Sunday, December 13, 2009

Public Agency Consultant’s Failure To Timely Prepare EIR Does Not Create Liability for Developer's Damages

November 3, 2009

In a decision that affects those involved in the preparation of environmental impact reports (EIR) pursuant to the California Environmental Quality Act (CEQA), a California Court of Appeal recently held that a consultant who fails to prepare an EIR for a public agency in a timely fashion cannot be held liable to the developer for losses arising from that failure. The decision affirms strong protections for public agencies and their consultants that perform work under CEQA.

In Lake Almanor Associates L.P. v. Huffman-Broadway Group Inc., No. A122563 (Ct. App. 1st Dist. Oct. 30, 2009), the developer was to reimburse the county for the consultant’s work. The consultant failed to meet the developer’s deadlines for the project and, as a result, a second consultant was needed to prepare the EIR. The developer suffered economic losses from the delay. The county sought reimbursement from the developer for the work performed by both consultants. The developer then sued the first consultant for negligence, negligent interference with prospective economic advantage and breach of contract alleging that the developer was a third-party beneficiary of the consultant’s contract with the county.

The court found that the developer was not a beneficiary of the consultant’s contract with the county. The developer was not owed a legal duty for preparing the EIR in a timely fashion and the county’s performance of its statutory obligations to prepare the EIR did not create a contractual obligation to the developer. On the contrary, the county’s only duty was related to releasing a proper EIR to the public, not the developer. Furthermore, the provisions in the consultant’s contract requiring that the developer receive a copy of the EIR did not create liability to the developer for breach of the contract. Because no duty was owed to the developer, the court similarly found that the consultant was not liable to the developer under a negligence theory.

The court did not directly address CEQA’s timing provisions, but instead found that the developer “point[ed] to nothing in CEQA that authorizes [a developer] to bring an action against a public entity for failure to complete an EIR on time.” The court found that such claims against consultants would be contrary to the policies in CEQA because they would undermine the consultants’ independence and objectivity, and affect their availability and fees charged.