Court: Louisiana Court of Appeal; April 28, 1992; Louisiana; State Appellate Court
In the case of Charles R. Colbert v. B.F. Carvin Construction Co., the Louisiana Court of Appeal examined a reconventional demand alleging Colbert's negligence in relation to a school renovation contract. The jury attributed 50% negligence to Colbert concerning B.F. Carvin individually and 47% regarding B.F. Carvin Construction Company, awarding $29,000 to Carvin individually and $89,763 to the company. The trial judge later granted a judgment notwithstanding the verdict, adjusting the awards to $190,985.10 for the construction company and $58,000 for Carvin, both reduced by 25% for their respective negligence. Colbert's plea of prescription for Carvin's individual claim was overruled, leading him to appeal.
Colbert's counsel filed a peremptory exception of no cause of action, arguing that the reconventional demand lacked a legally recognized basis for negligent interference with contract. The allegations against Colbert included failures to prepare adequate plans and specifications, delayed provision of necessary instructions, and the use of economic pressure to compel performance beyond the original contract's scope. Specific claims detailed his negligence in project surveying, communication, and inspections, which allegedly caused additional, uncontracted maintenance work for the plaintiffs in reconvention. The appellate court reversed part of the trial judge's decision while affirming other aspects.
B.F. Carvin, as plaintiff in reconvention, claims to have suffered mental anguish and emotional distress due to the actions or inactions of the defendant. B.F. Carvin Construction Company, Inc. details its damages, totaling $650,037.00, which includes $130,629.00 owed on a contract with the Orleans Parish School Board, $90,000.00 in lost overhead and profit, $179,408.00 for uncompensated extras, and $250,000.00 in lost profits from other business opportunities affected by the defendant's negligence. Additionally, B.F. Carvin claims $500,000.00 for personal mental anguish, emotional distress, frustration, and pain and suffering.
The plaintiffs assert claims of intentional and negligent interference with a contract, as well as a tort related to alleged negligence by Colbert in a professional undertaking with the Orleans Parish School Board, resulting in foreseeable economic harm to Carvin. A key issue is whether Louisiana recognizes a cause of action for these theories. The Louisiana Supreme Court acknowledged a corporate officer's duty to avoid intentional, unjustified interference with contractual relations, noting Louisiana's unique position as the only state that does not recognize tortious interference with contract. The court criticized past rulings that denied remedies for contract damage caused by corporate officials, emphasizing the civil law principle requiring individuals to repair harm caused by their fault. However, the court clarified that it does not intend to fully adopt the expansive common law doctrine of tortious interference, which is criticized for its vagueness and lack of clear standards for liability and defenses, suggesting that only a limited duty exists for corporate officers in this context.
The Fourth Circuit has refrained from broadening the tort of intentional interference with contract, adhering closely to the precedent set in *Spurney*. In *Tallo v. Stroh Brewery Co.*, Chief Judge Schott expressed skepticism regarding the limitation of the Supreme Court's recognition of tortious interference to the specific facts of *9 to 5*, suggesting that any expansion should be the purview of the Supreme Court, not an intermediate appellate court. The case under review only presented a theory of negligent interference with contract, as indicated by the Carvin interests’ counsel, who stated that their reconventional demand was grounded in negligence under Civil Code Article 2315. The jury instructions and interrogatories were also focused solely on negligence; Louisiana currently lacks a recognized remedy for negligent interference with contract, as noted in *Great S.W. Fire Ins. v. CNA Ins.*
The court highlighted that the recognition of intentional interference with contractual rights is a recent development, approached cautiously by the Supreme Court, which has historically limited liability for interference to intentional torts. The court referenced a prior ruling where it declined to recognize a cause of action for negligent interference with a lease contract. However, it acknowledged potential support for a tort based on negligent professional undertakings, citing a previous case involving a surveyor/appraiser where reliance on expertise led to claims of negligence. Ultimately, the court found no material fact issues and upheld the summary judgment in that case.
