2014 Fall Newsletter - Contractual Privity No Longer Required

Texas Supreme Court Confirms Owners May Bring Negligence Claim Directly Against Subcontractors
   by Joshua Mermis

A homeowner can bring a negligence claim directly against a subcontractor for damage caused by the subcontractor’s negligent performance of its subcontract with the homeowner’s general contractor, the Texas Supreme Court recently held in Chapman Custom Homes, Inc. v. Dallas Plumbing Co., No. (Tex.2014).
In Chapman, Duncan hired Chapman Custom Homes to build a home, and Chapman subcontracted with Dallas Plumbing Company to put in the plumbing. After the home’s completion, plumbing leaks caused extensive damage to the house. The homeowner then sued the plumber for the damage, alleging breach of contract, breach of express warranty, and negligence. The plumber denied liability and moved for summary judgment, which the trial court granted and the court of appeals affirmed on the basis that the homeowner was not a party to the plumbing subcontract.
The Texas Supreme Court overturned the trial court and the court of appeals. It cited Montgomery Ward & Co. v. Scharrenbeck, 204 S.W.2d 508, 510 (Tex. 1947) for the proposition that there is a common law duty to perform with care and skill that accompanies every contract and failing to meet this implied standard might provide a basis for recovery in tort, contract, or both. 
How does this decision affect you?
Owners will be pleased with this ruling because subcontractors can no longer hide behind their general contractors when their work causes the owner to incur damages. Subcontractors will not be pleased, and the increased exposure may necessitate an increase in the contract price with the general contractor. 


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