E.C. Goldman, Inc. v. A/R/C Associates, Inc.

• Citation: 14 Fla. L. Weekly 1108,543 So.2d 1268
• Decision Date: 04 May 1989
• Docket Number: No. 87-1258,87-1258
• Parties: 54 Ed. Law Rep. 356, 14 Fla. L. Weekly 1108 E.C. GOLDMAN, INC., Appellant, v. A/R/C ASSOCIATES, INC., etc., et al., Appellees.
• Court: Florida District Court of Appeals

Page 1268

543 So.2d 1268

54 Ed. Law Rep. 356, 14 Fla. L. Weekly 1108

E.C. GOLDMAN, INC., Appellant, v. A/R/C ASSOCIATES, INC., etc., et al., Appellees.

No. 87-1258.

District Court of Appeal of Florida,

Fifth District.

May 4, 1989.

Rehearing Denied June 9, 1989.

Harry W. Lawrence of Austin, Lawrence & Landis, Orlando, and Stephen M. Phillips and Dudley C. Rochelle, Atlanta, Ga., for appellant.

John C. Briggs of Fisher, Rushmer, Werrenrath, Keiner, Wack & Dickson, P.A., Orlando, for appellees.

ORFINGER, Judge.

E.C. Goldman, Inc. (Goldman) appeals from a final judgment on the pleadings in favor of the defendants, A/R/C Associates, Inc. (A/R/C) and Donald Dorner (Dorner). The sole issue presented on appeal is whether an expert who has had no connection whatsoever with a construction project and is hired by the owner of the project solely to evaluate the work of a roofing subcontractor, may be held liable to the subcontractor (with whom the expert has no privity) for the negligent performance of its evaluation. We agree that there is no liability under the circumstances here, and affirm.

In entering judgment on the pleadings, the trial judge correctly accepted as true all well pleaded allegations of Goldman's complaint. See McAbee v. Edwards, 340 So.2d 1167 (Fla. 4th DCA 1976); Geer v. Bennett, 237 So.2d 311 (Fla. 4th DCA 1970). A brief summary of the facts which crystallize the issue here follows.

Roger Kennedy (Kennedy), a contractor, entered into a contract with the School Board of Flagler County to build a school. Kennedy hired Goldman, a roofing subcontractor, to install a built-up roof. Goldman installed the roof in accordance with the contract specifications. The roof construction was periodically observed by the school board's clerk, the project architect and superintendent and Kennedy's project manager. Deficiencies in the roof were not observed at the time. Several months later the School Board raised complaints about the roof and on behalf of the School Board, the architect retained a nationally-known roof consulting firm, Robert M. Stafford, Inc., to examine the roof. Meanwhile, payment was withheld from the contractor, who in turn withheld payment from Goldman. Based on this consultant's roof inspection, the architect reported to the School Board that the roof was in good condition, and subsequently recommended that the School Board accept the project including the roof, and that the contractor be paid. Nevertheless, the issue of final payment was left unresolved pending the report and recommendations of a second roof consultant retained by the Board to conduct an additional roof inspection.

A/R/C, a roof consultant, was then engaged for the purpose of inspecting the roof and advising the school board as to whether it should be accepted. After conducting a roof investigation for A/R/C, Donald Dorner concluded that the architect and the School Board should not accept the roof. Based on A/R/C's written report and Dorner's verbal report, the Board decided not to accept the roof. Accordingly, it withheld payment to Kennedy, of which Goldman was owed $20,261.28. About one month later, Dorner performed another roof inspection and A/R/C prepared and sent a second written report in the form of a letter to the architect. Based on this report and a presentation to the Board, the Board again declined to accept the roof and continued to withhold payment.

Kennedy then initiated arbitration proceedings to collect the contract balance. Goldman was required to engage legal counsel and retain roofing experts in order to defend himself against the allegations of improper workmanship and to obtain the balance due under his subcontract with Kennedy. After a full evidentiary hearing, the arbitration panel unanimously determined that Goldman had performed the subcontract in accordance with the original contract specifications, and Goldman was awarded a total of $31,819.77, consisting of a subcontract balance of $20,261.28, test costs of $4,852.64 and interest of $6,705.85.