The legal document addresses the recovery of economic damages by third parties for negligent professional actions by surveyors and appraisers not in contractual privity. Although this issue was not explicitly decided in R. R. Enter., tacit approval for such claims was indicated through a summary judgment ruling that did not question the sufficiency of the petition. In Impressive Builders v. Ready Mix, the court found no privity of contract for a contractor's breach of contract claim against an engineering firm but acknowledged the potential for a tort claim. The Louisiana Second Circuit, in Alley v. Courtney, ruled that privity of contract is not necessary for a lender to claim damages against a construction appraiser for incorrect reporting. The U.S. District Court in Farrell Construction v. Jefferson Parish allowed a contractor to recover economic damages from an architect for defective plans and unreasonable delays, while the First Circuit recognized negligence claims by subcontractors against architects without privity in several cases, including Standard Roofing Co. v. Elliot Const. The document notes a historical trend beginning in the 1950s where courts expanded architects' liability to third parties. The rationale for this expansion is rooted in the significant control architects hold over contractors, necessitating a legal duty to perform their responsibilities without negligence.
Authority in professional relationships carries with it corresponding legal responsibilities. The Minnesota Supreme Court upheld a claim by a general contractor against an architect for negligent architectural services, despite the absence of a contractual relationship (Prichard Brothers, Inc. v. Grady Co., 428 N.W.2d 391 (Minn. 1988)). Similarly, in Waldor Pump v. Orr-Schelen-Mayeron Associates (386 N.W.2d 375 (Minn. Ct. App. 1986)), the court found that an engineer could owe a duty of care to a subcontractor relying on the engineer's professional services, countering the argument that liability arises only from a contractual duty. The court referenced the prevailing rule across many jurisdictions, affirming that professionals can be held liable for negligence if their services are foreseeably relied upon by others. This was further supported by cases from other jurisdictions recognizing a tort duty between design professionals and contractors when harm is foreseeable (e.g., Donnelly Construction Co. v. Oberg/Hunt/Gilleland, 139 Ariz. 184, 677 P.2d 1292 (1984)). The engineering firm owed a duty to the subcontractor to competently draft and interpret project specifications. In contrast, in Muncy Area School Dist. v. Gardner (91 Pa. Cmwlth. 406, 497 A.2d 683 (Pa. Commw. Ct. 1985)), the court ruled in favor of an architectural firm against a plumbing contractor, citing the absence of factual disputes regarding the contractor's claims of negligent misinformation based on Section 552 of the Restatement of Torts, concerning the liability for negligence in supplying false information for the guidance of others.
In Westerhold v. Carroll, 419 S.W.2d 73 (Mo.1967), the Missouri Supreme Court established a balancing test to evaluate the existence of a cause of action, focusing on several policy considerations. Key factors include the intent of the transaction to affect the plaintiff, foreseeability of harm, certainty of injury, closeness of the connection between the defendant's conduct and the injury, the moral blame associated with the defendant's actions, and the goal of preventing future harm. Although not all factors must be met for a cause of action to proceed, the court found that in the case at hand, all elements were satisfied except for moral blame.
The court noted that the architect's negligence was foreseeable to the contractor, who was known to be at risk of injury, and that there was a significant connection between the architect's actions and the contractor's injury, approaching privity. The court asserted that policy considerations favored allowing the plaintiff to pursue the action, as the architect would not face unlimited liability to an indefinite number of individuals. Consequently, the court adopted the Westerhold test and determined that the petition adequately stated a cause of action.
Colbert, the appellant, appealed the trial court's decision, raising multiple errors: the trial court should have granted his exception of prescription against Carvin's individual claim, allowed double recovery for a judgment already awarded through arbitration, permitted speculative evidence regarding Carvin's losses, and improperly granted a judgment notwithstanding the verdict. Colbert specifically noted that B.F. Carvin's company was put in default on December 26, 1986.
