In Texas, if you sue a design professional (like an engineer or an architect), you ordinarily must include a so-called “certificate of merit” affidavit from a similarly licensed professional, explaining the errors or omissions in the design professional’s work. The purpose of the certificate of merit is to deter frivolous claims by requiring plaintiffs to vet the defendant’s alleged errors or omissions through a similarly licensed professional first, and then present a signed affidavit(s) supporting the claims arising out of the professional services.

Prior to HB 2007, design-builders and other members of the design-build team were required to file a certificate of merit to support claims against their downstream design-professional subconsultants. This was perceived as unfair in a scenario where the owner first sued the design-builder, as it would require the design-builder defendant to secure an affidavit swearing that the design-builder’s subconsultant (for whom it is usually responsible by contract) has committed design errors or omissions. Understandably, design-builders did not want to do that, since that affidavit would bolster the owner’s very claims against the design-builder. HB 2007 resolves that concern by exempting (at least for public projects) design-builders, or their downstream design professionals, from having to file certificates of merit to assert third-party claims or crossclaims.

Purpose of HB 2007: Eliminate Certificate of Merit Requirements for Certain Design Claims on Public Projects

HB 2007 is a straightforward bill that eliminates a procedural requirement for some litigants in disputes arising from public design-build projects. To better understand the purpose of HB 2007, it’s important to generally understand Texas’s certificate of merit requirement.

Chapter 150 of the Texas Civil Practice and Remedies Code requires that a plaintiff suing certain design professionals (including architects and engineers) must include a so-called “certificate of merit” affidavit with its lawsuit. The affidavit must come from a similarly licensed design professional and set forth the design professional’s alleged errors or omissions. So, in a typical construction dispute, the owner may sue its general contractor and, separately, its architect. In its lawsuit against the architect, the owner must have a certificate of merit.

Complexities of Multi-Party Construction Disputes

Construction projects often involve long chains of contracts. The owner may hire a general contractor and an architect. The general contractor may then hire subcontractors or suppliers. And those subcontractors may have their own sub-subcontractors, and so on. On many projects, the prime architect (contracting with the project owner), or sometimes the prime engineer (contracting with the project owner), will hire design subconsultants to assist with preparing the overall design. To that end, it’s common for an architect to hire a civil engineer, a mechanical/electrical/plumbing engineer, and/or a structural engineer, all as subconsultants operating under the architect’s contract with the owner.

If the owner sues the architect for design errors, including alleged errors in the professional services provided by the architect’s subconsultants, the architect may decide to assert claims against those subconsultants in the owner’s lawsuit. The procedure to do so is through a third-party petition (if the owner/original plaintiff has not already sued the subconsultants), or through a crossclaim (if the owner/original plaintiff/ somebody else, has already joined the subconsultants to the lawsuit). Such third-party claims and crossclaims are common in multi-party construction- and design-defect disputes.

Legal Evolution: Amendments to Chapter 150 and Resulting Challenges for Design-Build Claimants

Under a prior version of Chapter 150, it was not clear whether a third-party plaintiff or cross-claimant had to file a certificate of merit at all. In 2014, however, the Texas Supreme Court held that Chapter 150 did not require a certificate of merit affidavit for third-party plaintiffs or cross-claimants. In response, the Texas Legislature amended Chapter 150 in 2019 to expressly require a “third-party plaintiff” to file a certificate of merit with their claims.

This requirement imposed an unusual problem for design-build claimants operating under Chapter 150. On a design-build project, the owner enters acontract with a design-builder, or a design-build team (frequently formed as a joint venture), who is solely responsible for the construction and design of the project. One of the benefits of the design-build delivery system is that the owner only has to look to one entity to resolve defect issues. Under the traditional delivery system (i.e., design-bid-build), the owner may have to look to the two separate parties it contracted with to address any defect issues (the general contractor on the one hand, and the prime designer on the other, usually the architect). Understandably, these two entities often point the finger at each other, leaving the owner in the middle to sort it out. Design-build solves that finger-pointing problem.

If a dispute arises relating to the design prepared by the design-builder or its subconsultants, the owner will sue the design-builder. If the design-builder does not perform design-professional services itself, the owner will not need a certificate of merit. But should the design-builder seek to join its design subconsultants to the lawsuit so they can defend their own work, Chapter 150 previously required the design-builder to include a certificate of merit with its resulting third-party action. Understandably, design-builders did not like this. If an owner sues a design-builder alleging design defects, the design-builder does not want to concede there are design defects. Instead, the design-builder would prefer to join their downstream design-professional subconsultants, without agreeing with the plaintiff’s design claims via a certificate of merit. Under Chapter 150, the design-builder would have to secure an affidavit from a similarly licensed design professional criticizing the subconsultant’s design. Since the design-builder is often liable to the owner for design errors, the prior version of Chapter 150 functionally required the design-builder to secure an affidavit supporting the owner’s claims against that design-builder. HB 2007 now excludes a “third-party plaintiff” who is either a design-builder (design-build team or design-build firm), or an architect, engineer, or other member of the design-build firm or team, from having to file a certificate of merit affidavit with its third-party claim. This exclusion resolves the perceived unfairness of a design-builder having to secure an affidavit that could be used against it by the party suing the design-builder. It is limited, however, to public design-build projects; on private projects, design-builders and their subconsultants will still need a certificate of merit or to find some other way around the operation of Chapter 150, such as a voluntary waiver.

Scope of HB 2007, Effective Date, and Anticipating Future Interpretations

Importantly, HB 2007 is only effective for “an action commenced on or after” September 1, 2023. It is unclear whether “action” refers to an original petition or to a third-party petition. It remains to be seen whether HB 2007 will exempt third-party claims asserted in lawsuitsthat originated prior to September 1, 2023, or only exempt third-party claims asserted in lawsuits filed after that date. The Texas Supreme Court, in their 2014 decision, interpreted an “action” under the old version of Chapter 150 as the original lawsuit, which may guide future interpretations of HB 2007.