Goldman then filed this action alleging that A/R/C and Dorner owed a duty to those persons, such as himself, who would foreseeably be harmed by their failure to exercise due diligence and reasonable care in performing their contractual obligations to the school board. He also alleged that A/R/C and Dorner knew that the school board's acceptance of the roof was contingent upon their investigatory findings and recommendations. He finally alleged that as a direct and proximate result of A/R/C's and Dorner's negligence in performing their contractual duties, he had sustained damages in the amount of $40,893.83. This amount consisted of those costs and expenses, including reasonable attorney's fees, which he incurred in arbitrating the foregoing claim. He also alleged that he had been damaged by failing to obtain additional work. Goldman sought a judgment against A/R/C and Dorner for these claimed losses and for damages to compensate him for the loss of business and damage to its reputation.

In its final judgment, the trial court held as a matter of law that:

1. No contractual privity exists between the Plaintiff and the Defendants. Therefore, the Defendants had no duty of care to the Plaintiff.

2. The Defendants owed a duty of reasonable care in the performance of their consulting services to the School Board of Flagler County, in that the Defendants were hired for that specific purpose by the School Board's architect. This precluded the existence of a duty flowing from the Defendants to any other parties, including the Plaintiff.

3. The Plaintiff did not rely to its detriment on the opinion rendered to the School Board of Flagler County by the Defendants, thereby precluding the existence of any duty from the Defendants to the Plaintiff even in the absence of contractual privity.

4. Public policy also dictates against the existence of a duty from the Defendants to the Plaintiff, which would give rise to the pleaded cause of action for negligent rendition of an expert opinion, in that the recognition of any such cause of action would make the practice of this or any similar consulting profession a financial hazard and would inject such self-protective reservations into the expert's consulting or advisory role so as to diminish the quality of the expert's services.

5. The Plaintiff therefore has no cause of action against these Defendants for any negligence which may have occurred in the rendition of their opinion pursuant to their retention for that purpose by the School Board of Flagler County.

Appellant, (as does the dissent) relies principally on A.R. Moyer, Inc. v. Graham, 285 So.2d 397 (Fla.1973) and its progeny as support for its position that liability can exist here notwithstanding the absence of privity between A/R/C and Goldman. Essentially, it is the position of the appellant that the foreseeability of economic damage to Goldman created a duty on the part of A/R/C to use due care in the preparation of its report, failing which Goldman has a cause of action against A/R/C. Both appellant and the dissent misconstrue and thus misapply Moyer and the other cases cited in the dissent to the facts here. To agree with appellant it would be necessary to hold that a professional hired to give an expert opinion to his client owes a duty of due care to a third party, not in privity with the contract, not an intended beneficiary of the contract nor a person who is expected by the professional to rely on his opinion. That is not the law, nor have we been cited to a single case that supports that proposition.

In Moyer, the court approved a cause of action for an injury to a third party's economic interests by the negligent performance of a contract. ¹ Moyer did not develop new legal principles, but extended products liability law to economic losses. The cases relied on by the Moyer court to support its holding were products liability cases, in all of which the defendants had a close nexus to the product which caused the injury and loss to the plaintiffs, either through design, manufacture or distribution of the product or the direct supervision of its construction. ² Moyer is still good law, but a careful reading of the case and the factual context in which it was decided clearly reveals that it does not apply here. ³

In Moyer the owner entered into a contract with the defendant architects who were to prepare plans and specifications for the construction of an apartment building and who were to supervise the plaintiff general contractor in building the project in accordance with defendants' plans. The plans were alleged to have been negligently prepared and then negligently corrected by the defendant architects. Defendants also were alleged to have negligently caused delays and to have negligently exercised control and supervision over the plaintiff. In Moyer, unlike the case before us, there was an extremely close nexus between the general contractor and the architect; indeed, the supreme court agreed with the statement in United States v. Rogers & Rogers, 161 F.Supp. 132 (S.D.Calif.1958) that a supervising architect has the "power of economic life or death" over the general contractor and that such a great degree of control should also carry with it a duty of due care to the general contractor. As the Moyer court noted, "such authority exercised in such a relationship [should] carry commensurate legal responsibility." 285 So.2d at 401. ⁴ In AFM Corp. v. Southern Bell Telephone and Telegraph Company, 515 So.2d 180, 181 (Fla.1987) the court explained the Moyer decision as being based "on the fact that the supervisory responsibilities vested in the architect carried with it a concurrent duty not to injure foreseeable parties not beneficiaries of the contract." In the instant case, not only is there no nexus between plaintiffs and the school board's consultant, there is no proximate cause. Plaintiffs were not harmed by the consultant's...