B.F. Carvin filed a reconventional demand on June 9, 1988, admitting to a notice of default from January 28, 1987. He claims that Colbert's refusal to certify his work as accepted by Labor Day 1986 caused him mental anguish. Carvin indicated that as of the trial, the Orleans Parish School Board had not yet released his bonding company, despite agreeing to do so. Carvin contends that the prescription period has not lapsed, arguing that the tort is a continuing one, citing South Central Bell Telephone v. Texaco, Inc. for support. The trial judge initially overruled the exception, agreeing that the tort was continuing, but the summary judgment found otherwise, concluding that Carvin's individual claim is prescribed, as the tortious conduct occurred only once.
Regarding arbitration, the trial judge denied the introduction of the affirmative defense of arbitration, classifying the suit as tort rather than contract. However, the judge permitted the use of sworn testimony from the arbitration for impeachment purposes. A stipulation submitted by Carvin and Carvin Construction Company indicated a reduction in claims due to wrongful withholding by the Orleans Parish School Board, totaling $526,549 after adjustments. Although the stipulation did not specifically mention arbitration, Colbert argued that Carvin's memorandum suggested a judicial confession regarding payment by the school board, under Louisiana Civil Code Article 1853. This article dictates that a judicial confession serves as full proof against the confessing party and may only be revoked for factual error. The Louisiana Supreme Court has recognized that such confessions waive the need for further evidence on the admitted issue.
A judicial admission does not prevent the confessor from refuting their prior admission unless the opposing party has relied on it to their detriment. Relevant case law, including Johnson v. Kennedy and Crawford v. Deshotels, establishes that for a statement to qualify as a judicial admission, it must expressly acknowledge an adverse fact, waiving evidence on that matter. The reliance must lead the other party to believe the fact was not disputed or to act detrimentally based on that admission. In the present case, Carvin testified about unpaid amounts due from the school board, and Colbert's counsel attempted to introduce impeachment evidence without success. The trial judge noted no double recovery would occur, and Colbert failed to show he was misled regarding arbitration. Thus, even if there were a judicial admission, the criteria from Jones were not satisfied. Furthermore, Colbert waived the right to appeal the double recovery issue by not presenting evidence. The jury found Colbert negligent, attributing equal negligence between Colbert and Carvin, and a lesser percentage to B.F. Carvin Construction Co. Inc. The damages awarded totaled $29,000 for Carvin and $89,763 for the construction company. Subsequently, B.F. Carvin Construction Co. Inc. and B.F. Carvin filed a motion for judgment notwithstanding the verdict or alternatively for a new trial.
Nine jurors submitted affidavits stating they misunderstood the trial judge's instructions regarding damage reductions due to negligence, leading them to independently adjust the damage amounts awarded. The Carvin interests sought a readjustment of these awards, asserting that Carvin and his company should only bear 25% of the fault. On September 25, 1990, the trial judge granted a Judgment Notwithstanding the Verdict (JNOV), awarding Carvin $29,000 and $89,763 to B.F. Carvin Construction Company, Inc. Subsequently, on October 4, 1990, the Carvin interests filed a motion for a new trial limited to reargument, claiming it was erroneous for the court to rely on juror affidavits for the JNOV, citing the general rule against juror testimony to impeach a verdict. They contended that the judge should reassess fault and damages based on all evidence favoring them.
On December 19, 1990, the trial judge granted the motion for a new trial, reaffirming the JNOV and rendering a judgment of $190,985.10 for B.F. Carvin Construction, reduced by 25% for negligence, and $58,000 for B.F. Carvin, also reduced by 25%. The judge emphasized that his decision was based on the proper legal standard and not the jurors' misinterpretations. The appellant argued that the judge's actions indicated manipulation influenced by juror affidavits, but the court disagreed, asserting that the trial judge followed the appropriate standard and provided justifications for the JNOV. The criteria for granting a JNOV, as outlined by the Louisiana Supreme Court, require that the evidence overwhelmingly supports one party to the extent that reasonable individuals could not reach a different verdict. The court must not assess witness credibility and must resolve all reasonable inferences in favor of the non-moving party. The appellate court's review of a JNOV begins with determining whether the trial court erred in its decision.
