Quail Hollow East Condominium Ass'n v. Donald J. Scholz Co., 7926SC558

• Decision Date: 15 July 1980
• Docket Number: No. 7926SC558,7926SC558
• Citation: 268 S.E.2d 12,47 N.C.App. 518
• Court: North Carolina Court of Appeals
• Parties: QUAIL HOLLOW EAST CONDOMINIUM ASSOCIATION, Plaintiff, v. DONALD J. SCHOLZ COMPANY and Harold Cooler, Defendants. Harold COOLER, Third-Party Plaintiff, v. INDOOR COMFORT OF RALEIGH, INC., a corporation and Holland ConstructionCompany, Inc., a corporation, Third Party Defendants. Harold COOLER, Third-Party Plaintiff, v. REA BROTHERS, INC., Additional Third-Party Defendants.

Page 12

268 S.E.2d 12

47 N.C.App. 518

QUAIL HOLLOW EAST CONDOMINIUM ASSOCIATION, Plaintiff, v. DONALD J. SCHOLZ COMPANY and Harold Cooler, Defendants.

Harold COOLER, Third-Party Plaintiff, v. INDOOR COMFORT OF RALEIGH, INC., a corporation and Holland

ConstructionCompany, Inc., a corporation, Third

Party Defendants.

Harold COOLER, Third-Party Plaintiff, v. REA BROTHERS, INC., Additional Third-Party Defendants.

No. 7926SC558.

Court of Appeals of North Carolina.

July 15, 1980.

Jones, Hewson & Woolard by Hunter M. Jones and Harry C. Hewson, Charlotte, for defendant and third party plaintiff-appellee Harold Cooler.

Weinstein, Sturges, Odom, Bigger, Jonas & Campbell by Allan W. Singer and L. Holmes Eleazer, Jr., Charlotte, for plaintiff-appellant.

MORRIS, Chief Judge.

Plaintiff preserves only one assignment of error on appeal: The trial court improperly granted summary judgment in favor of defendant Cooler. In order for defendant to prevail on his motion, the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any (must) show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." G.S. 1A-1, Rule 56(c); Moore v. Fieldcrest Mills, Inc., 296 N.C. 467, 251 S.E.2d 419 (1979). Plaintiff contends that there are genuine issues of material fact concerning the negligence of defendant Cooler in the performance of his professional obligations as an architect employed by Quail Hollow East Condominiums.

I. Architect Liability

The primary question raised by this appeal is whether a homeowner's association may sue an architect for the negligent design and preparation of plans and specifications and the negligent supervision of construction of a condominium complex where there exists no contractual privity between the architect and the homeowner's association. Recently becoming an area of enormous concern within the legal community, the scope of liability of an architect for the negligent performance of his professional duties has undergone considerable expansion. This broadening of scope has been seen principally in the relaxation of the traditional requisite of contractual privity. As a general proposition of the law of torts, it is settled that, under certain circumstances, one who undertakes to render services to another which he should recognize as necessary for the protection of a third person, or his property, is subject to liability to the third person for injuries resulting from his failure to exercise reasonable care in such undertaking. Restatement (Second) of Torts § 324A (1965); W. Prosser, Handbook of the Law of Torts § 93 (4th ed. 1971). This principle was applied in the recent decision of Davidson and Jones, Inc. v. County of New Hanover, 41 N.C.App. 661, 255 S.E.2d 580 (1979), cert. den. 298 N.C. 295, 259 S.E.2d 911 (1979), wherein Judge Erwin wrote for this Court the following:

The law imposes upon every person who enters upon an active course of conduct the positive duty to exercise ordinary care to protect others from harm and calls a violation of that duty negligence. Council v. Dickerson's, Inc., 233 N.C. 472, 64 S.E.2d 551 (1951); Stroud v. Transportation Co., 215 N.C. 726, 3 S.E.2d 297 (1939). The duty to protect others from harm arises whenever one person is by circumstances placed in such a position towards another that anyone of ordinary sense who thinks will at once recognize that if he does not use ordinary care and skill in his own conduct with regard to those circumstances, he will cause danger of injury to the person or property of the other. Insurance Co. v. Sprinkler Co., 266 N.C. 134, 146 S.E.2d 53 (1966); Honeycutt v. Bryan, 240 N.C. 238, 81 S.E.2d 653 (1954). The duty to exercise due care may arise out of contractual relations. However, a complete binding contract between the parties is not a prerequisite to a duty to use due care in one's actions in connection with an economic relationship nor is it a prerequisite to suit by a contractor against an architect. See Detweiler Bros., Inc. v. John Graham & Co., 412 F.Supp. 416 (E.D.Wash.1976); see also 57 Am.Jur.2d, Negligence, § 49, p. 398.

