Boren v. Thompson & Associates, No. 90,437.

CourtSupreme Court of Oklahoma
Citation2000 OK 3,999 P.2d 438,2000 Okla. 3
Docket NumberNo. 90,437.
PartiesGary BOREN d/b/a Reliable Plumbing, Jim Utley d/b/a Jim's Service Co., Interiors of Northwest Oklahoma, an Oklahoma Corporation, Southwest Glass and Door, a Kansas Corporation, J.A.G. Construction, a Kansas Corporation, and Sparks Electric, Inc., an Oklahoma Corporation, Plaintiffs-Appellees, and Jim Scott d/b/a Jim Scott Painting, Plaintiff, v. THOMPSON & ASSOCIATES, Defendant-Appellant, and Russell McBee d/b/a R.J. Builders, and McBee, Inc. d/b/a Thurman Wilson Insurance, Defendants.
Decision Date18 January 2000

999 P.2d 438
2000 OK 3
2000 Okla. 3

Gary BOREN d/b/a Reliable Plumbing, Jim Utley d/b/a Jim's Service Co., Interiors of Northwest Oklahoma, an Oklahoma Corporation, Southwest Glass and Door, a Kansas Corporation, J.A.G. Construction, a Kansas Corporation, and Sparks Electric, Inc., an Oklahoma Corporation, Plaintiffs-Appellees, and
Jim Scott d/b/a Jim Scott Painting, Plaintiff,
v.
THOMPSON & ASSOCIATES, Defendant-Appellant, and
Russell McBee d/b/a R.J. Builders, and McBee, Inc. d/b/a Thurman Wilson Insurance, Defendants

No. 90,437.

Supreme Court of Oklahoma.

January 18, 2000.


Rick Harbison, Larry Field, Guymon, Oklahoma, For Plaintiffs/Appellees.

Daniel H. Diepenbrock, Grant C. Shellenberger, Liberal, Kansas, For Defendant/Appellant.

999 P.2d 440
¶ 1 KAUGER, J

¶ 2 The dispositive issue presented on certiorari is whether an architectural firm may be liable to subcontractors in negligence for damages arising from its architect's certification of payments to a contractor without a required statutory payment bond being secured. Under the facts presented, it may.

FACTS

¶ 3 Pursuant to 61 O.S.1991 §§ 11 and 2,2 contractors must post performance

999 P.2d 441
and payment bonds ensuring the construction of public buildings. A performance bond protects the owner of the property by assuring completion of a project in the event of default by the general contractor and a payment bond guarantees payment to subcontractors in the event of default.3 This cause arose because of the failure to secure a payment bond during the construction of a library building for Independent School District 53 in Tyrone, Oklahoma

¶ 4 On September 13, 1993, the school board hired the appellant, Thompson and Associates (architectural firm), to design and oversee construction of the library.4 Gary Gilpin (architect), an employee of the firm, served as the architect and project manager. Besides designing the building, the firm advertised, initiated the bidding process, and prepared the project specifications used to obtain bids from contractors. The specifications for the library included a notice to all interested parties that the successful bidder was required to provide both a performance and a payment bond for the project.5 The instructions to bidders required that the bonds be delivered to the school board within three days of the execution of the contract.6

¶ 5 The initial bids exceeded the school's budget. Thereafter, modifications were made to the plans and the bids were resubmitted. On June 29, 1994, the school board awarded the contract to Russell McBee (contractor). The contract mandated a substantial completion by December 1, 1994. After the award, the contractor contracted with each of the appellees, subcontractors, to provide materials and/or labor for construction of the library.7

¶ 6 Although the contractor supplied the required performance bond, a payment bond was not secured.8 Work began on the project sometime in August of 1994. Under the contract between the architectural firm and the school board, the firm's architect certified payments to the contractor as construction proceeded.9 Pursuant to the General Conditions

999 P.2d 442
of the Contract for Construction, the architect had the authority to withhold certification if the contractor failed to pay the subcontractors.10 Nevertheless, payments were certified without evidence of a bond. Although the architect sent a note to the contractor dated August 3, 1994, reminding him of the required performance and payment bonds for the project,11 the architect received only a copy of the performance bond. Apparently, the architect simply assumed the packet included a payment bond and he filed the paperwork

¶ 7 In December of 1994, a lawyer contacted the architect on behalf of a subcontractor, Page Construction. The lawyer informed the architect of a dispute with the contractor regarding payment and requested a copy of the payment bond. It is at this juncture that the architect insists that he discovered that he did not have a copy of a payment bond in his file.12 Although the architect did withhold certification to the contractor until the dispute with Page Construction was resolved, he resumed certifying payments to the contractor on January 27, 1995, with knowledge that no bond existed. The architect became aware that other subcontractors were not being paid when he started receiving claims from them in May and June of 1995.13

