A. R. Moyer, Inc. v. Graham

• Decision Date: 10 October 1973
• Docket Number: No. 41151,41151
• Court: Florida Supreme Court
• Parties: A. R. MOYER, INC., Plaintiff-Appellant, v. John Hans GRAHAM and John Hans Graham and Associates, Defendants-Appellees.

Page 397

285 So.2d 397

65 A.L.R.3d 238

A. R. MOYER, INC., Plaintiff-Appellant, v. John Hans GRAHAM and John Hans Graham and Associates, Defendants-Appellees.

No. 41151.

Supreme Court of Florida.

Oct. 10, 1973.

Rehearing Denied Dec. 11, 1973.

Robert J. Paterno, of Taylor, Brion, Buker, Hames, Greene & Whitworth, Miami, for plaintiff-appellant.

William M. Hoeveler, of Knight, Peters, Hoeveler, Pickle, Niemoeller & Flynn, Miami, for defendants-appellees.

J. Michael Huey of Smith & Moore, Tallahassee, for The Florida Assn. of the American Institute of Architects, as amicus curiae.

CARLTON, Chief Justice.

Through avenues authorized by Fla.Stat., § 25.031, F.S.A., and Rule 4.61, Florida Appellate Rules, 32 F.S.A., the United States Court of Appeals, Fifth Circuit, has certified to us the following questions of law:

'I. Under Florida Law, may a general contractor maintain a direct action against the supervising Architect or Engineer, or both, for the general contractor's damages proximately caused by the negligence of the Architect or Engineer, or both, for said building project, where there is an absence of direct privity of contract between the parties.

II. Would the answer to Question I be the same if any one or all of the following circumstances were present:

(a) The Architect or Engineer, or both, were negligent in the preparation of the plans and specifications.

(b) The Architect or Engineer, or both, negligently caused delays in preparation of corrected plans and specifications.

(c) The Architect or Engineer, or both, were negligent in preparing and supervising corrected plans and specifications.

(d) The Architect or Engineer, or both, were negligent in failing and refusing to provide the general contractor with final acceptance of the building project in the form of an Architect Certificate upon the completion of the building.

(e) The Architect or Engineer, or both, undertook to exercise control and supervision over the general contractor in the performance of his duties to construct the building project.

(f) The Architect or Engineer, or both, negligently exercised control and supervision over the general contractor.

III. Under the Florida Law, may a general contractor enjoy the status of a creditor or donee beneficiary, or both, of a contract between the owner and the designing and supervising Architect or Engineer, or both, where the general contractor, under his contract with the owner, is obligated to construct the building project in accordance with the Architects-Engineers plans and specifications.'

As this case is postured, our expression of opinion as to the jurisprudence of Florida is based solely upon the conclusory language set forth by the Court of Appeals, Fifth Circuit, the substance of which is as follows: on the project in question, the supervising architect or engineer was negligent in the preparation and presentation of plans, designs and specifications; this negligence was the proximate cause of damages sustained by the general contractor; there was no direct privity of contract between the supervising architect or engineer and the general contractor.

The litigants view the issues as follows: whether a supervising architect is liable for economic damages to the general contractor on a construction project, with whom he has no direct contractual relationship either (a) for negligence in the performance of his duties, or (b) for breach of the architect's contract with his employer, the owner, treating the general contractor as a third party beneficiary of that agreement.

I. Negligence Theory

The architect contends that as a professional his liability for negligence extends only to those with whom he is in privity of contract. This contention derives from Sickler v. Indian River Abstract & Guaranty Co., 142 Fla. 528, 195 So. 195 (Fla.1940), and Investment Corporation of Florida v. Buchman, 208 So.2d 291 (2nd DCA Fla., 1968). Sickler involved a suit by the estate of A. H. Sickler against an abstracter for negligent preparation of an abstract prepared for the Melbourne Steam Laundry. Relying on the abstract, Sickler lent the laundry money in exchange for a mortgage; his investment was lost when an undisclosed, pre-existing mortgage was foreclosed. The trial court sustained the abstractor's demurrer and entered final judgment in its behalf. This court affirmed on the theory that:

'(A)n abstracter'(s) . . . liability is not in tort, but is contractual, and must be based upon a breach of his express or implied contract with his customer or client to furnish him with a true and correct abstract. . . .

