Case Name: E.C. GOLDMAN, INC., Appellant, v. A/R/C ASSOCIATES, INC., etc., et al., Appellees
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 1989-05-04
Citations: 543 So. 2d 1268
Docket Number: No. 87-1258
Parties: E.C. GOLDMAN, INC., Appellant, v. A/R/C ASSOCIATES, INC., etc., et al., Appellees.
Judges: SHARP, C.J., concurs.
Reporter: Southern Reporter, Second Series
Volume: 543
Pages: 1268–1278

Head Matter:
E.C. GOLDMAN, INC., Appellant, v. A/R/C ASSOCIATES, INC., etc., et al., Appellees.
No. 87-1258.
District Court of Appeal of Florida, Fifth District.
May 4, 1989.
Rehearing Denied June 9, 1989.
Harry W. Lawrence of Austin, Lawrence & Landis, Orlando, and Stephen M. Phillips and Dudley C. Rochelle, Atlanta, Ga., for appellant.
John C. Briggs of Fisher, Rushmer, Wer-renrath, Keiner, Wack & Dickson, P.A., Orlando, for appellees.

Opinion:
ORFINGER, Judge.
E.C. Goldman, Inc. (Goldman) appeals from a final judgment on the pleadings in favor of the defendants, A/R/C Associates, Inc. (A/R/C) and Donald Domer (Domer). The sole issue presented on appeal is whether an expert who has had no connection whatsoever with a construction project and is hired by the owner of the project solely to evaluate the work of a roofing subcontractor, may be held liable to the subcontractor (with whom the expert has no privity) for the negligent performance of its evaluation. We agree that there is no liability under the circumstances here, and affirm.
In entering judgment on the pleadings, the trial judge correctly accepted as true all well pleaded allegations of Goldman's complaint. See McAbee v. Edwards, 340 So.2d 1167 (Fla. 4th DCA 1976); Geer v. Bennett, 237 So.2d 311 (Fla. 4th DCA 1970). A brief summary of the facts which crystallize the issue here follows.
Roger Kennedy (Kennedy), a contractor, entered into a contract with the School Board of Flagler County to build a school. Kennedy hired Goldman, a roofing subcontractor, to install a built-up roof. Goldman installed the roof in accordance with the contract specifications. The roof construction was periodically observed by the school board's clerk, the project architect and superintendent and Kennedy's project manager. Deficiencies in the roof were not observed at the time. Several months later the School Board raised complaints about the roof and on behalf of the School Board, the architect retained a nationally-known roof consulting firm, Robert M. Stafford, Inc., to examine the roof. Meanwhile, payment was withheld from the contractor, who in turn withheld payment from Goldman. Based on this consultant's roof inspection, the architect reported to the School Board that the roof was in good condition, and subsequently recommended that the School Board accept the project, including the roof, and that the contractor be paid. Nevertheless, the issue of final payment was left unresolved pending the report and recommendations of a second roof consultant retained by the Board to conduct an additional roof inspection.
A/R/C, a roof consultant, was then engaged for the purpose of inspecting the roof and advising the school board as to whether it should be accepted. After conducting a roof investigation for A/R/C, Donald Domer concluded that the architect and the School Board should not accept the roof. Based on A/R/C's written report and Domer's verbal report, the Board decided not to accept the roof. Accordingly, it withheld payment to Kennedy, of which Goldman was owed $20,261.28. About one month later, Domer performed another roof inspection and A/R/C prepared and sent a second written report in the form of a letter to the architect. Based on this report and a presentation to the Board, the Board again declined to accept the roof and continued to withhold payment.
Kennedy then initiated arbitration proceedings to collect the contract balance. Goldman was required to engage legal counsel and retain roofing experts in order to defend himself against the allegations of improper workmanship and to obtain the balance due under his subcontract with Kennedy. After a full evidentiary hearing, the arbitration panel unanimously determined that Goldman had performed the subcontract in accordance with the original contract specifications, and Goldman was awarded a total of $31,819.77, consisting of a subcontract balance of $20,261.28, test costs of $4,852.64 and interest of $6,705.85.
Goldman then filed this action alleging that A/R/C and Domer owed a duty to those persons, such as himself, who would foreseeably be harmed by their failure to exercise due diligence and reasonable care in performing their contractual obligations to the school board. He also alleged that A/R/C and Domer knew that the school board's acceptance of the roof was contingent upon their investigatory findings and recommendations. He finally alleged that as a direct and proximate result of A/R/C's and Domer's negligence in performing their contractual duties, he had sustained damages in the amount of $40,-893.83. This amount consisted of those costs and expenses, including reasonable attorney's fees, which he incurred in arbitrating the foregoing claim. He also alleged that he had been damaged by failing to obtain additional work. Goldman sought a judgment against A/R/C and Domer for these claimed losses and for damages to compensate him for the loss of business and damage to its reputation.
