Consulting-Specifying Engineer - September 2007 - (Page 40)

Restatement (Second) of Torts §552 (1977) Information Negligently Supplied for the Guidance of Others (1)One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or, competence in obtaining or communicating the information. (2)Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered (a)by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b)through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction. (3)The liability of one who is under a public duty to give the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them. Comment h: Under this section, as in the case of the fraudulent misrepresentation (see §531), it is not necessary that the maker should have any particular person in mind as the intended, or even the probable, recipient of the information. In other words, it is not required that the person who is to become the plaintiff be identified or known to the defendant as an individual when the information is supplied. It is enough that the maker of the representation intends it to reach and influence either a particular person or persons, known to him, or a group or class of persons, distinct from the much larger class who might reasonably be expected sooner or later to have access to the information and foreseeably to take some action in reliance upon it. It is enough, likewise, that the maker of the representation knows that his recipient intends to transmit the information to a similar person, persons or group. It is sufficient, in other words, insofar as the plaintiff’s identity is concerned, that the maker supplies the information for repetition to a certain group or class of persons and that the plaintiff proves to be one of them, even though the maker never had heard of him by name when the information was given. It is not enough that the maker merely knows of the ever-present possibility of repetition to anyone, and the possibility of action in reliance upon it on the par of anyone to whom it may be repeated. Illustration 9 to Comment h: The City of A is about to ask for bids for work on a sewer tunnel. It hires B Company, a firm of engineers, to make boring tests and provide a report showing the rock and soil conditions to be encountered. It notifies B Company that the report will be made available to bidders as a basis for their bids and that it is expected to be used by the successful bidder in doing the work. Without knowing the identity of any of the contractors bidding on the work, B Company negligently prepares and delivers to the City an inaccurate report, containing false and misleading information. On the basis of the report C makes a successful bid, and also on the basis of the report D, a subcontractor, contracts with C to do a part of the work. By reason of the inaccuracy of the report, C and D suffer pecuniary loss in performing their contracts. B Company is subject to liability to C and to D. [Illustration is based on M. Miller Co. v. Central Contra Costa Sanitary District, 198 Cal.App.2d 308, 18 CalRptr 13 (1961)] • Work not called for by the contract • Redoing work it had done strictly in accordance with the contract. The contractor included a claim against the architect for: • Willful and malicious interference with performance of the contract • Inducement of owner to breach the contract • Damage to the contractor’s reputation because of the architect’s claim that the contractor failed to substantially perform • Damage to credit standing with subcontractors, material suppliers and bonding companies • Punitive damages. The Court of Appeals found the architects not liable to the contractor for acts as agents of the owner, because the contractor had agreed to arbitrate claims against the owner. The court also found the architects not liable to the contractor for acts as quasi-arbitrators: “If their decisions can thereafter be questioned in suits brought against them by either party, there is a real possibility that their decisions will be governed more by the fear of such suits than by their own unfettered judgment as to the merits of the matter they must decide.” 8 The architect’s immunity as arbitrator does not extend to fraudulent actions or to actions taken with willful and malicious intent to injure one of the parties. If the contractor could prove that the architect damaged him by actions outside the scope of the architect’s authority as agent or quasi-arbitrator, the contractor can recover damages that naturally flow from that action. The contractor need only show that the architect’s action was willful and intentional. The contractor does not have to show a specific intent to injure him. Loss of credit standing and damage to his reputation as a builder may be within the damages recoverable, if it can fairly be said that, under the circumstances, such damages were reasonably foreseeable. 9 Contractors also might claim that an engineer interfered with the contractor’s contract by any of the following means: • Refusing to approve “qualified” subcontractors. The case of Vojak v. Jensen 10 involved an architect who wrote a letter to owners and general contractors saying that a particular roofing subcontractor’s work was 40 Consulting-Specifying Engineer • SEPTEMBER, 2007

Table of Contents Feed for the Digital Edition of Consulting-Specifying Engineer - September 2007

Contents M/E Roundtable Cover Story: Airborne Superbugs Third-Party Liability Back to School Product Spotlight Codes & Standards Professional Practices How To New Products Jobs/Cliassifieds Specifier’s Notebook Pure Power Supplement New Technologies, Same Old Transmission Problems Wireless Battery Recharging Solar Concentration Renewables Tracking System A Mighty Wind The Importance of Load Bank Testing Quality Power for Security Systems

Consulting-Specifying Engineer - September 2007

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