Testing the Limits of Expert Testimony Pt. III: The Underlying Flaw of Fault Allocation in Construction Litigation.

The first ‘Testing the Limits of Expert Testimony’ post discussed inconsistency in barring experts from opining on ultimate issues like fault allocation, and the second post discussed jury reliability in allocating fault absent expert guidance.  These posts assumed that fault allocation is appropriate in construction litigation when both contract and tort claims exist.  But is it?

In Arizona, like many states, damages for tort claims are apportioned based on the percentage of fault allocated by the jury to each party or non-party.  However, damages for breach of contract and other contractual claims are not apportioned based upon percentages of fault.

In Webb v. Omni Block, Inc., the Webbs asserted claims for breach of contract and negligence against the architect, suppliers, and subcontractors after bonding material applied to concrete blocks used to construct the Webbs’ home failed.  Although the court simply allowed the jury to apportion fault among the parties, the court never explained why.

Bruner and O’Connor, the dominant scholars in modern construction law, discuss problems that arise when apportioning fault among multiple parties in a construction defect suit: (1) parties not in contractual privity may be liable for each other’s breaches of contract; (2) contracting parties may become liable for damages exceeding contractual obligations; and (3) damages calculations for individual parties becomes less formulaic and reliable.  6 Bruner and O’Connor § 19:1.

Consider Northern Petrochemical Co. v. Thorsen & Thorshov, Inc., where the troubled Minnesota Supreme Court enunciated a theory of ‘negligent breach of contract’ to attempt to remedy the disjunct between overlapping tort and contract damages in construction litigation when multiple parties not in contractual privity are at fault.  The court ultimately held that the trial court’s apportionment of damages must be retried because the trial court treated the construction defects as a “single indivisible injury,” despite lacking a “causal relationship between the design errors and construction defects.”

Bruner and O’Connor note that courts may avoid these issues by merely considering overlapping tort and contract damages in multiple-party construction litigation matters a question of fact for the jury.  While many courts adopt this approach, it ignores, rather than solves, the central issue:  How should damages be apportioned when multiple defendants contribute to the same loss when tort and contract claims overlap?