in increased costs to the
contractor. In overturning a dismissal granted by the trial court, the Supreme
Court of Arizona found that the absence of a contract between the contractor
and the designer did not preclude the contractor's negligence action as privity
was not required to maintain an action in tort.
Rather, an action in negligence may be maintained upon the plaintiff's showing that the defendant owed a duty to him, that the duty was breached, and that the breach proximately caused an injury which resulted in actual damages. . . . Duty and liability are only imposed where both the plaintiff and the risk are foreseeable to a reasonable person.
Donnelly, 139 Ariz. at ___, 677 P.2d at 1295 (internal citation omitted). The Court elaborated:
Design professionals have a duty to use ordinary skill, care, and diligence in rendering their professional services. . . . When they are called upon to provide plans and specifications for a particular job, they must use their skill and care to provide plans and specifications which are sufficient and adequate. . . . This duty extends to those with whom the design professional is in privity, . . . and to those with whom he or she is not. . . .
Id. (internal citations omitted). Finally, the Court concluded that it was foreseeable that the contractor, who was hired to follow the plans and specifications prepared by [the design professional], would incur increased costs if those plans and specifications were in error. Id. at ___-__, 677 P.2d at 1295-96. See also A.R. Moyer, Inc. v. Graham, 285 So. 2d 397 (Fla. 1973) (concluding that third-party general contractor could maintain negligence action against architect in absence of privity); National Sand, Inc. v. Nagel Constr., Inc., 182 Mich. App. 327, 451 N.W.2d 618 (1990) (acknowledging, with approval, that Court of Appeals of Michigan had allowed a contractor to maintain a negligence action against a project engineer in the absence of privity of contract); Bacco Constr. Co. v. American Colloid Co., 148 Mich. App. 397, ___, 384 N.W.2d 427, 434 (1986) (allowing contractor's claim of negligence against engineer based upon foreseeability that an engineer's failure to make proper calculations and specifications for a construction job may create a risk of harm to the third-party contractor who is responsible for applying those specifications to the job itself. The risk of harm would include the financial hardship created by having to cure the defects which may very well not be caused by the contractor.); Jim's Excavating Serv., Inc. v. HKM Assoc., 265 Mont. 494, ___, 878 P.2d 248, 255 (1994) (holding that a third party contractor may successfully recover for purely economic loss against a project engineer or architect when the design professional knew or should have foreseen that the particular plaintiff or an identifiable class of plaintiffs were at risk in relying on the information supplied.); Reliance Ins. Co. v. Morris Assocs., P.C., 200 A.D.2d 728, 607 N.Y.S.2d 106 (1994) (affirming lower court's denial of defendant design professional's motion to dismiss complaint as to counts of negligence and professional malpractice asserted by contractor, notwithstanding absence of privity).See footnote 8 8
We are persuaded by our prior analysis in Aikens
v. Debow, and the foregoing authority from other jurisdictions allowing
contractors to assert negligence causes of action to recover economic damages
in the absence of contractual privity, consequently we expressly hold that a
design professional (e.g. an architect or engineer) owes a duty of care to a
contractor, who has been employed by the same project owner as the design professional
and who has relied upon the design professional's work product in carrying out
his or her obligations to the owner, notwithstanding the absence of privity
of contract between the contractor and the design professional, due to the special
relationship that exists between the two. Consequently, the contractor may,
upon proper proof, recover purely economic damages in an action alleging professional
negligence on the part of the design professional.
We believe that this resolution adequately balances
the need to permit recovery of meritorious claims while simultaneously providing a barrier
against limitless liability. Aikens, ___ W. Va. at ___, ___
S.E.2d at ___, slip op. at 29. The contractor is a member of a limited class
compiled of those contractors bidding on a particular project. Moreover, the
facts that the contractor must rely on design documents to calculate his or
her bid and, if successful in bidding, to construct the project, and may be
further subject to oversight by the design professional during actual construction
of the project, fulfills the requirement of the foreseeability of harm that
would result from negligence on the part of the design professional. Finally,
this resolution properly places the duty of care on the party who is in the
best position to guard against the type of negligence herein asserted.
Having established that a design professional owes
a duty of care to contractors, we endeavor to give some definition to that duty.
We note that the exact nature of the specific duty owed by a design professional
may be impacted by provisions contained in the various contracts entered
among the parties (e.g. the contract between the owner and the design professional,
and the contract between the owner and the contractor), provided that such contractual
provisions do not conflict with the law. In addition, the duty of care may be
further defined by rules of professional conduct promulgated by the agencies
charged with overseeing the specific profession of which a defendant is a member.
