Structural Engineer Wins Twin Malpractice Victories In Indianapolis Public Library Cases Part 1
In an article last week, Jon Murray of the Indianapolis Star reported that the Indianapolis-Marion County Public Library (the "owner") will not appeal a jury verdict of no liability on the owner's $50 Million fraud claim against against New York based Thornton Tomasetti
Engineering, Inc. (the "structural engineer"). The case stems from cracks and gaps in the concrete members of the Indianapolis Central
Library's new underground garage that also serves as the building's foundation.
Though the owner will not appeal from the lost trial of their fraud claims, they are already appealing Judge Matthew Kincaid's pre-trial dismissal of their negligence and breach of contract claims.
The Backstory
In 1998, the owner hired architects Woolen Molzan and Partners, Inc. (the "architect") to design renovation of, and additions to, the main Indianapolis public library. The architect contracted with the structural engineer to work as the structural engineering sub-designer on the project. The architect also hired Charlier Clark & Linard, PC (the "observer") to observe report on the construction work once it started.
Construction started in 2002 with Shook, LLC as the "prime contractor". As construction progressed, significant problems developed with the rebar and concrete in the garage. In fact, after the completion of each concrete pour, numerous defects were discovered, including exposed steel reinforcement and voids in the beams and columns.
In February 2004, approximately a month after the prime contractor completed the two final major concrete pours, owner personnel discovered major voids in concrete beams and columns in the garage. Concerned about the structural integrity of the garage, the owner hired Construction Technologies Laboratories, Inc. (the "forensic engineer") to investigate the garage. The forensic engineer reported several design and construction defects in the garage. Representatives of the forensic representatives even believed that the garage was "at serious risk for structural failure if construction were allowed to continue." The owner suspended work on the project on May 6, 2004.
Fixing the problems required large scale retrofitting and repair that also required the owner to remove and replace work that other contractors and subcontractors had already installed (e.g., plumbing, electrical, mechanical). Repair and retrofitting delayed the work resulting in
damages and expenses to the owner of between $40 Million and $50 Million.
Starting in August 2004, the owner sued the structural engineer and the observer alleging multiple claims including fraud and negligent performance of engineering services. The owner reached settlements of about $25M, including settlement with the architect. As part of settlement with the architect, the architect assigned to the owner the architect's claims against the structural engineer. So, in addition to the negligence and related tort claims the owner originally filed against the structural engineer, the owner inherited the architects breach of contract negligence claims against the structural engineer.
Before trial in March 2008, the trial court dismissed (1) the owner 's own original negligence claims against the structural engineer and (2) the breach of contract claims and negligence claims the owner inherited from settlement with the architect.
The Trial And The Verdict
Even though the owner appealed that dismissal, trial on the owner's fraud claims against the structural engineer started in March 2009. The trial ended five weeks later with a verdict for the structural engineer against the owner. And not only did the jury refuse to find the structural engineer guilty of fraud, they also awarded the structural engineer $712,000 in unpaid engineering fees.
So the owner is still left with more than $25 Million in cost overruns on the project, a $712,000 invoice from the structural engineer, and appeals from (1) dismissal of their own original negligence claims against the structural engineer and (2) dismissal of the breach of contract and negligence claims the architect assigned to the owner as part of their settlement.
Focusing on economic loss rule, the Indiana Court of Appeals already affirmed dismissal of the owner's own negligence claims against the structural engineer. The owner is now asking the Indiana Supreme Court to hear that case. And that's where we'll turn in the next post.
Though the owner will not appeal from the lost trial of their fraud claims, they are already appealing Judge Matthew Kincaid's pre-trial dismissal of their negligence and breach of contract claims.
The Backstory
In 1998, the owner hired architects Woolen Molzan and Partners, Inc. (the "architect") to design renovation of, and additions to, the main Indianapolis public library. The architect contracted with the structural engineer to work as the structural engineering sub-designer on the project. The architect also hired Charlier Clark & Linard, PC (the "observer") to observe report on the construction work once it started.
Construction started in 2002 with Shook, LLC as the "prime contractor". As construction progressed, significant problems developed with the rebar and concrete in the garage. In fact, after the completion of each concrete pour, numerous defects were discovered, including exposed steel reinforcement and voids in the beams and columns.
In February 2004, approximately a month after the prime contractor completed the two final major concrete pours, owner personnel discovered major voids in concrete beams and columns in the garage. Concerned about the structural integrity of the garage, the owner hired Construction Technologies Laboratories, Inc. (the "forensic engineer") to investigate the garage. The forensic engineer reported several design and construction defects in the garage. Representatives of the forensic representatives even believed that the garage was "at serious risk for structural failure if construction were allowed to continue." The owner suspended work on the project on May 6, 2004.
Fixing the problems required large scale retrofitting and repair that also required the owner to remove and replace work that other contractors and subcontractors had already installed (e.g., plumbing, electrical, mechanical). Repair and retrofitting delayed the work resulting in
damages and expenses to the owner of between $40 Million and $50 Million.
Starting in August 2004, the owner sued the structural engineer and the observer alleging multiple claims including fraud and negligent performance of engineering services. The owner reached settlements of about $25M, including settlement with the architect. As part of settlement with the architect, the architect assigned to the owner the architect's claims against the structural engineer. So, in addition to the negligence and related tort claims the owner originally filed against the structural engineer, the owner inherited the architects breach of contract negligence claims against the structural engineer.
Before trial in March 2008, the trial court dismissed (1) the owner 's own original negligence claims against the structural engineer and (2) the breach of contract claims and negligence claims the owner inherited from settlement with the architect.
The Trial And The Verdict
Even though the owner appealed that dismissal, trial on the owner's fraud claims against the structural engineer started in March 2009. The trial ended five weeks later with a verdict for the structural engineer against the owner. And not only did the jury refuse to find the structural engineer guilty of fraud, they also awarded the structural engineer $712,000 in unpaid engineering fees.
So the owner is still left with more than $25 Million in cost overruns on the project, a $712,000 invoice from the structural engineer, and appeals from (1) dismissal of their own original negligence claims against the structural engineer and (2) dismissal of the breach of contract and negligence claims the architect assigned to the owner as part of their settlement.
Focusing on economic loss rule, the Indiana Court of Appeals already affirmed dismissal of the owner's own negligence claims against the structural engineer. The owner is now asking the Indiana Supreme Court to hear that case. And that's where we'll turn in the next post.
Construction Law Today is a legal blog about construction contracts, disputes, finance, and the people whose job it is to deal with them.
