For the Client: Betterment and Added Value

 

July 2013

COMMUNITIES: PRIVATE PRACTICE
For the Client: Betterment and
Added Value

BY NAHOM A. GEBRE, ESQ., P.E.

NAHOM A. GEBRE, ESQ., P.E.The engineer you engage to perform services is required to perform those services without negligence, in a manner that meets the standard of care. The standard of care is typically defined as the degree of care that a similarly situated engineer would have exercised in the same or similar circumstances at the same time. On occasion, however, the engineer may be deemed to have failed to provide services in a nonnegligent manner; as a client, you are legally entitled to recover damages caused by the engineer's negligence.

Determining the nature and extent of the damages caused by the engineer's negligence is often difficult. A basic principle of the law of damages states that the damaged party should be "made whole," meaning that you should be compensated for the loss caused by the failure of the engineer to meet the standard of care. These types of damages are labeled as compensatory damages. Compensatory damages cover both general (direct) damages and special (consequential) damages. Special damages are those damages that are suffered because of a ripple effect. General damages are recoverable in all instances; special damages are generally limited to those that were foreseeable at the time of the contract's creation. As a result, special damages are more difficult to prove and recover.

While you should be compensated for the damages you suffer due to the engineer's negligence, the law is also clear that you should not be compensated for more than the damages you have suffered. In construction, repair of a faulty design or installation of an omitted component may leave you with a better structure or one with a longer useful life than described by the original specifications. So that you do not receive undue betterment if the engineer fails to include a component in a design, you should pay what the cost would have been if the component had been included initially. The engineer should bear only the costs caused by the omission itself (i.e., those associated with the change order or retrofitting of the part). Additionally, you should not, at the engineer's expense, receive added value in the form of an extended useful life of the structure. If you must repair or replace a defective element, your damages should be reduced to the extent that a repair or replacement extends the useful life of an element. Also, you should not be able to recover any costs associated with enhancing the element beyond the standard described in the contract.

Betterment is generally, though not in all cases, considered to be an affirmative defense, meaning that the burden of proof falls on the defendant (engineer). In other words, it is incumbent upon the defense to show, once liability has been established, that the proposed compensatory damages would result in the undue betterment of the claimant (client).

SketchHere is an example to illustrate the concept of betterment. Imagine that an engineering firm fails to include return air grilles in its plans and specifications. When the omission is discovered after the construction has been completed, it is necessary to provide the missing items and make changes in the physical condition of the wall to install the missing air grilles.

Under the betterment concept, the engineering firm is liable for the additional cost of installing the missing air grilles. However, you will be responsible for their actual cost because you would have been obliged to pay for the air grilles had they been properly stipulated in the original plans and specifications and thereby a part of the construction bids.

On the other hand, if the omission had been discovered prior to bids being opened, an addendum would have been issued and the cost of the missing items would have been in the original bid price. Under this basic principle, if the defect is one that can be corrected or cured without additional cost to you, there has been no actual damage to you as the client. But, if the correction requires additional construction costs to achieve the proper result as originally intended, the engineering firm is responsible for those additional costs.

As a client you are entitled to be made whole when the engineer is negligent in the performance of services, and that negligence subsequently causes damages. When measuring the damages that are owed to you, you should realize that the engineer is responsible only for those damages that are caused by his or her negligence; you are still responsible for those amounts that will ultimately leave you with a better facility. The engineer's negligence does not mean that you receive a facility greater than that for which you had originally bargained.

Nahom A. Gebre, Esq., P.E., is a risk management attorney for Victor O. Schinnerer & Co. Inc. CNA/Schinnerer's professional liability insurance program has been commended by NSPE since 1957.