See, e.g., West Virginia Rules of Professional Responsibility for Professional Engineers, 1A W. Va. C.S.R. § 7-1-16 et seq. (1993);See
footnote 9 9 West Virginia Rules of Professional Conduct for
Architects, 1A W. Va. C.S.R. § 2-1-9 et seq. (1998).See
footnote 10 10 Consequently, we hold that when a special relationship
exists between a design professional and a contractor, the specific parameters
of the duty of care owed by the design professional to the contractor must be
defined on a case-by-case basis. However, in general, the duty of care owed
by a design professional to a contractor with whom he or she has a special relationship
is to render his or her professional services with the ordinary skill, care
and diligence commensurate with that rendered by members of his or her profession
in the same or similar circumstances. See, e.g., Donnelly Constr. Co. v.
Oberg/Hunt/Gilleland, 139 Ariz. 184, ___, 677 P.2d 1292, 1295 (Design
professionals have a duty to use ordinary skill, care, and diligence in rendering
their professional services. (citation omitted)); I.O.I. Sys., Inc v. City of Cleveland,
Texas, 615 S.W.2d 786, 790 (Tex. Civ. App. 1980) (An engineer or an
architect must use the skill and care in the performance of his duties commensurate
with the requirements of his profession, and is only liable for a failure to
exercise reasonable care and skill commensurate with those requirements.
Having determined that a contractor may indeed maintain
a cause of action for negligence seeking purely economic damages against a design
professional where there is no privity of contract between the two, we conclude
that the circuit court erred in granting summary judgment in favor of Kanakanui
as to Eastern's claim of professional negligence.
In the sole Syllabus point of Dawson v. Canteen Corp.,
158 W. Va. 516, 212 S.E.2d 82 (1975), this Court held [t]he requirement
of privity of contract in an action for breach of an express or implied
warranty in West Virginia is hereby abolished. (Emphasis added). While Dawson
was a product liability case involving contaminated food purchased from a vending
machine, we extended its holding into the realm of construction cases in Sewell
v. Gregory, 179 W. Va. 585, 371 S.E.2d 82 (1988). In Sewell, we
concluded that a contractor's implied warranty of habitability of fitness extended
to a used home purchased from a seller other than the contractor him or herself.
By way of explaining our rationale for this conclusion, we observed that
[t]he purpose of a warranty is to protect innocent purchasers and hold builders accountable for their work. With that object in mind, any reasoning which would arbitrarily interpose a first buyer as an obstruction to someone equally as deserving of recovery is incomprehensible . . . . No reason has been presented to us whereby the original owner should have the benefits of an implied warranty or a recovery on a negligence theory and the next owner should not simply because there has been a transfer. Such intervening sales, standing by themselves, should not, by any standard of reasonableness, effect an end to an implied warranty or, in that matter, a right of recovery on any other ground, upon manifestation of a defect. The builder always has available the defense that the defects are not attributable to him.
Sewell, 179 W. Va. at 589, 371 S.E.2d at 86 (quoting Moxley v. Laramie Builders, Inc., 600 P.2d 733, 736 (Wyo. 1979)).
Due to the special relationship that exists between a
design professional and a contractor, which is discussed in the preceding section
of this opinion, we believe a similar conclusion is warranted in the case of an
implied warranty of plans and specifications. While, in a technical sense, the
plans and specifications are prepared for the owner of a project, a design professional
nonetheless knows that they will be relied upon by contractors vying for the project,
and ultimately will be further relied upon by the contractor who is hired to perform
the actual work. Furthermore, errors and inadequacies in the specifications will
forseeably work to the financial detriment of the contractor. Consequently, an
innocent contractor should be protected by a warranty, and design professionals
thereby held accountable for their work.
We are not alone in concluding that a warranty of
plans and specifications should extend to benefit of a contractor. The Supreme
Court of South Carolina, in Tommy L. Griffin Plumbing & Heating Co. v.
Jordan, Jones & Goulding, Inc., 320 S.C. 49, 463 S.E.2d 85 (1995), concluded
that a trial court had erred in dismissing a contractor's warranty claims based
upon lack of privity between the contractor and the engineer who produced the
subject plans and specifications. The Griffin Court explained that, pursuant
to existing South Carolina precedent, one who [undertakes] to design and
oversee a construction project for another impliedly warrant[s] the design and
quality of construction despite the lack of privity between the parties.