The trial judge determines whether to grant a motion by assessing if the evidence overwhelmingly favors the moving party, such that no reasonable jury could reach a different verdict. If reasonable jurors could disagree, the motion should be denied, and the jury's verdict reinstated. The Louisiana Supreme Court's negligence liability framework requires plaintiffs to prove: 1) the defendant's conduct caused the harm; 2) a duty was owed to the plaintiff; 3) that duty was breached; and 4) the harm was within the scope of that duty. In M.J. Womack, Inc. v. State House of Representatives, the court clarified that architects are not expected to provide perfect plans but must exercise the standard of care typical for their profession. Expert testimony is not always necessary to establish negligence, especially if the negligence can be discerned through common sense. However, in some cases, expert testimony is required. An architect is only liable if their actions fall below the professional standard of care. The trial judge correctly granted a judgment notwithstanding the verdict (JNOV) on fault apportionment, as evidence clearly indicated that Colbert bore a significantly greater share of fault. Colbert had a duty to provide reasonable skill in preparing plans for Carvin Construction, to supervise the work, and to issue change orders for hidden defects, all of which he breached.
Carvin Construction Company experienced economic losses due to a breach of duty related to the architectural plans prepared by Charles Colbert for the renovation of McDonough Number 36. Colbert, who acted as the architect for both the initial design and renovation, failed to adhere to the standard of reasonable skill and care required under his contract with the Orleans Parish School Board. The School Board relied on Colbert as an independent contractor for design and construction administration, as noted in the introduced standards document, which stated that the School Board lacked the expertise to assess the adequacy of the architectural plans.
During the investigative phase, Colbert conducted preliminary site inspections but did not perform essential tasks such as scaffolding or digging, although he did make roof cuts to check conditions. He acknowledged that typical investigations, like testing roof drains, were not within the architects' purview. Carvin's expert, John Coleman Bartley, emphasized that it was not the contractor's responsibility to determine necessary work, as that duty fell to the architect. Bartley found the specifications provided by Colbert to be vague, particularly regarding doors, windows, and hardware.
Colbert detailed his investigation process, which included documenting conditions, making notes, and consulting various engineering experts. He believed his investigations were adequate for creating clear specifications and plans. However, Carvin's project manager, Marjean M. Gould, criticized Colbert's specifications for specifying three manufacturers of replacement window parts that were no longer in business, creating delays in sourcing necessary materials.
Carvin contested Colbert's assertions about the adequacy of the construction specifications, claiming that the windows had long-standing issues that had been previously modified and were never intended to be waterproof. He described the doors as outdated and criticized Colbert's lack of knowledge regarding the existing problems and the absence of proper repair plans, stating that the blueprints were misleading and led to significant repair costs. Colbert maintained that his drawings indicated they were for convenience only and that it was the contractor's responsibility to assess the salvageable window panes. Carvin countered that it was Colbert's duty to identify the number of usable windows. Expert witness Richard Dennis Oehler argued that Colbert's notation on the plans was inappropriate and emphasized the need for thorough investigation during renovations. Conversely, defense expert Anthony J. Gendusa reviewed Colbert's plans and deemed them sufficient for contractor guidance. Colbert explained that he created preliminary and working drawings after School Board approval, adhering to contract requirements for clarity in specifications. He cited a contract provision obligating the Owner to supply existing drawings and for him to create as-built drawings if none existed, at no extra cost. Colbert asserted that he complied with contract stipulations and responded reasonably to requests for additional instructions. Gould noted that a plumbing subcontractor encountered issues when replacing roof drains, which were not adequate for the existing conditions.
