Executive Summary:

Lynch v. Peter & Associates clarifies the duty of care owed by professionals to homeowners during residential projects, even absent a direct contract with the property owners. This decision highlights the importance of adhering to professional standards to mitigate liability.

Case Summary:
Lynch arose when a homeowner’s property suffered damages after Peter & Associates performed a geotechnical inspection. The Plaintiff, Cheryl Lynch, hired a general contractor for a multi-phase remodeling project on her home. The first phase of the project involved site improvements, and the second included a home remodel and additions to the existing structure.

As part of Phase I, the general contractor engaged Peter & Associates, Engineers, Geologists, Surveyors, Inc. to perform a geotechnical inspection of a footing trench for $360. The contract contained disclaimers limiting the firm’s scope of work and liability in the event of slope failure or other damages stemming from Peter & Associate’s work.

Peter & Associates sent a geotechnical engineer conduct the inspection of the Lynches property, which consisted of a “visual observation” and the use of a three-foot long steel probe to feel the soil within the trench. In his report, addressed to the contractor and the Lynches, the engineer stated that the excavation area was “geotechnically acceptable and suitable for the intended use.”

Based on this inspection, the contractor poured the footing for the addition. In fact, unbeknownst to the parties, published geologic maps of the area showed the Lynches property was situated in a location prone to landslides. Subsequently, the house subsided and suffered substantial damage. The Lynches filed a lawsuit.

Impact on Professionals in Construction and Engineering:
The Lynch decision underscores that geotechnical engineers and consultants on residential projects must exercise reasonable care, even when their contracts limit liability or limit the scope of work. If a consultant’s work is for the benefit of a homeowner, even absent a direct contract with the homeowner, they may still be held liable for negligence or nuisance under California law.

Key Legal Findings:

  1. Negligence – Duty of Care Without Privity

The court emphasized that even without direct contractual privity, professionals can owe a duty of care if their work directly impacts intended beneficiaries, such as homeowners. In fact, the court noted that courts are more likely to find a professional duty of care in residential as opposed to commercial construction projects.

To determine whether liability should attach, courts will consider the factors laid out by the California Supreme Court in Biakanja v. Irving: 1) the foreseeability of harm; 2) moral blameworthiness; 3) how certain the plaintiff’s injury is; 4) whether professional liability will deter future harm; 5) the extent to which the contract was meant to benefit the plaintiff; 6) and the connection between the professional’s conduct and the injury.

Applied to the facts of Lynch, the court found that all six Biakanja factors favored holding the Peter firm did owe a duty of care to the Lynches. The court heavily weighed that existing literature showed the house was situated on a possible landslide area, “which was information easily accessible to the Peter firm if they had tried to obtain it.” Owing to the “nature of the property, the Peter firm had to have known a proper soils inspection was crucial to successfully building the foundation.” Even though it was not one-hundred percent clear who was responsible for the subsistence of the home, the court found that a it would be reasonable to conclude that Peter & Associates was at fault for not raising any issues regarding the soil.

  • Nuisance

The court’s handling of the Lynches nuisance claim should also be of particular note to designers and inspectors. Traditionally, liability for nuisance attaches where a party causes a substantial and unreasonable interference with another’s use and enjoyment of property. 

In Lynch, the court clearly stated that there is no nuisance liability where a professional works with defective products, such as faulty drywall, when performing residential work. However, the court found: “The Peter firm rendered a geotechnical opinion knowing that Grover Construction would be relying on it in pouring a footing for the Lynches’ remodel. The footing failed and the house continues to subside. Without question, this is a substantial and unreasonable interference with appellant’s use of the property and it was one created, at least indirectly, by the Peter firm’s own conduct, rather than a defective product.”

The message is clear: although a firm cannot be held liable for factors out of its control, such as defective building materials, it cannot avoid liability for things within its control, such as the quality of its workmanship.

Conclusion:

This ruling serves as a reminder that firms offering inspections or consulting services cannot rely solely on disclaimers to avoid responsibility. Courts will look at the nature of the project and the impact on homeowners to determine whether a duty of care exists. A firm that conducts an inspection merely to “tick a box” does so at its own risk.       

-Written by Scot Gauffeny and Keith Turner