Design Professional Hired by Subcontractor Does Not Owe a Duty of Care to the Property Owner or the General Contractor.

Weseloh Family v. K.L. Wessel Construction Co., Inc. (2004) 125 Cal.App.4th 152 (review denied March 23, 2005).

In the Weseloh case, design engineers of a failed retaining wall system, who had been hired by a subcontractor, were held not to owe the property owner or the general contractor a duty of care. Because the design engineers did not owe such a duty to the property owner, the general contractor's claim for equitable indemnity also failed.

Plaintiff property owners retained a general contractor (Wessel) in May 1999 to construct an automobile dealership on their property. Wessel hired a subcontractor (Sierra) to build the necessary retaining walls. Sierra hired Charles Randle and Owen Engineering Company (Randle) to perform consulting work, including supervising the design engineers that designed two Keystone retaining walls on the project. Randle knew that plaintiffs owned the property, but Randle did not contract in any way directly with plaintiffs or Wessel. Following design, Randle did not have a role in the retaining wall construction, although Randle inspected the retaining walls after completion.

In February 2001, the retaining walls failed, damaging the dealership. Plaintiffs sued (inter alia) Wessel, Sierra, and Randle, and alleged not less than $6 million in losses. Plaintiffs eventually settled with several parties, including Wessel and Sierra, for a total of $3.6 million, and they then proceeded against Randle for the remaining $2.4 million in damages on a theory of professional negligence. Wessel also continued to prosecute its cross-complaint for indemnity against Randle. Plaintiffs claimed that Randle breached his duty to them by failing to use the care required of his profession in the design, planning, engineering, and/or review of the construction of the retaining walls.

Randle moved for summary judgment, primarily on the grounds that he did not owe a professional duty to either plaintiffs or to Wessel. The trial court granted the motion by finding as a matter of law that Randle did not owe any such duty, the Fourth District Court of Appeal upheld the trial court's ruling, and the Supreme Court declined further review.

The Court of Appeal decision states: "The threshold element of a cause of action for negligence is the existence of a duty..." In its ruling, the Weseloh court provides a detailed discussion of the factors for determining whether, outside a contractual relationship, a design professional may be liable to third parties for negligently performed design work, by reference to the opinions in Biakanja v. Irving and in Bily v. Arthur Young & Co. The Weseloh court further noted that the Supreme Court, as recently as 2000 in Aas v. Superior Court, had reiterated these factors as a case-by-case test for identifying such a duty as a matter of policy, by balancing various factors:

1. The extent to which the transaction was intended to affect the plaintiff;

2. The foreseeability of harm to him;

3. The degree of certainty that the plaintiff suffered injury;

4. The closeness of the connection between the defendant's conduct and the injury suffered;

5. The moral blame attached to the defendant's conduct, and

6. The policy of preventing future harm.

The court carefully applied the Biakanja factors and explained:

(1) Randle's role in the project primarily benefited Sierra, not the property owner;

(2) foreseeability factors have little weight because the courts "will not treat the mere presence of a foreseeable risk of injury to third persons as sufficient, standing alone, to impose liability for negligent conduct";

(3) and (4) although there was injury, plaintiffs failed to produce evidence of the extent to which design defects actually caused their damages, especially without evidence that Sierra actually used Randle's design without alteration in constructing the retaining walls;

(5) there was no reason to assign Randle any moral blame; and

(6) there was no evidence supporting an argument that greater care in future design engineering would result from attaching liability here.

The Weseloh court also noted the Supreme Court's concern in Bily about imposing liability far out of proportion to fault. Here, the court noted, Randle was paid no more than $2,200, and it was not clear Sierra even followed the specifications of their design. Finally, the decision noted that third parties (such as plaintiffs) can privately order their risks by contractual arrangements. For instance, the plaintiffs could have required that they be named as additional insureds on all insurance policies covering the risks of defective workmanship of subcontractors. This militated against imposing a duty and finding a cause of action in negligence.

Plaintiffs appear to have settled their contractual claims and gambled they could recover $2 million to $3 million on a tort claim against thirdparty design professionals. In retrospect, plaintiffs miscalculated the level of participation of these design professionals on the project. The lesson appears to be that courts will look for contractual remedies when sophisticated parties enter into complex construction agreements, and that the level of control a design professional has over the implementation of his design will be dispositive as to whether or not tort liability may be imposed. Put more simply, the more involved the design professional is with both the design and its construction, the more likely liability could be imposed for professional negligence.

- Randel J. Campbell