Construction Defect Suits and Apportionment Under McGonigal’s Flamingo v. RJG


 

A 2011 S.C. Court of Appeals decision has further clarified South Carolina’s treatment of comparative fault in construction defect suits.  http://m.sccourts.org/opinions/displayUnPubOpinion.cfm?caseNo=2011-UP-260 

An owner of a hotel located in South Carolina brought a construction defect action against the general contractor, subcontractors for damages resulting from original construction. The General Contractor responded with affirmative defenses and third-party claims against the at-fault subcontractors who provided non-conforming materials and derelict labor during the hotel’s construction.   For purposes of understanding the full facts and circumstances, assume the Owner and Developer to be one and the same.

With the exception of one subcontractor that failed to successfully resolve the case prior to trial, all parties entered into a settlement agreement which stipulated sums certain in exchange for release documents.  One remaining subcontractor failed to settle at mediation, and was cut adrift by the remaining litigants.  The General Contractor contributed settlement funds on behalf of the non-settling sub and filed a contribution action immediately afterwards.   

The Circuit Court granted summary judgment to the General Contractor in the contribution action against the subcontractor which was appealed on more than one basis.  For purposes of our discussion, the key issue(s) debated by South Carolina appellate court involved the method of allocating pro-rata shares to be paid by the appealing subcontractor.

On appeal, the subcontractor argued that the Circuit Court erred by failing to include both the project’s architect (for design defects) and the Developer as pro-rata contributors Plaintiff.  It was further argued that these two parties shared in the aggregate culpability which would act to directly reduce subcontractor’s pro-rata share as a participant during not readily divisible common liability.    

The circuit court properly considered equitable principles in calculating the common liability in determining the pro rata share.

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