In its final judgment, the trial court held as a matter of law that:
1. No contractual privity exists between the Plaintiff and the Defendants. Therefore, the Defendants had no duty of care to the Plaintiff.
2. The Defendants owed a duty of reasonable care in the performance of their consulting services to the School Board of Flagler County, in that the Defendants were hired for that specific purpose by the School Board's architect. This precluded the existence of a duty flowing from the Defendants to any other parties, including the Plaintiff.
3. The Plaintiff did not rely to its detriment on the opinion rendered to the School Board of Flagler County by the Defendants, thereby precluding the existence of any duty from the Defendants to the Plaintiff even in the absence of contractual privity.
4. Public policy also dictates against the existence of a duty from the Defendants to the Plaintiff, which would give rise to the pleaded cause of action for negligent rendition of an expert opinion, in that the recognition of any such cause of action would make the practice of this or any similar consulting profession a financial hazard and would inject such self-protective reservations into the expert's consulting or advisory role so as to diminish the quality of the expert's services.
5. The Plaintiff therefore has no cause of action against these Defendants for any negligence which may have occurred in the rendition of their opinion pursuant to their retention for that purpose by the School Board of Flagler County.
Appellant, (as does the dissent) relies principally on A.R. Moyer, Inc. v. Graham, 285 So.2d 397 (Fla.1973) and its progeny as support for its position that liability can exist here notwithstanding the absence of privity between A/R/C and Goldman. Essentially, it is the position of the appellant that the foreseeability of economic damage to Goldman created a duty on the part of A/R/C to use due care in the preparation of its report, failing which Goldman has a cause of action against A/R/C. Both appellant and the dissent misconstrue and thus misapply Moyer and the other cases cited in the dissent to the facts here. To agree with appellant it would be necessary to hold that a professional hired to give an expert opinion to his client owes a duty of due care to a third party, not in privity with the contract, not an intended beneficiary of the contract nor a person who is expected by the professional to rely on his opinion. That is not the law, nor have we been cited to a single case that supports that proposition.
In Moyer, the court approved a cause of action for an injury to a third party's economic interests by the negligent performance of a contract. Moyer did not develop new legal principles, but extended products liability law to economic losses. The cases relied on by the Moyer court to support its holding were products liability cases, in all of which the defendants had a close nexus to the product which caused the injury and loss to the plaintiffs, either through design, manufacture or distribution of the product or the direct supervision of its construction. Moyer is still good law, but a careful reading of the case and the factual context in which it was decided clearly reveals that it does not apply here.
In Moyer the owner entered into a contract with the defendant architects who were to prepare plans and specifications for the construction of an apartment building and who were to supervise the plaintiff general contractor in building the project in accordance with defendants' plans. The plans were alleged to have been negligently prepared and then negligently corrected by the defendant architects. Defendants also were alleged to have negligently caused delays and to have negligently exercised control and supervision over the plaintiff. In Moyer, unlike the case before us, there was an extremely close nexus between the general contractor and the architect; indeed, the supreme court agreed with the statement in United States v. Rogers & Rogers, 161 F.Supp. 132 (S.D.Cal if.1958) that a supervising architect has the "power of economic life or death" over the general contractor and that such a great degree of control should also carry with it a duty of due care to the general contractor. As the Moyer court noted, "such authority exercised in such a relationship [should] carry commensurate legal responsibility." 285 So.2d at 401. In AFM Corp. v. Southern Bell Telephone and Telegraph Company, 515 So.2d 180, 181 (Fla.1987) the court explained the Moyer decision as being based "on the fact that the supervisory responsibilities vested in the architect carried with it a concurrent duty not to injure foreseeable parties not beneficiaries of the contract." In the instant case, not only is there no nexus between plaintiffs and the school board's consultant, there is no proximate cause. Plaintiffs were not harmed by the consultant's opinion, but rather by the school board's refusal to pay based on the opinion. There is nothing in the record to indicate that the school board was bound by the consultant's report, or that the plaintiffs relied on or were intended to be influenced by the consultant's report.
