Several cases have held that a homeowner cannot sue a subcontractor for defective work because the homeowner’s contract is with the general contractor and not the subcontractor. Those cases left it to the general contractor to bring the subcontractor into the suit. If the general contractor did not bring them in, the subcontractor often evaded responsibility for their defective work.

In a case handed down today, Chapman Custom Homes, Inc. v. Dallas Plumbing Co., the Texas Supreme Court held that a homeowner could bring a negligence claim directly against a subcontractor for water damage caused by the subcontractor’s negligent performance of its subcontract with the homeowner’s general contractor. The Texas Supreme Court relied on a 65 year old case, holding the negligent performance of a contract that damages a party’s property or person gives rise to a negligence claim directly against the subcontractor.

In Chapman, Michael B. Duncan hired Chapman Custom Homes to build a home. Chapman, in turn, subcontracted with Dallas Plumbing Company to put in the plumbing at the new house. 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, though, overturned the trial court and the court of appeals, noting that it held in Montgomery Ward & Co. v. Scharrenbeck, 204 S.W.2d 508, 510 (Tex. 1947) that a common law duty to perform with care and skill accompanies every contract and failing to meet this implied standard might provide a basis for recovery in tort, contract, or both. The contract in Scharrenbeck was for the repair of a water heater in the plaintiff’s home. The contractor performed its work so poorly that the house burned down. The Texas Supreme Court held that the contractor owed the homeowners the duty to not negligently burn their house down.

The Texas Supreme Court observed that the circumstances in Chapman were similar to Sharrenbeck. The Texas Supreme Court stated that having undertaken to install a plumbing system in the house, the plumber assumed an implied duty not to flood or otherwise damage the homeowner’s house while performing its contract with the builder, and the breach of that duty could give rise to tort liability.

KEY TAKEAWAYS

The Chapman opinion confirms that a subcontractor is not immune from tort claims, like negligence, brought directly by the owner so long as the tort damages are more than just economic loss of a contractual expectancy; they must be actual property damage.

While insurance was not directly mentioned in this case, this important ruling should also remove doubt that property damage due to negligent work by a contractor or subcontractor is covered by typical liability insurance policies.