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Bilt-Rite but Otherwise Wrong? – How Far does Design Liability Extend in Pennsylvania?

8/4/17

By: Scott C. Hofer
It has long been held that construction design professionals and others who engage in the business of supplying information to others for pecuniary gain may be held liable if incorrect information is provided. See Bilt-Rite Contractors, Inc. v. The Architectural Studio, 866 A.23d 270, 285 (Pa. 2005). Since that time it has been argued by some, including some design professionals, that Bilt-Rite applies to anyone that supplies information regarding what goes into a construction project. The case Elliott-Lewis Corp. v Skanska Building, Inc., 2015 WL 4545362 (EDPA July 28, 2015) is an example of this phenomenon.

In the Elliott-Lewis case the mechanical contractor (“Elliott-Lewis”) sued the general contractor (“Skanska”) for its failure to pay in full for the labor and materials, including change order work, Elliott-Lewis provided. Skanska thereafter made third-party claims against the design team (hereinafter referred to as “Designers”), who then filed fourth-party claims against several other parties, including the pump manufacturer (“Patterson”) and its manufacturer’s representative (“Clapp”).

Thereafter Clapp[1] and Patterson filed motions to dismiss the action, pointing out that Designers’ tort claims were barred by the economic loss doctrine. Clapp and Patterson explained to the Court that while Clapp and Patterson provided some information about Patterson’s product to Elliott-Lewis they were in the business of providing a product, not providing information to be used by others. The designers responded by claiming that because Clapp and Patterson provided information about Patterson’s pumps they were suppliers of information for pecuniary gain under Bilt-Rite.

The Court soundly rejected the Designers’ argument. The Court found that Patterson manufactured and was in the business of providing a product and that Clapp was in the business of facilitating the sale of that product. It noted that manufacturing and selling a product is very different from the services provided by accountants, lawyers and architects that were noted in Bilt-Rite. The Court noted that any other outcome would effectively eviscerate the economic loss doctrine, as almost all sales involve at least some conveyance of information from the seller to the purchaser.

The Elliott-Lewis case does an excellent job of illustrating how narrow the Bilt-Rite exception to the economic loss rule is. This is incredibly valuable for construction professionals that help develop construction projects but do not engage in what is traditionally considered “design” work.

For additional information related to Pennsylvania law on issues related to design and construction liability in the Commonwealths of Pennsylvania and Virginia, the States of New Jersey and Maryland and the District of Columbia you can contact Scott C. Hofer of the law firm of Freeman, Mathis & Gary, LLP at (267) 758-6023 or shofer@fmglaw.com.

[1] Via this writer.