When a subcontractor’s work is called into question, is the project owner entitled to pursue a direct action against the sub? Both cases in this issue relate to that question. A design subcontractor fared well. A construction subcontractor found itself vulnerable.
An owner’s project architect subcontracted with an engineering consultant. The owner later sued the architect for breach of contract and professional malpractice and the engineering consultant for malpractice. The owner settled with the architect but continued to pursue the claim against the engineer. The engineer argued that its duties and responsibilities were defined in its subcontract with the architect. It owed no independent duty of due care to the project owner. A Texas appeals court agreed with the engineer.
A project owner and a prime construction contractor agreed to reciprocally waive claims for insured property losses and to incorporate the waiver clause into all subcontracts. When a subcontractor’s work caused water damage to the property, the owner’s property insurer paid to repair the damage. Subrogated to the rights of the owner, the insurer then sued the subcontractor to recoup its loss, and the sub raised the waiver as a defense. A Michigan appellate court ruled that the waiver, when incorporated into the subcontract, protected the owner and prime contractor from subcontractor claims for insured property losses, but did not shield the sub from the claim of the insurer.