An architect, in the performance of his contract with his employer, is required to exercise the ability, skill, and care customarily used by architects upon such projects. 5 Am.Jur.2d, Architects, § 8, pp. 669-70. Where breach of such contract results in foreseeable injury, economic or otherwise, to persons so situated by their economic relations, and community of interests as to impose a duty of due care, we know of no reason why an architect cannot be held liable for such injury. Liability arises from the negligent breach of a common law duty of care flowing from the parties' working relationship.

41 N.C.App. at 666-67, 255 S.E.2d at 584. In a more recent case, Industries, Inc. v. Construction Co., 42 N.C.App. 259, 257 S.E.2d 50, cert. denied, 298 N.C. 296, 259 S.E.2d 301 (1979), we stated that "the position and authority of a supervising architect are such that he ought to labor under a duty to the prime contractor (third party) to supervise the project with due care under the circumstances, even though his sole contractual relationship is with the owner." 42 N.C.App. at 266, 257 S.E.2d at 55. We concluded there as follows:

The additional defendant (architect) here entered upon performance of an undertaking and, by doing so, entered into a relation with the contractor and others giving rise to a duty to those who must reasonably rely upon his professional performance. The arrangement presented here of an architect having general supervisory responsibility over the contractor and other subcontractors on a construction project of this nature is a normal one in this commercial age. Each of the various participants must, to some degree, rely upon the professional performance of the other and each therefore has the responsibility of performing his task with due care. Clearly, the incidental fact of the existence of the contract between the architect and the property owner should not negative the responsibility of the architect when he enters upon a course of affirmative conduct which may be expected to affect the interest of third parties.

42 N.C.App. at 271-72, 257 S.E.2d at 59.

In Browning v. Levien & Co., 44 N.C.App. 701, 262 S.E.2d 355 (1980), we applied Davidson and Jones, Inc. and Industries, Inc. in again considering the scope of architect liability. In Browning, plaintiffs were members of a limited partnership formed to build an apartment complex, having obtained a construction loan from the First National City Bank of New York. First National employed defendant and his architectural firm to inspect the construction at the time of each progress payment request and to certify the progress according to the applicable plans and specifications. Upon default by the building contractor under the loan agreement, the limited partners brought suit against defendants, alleging that defendants had been negligent in certifying the work done by the contractor. As a cross assignment of error on appeal, defendants argued that the action was improper because there was no contractual privity between plaintiffs and defendants. This Court rejected that contention and held that "when the defendants undertook to perform services for the bank, it could be reasonably foreseen that the owners of the property, the plaintiffs in this case, might rely on the certification of defendants." 44 N.C.App. at 705, 262 S.E.2d at 358. In so holding, we recognized the general rule evolving from recent decisions that "an architect who contracts to perform services is liable for damages proximately caused by his negligence to anyone who can be reasonably foreseen as relying on that architect's performing services in a reasonable manner." 44 N.C.App. at 704-5, 262 S.E.2d at 358. This rule is applicable to actions arising both from negligent supervision and from the negligent preparation of plans and specifications. Industries, Inc. v. Construction Co., supra.

We must now determine whether these particular plaintiffs an association of condominium purchasers may maintain this action for damages resulting from negligent design and supervision. We find language from United Leasing Corp. v. Miller, 45 N.C.App. 400, 263 S.E.2d 313, 318 (1980), instructive:

Whether . . . a party has placed himself in such a relation with another so that the law will impose upon him an obligation, sounding in tort and not in contract, to act in such a way that the other will not be injured calls for the balancing of various factors: (1) the extent to which the transaction was intended to affect the other person; (2) the foreseeability of harm to him; (3) the degree of certainty that he suffered injury; (4) the closeness of the connection between the defendant's conduct and the injury; (5) the moral blame attached to such conduct; and (6) the policy of preventing future harm. (Citations omitted.)

Proper application of these factors requires that we consider the materials presented by both plaintiff and defendant on motion for summary judgment. From our review of those materials, it is evident that plaintiff's members fall within the range of potential plaintiffs contemplated by our earlier decisions abolishing the privity requirement. It is obvious that any architect's involvement in residential construction is intended to affect the ultimate consumer-purchaser in that the buyer anticipates and expects sound construction and solid workmanship. In addition, it is certainly foreseeable that any defect in design or negligence in supervision may bring harm to the homeowner, who is met daily with any deficiencies that may develop. Further, in this case, it is certain that the homeowners have suffered injury, as evidenced by the exhibits showing the water damage caused to the various condominium units and the extensive repairs...