The factual posture of the instant case sets it apart from Moyer and the other cases relied on by appellant and the dissent. In those cases there was a direct nexus between the defendant and the "product" which caused the injury or economic loss. Drexel Properties, Inc. v. Bay Colony Club Condominium, Inc., 406 So.2d 515 (Fla. 4th DCA 1981), rev. denied, 417 So.2d 328 (Fla.1982) was an action by purchasers of condominium units against the developer of the condominium for negligent construction. Parliament Towers Condominium v. Parliament House Realty, Inc., 377 So.2d 976 (Fla. 4th DCA 1979) was also an action by purchasers against the developers, and the architect as well, of the condominium units. Navajo Circle, Inc. v. Development Concepts Corp., 373 So.2d 689 (Fla. 2d DCA 1979) was an action by purchasers of condominium units against the architect for negligent supervision of construction and subsequent repairs to the roof of building, and against the contractor for negligent construction. In Luciani v. High, 372 So.2d 530 (Fla. 4th DCA 1979), the defendant was an engineer retained by the contractor to do soil tests on the property prior to construction, and it was alleged that he negligently performed these tests, thus causing damage to the owner's property. Sub judice the defen dant expert was outside the "chain of construction." He had nothing to do with the design or construction of the roof, and was only hired to render an opinion to the school board as to the condition of the roof built by plaintiff. His opinion was not, obviously, relied on by plaintiff nor was it intended to be relied on by or influence the plaintiff.
The abstractor and attorney cases, cited by appellant as evincing the further erosion of the privity requirement in negligence actions, are not decided on tort principles but on contract principles, and are consistent with what we believe to be the correct analysis of the instant case. In First American Title Insurance Company, Inc. v. First Title Service Company of the Florida Keys Inc., 457 So.2d 467 (Fla.1984) the supreme court receded somewhat from the strict requirement of privity between an abstractor and the person injured by the negligent preparation of the abstract, applying third party beneficiary principles, and holding that an abstractor is liable to purchasers whose reliance on the abstract was known or should have been known to the abstractor, regardless of privity. Liability was limited, however, to parties to the transaction for which the abstract was prepared. The court declined to recognize an abstractor's liability "to any and all foreseeable injured parties," a theory advanced by the appellants based on Moyer, explaining that Moyer involved direct supervisory responsibility by the architect for the construction project and direct control over the contractor.
We also believe that petitioner's argument based on A.R. Moyer, Inc. v. Graham is unpersuasive. Where a contractor is totally dependent on the plans and specifications prepared and supplied by an architect or engineer with supervisory authority over a project, the contractor is unable to take steps independently to protect itself against the consequences of the negligence of the architect or engineer. Although Moyer applied products-liability tort principles to negligent provision of professional services, we find a vast difference between that situation and this one. Here there is far less compelling reason to make such an application.
457 So.2d at 471-472.
The supreme court has limited an attorney's liability for negligence in the performance of a professional duty to the client with whom the attorney shares privity of contract. In Angel, Cohen and Ro-govin v. Oberon Investment, N. V, 512 So. 2d 192 (Fla.1987) the supreme court refused to relax the rule of privity in actions against attorneys for negligence in the performance of their professional duties. The court noted that lack of privity will not defeat liability where the attorney's negligence has injured an intended third party beneficiary of the contract with the client, as in the area of will drafting. See, e.g., McAbee v. Edwards, supra. The rule of law in attorney negligence actions that there be privity between the attorney and the plaintiff or that the plaintiff be an intended third party beneficiary of the contract with the attorney espouses the principle applicable in the case before us here. The expert's duty in this case was to its client, as was the attorney's in Angel, Cohen and Rogovin, supra. Clearly, Goldman was not an intended third party beneficiary of the contract between A/R/C and the School Board, so as to fall within the exception to the rule of that case.
Because plaintiff and defendants were not in privity of contract and because plaintiff was not the intended beneficiary of the consulting contract between the school board and defendants, and because there was no reliance by plaintiff or any intention that plaintiff rely on the expert's report, defendants had no duty to plaintiff and thus were not liable for any negligence in preparing their report. Product liability principles are not applicable here because plaintiff was not injured by use of any "product" designed, constructed or distributed by the defendants. The trial court correctly entered judgment for the appel-lee.
AFFIRMED.
SHARP, C.J., concurs.
DANIEL, J., dissents with opinion.
. Thé annotation in 65 A.L.R.3d 249, Tort Liability of Project Architect For Economic Damages Suffered by Contractor, cited by the dissent, addresses the problem espoused by Moyer, the lead case for the annotation. It announces a caveat in the very beginning:
This annotation is concerned solely with professional or licensed architects who are engaged in the construction or alteration of buildings or other structures.
