762 F.2d 1192 (4th Cir. 1985), 84-1137, Bryant Elec. Co., Inc. v. City of Fredericksburg

Docket Nº:84-1137.
Citation:762 F.2d 1192
Party Name:BRYANT ELECTRIC COMPANY, INC., Appellant, v. CITY OF FREDERICKSBURG and Malcolm Pirnie, Inc., Appellees.
Case Date:May 23, 1985
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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762 F.2d 1192 (4th Cir. 1985)

BRYANT ELECTRIC COMPANY, INC., Appellant,

v.

CITY OF FREDERICKSBURG and Malcolm Pirnie, Inc., Appellees.

No. 84-1137.

United States Court of Appeals, Fourth Circuit

May 23, 1985

Argued Jan. 7, 1985.

C. Allen Foster and Richard Conner, Greensboro, N.C. (Foster, Conner & Robson, Greensboro, N.C., on brief), for appellant.

William D. Bayliss, Richmond, Va. (Paul S. Bliley, Jr., Browder, Russell, Morris & Butcher, Richmond, Va., on brief) and Murray H. Wright, Richmond, Va. (Edward E. Nicholas, III, McGuire, Woods & Battle, Richmond, Va., on brief), for appellees.

Before HALL, ERVIN and SNEEDEN, Circuit Judges.

SNEEDEN, Circuit Judge:

Plaintiff, Bryant Electric Company, Inc. ("Bryant"), appeals from an order of the United States District Court for the Eastern District of Virginia granting the motions to dismiss filed by the respective defendants, Malcolm Pirnie, Inc. ("Pirnie") and the City of Fredericksburg ("City"). The district court dismissed Bryant's claim against Pirnie for failure to state a cause of action. Fed.R.Civ.P. 12(b)(6). The district court declined to exercise jurisdiction over Bryant's claim against the City because it enforced a forum selection clause in the contract between the City and Bryant providing for all claims to be litigated in the Circuit Court for the City of Fredericksburg. We agree and accordingly affirm the order of the district court.

Bryant, a North Carolina corporation with its principal place of business in High

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Point, North Carolina, is a general contractor. Bryant entered into a contract with the City in August 1982, following a competitive bidding process, to construct an aqueduct from the Rappahanock River to the City's water filtering plant and to perform certain restoration work on intake gates at a dam on the river. Pirnie, a New York corporation with its principal place of business outside Virginia, had been hired by the City in 1981 to provide architectural and engineering services for this project. Pirnie, under its contract with the City, was also to serve as the City's authorized representative and agent during the construction period.

Bryant alleges that it has suffered economic loss because of errors by Pirnie in the design and supervision of the project. Bryant maintains that Pirnie's errors caused significant delay and additional expense. The original contract price was $1,549,550.00. Bryant claims that the cost of the extra work which it performed exceeds $550,000.00.

Bryant brought suit against Pirnie and the City seeking to hold the defendants jointly and severally liable for the additional cost. 1 Bryant sued the City for breach of contract. Bryant sued Pirnie in tort, alleging negligence in the design and supervision of the project. No contract exists between Bryant and Pirnie, and Bryant does not allege that it is a third-party beneficiary of the contract between Pirnie and the City.

Bryant filed its diversity suit in federal court despite the forum selection clause in its contract with the City designating the Circuit Court of the City of Fredericksburg as the appropriate forum for resolution of disputes. Bryant, however, has filed an identical action in the Circuit Court for the City of Fredericksburg.

II.

To resolve Bryant's claim against Pirnie, this Court must decide whether there exists a cause of action in tort under Virginia law for a contractor to recover against an engineer for economic loss in the absence of privity. Because this is a diversity case, we must decide this issue as we believe the Supreme Court of Virginia would decide were it faced with the issue. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 83 L.Ed. 1188 (1938). Unfortunately, the Supreme Court of Virginia has not yet addressed this specific issue. There is, however, a case pending before the Supreme Court of Virginia in which this identical issue is raised. Blake Construction Co. Inc. v. Milton M. Alley, et al., No. 831942 (Circuit Court, City of Richmond, September 8, 1983). It appears unlikely that a decision will be rendered in that case in the near future. In view of this delay, we have determined that we must proceed to decide the case before us despite our preference for guidance from the Supreme Court of Virginia.

The district court concluded that there was no such cause of action under Virginia law and accordingly dismissed Bryant's claim against Pirnie under Fed.R.Civ.P. 12(b)(6). The district court, noting the absence of any Virginia Supreme Court decision directly on point, turned to the "host" of lower Virginia courts of record which have decided the issue. Joint Appendix at 44. These lower courts have consistently held that a contractor may not recover for purely economic losses suffered as a result of an architect's or engineer's negligence absent privity of contract. In J. West Construction Co. v. Beeson, Lusk, Jones, Inc., for example, a subcontractor sought delay damages resulting from an

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architect's alleged negligence. In sustaining the architect's demurrer with prejudice, the Circuit Court for the City of Richmond stated the following:

[T]here is no duty owed by an architect to a subcontractor, unless a contractual duty exists; and there is no contractual duty alleged in this case. The architect's duty runs to the owner, not to the contractor or subcontractor.

J. West Construction Co. v. Beeson, Lusk, Jones, Inc., LE-1095 (Circuit Court, City of Richmond, April 16, 1982). Addendum to Appellees' Brief at 11. 2

While Bryant correctly argues that such lower court...

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