Shepherd Components, Inc. v. Brice Petrides-Donohue & Associates, Inc., PETRIDES-DONOHUE
| Decision Date | 17 July 1991 |
| Docket Number | No. 89-1256,PETRIDES-DONOHUE |
| Citation | 473 N.W.2d 612 |
| Parties | SHEPHERD COMPONENTS, INC., Appellee, v. BRICE& ASSOCIATES, INC., and Peterson Contractors, Inc., Appellants. |
| Court | Iowa Supreme Court |
Steven L. Udelhofen of Jones, Hoffmann & Huber, Des Moines, for appellant Brice Petrides--Donohue & Associates, Inc.
James E. Walsh, Jr., and Paul W. Demro of Clark, Butler, Walsh & McGivern, Waterloo, for appellant Peterson Contractors, Inc.
Edward J. Gallagher, Jr., and Cynthia A. Scherrman, of Gallagher, Langlas & Gallagher, Waterloo, for appellee.
Patrick M. Roby and Diane Kutzko of Shuttleworth & Ingersoll, P.C., Cedar Rapids, for amici curiae Iowa Engineering Soc., et al.
Considered by HARRIS, P.J., and LARSON, SCHULTZ, NEUMAN, and ANDREASEN, JJ.
Plaintiff Shepherd Components (Shepherd) commenced this action after a wall of its cinder block building collapsed during excavation work performed on adjacent property for a city sewer project. Defendant Brice Petrides--Donohue & Associates, Inc. (Brice), an engineering firm, prepared the plans and specifications for the project. Codefendant Peterson Contractors, Inc. (Peterson), was the contractor that performed the excavation work for the sewer project. A jury returned special verdicts allocating fault and determining Shepherd's damages. In accordance with the verdicts, the trial court entered a judgment against Brice for thirty percent of the actual damages and a judgment against Peterson for the remaining seventy percent of Shepherd's actual damages and for punitive damages. The court allocated seventy-five percent of the award for punitive damages, less attorney fees, to the civil reparation fund pursuant to Iowa Code section 668A.1(2)(b) (1989). Both defendants appeal, and plaintiff cross-appeals.
The original plans and specifications did not detail any protective methods for Peterson to use in excavating the adjoining property. Peterson engaged an engineer, not named in the suit, to prepare shop drawings of a system to retain the earth along the excavation route adjacent to Shepherd's building. These drawings were approved by Brice and required that sheet piling (sheeting) be driven along the excavation route with the use of accompanying backfilling as the sewer pipe was being laid. The drawings did not provide for the excavation of earth between Shepherd's building and the sheeting.
During the excavation work, Peterson departed from the drawings by removing earth immediately adjacent to Shepherd's building and below the footings before actually installing the sheeting. Peterson maintained that the earth immediately adjacent to Shepherd's building was removed to lessen the vibration caused by the hammer used to drive the sheeting into the frozen earth. This preliminary excavation was performed on a Friday afternoon. The following Monday, a Peterson employee noticed that a corner of Shepherd's building was cracked and deteriorating. Work was then halted. Brice and Shepherd were notified. After a series of meetings between the parties, Peterson elected to finish its work and repair Shepherd's building when the project was completed. Peterson instructed Shepherd not to use the damaged corner while the sewer project was being completed and to place scaffolding inside the building. Shepherd maintained that this temporary corrective measure compounded the problem because its employees could not operate equipment. When the sheeting was removed three months later, the entire damaged wall collapsed.
Peterson conceded its negligence when the damage occurred, but denied the amount of monetary damages claimed by Shepherd. Brice denied any responsibility for damages to the building. The jury separately determined Shepherd's monetary damages for repairing the building, fixed overhead expenses, and loss of good will. The jury found that Shepherd was not at fault for failing to mitigate damages and did not sustain any loss of profits. The jury also found that Peterson's wrongful conduct was not directed specifically at Shepherd.
On appeal, Brice claims that the trial court erred in submitting the issue of its negligence to the jury because it neither controlled nor supervised the excavation work performed adjacent to plaintiff's building. Brice also raises issues concerning the admission of expert testimony and the award of damages to Shepherd.