320 S.C. at __, 463 S.E.2d at 89 (citing Hill v. Polar Pantries, 219 S.C. 263, 64 S.E.2d 885 (1951)). The Court
also reasoned that '[i]f a party furnishes plans and specifications for
a contractor to follow in a construction job, he thereby impliedly warrants
their sufficiency for the purpose in view notwithstanding the absence
of privity. Id. (quoting Beachwalk Villas Condominium Ass'n v. Martin,
305 S.C. 144, 146, 406 S.E.2d 372, 374 (1991).
Arizona has reached a similar conclusion. In Donnelly
Construction Co. v. Oberg/Hunt/Gilleland, the Supreme Court found the trial
court's dismissal of a claim for breach of implied warranty of plans and specifications
on lack of privity grounds was in error. 139 Ariz. 184, 677 P.2d 1292. The Donnelly
Court stated, without elaboration, that [a] claim for breach of a common
law warranty does not require privity. Id. at ___, 677 P.2d at
1297 (citing Rocky Mountain Fire and Cas. Co. v. Biddulph Oldsmobile,
131 Ariz. 289, 640 P.2d 851 (1982)). Finally, the court identified the scope
of such a warranty by explaining that design professionals do not 'warrant'
that their work will be 'accurate,' . . . . Rather, . . . they
'warrant' merely that they have exercised their skills with care and diligence
and in a reasonable, non-negligent manner. Id. (internal citation
Following existing West Virginia precedent, and the
cases discussed above, we hold that a design professional (e.g. an architect
or engineer) providing plans and specifications that will be followed by a contractor in carrying out some
aspect of a design, impliedly warrants to the contractor, notwithstanding the
absence of privity of contract between the contractor and the design professional,
that such plans and specifications have been prepared with the ordinary skill,
care and diligence commensurate with that rendered by members of his or her
Because we conclude that a contractor may pursue a
claim for the breach of an implied warranty of plans and specifications in the
absence of privity, we find that the circuit court erred in granting summary
judgment to Kanakanui as to Eastern's claim for breach of implied warranty.
We have similarly concluded that medical malpractice
plaintiffs could not bring a direct action as third-party beneficiaries against
a physician's liability insurer where it was not established that the insurance
policy contained language bestowing a benefit on a third-person who was not
a party to the contract. Robinson v. Cabell Huntington Hosp., Inc., 201
W. Va. 455, 498 S.E.2d 27 (1997). In reaching its conclusions, the Robinson
Court observed that '[t]his Court has held that in order for a contract
concerning a third party to give rise to an independent cause of action in the third party, it
must have been made for the third party's sole benefit.' 201 W. Va.
at 460, 498 S.E.2d at 32 (quoting Woodford v. Glenville State College Hous.
Corp., 159 W. Va. 442, 448, 225 S.E.2d 671, 674 (1976). See also
United Dispatch v. E.J. Albrecht Co., 135 W. Va. 34, 46, 62 S.E.2d
289, 296 (1950) (concluding that [t]he provisions relied upon by plaintiff
as giving it a right of action on the contract were intended for the benefit
and protection of [one of the contracting parties], and not for the sole
benefit of the plaintiff or for the sole benefit of a class of which
plaintiff is a member. (emphasis added)).See
footnote 11 11
With regard to making a determination of whether a
plaintiff is a third-party beneficiary of a particular contract, we have held
In the absence of a provision in a contract specifically stating that such contract shall inure to the benefit of a third person, there is a presumption that the contracting parties did not so intend and in order to overcome such presumption the implication from the contract as a whole and the surrounding circumstances must be so strong as to be tantamount to an express declaration.
Syl. pt. 2, Ison v. Daniel Crisp Corp., 146 W. Va. 786, 122 S.E.2d 553 (1961). Eastern has failed to direct this Court to any language in the contract between Kanakanui and Salem that either expressly or impliedly declares an intent that the contract was for Eastern's sole benefit. While it is clear that the contracting parties knew the contract would result in professional work product by Kanakanui that would ultimately be relied upon by a construction contractor building the project, it is equally clear that the contract itself was for the benefit of the contracting parties. Consequently, we find no error in the circuit court's grant of summary judgment on this ground.
If a covenant or promise be
made for the sole benefit of a person with whom it is not made, or with whom
it is made jointly with others, such person may maintain, in his own name, any
action thereon which he might maintain in case it had been made with him only,
and the consideration had moved from him to the party making such covenant or
An independent contractor,
who claims special skill or knowledge to plan and design an access road and
encroachment onto a public highway, and negligently prepares such a plan and
design, may be liable to persons injured as a proximate result of such negligence
before or after the plan or design has been accepted by the owner or employer
of the independent contractor and regardless of privity.
Syl. pt. 5, Louk v. Isuzu Motors, Inc., 198 W. Va. 250, 479 S.E.2d 911 (1996).
An individual who sustains
economic loss from an interruption in commerce caused by another's negligence
may not recover damages in the absence of physical harm to that individual's
person or property, a contractual relationship with the alleged tortfeasor,
or some other special relationship between the alleged tortfeasor and the individual
who sustains purely economic damages sufficient to compel the conclusion that
the tortfeasor had a duty to the particular plaintiff and that the injury complained
of was clearly foreseeable to the tortfeasor.
§ 552. Information Negligently
Supplied for the Guidance of Others
(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary 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.
(2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered
(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and
(b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.
(3) The liability of one who is under a public duty to give the
information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them.
In engaging in the practice of architecture, a registered architect shall act with reasonable care and competence, and shall apply the technical knowledge and skill which are ordinarily applied by registered architect [sic] of good standing, practicing in the same locality.