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In United States of America v.
Osborne, No. 4:11-CV-1029, 2017 WL 1135640 (N.D. Ohio March 27, 2017), the Northern
District of Ohio denied a Motion for Summary Judgment filed by Third-Party
Defendant William R. Gray Associates, Inc. (“Gray”) based on the permit
procurement obligations in Gray’s agreement for engineering services with Third-Party
Plaintiff City of Willoughby (the “City”).
On March 27,
2002, the City contracted with Gray for Gray to provide engineering services
for the construction of a road, along with sewer and utility improvements (the
“Project”). Gray’s agreement provided, “The
Engineer shall perform or furnish professional engineering and related services
in all phases of the Project to which this Agreement applies. The Engineer
shall serve as the City's prime professional for the Project.” In Exhibit “A”,
Basic Services under Commercial Development Plans and Industrial Development
Plans, include: “Permit Applications and Reviews from various review
In July 2011
(nine years later), the United States of America and the State of Ohio brought
an action against the City for discharging pollutants from the Project into the
waters of the United States and the State of Ohio without a prior permit. On August 9, 2011, the City filed a
Third-Party Complaint against Gray, asserting Gray breached its contract with
the City by failing to procure the proper permit for discharging pollutants
into the waters.
wetlands work was not included in Gray’s agreement for engineering services
with the City based on extrinsic evidence outside the agreement. The Court rejected Gray’s argument, holding
the Court would not look to extrinsic evidence because the terms of the
agreement were not ambiguous, and Gray, as the “prime professional,” was
required to perform all professional engineering services in all phases of the Project. The Court further held the term “permit
applications” in the agreement had a plain and ordinary meaning and contained no
restrictions. The Court interpreted the
plain meaning of permits to incorporate all permits necessary for the Project,
including wetlands permits.
The Court’s decision in Osborne
demonstrates the pitfalls in a design professional relying on representations
made regarding the interpretation of an agreement for engineering services that
are in conflict with the plain terms of the agreement. Although most standard form agreements, such
as those provided by the AIA, specifically enumerate the duties of the design
professional, many agreements drafted by owners may not be as thorough and coherent. In these cases, design professionals should
be wary to trust the representations made by owners regarding the
interpretation of the agreement, and should seek counsel to determine the exact
scope of services the design professional is required to provide.