Viability of supplier’s claim against design engineer, by Hugh Anderson

Issue: Viability of supplier’s claim against design engineer. State Ready Mix, Inc., v. Moffatt & Nichol. Court of Appeals of California (2015).

Summary: Bellingham Marine, as “project manager,” (in reality a design-­‐builder) hired Moffatt & Nichol, an engineering firm, to design a travel lift pier at the Channel Islands Harbor. Bellingham contracted with Major Engineering Marine to construct the pier. Major subcontracted with State Ready Mix to supply the concrete.

Moffatt’s design included concrete specifications for air entrainment and for compressive strength after 28 days. As the work progressed, State Ready Mix wrote a concrete mix design (in essence the “recipe” for preparing the concrete). The case definitively states that Moffatt had no duty to review or approve the mix design, suggesting that it was not a contractually required submittal. At any rate, at some point Major, the contractor, asked Moffatt to review and approve the mix design. Moffatt did so “gratuitously.”

The concrete mix design called for the addition of an air entrainment chemical, Micro Air—in quantities 32 times greater than recommended by the manufacturer. Moffatt’s review did not identify this flaw. Later, a substantial portion of concrete was found to be substandard in compressive strength and needed to be removed and replaced. An investigation by the contractor revealed that on the day of the pour of the substandard concrete, State Ready Mix had experienced a mechanical failure and added the air entrainment chemical manually (in a manner that was “the antithesis of precision”), in amounts that differed from its own flawed mix design. The end result was concrete that contained Micro Air at 6.5 times the necessary rate, seriously reducing the compressive strength.

The contractor, Major, sued State Ready Mix, which in turn pulled Moffatt into the lawsuit, under various liability theories all linked to the voluntary review of the concrete mix design. The trial court rejected the claim against Moffatt; State Ready Mix then appealed to the California Court of Appeals.

Decision: The core of the appellate decision was a routine determination that because there was no contractual privity between the concrete supplier and the design engineer, and because there was no element of property damage or injury, the economic loss rule barred the claim. The court also concluded that Moffatt’s review of the concrete design mix was intended solely for the benefit of the design-­‐ builder, Bellingham, not for the contractor or concrete supplier.

State Ready Mix advanced a spin on its claim contending that there were special factors at play that justified survival of the claim, as a matter of public policy under California tort law. The court held that State Ready Mix was unable to satisfy any of the six required factors, concluding that “Moffatt was not State’s insurer or guardian angel.” In approving the mix design, Moffatt did not warrant that the concrete would work “if overdosed with the Micro Air additive.”

The court concluded with one final blast for the concrete supplier, stating that if the supplier “wants to see who is at fault, it should look in the mirror.” The failure to follow its own mix design compelled the conclusion that the supplier “alone is responsible for the bad concrete.”

Comment: This decision illustrates the dangers that accompany straying from the contractual scope of services. An engineer that receives an unrequired submittal should politely return it without review.

There was no discussion in the case of the contractual procedures that governed legitimate submittals. EJCDC’s submittal procedures in C-­‐700, the standard general conditions for construction, define and limit the purpose of the review and approval.