Peterson challenges the amount of damages awarded. It also attacks the jury instructions on punitive damages and overhead expenses. Finally, Peterson claims the trial court should not have submitted the issue of damages for loss of good will.
On cross-appeal, Shepherd maintains that the award of punitive damages is the property of Shepherd and that any distribution to the civil reparation fund pursuant to Iowa Code chapter 668A is unconstitutional.
I. Negligence of construction engineer. Plaintiff's action against Brice alleged negligence in the design of the sewer project and in providing consultation services to Peterson. At the close of the evidence, Brice moved for a directed verdict, claiming that plaintiff did not present sufficient evidence of faulty design of the project. Even though the trial court overruled the motion, its jury instructions addressed only issues concerning the construction phase of the project and did not address the issue of faulty project design. Brice also asserted that it did not owe plaintiff a duty under its contractual obligations with the City. The court concluded that Brice owed a duty to plaintiff as a matter of law in providing construction review and related services. Consequently, the court instructed the jury to determine whether Brice was negligent in the performance of these services by failing to stop the construction work, allowing Peterson to continue working after discovery of the damage without acting to prevent further damages, and failing to exercise the ordinary skill of an engineer. On appeal, Brice maintains that the trial court erred in concluding that it owed plaintiff a duty.
We are guided by certain principles in considering Brice's contentions. When a contract imposes a duty upon a party, the neglect of that duty is a tort founded on contract. Chrischilles v. Griswold, 260 Iowa 453, 459, 150 N.W.2d 94, 98 (1967). A design engineer may be held liable for negligence in failing to exercise the ordinary skill of the profession in drafting plans and specifications or in supervising construction work. Evans v. Howard R. Green Co., 231 N.W.2d 907, 913 (Iowa 1975). An engineer's potential for liability is not limited to the party with which he contracts and extends beyond privity of contract. Id. However, the determination of whether a contract that employs a professional imposes a duty on a noncontractual party is a matter of law to be decided by the court. Porter v. Iowa Power & Light Co., 217 N.W.2d 221, 228 (Iowa 1974).
The issue in this case is whether the trial court correctly determined that Brice, in its role as a construction reviewer, owed a duty to protect plaintiff from harm. An examination of the contracts that the City entered with defendants Brice and Peterson is helpful.
The contract between the City and Brice reveals that Brice's duties were limited during the construction phase of the project. One provision generally describes the engineer's duties during the construction phase as follows:
The ENGINEER shall:
....
Make periodic visits to the site of the construction to observe the progress and quality of the construction work and to determine, in general, if the results of the construction work are in accordance with the Drawings and the Specifications. On the basis of his on-site observations as an ENGINEER, he shall endeavor to guard the OWNER against apparent defects and deficiencies in the permanent work constructed by the Contractor but does not guarantee the performance of the Contractor ... The ENGINEER is not responsible for construction means, methods, techniques, sequences or procedures, time of performance, programs, or for any safety precautions in connection with the construction work. The ENGINEER is not responsible for the Contractor's failure to execute the work in accordance with the Construction Contract.
Under this paragraph, Brice was responsible for preventing any apparent defects or deficiencies in Peterson's completed work. However, the purpose of this responsibility was to protect the City rather than an adjoining landowner such as plaintiff.
Another provision of the contract limited the engineer's responsibility for construction review services as follows:
The ENGINEER has not been retained or compensated to provide design and construction review services relating to the Contractor's safety precautions or to means, methods, techniques, sequences, or procedures required for the Contractor to perform his work but not relating to the final or completed structure; omitted services include but are not limited to shoring, scaffolding, underpinning, temporary retainment of excavations and any erection methods and temporary bracing.
Another provision of the contract provided that the purpose of on-site review services was not to protect the public from unreasonable work methods and means, but to protect the City by assuring the quality of work performed. This provision provides as follows:
By means of the more extensive on-site observations of the work in progress, the ENGINEER will endeavor to provide further protection for the OWNER against defects and deficiencies in the Contractor's work, but the furnishing of such services shall not include construction review of the Contractor's construction means, methods, techniques, sequences or procedures, or of any safety precautions and programs in connection with the work, and the ENGINEER shall not be responsible for the Contractor's failure to carry out the work in accordance with the Construction Contract.
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