{"id":899379,"date":"2021-12-02T11:23:44","date_gmt":"2021-12-02T18:23:44","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=899379"},"modified":"2021-12-02T11:23:53","modified_gmt":"2021-12-02T18:23:53","slug":"design-defect-geotechnical-reports","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/design-defect-geotechnical-reports\/","title":{"rendered":"Utah Digs Deep and Finds \u201cDesign Defect\u201d Includes Pre-Construction Geotechnical Reports"},"content":{"rendered":"\n

Kyle Rice | White and Williams<\/a><\/p>\n\n\n\n

The Supreme Court of Utah recently found that an incorrect pre-construction geotechnical engineering report is a \u201cdefective design<\/a>.\u201d Thus, actions arising from an incorrect geotechnical report are appropriately governed by Utah\u2019s Economic Loss Statute (Statute), Utah Code Ann. \u00a7 78B-4-513(1).<\/p>\n\n\n\n

Hayes v. Intermountain GeoEnvironmental Servs. <\/em>No. 20190764, 2021 UT 62, 2021 Utah Lexis 144, arose out of a suit filed by homeowners Kim and Nancy Hayes (the Hayeses). The Hayeses\u2019 home was part of the Quail Hollow subdivision in Layton, Utah, which was developed by K.C. Halls Construction, Inc. (K.C. Halls). Prior to construction, K.C. Halls contracted with Intermountain GeoEnvironmental Services, Inc. (IGES) for a geotechnical report of the planned development to comply with the requirements of Layton City. The report found that \u201cthe subject site is suitable for the proposed construction\u201d and made recommendations to ensure foundational integrity for future construction. The Hayeses ultimately purchased a lot from an agent for K.C. Halls and hired Bob Stevenson (Stevenson) to construct the home. About 14 months after the completion of construction, the Hayeses noticed cracking in their foundation walls.<\/p>\n\n\n\n

After discovering the cracking in the foundation, the Hayeses filed suit against K.C. Halls, Stevenson and IGES for damages. The counts against IGES included negligence, negligent misrepresentation and negligent infliction of emotional distress, focusing on the allegation in each count that IGES\u2019s report incorrectly stated the property was \u201csafe and suitable\u201d for residential construction.<\/p>\n\n\n\n

IGES moved to dismiss the complaint, alleging that the Hayeses\u2019 negligence claims were barred by both the common law economic loss rule and Utah\u2019s Economic Loss Statute because the Hayeses were seeking compensation for purely economic losses and the case was an action related to \u201cdefective design.\u201d The district court granted the motion and its ruling was subsequently affirmed by the court of appeals. The Hayeses petitioned for certiorari, which was granted to address whether the court of appeals erred in its interpretation and application of the Statute by holding the Hayeses\u2019 tort claims \u201camounted to an \u2018action for defective design and construction as that term is used in the [S]tatute.\u2019\u201d<\/p>\n\n\n\n

The court began with an analysis of the economic loss rule. The economic loss rule places limits on tort claims for purely economic losses by creating a \u201cfundamental boundary between contract law, which protects expectancy interests created through agreement between the parties, and tort law, which protects individuals and their property from physical harm by imposing a duty of reasonable care.\u201d The common law economic loss rule was first adopted in Utah in American Towers Owners Ass\u2019n, Inc. v. CCI Mechanical, Inc.<\/em>, 930 P. 2d 1182 (Utah 1996).<\/p>\n\n\n\n

The court noted the exception to the common law economic loss rule regarding an independent duty of care. If a duty of care exists independent of any contractual obligations, the economic loss rule is excepted, and a tort claim may be brought. The court further noted that after the court\u2019s adoption of the common law rule in 1996, in 2008 the Utah legislature codified the economic loss rule with respect to actions \u201cfor defective design or construction.\u201d The Statute does not contain the same exception as the common law rule regarding an independent duty of care.<\/p>\n\n\n\n

Given the statute, the threshold question was whether to apply the statutory or common law economic loss rule to the Hayeses\u2019 claim\u2014that is, whether IGES\u2019s geotechnical report was a \u201cdefective design.\u201d If the report qualified as \u201cdefective design or construction,\u201d the Statute applied. If the report was not \u201cdefective design or construction,\u201d the Statute did not apply. If the Statute did not apply, the Hayeses argued the claim was subject to the common law exception to the economic loss rule involving the violation of an independent duty of care.<\/p>\n\n\n\n

To determine whether this action was subject to the Statute, the court analyzed what constitutes a \u201cdefective design.\u201d The court noted while the Statute governs defective design and construction claims, it never actually defines the word \u201cdesign.\u201d The Hayeses argued the appropriate definition would be based on those found in the dictionary, such as \u201cto make or draw plans for something\u201d or \u201ca drawing or set of drawings.\u201d<\/p>\n\n\n\n

The court found that while the ordinary meaning of a word is \u201cpowerful evidence,\u201d it must consider the meaning intended in the context of the statute. If words are used in a \u201ctechnical sense,\u201d they must be construed within that technical context. As such, the court stated that the term \u201cdesign\u201d must be interpreted within the realm of construction or engineering.<\/p>\n\n\n\n

Analyzing the legislature\u2019s use of the term \u201cdesign professional\u201d in other statutes and after considering the definition for an \u201cengineering design\u201d utilized by The Accreditation Board of Engineering & Technology, the court defined the term broadly and agreed with the finding of the Court of Appeals that \u201c[a] geotechnical engineer is often an essential participant on the design team.\u201d The court further noted the geotechnical report was \u201can integral part of the structural design of the building\u2019s foundation.\u201d Although the court acknowledged that IGES failed to identify the structural instability in the soil in their geotechnical report, which resulted in the structural instability of the home, given that the building would not have been constructed in the manner it was but for IGES\u2019s report, the court found the IGES report was foundational to the design of the building. As a result, IGES\u2019s work was structural, which was a defective design, and the action was appropriately governed by Utah\u2019s Economic Loss Statute.<\/p>\n\n\n\n

Because the loss was encompassed within the Statute, the common law exception for an independent duty of care did not apply. The court noted that the only possible exception to the Statute involves a claimant in privity of contract \u201cbased on an intentional or willful breach of a duty existing in law.\u201d However, since the Hayeses were not in privity with IGES, the exception did not apply.<\/p>\n\n\n\n

The Hayes <\/em>case demonstrates that subrogation professionals must always be mindful of economic loss issues when evaluating claims and determining recoverable damages. It is particularly important to analyze any relevant statutes in the state of loss to ascertain whether an economic loss issue may arise, even where it is not facially apparent that it will affect the claim.<\/p>\n","protected":false},"excerpt":{"rendered":"

Kyle Rice | White and Williams The Supreme Court of Utah recently found that an incorrect pre-construction geotechnical engineering report is a \u201cdefective design.\u201d Thus, actions arising from an incorrect geotechnical report are appropriately governed by Utah\u2019s Economic Loss Statute (Statute), Utah Code Ann. \u00a7 78B-4-513(1). Hayes v. Intermountain GeoEnvironmental Servs. No. 20190764, 2021 UT 62,… Continue reading Utah Digs Deep and Finds \u201cDesign Defect\u201d Includes Pre-Construction Geotechnical Reports<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[4,9009],"tags":[9895,546,319,11591,106],"class_list":["post-899379","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-design-professionals","tag-advise-consult","tag-defective-design","tag-economic-loss-rule","tag-geotechnical-reports","tag-utah","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nUtah Digs Deep and Finds \u201cDesign Defect\u201d Includes Pre-Construction Geotechnical Reports - 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