The Pennsylvania Superior Court recently determined that “Bilt-Rite Liability” is not limited to architects and construction industry design professionals, but instead could apply to any professional who provides information that may be relied upon by a third party.
Bilt-Rite Liability flows from a 2005 decision by the Pennsylvania Supreme Court, Bilt-Rite Contractors, Inc. v. The Architectural Studio, 866 A.2d 270 (Pa. 2005), where the Court adopted Section 552 of the Restatement (Second) of Torts and allowed a contractor to maintain a negligent misrepresentation claim in tort against an architect, despite the absence of a contract between the contractor and architect. Section 552 generally imposes a duty upon a professional who, for the professional’s own pecuniary gain, supplies information to others and expects or knows that the information will be used by the recipient in the course of their own business activities. Bilt-Rite is often cited in support of claims against architects, engineers, and other design professionals that allege construction drawings or specifications were erroneous, and thus negligently misrepresented.
In Fulton Bank, N.A. v. Sandquist, 2306 EDA 2016, 2017 WL 4284923, at *1 (Pa.Super. Sep. 27, 2017), Fulton Bank relied on Bilt-Rite to assert a negligent misrepresentation claim against an accountant and his firm. Fulton Bank accused the defendants of making a negligent misrepresentation related to financial statements prepared on behalf of a commercial loan applicant. Despite the bank’s contention that its situation was analogous to that of the contractor in Bilt-Rite, the trial court held that Bilt-Rite applied only to design professionals in the construction industry.
In a non-precedential opinion, the Pennsylvania Superior Court reversed the trial court, stating that “We find the court applied a too narrow reading to Bilt-Rite in determining that the case only concerns disputes involving an architect/contractor scenario. Rather, we conclude Bilt-Rite can be applied to other factual scenarios where a party is providing professional information that is designed to be relied upon by a third party.” Id. at *8. (emphasis added). “[T]he Bilt-Rite holding points to the architect or design professional example as an illustrative suggestion, but the [Pennsylvania Supreme Court’s] wording does not impose a limitation on which kind of situation Section 552 can apply . . . .” Id. Ultimately, the Pennsylvania Superior Court remanded the case for further proceedings on the negligent misrepresentation claim.
While not precedential, the Sandquist case demonstrates that Bilt-Rite Liability may extend beyond the common targets of negligent misrepresentation claims—architects and engineers—and attach to professionals both within and beyond the construction industry. Professionals within the construction industry that are providing information for a fee, including scheduling consultants, testing agencies, shop drawing detailers, etc., should take particular notice of this case and its implications. In the wake of Sandquist, it is prudent to consult with an insurance professional about available coverage options and to have an attorney carefully review the terms of any contractual indemnity obligations.