¶ 8 On November 29, 1995, the subcontractors filed suit against the architectural firm alleging negligence in certifying payments to the contractor in absence of the statutorily required payment bond.14 The architectural firm filed a motion to dismiss on December

999 P.2d 443
28, 1995. It argued that the subcontractors failed to state a claim for which relief could be granted because: 1) it did not owe the subcontractors a duty; 2) no privity of contract existed between the architectural firm and the subcontractors; and 3) the subcontractors had constructive knowledge of the contractor's duty to procure the bonds making the proximate cause of the loss their own negligence. The trial court denied the firm's motion to dismiss.

¶ 9 A three day jury trial was conducted in September of 1997. During the trial, the architectural firm demurred to the subcontractor's evidence. At the close of all of the evidence, it moved for a directed verdict. The trial court overruled both of the motions and submitted the cause to the jury. The jury found in favor of the subcontractors and against the architectural firm.15 It also returned a special verdict finding that the firm's architect had acted wilfully and with reckless disregard for the rights of the subcontractors. The subcontractors were awarded $38,525.48 in actual damages.

¶ 10 When the cause was presented for a determination of punitive damages, the subcontractors complained that the architectural firm had failed to provide the financial information they had requested in discovery. As sanctions, the trial court entered a directed verdict for punitive damages in the amount of actual damages, and the architectural firm appealed. The Court of Civil Appeals reversed and remanded finding that the proximate cause of the subcontractor's loss was their failure to ensure the statutory bond had been obtained before furnishing material or commencing work. We granted certiorari on September 27, 1999.

¶ 11 THE ARCHITECTURAL FIRM'S MOTION TO DISMISS WAS PROPERLY DENIED UNDER THE FACTS PRESENTED. THE SUBCONTRACTORS STATED A CLAIM OF NEGLIGENCE AGAINST THE ARCHITECTURAL FIRM. HASKELL LEMON CONST. CO. v. INDEPENDENT SCHOOL DIST NO. 12 OF EDMOND AND ITS PREDECESSORS ARE NOT DISPOSITIVE OF THE SUBCONTRACTOR'S CLAIMS AGAINST THE ARCHITECTURAL FIRM.

¶ 12 The architectural firm asserts that the trial court erred in denying its motion to dismiss and that this cause should not have proceeded to trial. It argues that: 1) pursuant to 12 O.S.1991 § 2012(B)(6),16 the subcontractor's petition failed to state a claim because it owed no duty to the subcontractors; and 2) no privity of contract exists to support a tort action. Alternatively, the architectural firm seeks the same protection afforded a public official under Haskell Lemon Const. Co., v. Independent School Dist. No. 12 of Edmond, 1979 OK 5, 589 P.2d 677. Haskell holds that public officials are not liable to subcontractors for the failure to secure a statutory payment bond because the proximate cause of loss is their negligence in failing to ascertain the existence of the bonds.

¶ 13 The subcontractors concede that they are not in privity of contract with the architectural firm. Rather they argue that a contractual relationship is not required under the facts of this case, and that the firm's architect had a duty to avoid foreseeable harm to the subcontractors. To support their assertions they point to the architect's obligation to certify payment's to the contractor, the architect's authority to withhold payment, the statutory requirement of a payment bond, and the architect's actions when he knew or should have known that there was no payment bond. We granted certiorari to revisit Haskell's rationale, and to address its application to a private, for-profit company engaged in the business of designing

999 P.2d 444
and overseeing public construction projects.

¶ 14 In Haskell Lemon Const. Co. v. Independent School Dist. No. 12 of Edmond, supra, a subcontractor brought an action against a school district and individual school board members for materials furnished to a contractor on a public works project. The school district did not check to see that the contractor had obtained the required statutory payment bond. Consistent with a line of cases beginning in 1916,17 the Haskell Court did not impose liability on the public entity or the individual school board members for any losses caused by the failure of the contractor to obtain the bond.

¶ 15 The Haskell Court recognized that: 1) the bond statutes were enacted by the Legislature as a matter of public policy to protect laborers and materialmen on public construction projects in the event of default of the contractor; 2) regardless of whether the responsible public official fails to ensure that a bond is secured, unpaid laborers and materialmen may not look to or collect from the public entity; and 3) a subcontractor is charged with knowledge of the statutory duty of the contractor to obtain a bond. The Court also stated that a subcontractor furnishing materials or performing work before a bond is secured cannot recover from a public agency because "the proximate cause of the loss was his own negligence in not ascertaining whether a bond had been given."