65 A.L.R.3d at 250, n. 1. It thus clearly has no application to the facts of this case.
. For example, in Matthews v. Lawnlite Company, 88 So.2d 299 (Fla.1956) a prospective purchaser of a lawn chair manufactured by Lawn-lite was injured because of a defect in the chair while trying it out in a retail store. In Audlane Lumber & Builders Supply, Inc. v. D.E. Britt Associates, Inc., 168 So.2d 333 (Fla. 2d DCA 1964), cert. denied, 173 So.2d 146 (1965), the defendants had designed and manufactured truss plates which were used by plaintiff in assembling wooden trusses for resale to builders. Plaintiff suffered economic damages when the trusses failed. In Geer v. Bennett, 237 So.2d 311 (Fla. 4th DCA 1970), it was contended that the defendant architects had prepared the plans and specifications and had undertaken the responsibility of directing the contractor in regard to installation of protective guard rails in the building under construction, the absence of which caused plaintiff to fall and be injured. In Conklin v. Cohen, 287 So.2d 56 (Fla.1973), the court accepted the rule promulgated in Geer v. Bennett, supra that an architect may be liable for negligence in designing a building or supervising its construction, resulting in injury to third persons notwithstanding the absence of privity between the architect and the injured person.
.Products liability deals with recourse for personal injury or property damage resulting from the use of a product. West v. Caterpillar Tractor Company, Inc., 336 So.2d 80, 84 (Fla.1976). Moyer extended the principle to damage to economic interests, but did not eliminate the requirement that the claimant shall have suffered the injury from the use of, or his direct connection with, the "product."
. Commenting on Moyer, one author has stated: While the court did permit a cause of action for an injury to a third party's economic interests caused by the negligent performance of a contract, the scope of the court's holding is uncertain. In addition to the opinion's overall restraint and ambiguity, there is language that could be interpreted to indicate that the supreme court based the architect's duty on the more general negligence approach of foreseeability of injury. Based on an analysis of the facts, however, it is probable that the scope of duty the supreme court actually espoused is narrower. Because the extremely close nexus between the general contractor and the architect gave the architect "power of economic life or death" over the contractor, a known third party, the creation of a duty of due care running from the architect to the contractor was mandated. [Footnotes omitted].
Probert, Negligence and Economic Damage: The California-Florida Nexus, 33 U.Fla.L.Rev., 485, 491 (Summer, 1981).
. To the contrary, the complaint indicates that the school board had earlier retained a consultant to examine the roof and had refused to pay for the work despite a favorable report by that consultant. Thus, Goldman was not dependent on this testing for payment.
.Other out-of-state cases cited by the dissent address problems like that in Luciani v. High, supra, and produce similar results. In Donnelly Construction Company v. Oberg/Hunt/Gilleland, 139 Ariz. 184, 677 P.2d 1292 (1984), it was alleged that the defendant architect negligently prepared plans and specifications as a result of which the successful bidder incurred additional construction costs. In Owen v. Dodd, 431 F.Supp. 1239 (N.D.Miss.1977) and in Mayor and City Council of City of Columbus v. Clark-Dietz and Associates-Engineers, Inc., 550 F.Supp. 610 (N.D.Miss.1982), appeal denied, 702 F.2d 67 (5th Cir.1983), the facts were similar to Donnelly. In Davidson and Jones, Inc. v. County of New Hanover, 41 N.C.App. 661, 255 S.E.2d 580, review denied, 298 N.C. 295, 259 S.E.2d 911 (1979) and Shoffner Industries, Inc. v. W.B. Lloyd Construction Co., 42 N.C.App. 259, 257 S.E.2d 50 (N.C.App.), rev. denied, 298 N.C. 296, 259 S.E.2d 301 (1979), it was also alleged that the contractor incurred additional costs because of negligently prepared plans and specifications by the architect. Those cases are inapposite to the case before us.
. Section 552, Restatement (Second) of Torts, (1979) states the rule of liability to be:
§ 552. Information Negligently Supplied for the Guidance of Others
(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
(2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered
(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and
(b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.
(3)The liability of one who is under a public duty to give the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them.
Comment i to this section states, in pertinent part:
Under the rule stated in Subsection (2) of this Section, when the misrepresentation is merely negligent and results in pecuniary loss, the scope of the liability is narrower. The maker of the negligent misrepresentation is subject to liability to only those persons for whose guidance he knows the information to be supplied, and to them only for loss incurred in the kind of transaction in which it is expected to influence them, or a transaction of a substantially similar kind. There is an exception, as stated in Subsection (3), when there is a public duty to give the information. [Emphasis added].