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The Court Of Appeals Of Michigan Holds That An Architect Owed No Common Law Duty To Owner For Alleged Professional Negligence

In Auburn Hills Tax Increment Finance Authority v. Haussman Construction Co., 2018 WL 385057 (Mich. Ct. App. January 11, 2018), the Michigan Court of Appeals held that the owner of a construction project could not maintain a professional negligence claim against the architect for failing to adequately review payment applications.

The Auburn Hills Tax Increment Finance Authority (hereinafter, “the Owner”) entered into a design-build contract with Haussman Construction Company (“Haussman”), the Design-Builder, for the construction of a four-story concrete parking structure.  In turn, Haussman and Mayotte Group, Inc. (“Mayotte”), entered into a subcontract for Mayotte to provide professional services for the project, including reviewing and certifying pay applications.

After Haussman was paid in full for the project, Haussman dissolved without paying its subcontractors, leaving the Owner exposed to the subcontractors’ claims.  The Owner filed suit against Mayotte claiming it relied upon Mayotte’s certifications of Haussman’s pay applications when it processed each payment to Haussman.  The Owner alleged that Mayotte certified the last payment to Haussman for “the full amount of the [Owner-Builder Agreement] contract sum, less $13,408.93 as retainage, without any allowance for the liquidated damages specified in the [Owner-Builder Agreement].”

The trial court granted Mayotte’s motion for summary judgment, holding the Owner failed to identify any provision of the Builder-Architect Agreement that required Mayotte to certify the pay applications for the Owner.  The Court of Appeals affirmed the trial court’s decision and held that, when reviewing payment applications, Mayotte did not owe a common law duty to the Owner to withhold payments for liquidated damages or confirm that Haussman had actually paid its subcontractors.  Rather, the Court of Appeals found that Mayotte’s duties with respect to reviewing payment applications arose solely out of the contract between it and Haussman, and as such, Mayotte’s duties were only owed to Haussman, not to the Owner.