On January 8, 2015, the Second Appellate district affirmed judgment of the lower court in State Ready Mix Inc. v. Moffatt & Nichol, and barred a concrete supplier from blaming a third party consultant for the concrete supplier’s failure to deliver concrete that met project specifications.
In 2012, Major Engineering Marine, Inc. was hired by a project manager to construct a harbor pier in the Channel Islands Harbor. Major hired State Ready Mix, Inc. to supply the concrete for the project. State wrote and submitted a concrete mix design and, at the request of Major, civil engineer Moffatt & Nichol reviewed and approved State’s mix design at no charge.
The concrete that State delivered to the project did not meet project specifications, specifically those set forth in Moffatt’s strength requirements. Due to this ‘bad batch’ prepared by State, Major was forced to demolish and rebuild the affected portion of the pier. When State was sued to recoup the cost of replacing the concrete, it filed a cross-complaint for equitable indemnity and contribution against Moffatt. The trial court dismissed the cross-complaint.
State had four main arguments it made to the appellate court, but in reading the opinion, it is clear that none of the justices were impressed with any of State’s arguments that State should be allowed to blame the civil engineer for its own failure to deliver.
At its core, the case was about State not living up to its contract and the fact that Plaintiff suffered only economic damages, as opposed to personal injury or property damage. If for instance, the owner had suffered other damages, such as damage to other property caused by the defects, the outcome of the case would have likely been different.
The court of appeal was clearly irritated by this appeal. It called one of State’s theories “far-fetched” and concluded the opinion by stating: “State claims that the moral blame falls on Moffatt. If State wants to see who is at fault, it should look in the mirror.”
The takeway from the case is this: A defendant in a suit involving deficient work or services cannot automatically name third party defendants where the party harmed has not suffered property damage or personal injury. Claims against third parties are generally permitted in tort cases (i.e., cases for negligence), but claims against third parties are subject to greater scrutiny where only breach of contract “economic damages” are at stake.
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