The existing roof drains were improperly configured, featuring a 45-degree angle connecting to a square pipe, while the plans specified a 90-degree drain with a round connection. This discrepancy was discovered after significant roof work had commenced, preventing proper installation before students returned from holidays. Testimony from Gould indicated that inadequate guidance was received from both the architect and engineer regarding how to address the connection issue. Colbert, representing the project oversight, maintained that Carvin should have anticipated the square-to-round connection challenge and denied requests for additional costs, only approving one change order related to the sound and fire alarm system. He acknowledged receiving multiple notifications about the issue prior to March 17, 1986, but failed to provide necessary instructions or drawings, claiming none were required. Colbert also recognized that the original plans inaccurately depicted the connection's location and admitted the lack of a drawing indicating the need for a round-to-square connection. He characterized the issue as a hidden condition and conceded that a change order could be warranted but criticized the requests as lacking proper justification and pricing. Carvin discovered rust in the existing drainage system shortly after connecting the first roof drain and informed Colbert, who asserted that the repair responsibility lay with Carvin and was not included in the project scope. Carvin emphasized that renovation projects often encounter hidden conditions that cannot be fully anticipated.
Carvin's testimony indicated that no modifications were approved by Colbert for the project, leading to an eight-week delay that hindered his ability to complete finishing work in classrooms due to unresolved issues with rainwater leaders. Leaks caused by these issues further complicated matters. Carvin awaited instructions from Colbert before preparing a change order. Project engineer Lucien T. Vivien noted that Colbert's failure to provide a drawing for a round to square connection was not unusual, despite Carvin's repeated requests. Ronald G. Berkwest, employed by the Orleans Parish School Board, characterized the round to square connection issue as minor and referenced contract procedures for change orders. Colbert justified his refusal to execute a change order by claiming a lack of basis for pricing and the need for further investigation before determining the extent of repairs. He acknowledged receiving letters from Carvin regarding rusted roof drains and leaks but stated he could not provide repair guidance without more information. Oehler highlighted that the rainwater conductors and leaders constituted unknown conditions, emphasizing that contractors typically cannot conduct investigative work during the bidding process, which limits their ability to identify hidden issues. Oehler asserted that a change order was necessary and noted that general contractors are not accountable for hidden conditions not specified in the plans. He estimated that a typical renovation would involve 7-10% of work requiring change orders. Bartley pointed out that according to the general conditions, any extra work requires a written order from the owner and countersignature from the architect, which is the architect's responsibility to initiate.
Colbert did not execute any change orders to address unforeseen or hidden conditions during the renovation project, despite Bartley's assertion that such conditions, like the round to square connection, typically warrant a change order due to additional expenses. Colbert cited issues with the roof drainage system as a reason for withholding payments to Carvin, recommending Carvin's company be placed in default for problems related to leaking roof drains, the drainage system, and windows. Colbert believed Carvin's team had damaged a terracotta line installed in the 1950s with a backhoe, contrary to Carvin's claim that the line had collapsed due to prior conditions. Colbert rejected Carvin's request for a change order for $4,467.00, arguing the costs were excessive and that the sidewalk did not need removal, asserting that the contractor should have anticipated such issues in his bid. Carvin contended the storm drain system had hidden conditions, which became evident when debris emerged while flushing the system. Oehler supported Carvin's view that the issue should have warranted a change order for unknown conditions. Bartley noted that the architect was obligated to supervise the work and provide additional instructions, emphasizing the collaborative nature of the architect-general contractor relationship in renovation projects. He indicated that unforeseen conditions are likely to arise, and he believed that Colbert had failed to conduct timely inspections, with Gould corroborating the lack of supervision from Colbert.
Colbert recommended awarding the contract to Carvin, the lowest bidder, but failed to provide additional requested information. He characterized the architect's role during construction as one of observation rather than supervision, despite specifications labeling the architect as a supervisor. Article 30 of the contract specifies that the architect acts as the owner's representative and is responsible for ensuring adherence to drawings and specifications, though not for the contractor's poor workmanship or materials. The architect has the authority to halt work if necessary for contract execution. Colbert acknowledged the provision in Article 5.1.5.1 requiring him to administer the construction contract but denied any supervisory obligation.
