Should Commercial General Contractors Share Responsibility for Damages Resulting from Design and Engineering Defects in Texas?
Construction defects at a minimum can cause extensive damage to the structures all Texans rely on, including those most vulnerable in our society. These defects routinely cause hundreds of thousands of dollars of damage to commercial buildings such as schools, churches, office buildings, and shopping centers. The “down time” can result in significant financial losses from lost rents and additional expenses to find facilities during the period of repair. Sometimes, these defects can lead to severe injury or even death of those that the buildings were intended to serve. Due to his experience in this area and his position as President of the Texas Trial Lawyers Association, Lin McCraw was asked to provide testimony at a recent hearing of the Business and Industry Committee in the Texas House of Representatives pertaining to the responsibility General Contractors in Texas have when defects in the plans, specifications, or other documents for the construction or repair of an improvement to real property cause injuries and other damages.
For Over 100 Years, the Law has Been That Builders, (General Contractors) are Responsible for Construction Defects
In the 1907 case Lonergan v. San Antonio Loan & Trust, the Texas Supreme Court held that it was the responsibility of Lonergan, the builder, to reconstruct a collapsed building even though the collapse was due to a fatal defect in the design plans and specifications prepared by the architect of the owner and provided to Lonergan by the owner, San Antonio Loan & Trust. In the 2012 case of El Paso Field Services v. Mastec, the Texas Supreme Court reaffirmed its decision in Lonergan. The reasoning is sound and straightforward, the owner contracts with a general contractor to make sure not only that the building project is completed, but that the building does not have the kind of construction issues that endanger the lives and bank accounts of hard working Texans. The general contractor, if he is truly a professional, is in a better place to evaluate construction for defects in engineering than is the owner who is hiring the general contractor. If the general contractor does not feel that a design is safe or will perform, the general contractor is responsible as a professional to step in, to call out the issue and not to construct the project if the design or engineering is dangerous or inadequate.
In Texas General Contractors Have no Licensing Requirements, They May Not Know Design
The real heart of the problem is that in Texas, there is no licensing requirement whatsoever to be the general contractor of a commercial building project. While many of the trades and require professional licenses, any person in Texas can call themselves a general contractor and start building. When unqualified builders fail to appreciate a design or engineering defect, and just complete to project to “plan,” they feel that the general contractor should not be responsible for the architectural or engineering defect, but to a standard that is within their industrial experience or construction experience. The argument makes since on a surface level, but with scrutiny, the argument falls apart. It is essentially the same argument that we sometimes see from those in industries such as the trucking industry when they do not want to be held accountable for failing to follow trucking regulations that have led to injury or death; “since I am not experienced, or since I am a small player, I should get a mulligan.” Such arguments incentivize carelessness and put those who do it right at a competitive disadvantage. If you are going to be a general contractor on these commercial jobs, you had better have the expertise to evaluate architectural design and building engineering. If you do not have the expertise, either develop it as a subcontractor or find another line of business. Don’t “wing it” when the lives and financial health of Texans are at stake. The careful and professional general contractors should have a financial advantage over those who know nothing about construction design or engineering.
Texas General Contractors Push the Legislature to Change the Law
During the last legislative session, there was a push from general contractors and builders in Texas to have laws put in place that limit their responsibility for certain types of construction defects, especially those found months or years after a project has been completed. The bill, SB 1215, would have essentially turned professional builders into high paid schedulers of the various trades, removing responsibility for evaluating the design and engineering of commercial building projects. A different but similar bill would have severely limited the amount of time a building owner had to file suit for a defect the building owner knew nothing about.
SB 1215 is Dead for Now
Faced with increasing opposition from property owners and others, SB 1215 was amended to substitute an interim study on risk allocation in construction contracts in place of the original language of the bill. The bill was vetoed by Greg Governor Abbott on June 15, 2017.
While this bill wasn’t successful during this last regular legislative session, the fact that hearings are being held, even after Governor Abbott vetoed an interim study, means that those with a stake in the outcome of potential new laws governing general contractors liability need to pay attention and let their voices be heard.
Lin McCraw: “Helping the Victims of Construction Accidents in Texas comes First”
The McCraw Law Group is concerned with helping those who have been injured in accidents caused by design, engineering and construction defects get the compensation they deserve. A related concern is to help those whose buildings have the construction defect recover so they can rebuild what is often a major asset. School’s churches and other commercial building owners often have large notes secured by these buildings, and when these buildings are substandard, it can affect the ability of the building owner to finance these buildings.
“Our primary interest in this area is when we have catastrophic failures and injuries,” Lin McCraw told the Committee. “We run into that in a number of situations, and when we do that, we want to make sure that liability is allocated fairly. We want to make sure that the parties that are responsible do not get immunity, and that they are responsible for the damages they cause, because when they are not responsible for the damages they cause, we all pay the price.”
One way for contractors to protect themselves is to include language in the contract that frees them from liabilities due to design defects and mistakes made by subcontractors. The contractors have the ability to contract away their responsibility now. Part of the value of this ability is that when negotiating a contract to build a commercial building, that the owner is made explicitly aware that the builder is or is not going to be responsible for architectural or engineering defects. That way, the owner is going into the deal with knowledge to hire the right contractor. The language of the legislative proposals would prevent sophisticated owners from even including a contractual provision making the general contractor responsible for these defects.
If you or a loved one has been seriously injured by the failure of a commercial building, or if you are a building owner who has suffered a building failure due to a hidden defect, The McCraw Law Group can help.