Boren v. Thompson & Assocs

In Boren v. Thompson & Assocs., 2000 OK 3, 999 P.2d 438, a school board hired an architecture firm to design and oversee construction of a new library building. The architecture firm's contractor failed to secure a payment bond required under 61 O.S. 1991 1 and 2. When the contractor failed to pay the subcontractors, they sued the architecture firm alleging negligence in certifying payments to the contractor in the absence of the statutorily-required payment bond. Id. The architecture firm filed a motion to dismiss arguing it did not owe a duty to the subcontractors; there was no privity of contract between them; and, given the subcontractors' constructive knowledge of the contractor's duty to procure a payment bond, the subcontractors' own negligence was the proximate cause of their loss. Id. The trial court denied the architecture firm's motion to dismiss. Id. After a three-day trial on the merits, the jury found the architecture firm liable in negligence to the subcontractors and returned a special verdict finding the firm's architect had acted wilfully and with reckless disregard for the rights of the subcontractors. Id., 999 P.2d at 443. In its review, the Supreme Court noted the fundamental objective of 2 is to protect subcontractors and materialmen on public construction projects given that no lien rights exist against public land or improvements. Id., 999 P.2d at 444. The Supreme Court acknowledged it is the duty of the contractor, not the architecture firm, to secure the payment bond, and that "a jury may consider the subcontractors' neglect in failing to personally verify whether a payment bond has been secured." It also observed, however, that the damages in the case "arose from the architect's negligence in failing to ascertain that there was no payment bond and in making unauthorized payments to the contractor after he discovered that no payment bond existed. Damages would not have arisen had the bond been obtained." Id. The Court further reasoned "once a public entity has contracted with a private party to oversee a construction project, subcontractors should be able to assume that the private party responsible for certifying payments has verified the existence of the bonds. To do otherwise, would thwart the purpose and intent of the bond statutes." Id. "Concurrent with a contractor's duty to secure a bond is the public entities' duty to withhold payment to a contractor in the absence of a bond." Id. Finally, "the architect ought to labor under a duty to subcontractors to refrain from paying the contractor without the required statutory payment bond being secured." Id. This holds true despite the lack of privity between the architecture firm and the subcontractors, because the architecture firm's liability "is based upon proximate cause and the foreseeability that [its] conduct could harm third parties." Id. Thus, in upholding the trial court's denial of the architecture firm's motion to dismiss for failure to state a cause of action, the Boren decision stands for the proposition that certain parties involved in contracts for public works have an obligation to subcontractors to ensure contractors obtain payment bonds and thereby avoid the foreseeable harm to subcontractors of nonpayment in the absence of lien rights. In other words, "a subcontractor should not be precluded in all circumstances from asserting a claim against an entity such as the [architecture] firm solely because it did not request a copy of the bond." Id.