¶ 16 Haskell and its predecessors18 stand for the proposition that regardless of whom bears the burden of ensuring that the statutorily required bond is in place, a public entity or its officers may not be held liable for the failure to secure the bond.19...

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19 practice notes
  • Leak-Gilbert v. Fahle, No. 97,540.
    • United States
    • Supreme Court of Oklahoma
    • July 16, 2002
    ...& Affiliates, 1989 OK 48, ¶ 7, 775 P.2d 797; Keel v. Titan Constr. Corp., see note 6, supra. 13. Boren v. Thompson & Associates, 2000 OK 3, ¶ 22, 999 P.2d 14. Id.; Keel v. Titan Construction Corp., see note 6, supra. 15. A few jurisdictions retain the rule that, absent fraud, collusion or m......
  • Cleveland v. Dyn-A-Mite Pest Control, Inc., No. 95,680.
    • United States
    • United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma
    • April 30, 2002
    ...OK 15, 956 P.2d 864; Bradford Sec. Processing Servs., Inc., v. Plaza Bank & Trust, 1982 OK 96, 653 P.2d 188; Boren v. Thompson & Assocs., 2000 OK 3, 999 P.2d 4. We note that, although Brewer-Russell effectively argues it would be tedious to search company records and ask company staff about......
  • Robertson Stephens, Inc. v. Chubb Corp., C.A. No. 05-360 S.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Rhode Island
    • February 14, 2007
    ...Cardente. Page 278 Kennett, 798 A.2d at 418. The exception carries currency in the construction context, see Boren v. Thompson & Assoc., 999 P.2d 438, 445 (Okla.2000) (holding, relying in part on Forte Bros., that an architectural firm had duty to ensure that general contractor had secured ......
  • Yocum v. Greenbriar Nursing Home, No. 100,282.
    • United States
    • Supreme Court of Oklahoma
    • April 12, 2005
    ...neither was there a probative value objection based on timeliness of the employer's medical report. 37. Boren v. Thompson & Associates, 2000 OK 3, ¶ 26, 999 P.2d 438, 448; Beets v. Metropolitan Life Ins. Co., 1999 OK 15, ¶ 4, 995 P.2d 1071, 1078 (Opala, J., dissenting). The provisions of Ru......
  • Request a trial to view additional results
19 cases
  • Leak-Gilbert v. Fahle, No. 97,540.
    • United States
    • Supreme Court of Oklahoma
    • July 16, 2002
    ...& Affiliates, 1989 OK 48, ¶ 7, 775 P.2d 797; Keel v. Titan Constr. Corp., see note 6, supra. 13. Boren v. Thompson & Associates, 2000 OK 3, ¶ 22, 999 P.2d 14. Id.; Keel v. Titan Construction Corp., see note 6, supra. 15. A few jurisdictions retain the rule that, absent fraud, collusion or m......
  • Cleveland v. Dyn-A-Mite Pest Control, Inc., No. 95,680.
    • United States
    • United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma
    • April 30, 2002
    ...OK 15, 956 P.2d 864; Bradford Sec. Processing Servs., Inc., v. Plaza Bank & Trust, 1982 OK 96, 653 P.2d 188; Boren v. Thompson & Assocs., 2000 OK 3, 999 P.2d 4. We note that, although Brewer-Russell effectively argues it would be tedious to search company records and ask company staff about......
  • Robertson Stephens, Inc. v. Chubb Corp., C.A. No. 05-360 S.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Rhode Island
    • February 14, 2007
    ...Cardente. Page 278 Kennett, 798 A.2d at 418. The exception carries currency in the construction context, see Boren v. Thompson & Assoc., 999 P.2d 438, 445 (Okla.2000) (holding, relying in part on Forte Bros., that an architectural firm had duty to ensure that general contractor had secured ......
  • Yocum v. Greenbriar Nursing Home, No. 100,282.
    • United States
    • Supreme Court of Oklahoma
    • April 12, 2005
    ...neither was there a probative value objection based on timeliness of the employer's medical report. 37. Boren v. Thompson & Associates, 2000 OK 3, ¶ 26, 999 P.2d 438, 448; Beets v. Metropolitan Life Ins. Co., 1999 OK 15, ¶ 4, 995 P.2d 1071, 1078 (Opala, J., dissenting). The provisions of Ru......
  • Request a trial to view additional results

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