The negligence or unskillfulness of an abstracter does not render him liable to the alienee, devisee, or other successor in interest employing him, or other persons with whom there is no privity of contract.'

In the Investment Corporation case a firm of certified public accountants negligently prepared financial statements for a corporation; a group of investors bought substantial stock in reliance on the financial position as reported by the accountants; thereafter, the corporation went bankrupt. Suit against the accountants followed, with one count alleging '(T)hat defendants violated their duty of care to plaintiff in that defendants were negligent in the preparation of the financial statement when they knew plaintiff intended to act in reliance upon this statement.' The trial court dismissed the negligence count for failure to state a cause of action. On appeal, the District Court of Appeal, Second District, felt itself compelled by Sickler to affirm; in so doing, it ruled that an accountant could not be held liable for the negligent preparation of financial statements resulting in economic loss to third parties not in privity of contract.

It is conceded by the architect that Audlane Lbr. & Bldrs. Sup. v. D. E. Britt, 168 So.2d 333 (2nd DCA, Fla.1964) recognizes that a cause of action may exist against an architect for negligent execution of plans and specifications where a non-privity third party has sustained economic damage, but that case as well as others (discussed infra) involving personal injury are seen as 'products liability' and, therefore, distinguishable cases.

The contractor maintains a viable cause of action exists, notwithstanding a lack of privity, by virtue of the following decisions: Matthews v. Lawnlite Co., 88 So.2d 299 (Fla.1956); Mai Kai, Inc. v. Colucci, 205 So.2d 291 (Fla.1967); Audlane Lbr. & Bldrs. Sup. v. D. E. Britt, Supra; moreover it is contended that Sickler and Investment Corporation, supra, are inapplicable here because neither involved the element of direct supervision and control which extended the participation of the architect beyond mere draftsmanship. We agree that a cause of action exists.

Privity is a theoretical device of the common law that recognizes limitation of liability commensurate with compensation for contractual acceptance of risk. The sharpness of its contours blurs when brought into contact with modern concepts of tort liability. MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 (1916), is heralded not so much for its decision on the facts as for its precedential value: a case relaxing privity's strictures. In Matthews v. Lawnlite Co., Supra, the Court recognized MacPherson as humane and accepted its principle as being 'more in line with reason and justice.'

The Audlane case, decided by the District Court of Appeal, was a natural extension of the Matthews case. Britt, an architect, designed plans and specifications for roof trusses and sold them to Anchor Lock; in turn, Anchor Lock manufactured truss plates and then sold the plans, specifications and plates to Audlane; Audlane then constructed trusses according to Britt's design, using Anchor Lock's plates. A contractor purchased the completed trusses from Audlane and used them in construction. The trusses failed and Audlane sustained considerable economic loss as a result. Thereafter, Audlane brought suit against Britt for negligent preparation of the truss plans and specifications, but it was dismissed for failure to state a cause of action. In reversing the dismissal, the District Court reasoned:

'With respect to the negligence action and appellee Britt Associates' 'duty', there is no magic in the generality 'professional service.' The phrase 'professional services' encompasses a multitude of activities which may give rise to actions on numerous theories of liability. The nature of the professional's duty, the standard of care imposed, varies in different circumstances. So, too, the extent of the duty, the delimitation of the objects of the duty, varies. In every instance duty must be defined in terms of the circumstances and the theories advanced to sustain liability. In our view the extent of appellee's duty may best be defined by reference to the forseeability of injury consequent upon breach of that duty. The complaint alleged that appellee knew that the design and specifications it prepared would be resold to and used by various fabricators. To argue that it is absolutely free of liability for negligence to these known users or consumers of its work is to disregard the half century of development in negligence law popularly thought to have originated in MacPherson v. Buick Motor Co. 217 N.Y. 382, 111 N.E. 1050, L.R.A. 1916F, 696 (1916) and explicitly recognized in this State in Matthews v. Lawnlite Co., Fla.1956, 88 So.2d 299. The allegations of the complaint bring appellant within the ambit of Britt Associates' duty and the court erred in its contrary determination.' (Emphasis supplied.)

Mai Kai v. Colucci, Supra, further weakened privity as a limitation of liability in negligence actions. A restaurant patron brought suit against both the owner and an architect who had supervised the installation of an overhead fan after preparing appropriate plans and specifications. The fan struck the patron when a weld severed. The District Court of Appeal, Fourth...