In a recent case in California, subcontractors found out the hard way that sometimes an engineer may be friendly without having any real legal obligations for subcontractor work.

A travel lift pier was planned for the Channel Islands Harbor at the end of Santa Barbara Channel in Oxnard, California. Marine project manager, Bellingham Marine, Inc., hired Major Engineering Marine, Inc., to construct the pier and hired Moffatt & Nichol to serve as civil engineer on the project. As part of Major’s contract, Major promised that it would remove and replace the concrete on the pier if it did not meet the appropriate compression strength standard. Subsequently, Major hired State Ready Mix, Inc., to write the concrete mix design and prepare batches of concrete for the project. After being asked to do so by Major, Moffatt agreed to review and make approvals for Ready Mix’s concrete mix design for the benefit of Bellingham, even though such was not part of Moffett’s ordinary duties on the project.

During the project, Ready Mix delivered several batches of pre-mixed concrete to the site. After it was cast on the pier, the concrete did not pass laboratory tests for the necessary compressive strength. Major asked Ready Mix to investigate the issue. Ready Mix’s technical personnel discovered the problem: the concrete application equipment had failed during the pouring and Ready Mix had chosen to manually apply the rest to finish the job The manual application had caused the mixture to deviate from what was specified in the project plan documents. Upon conclusion of the investigation, Major had to tear down and rebuild the affected portion of the pier at its own expense.

Major sued Ready Mix for Major’s damages in removing and replacing the defective concrete. Ready Mix filed a cross-complaint for equitable indemnity and contribution against Moffett, stating that Moffett should have used reasonable care in reviewing Ready Mix’s concrete mix and approving it. Moffett took the position that it had no contract with Ready Mix or with Major for responsibility of the concrete mix and also that Moffett owed no duty of care for the concrete mix. Both the trial court and the appellate court agreed with Moffett that there was no contract and Moffett had made no clear promise. Further, both courts determined that there were no facts showing that the concrete injured a person or caused damage to any other property, so Ready Mix could not recover from Moffett under an economic loss rule theory, either.

Finally, the courts determined that Moffett owed no duty of care to Major because Moffett’s services did not create liability under the six-part test: (1) Moffett’s services were gratuitous and intended to benefit its contract with Bellingham—not Ready Mix or Major, (2) Moffett’s review and approval was not the cause of the bad concrete, (3) Moffett could not have known that the concrete would be nonconforming or would deviate from the approved mix design, (4) Moffett could not have predicted the structural soundness of the concrete, (5) Moffett did not control Ready Mix’s performance or relationship with Major, and (6) Moffett was not the insurer and could not have prevented future harm. Essentially, both courts agreed that Moffett had no duty to “‘sound the alarm’ when [Ready Mix] submitted a concrete mix design that increased the risk of making substandard concrete.”

Clearly, Ready Mix relied on Moffett’s review of the concrete mix design before pouring the concrete. However, as this case demonstrates, it does not necessarily implicate a third-party engineer for liability related to the design. This case illustrates how subcontractors should carefully evaluate whether a third party on a project is lending services under an obligation or as a favor to other parties. If under the latter, a court might fail to find the party at fault if something goes wrong, and the party relying on the services may be left holding the bag.

State Ready Mix, Inc. v. Moffatt & Nichol, 232 Cal. App. 2d 1227 (2015)