Construction related services can range from the broad, like project planning or management, to the narrow, like materials testing. What are some of the issues that a materials testing service encounter? Are there liability risks even when the service follows explicitly defined instructions and there are no errors or omissions? Here we examine a materials testing scenario that illustrates how issues and liability exposure might arise and proceed to resolution.
The exact details of this scenario may not be accurate. But events close to those described did occur.
A state Department of Transportation was engaged in a highway improvement project. The pavement on a section of highway was being replaced by a contractor. There were tight materials specifications applicable to the project. Specifically, the aggregate used for the pavement needed to meet specifications. A materials testing company was retained to perform tests on the aggregate used for the repaving project.
There was more than one standard applicable to the aggregate and more than one generally accepted testing method to determine compliance with specifications. In this case the Department of Transportation instructed the testing company as to which test method to use. The tests were performed and only the aggregate passing the test was allowed for the paving project.
A sizeable section of a high traffic roadway was paved. After the project was completed, the pavement experienced premature failure. Forensic analysis determined that the aggregate used did not meet the specification when tested by a method different from the one that the Department of Transportation instructed the materials testing company to use.
Premature repaving of the roadway cost some $40 million. The state Department of Transportation, required the contractor to repave the section of roadway. This resulted in the contractor filing for bankruptcy. As one would expect, events led to litigation in which the parties made claims and crossclaims each seeking to recover their losses.
The matter raised a variety of issues. Some of those issues addressed technical details of the adequacy and appropriateness of the testing methods used. There were also insurance coverage issues including questions as to when the materials testing company first received the claim thereby determining which of several policies with different limits would apply. The matter was in litigation for some time before the allegations directed to the testing company were articulated. This led to questions and disputes over when a claim was first made and whether the litigation should have been disclosed in an application for renewal.
Aside from the professional liability insurance coverage issues, the obligations of the materials testing company to communicate concerns about the appropriateness of the aggregate testing methods used were disputed. The Department of Transportation alleged and argued that the materials testing company knew or should have known the limitations of the testing method they were instructed to use and should have raised those issues before proceeding with the testing. The materials testing company’s defense was that they did exactly what the Department of Transportation engineers instructed them to do.
The Department of Transportation and the bankrupt contractor were relentless in their pursuit of finding someone to hold accountable for their losses. The Department of Transportation was protected, to some degree, by a statutory limitation of liability. In other words, one of the obstacles to resolving the issues was finding a “deep pocket.” And even though the materials testing company did not have a very large limit on their policy, it was worth pursuing a contribution from them.
The parties to the lawsuit became entrenched in their positions and the matter eventually went to trial. Jurors chosen included housewives, farmers, truck drivers, and others similarly unfamiliar with the nuances of construction contracts and technical issues. The jury was also composed of taxpayers who would presumably be affected, even if only remotely, by the outcome of the trial. The trial, which lasted over two weeks, inconvenienced and bored the jurors. This was evident from their distant stares. Sometimes they were observed staring at the bankrupt contractor’s children who were present through much of the trial.
As evidence of the specifics of communications that took place between the testing company and the Department of Transportation was presented, the details of those disputed facts tended to obfuscate broader issues focusing on contractual obligations and standards of practice. Expert testimony was presented on how far a professional service provider needs to go in attempts to persuade a purchaser of their service that the client’s requirements are inappropriate. In this case, the client’s decision makers were trained and knowledgeable engineers who were, arguably, able to make their own assessments of the materials testing methods to be used.
The trial resulted in awards against the suppliers of the aggregate as well as consulting engineers and sub-contractors including the materials testing company which contributed its remaining professional liability policy limit. The narrowly defined service of testing construction materials does have its liability risks even when the tests are performed as requested and with undisputed accuracy.
Whenever a claim – or for that matter any situation - turns out badly, it makes sense to salvage something worthwhile out of it. In this case, perhaps there were some costly lessons learned.
- Even a very narrowly defined service performed using methods defined by the client and with unquestioned accuracy can lead to substantial liability exposure.
- Making the extra effort to settle to avoid having a decisions like this made by a jury is advisable.
- Factors other than science and law often play a substantial role in determining the outcome of litigation over professional liability issues.
Can you think of any other useful lessons that can be learned from an experience like the one described?
This article expresses ideas for consideration and should not be taken as recommendations applicable to any specific situation. When making a decision on how to address a specific situation consulting with an experienced attorney is recommended.
© 2016 John Wersyn, All Rights Reserved