Oehler clarified that the architect's responsibilities include inspecting work, ensuring compliance with plans, and certifying completed work for payment. He asserted that Colbert was obligated to provide additional instructions and timely inspections but admitted to refusing a request to inspect roof drains, claiming they were not ready. Colbert's later observations deemed certain tests on the work as inadequate. He cited significant issues for terminating Carvin, including leaks from the roof and malfunctioning windows. Mechanical engineering expert Andrew J. McPhate noted that the windows could not be made watertight under normal usage due to alignment and gasket issues, while Oehler criticized the unrealistic testing methods applied to the aged windows, indicating that leaks were expected.
Concerns were raised regarding the windows installed at the school, with expert Bartley expressing doubts about their ability to meet required standards due to inherent design issues. Gendusa confirmed that a contract for renovation was being developed, proposing a different window system, and questioned the existing windows' water tightness.
Colbert’s testimony referred to contractual obligations for final inspections as outlined in Article 66 of the General Conditions. The architect must notify and conduct inspections upon project completion, prepare lists of minor corrective work, and inform the Owner and Contractor if significant work remains. The Contractor is required to notify the architect when ready for further inspection to potentially receive a Certificate of Substantial Completion. The architect will conduct additional inspections until final compliance with the Contract Documents is verified, after which all necessary documents will be forwarded to the owner prior to acceptance of the work.
Oehler indicated that Colbert sought to alter contract terms by holding the contractor responsible for classrooms until project completion, contrary to standard school board procedure due to potential damage from occupancy. Berkwest noted that without the architect’s certification of substantial completion, the school board could not proceed. Carvin recounted delays caused by Colbert’s refusal to inspect classrooms, requiring inspections just before school started, complicating necessary corrections. Colbert characterized his inspections as "courtesy" rather than formal, and he did not perform a final inspection leading up to the trial. Colbert's testimony included evidence of alleged unworkmanlike performance by Carvin.
Vivien, Berkwest, and Gendusa testified about Carvin's poor workmanship, while Colbert raised installation issues that Oehler disputed, asserting Carvin's work was on par with other contractors. Bertley confirmed Carvin's work was "absolutely" acceptable. Carvin stated that Colbert conditioned payment on a warranty for adjacent buildings, despite Carvin not working on these, as they were outside his contract. Oehler noted that such a roofing warranty was not standard practice. The trial judge awarded $190,185.10 in damages, compared to the jury's $89,763. Carvin's claims of "fixed overhead" and "loss of anticipated profits" were challenged as speculative. The appellant argued that Carvin's claims for fixed overhead and delays were based on work performed under the contract, and that the claim for time after October 6, 1986 was improper since Carvin deemed the job substantially complete by August 1986. Although the appellant indicated that speculative testimony was improperly admitted, no formal objection was raised at trial. The trial judge's grant of a Judgment Notwithstanding the Verdict (JNOV) on damages was deemed appropriate, as Carvin's uncontroverted testimony indicated a reasonable basis for the awarded amount. Carvin admitted his claim for anticipated profits was speculative and provided no specific amount. The trial judge's award was $6,650.41 less than what Carvin testified was owed, indicating that speculative damages were not awarded. Carvin claimed damages from Colbert's actions, stating a balance of $49,181.00 was owed under the contract and detailing extended overhead due to delays from Colbert's lack of instruction and timely inspections, amounting to $18,001.31 and $13,598, respectively.
The claim involves a total of $61,879.51 for overhead damages, calculated as $24,751 for eleven weeks of extended overhead due to the School Board's default on the contract and a customary 10% profit. Additional claims include $1,646 for extended bond costs, $13,135 for extended job site supervision, $184 for maintaining trees, $769 for special top soils and seeds, $41,051 for reusable window material, $16,160 for subsurface drainage and roof drains outside the plans, $1,035 for additional finished hardware, and $11,979 for repairs related to drainage system leaks. The judgment reversed an exception of prescription, ruled against Carvin’s individual claim, and overruled an exception of no cause of action for Colbert. The judgment notated that no evidence for double recovery was presented, referencing an earlier ruling that denied Colbert's appeal on this matter. The court affirmed other aspects of the judgment, with a rehearing refused.
