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Nebraska Engineer Shielded from Professional Negligence Claim Based on Information Available to Owner


August 27, 2001


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Thelen Reid Brown Raysman & Steiner LLP

The Gering-Fort Laramie Irrigation District contracted with Baker to design and oversee relocation of irrigation structures near Scottsbluff, Nebraska. Baker assigned Smith, an engineer and employee of Baker, to design the project and provide construction supervision. A contractor was hired to perform the construction work. Construction was substantially complete on August 25, 1993, and Baker certified that the construction project was complete on April 5, 1994.

In the spring of 1994, a leak was discovered in PVC pipe joints. When the district excavated, it discovered that at the transition point where the PVC pipe changed directions, the two PVC pipes were field cut and wrapped in duct tape covered by a concrete collar. A prefabricated PVC coupler had not been used. The district replaced the concrete collar with a prefabricated PVC coupler after determining that the joint had not been properly constructed. Additional leaks appeared in PVC joints in 1994, 1996 and 1997 due to improperly constructed joints. The district advised Baker of the problem in 1997. Baker stated that all of the PVC joints were constructed in the same manner and that Smith had approved the method. In 1993, Smith had prepared and submitted to the district payment estimate No. 7 noting that 37 concrete bends, or joints, had been used in the relocation project.

The district filed an action for professional negligence against Baker and Smith on August 19, 1997.

The trial court granted Baker and Smith's motion for summary judgment, concluding that the action was time-barred and that the doctrine of fraudulent concealment was unavailable to the district. The Court of Appeal reversed the trial court's decision based, in part, on its determination that a genuine issue of material fact existed as to whether the district's discovery of one improperly constructed joint would lead a reasonably prudent person to inquire regarding the construction of the remaining joints. The Supreme Court reversed and directed the Court of Appeals to enter an order affirming the trial court's grant of summary judgment. Gering-Ft. Laramie Irrigation District v. Baker, 612 N.W.2d 897, 2000 Neb. Lexis 158 (2000).

The issues presented to the Nebraska Supreme Court were: (1) whether the district's discovery of one defective joint constituted discovery as a matter of law under Nebraska's professional negligence statute and (2) whether the district could rely on the doctrine of fraudulent concealment to estop Baker and Smith from asserting a statute of limitation defense.

The court stated that the professional negligence statute requires a suit to be commenced within two years after the alleged "act or omission" in rendering or failing to render professional services. The court noted that Nebraska follows the occurrence rule, under which a professional negligence suit accrues at the time the act or omission in rendering or failing to render professional services takes place. Reinke Mfg. v. Hayes, 256 Neb. 442, 590 N.W.2d 380 (1999). A plaintiff may be relieved from the two-year filing requirement by the "discovery exception." Weaver v. Cheung, 254 Neb. 349, 354, 576 N.W.2d 773, 777 (1998). The discovery exception permits an action to be commenced within one year from the earlier of (a) the date of discovery of the cause of action or (b) the date of discovery of facts that would reasonably lead to such discovery. The exception is only applicable when the cause of action is not discovered and could not have reasonably been discovered during the basic two-year limitation period.

The court held that the discovery exception to the statute of limitations was inapplicable because the cause of action could reasonably have been discovered during the two-year limitation period. The court stated that in a professional negligence case, "discovery of the act or omission" occurs when the party knows of facts sufficient to put a person of ordinary intelligence and prudence on inquiry which, if pursued, would lead to the knowledge of facts constituting the basis of the cause of action. The court noted that the district determined that the joint was improperly constructed in the spring of 1994. Further, the district had payment estimate No. 7 in its possession indicating that 37 such concrete bends had been installed. The court concluded that discovery of the allegedly negligent act or omission occurred in the spring of 1994 when the district knew that at least one joint was improperly constructed and that inquiry at that time would have led to knowledge of the fact that Baker and Smith approved the improper construction of all of the joints. Thus, the district had knowledge of the facts constituting the cause of action.

The court held that if the number of defective joints was in doubt, a "lack of knowledge of the extent of damages is not the equivalent of a lack of discovery of a cause of action" for purposes of the statute of limitations.

The court stated that the doctrine of fraudulent concealment estops a defendant from asserting a statute of limitations defense when the defendant has, either by deception or by violation of duty, concealed material facts from the plaintiff that prevent the plaintiff from discovering professional negligence. The court held that the doctrine of fraudulent concealment was inapplicable because the district discovered the improperly constructed joint and, thus, could reasonably have learned of its cause of action within the limitations period.


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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-369-7229 or at pwberning@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.





©2001 Thelen Reid Brown Raysman & Steiner LLP

More than 500 online news and legal reports on construction law, including claims, payment remedies, damages, government contracting, insurance, building codes, licensing, technology, arbitration, engineering, architecture, infrastructure

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