Oklahoma Supreme Court Expands Professional Liability
Riggs, Richard, THE JOURNAL RECORD
In a January decision, the Oklahoma Supreme Court significantly expanded the potential liability of architects involved in supervising public construction projects. In doing so, it may have expanded the potential liability of other professionals.
Boren v. Thompson & Associates arose out of the construction of a library by the Tyrone, Okla., school district. The case was brought by a subcontractor that had not been paid by the general contractor. The general contractor's liability to its subcontractor was apparently undisputed, but the case focused not on the general contractor's liability but on the liability of the school district's architect.
Normally, unpaid subcontractors may file mechanic's and materialmen's liens against property on which they perform work. However, public property is not subject to liens, thereby leaving unpaid subcontractors with no claim against the property. To protect subcontractors working on public projects, Oklahoma law provides alternative security. It requires that the general contractor post a payment bond.
Through the payment bond, the bonding company commits to pay subcontractors whose bills are not paid by the general contractor.
The Tyrone school district had employed an architect to oversee the construction project. The architect's responsibilities included "certifying" payments to the general contractor -- that is, certifying that the contractor was entitled to payment under its construction contract. To qualify for payment, the general contractor had to satisfy the obligations of its contract, which included the posting of the payment bond required by law.
In this case, however, the architect overlooked the fact that the general contractor had failed to post the required bond and proceeded to certify payments under the contract. The unpaid subcontractor sued the architect, claiming the architect's failure to withhold certification facilitated unauthorized payments to the general contractor, thereby depleting funds which should have been reserved to pay subcontractors' claims.
The court took the opportunity to revisit a 1979 Oklahoma Supreme Court case that considered a similar issue. In that case, a subcontractor had sought recovery against the Edmond Public School District for amounts not paid by the general contractor. In this case, the general contractor had failed to post the required statutory bond, but the district had nonetheless made payments to the general contractor. The court held that a subcontractor who furnishes labor or materials without satisfying itself that the bond is in place does so at its own peril. Therefore, the court held that no claim could be made against the school board or the board members.
In the Boren case, the Supreme Court considered the potential liability of a for-profit company (as opposed to the public agency involved in the 1979 decision).
The court held that under the facts of the case subcontractors could assert claims of negligence against the school district's architect and, if such claims are substantiated, presumably recover unpaid amounts from the architect. The court held that an architect under such circumstances "ought to labor under a duty to subcontractors" to avoid action that may result in the subcontractors not being paid. …