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Contractor Liable for a Third Party’s Faulty Design


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Murray 

By Laura Murray

Stormwater drainage issues plague homeowners
During and after construction of condominiums, the members of the new homeowners’ association (“HOA”) noticed that there was a serious drainage problem with stormwater runoff. Specifically, the HOA noticed that water would collect in the common areas between the units and began jeopardizing the integrity of the rear walls of the units. The general contractor, who was developing the condos, had previously hired an engineering firm to prepare conceptual drawings and plans for the condos’ drainage system.  Unfortunately, the drainage system, as installed, did not properly address the drainage issues.

The general contractor verbally assured members of the HOA that the drainage problems would be repaired before the condos were transferred to the HOA.  However, the issues were not resolved, and the general contractor transferred ownership to the HOA.  After the general contractor failed to make the repairs, the HOA paid $40,000 to a third party to repair the drainage issues and filed suit in an effort to recoup the payment from the general contractor.  The trial court found in favor of the HOA, and the general contractor appealed.

General contractor’s duty
The court of appeals rejected the general contractor’s argument that it should not be held responsible because the faulty drainage system was designed and developed by a third party.  The court explained that once a builder undertakes a project pursuant to a construction contract, he or she is under an implied duty to ensure that all work is performed in a workmanlike matter.  Even though the general contractor did not actually perform the work that resulted in the poor drainage system, the general contractor had the ultimate duty to ensure that the condominium community was completed in a workmanlike fashion.  

The court held that the general contractor had notice of the defect and it had a duty to the HOA to act reasonably to remedy the drainage problem.  The court found the general contractor did make a minimal effort by adding additional dirt and gravel and installing yard drains in some areas, but he failed to do anything between the units, where the real problems were located.  Therefore, the court held that the general contractor was liable to the HOA for failing to remedy the known drainage problem.

Takeaway
The court held the unilateral delegation of work to a third party will not absolve a general contractor from work performed in a nonworkmanlike manner by the third party.  Even if the general contractor did not draw up the plans or actually performed the faulty work, if the general contractor was on notice of a defect, it can be held liable for negligent construction.

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