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December 11, 2020 ARTICLE

Certificates of Merit: Practical Guidance to Avoid Procedural Pitfalls

James Moye and Paul Bennett

I. Introduction 

Since the early 1990s, states around the country have implemented laws requiring an “affidavit of merit” or “certificate of merit” as a condition precedent to bringing actions against design professionals such as architects and engineers. A certificate of merit is an affidavit that is issued by an independent third-party (or in some cases an attorney) certifying that the claim being brought against a design professional is factually and legally supportable. While laudable in their intent to screen meritless claims, certificate of merit statutes often serve as procedural booby-traps that allow for meritorious claims to be disposed of on procedural grounds. This article aims to introduce construction litigators with procedural and substantive complexities associated with certificate of merit statutes, and to identify potentially avoidable pitfalls when bringing meritorious actions against design professionals. 

II. Background

Design professional certificates of merit laws are a by-product of the medical tort reform movement of the 1990s. During the medical tort reform movement, many states imposed pre-suit requirements, such as certificates of merit, to assist in the efficient identification and disposal of meritless claims against medical professionals. Design professional associations seized the momentum and, in many cases, successfully lobbied state legislations to implement certificate of merit statutes as a means of protecting design professionals from perceived abuse in defending frivolous actions.

Currently, fourteen states have certificate of merit statutes in place: Arizona, California, Colorado, Georgia, Hawaii, Kansas, Maryland, Minnesota, Nevada, New Jersey, Oregon, Pennsylvania, South Carolina, and Texas. Those practicing construction law outside of these states should nevertheless be aware of certificate of merit laws for two reasons.  First, professional associations are actively lobbying additional state legislatures to implement certificate of merit laws. Second, a certificate of merit may apply outside of the statutory framework.  For instance, contract documents may contain certificate of merit requirements as a condition precedent to bringing an action against designers. 

While each state's certificate of merit statute is unique, the statutes are geared to achieve the same overarching purpose - to protect design professionals from frivolous lawsuits. There are divergent opinions on the efficacy of certificate of merit statutes. Not surprisingly, design professionals are in favor of the additional protections and hurdles created by certificate of merit statutes. Design professionals are frequently parties to complex construction litigation and are often pulled into litigation by other members of the project delivery relationships such as the owner, project architect, general contractor, subconsultants, subcontractors, and injured third parties. With so many parties consistently pointing the finger and seeking to recover from design professionals for, among other things, professional negligence, design professionals believe they deserve the additional protection afforded by the imposition of pleading requirements such as the filing of a certificate of merit.  Conversely, opponents see certificate of merit statutes as unnecessary, unconstitutional, and costly procedural hoops that serve to protect design professionals from otherwise valid claims.

III. Summary of Certificate of Merit

While the purpose of certificate of merit statutes is uniform, the language and application of each state's certificate of merit statute range widely.  These statutes typically track the model statutory framework provided and endorsed by the American Council of Engineering Companies, the National Society of Profession Engineers, and other profession groups. The model provides:

In any action for damages alleging professional negligence by a registered architect or professional engineer, the plaintiff shall be required to file with the complaint an affidavit of a third-party registered architect or professional engineer competent to testify and practicing in the same profession as defendant, which affidavit shall set forth specifically at least one negligent act, error, or omission claimed to exist and the factual basis for each such claim. The third-party professional engineer or registered architect shall be licensed in this state and actively engaged in the practice of architecture or engineering.

While this is the general template of a certificate of merit statute, states have enacted a broad range of statutory language that either relaxes or bolsters these model requirements. 

1.      The Easy Way

Some states have toothless certificate of merit statutes with low procedural and substantive thresholds. California, for instance, has a weak certificate of merit statute. There, a certificate of merit is required in professional negligence actions but need only be executed by a claimant's attorney after consulting with an anonymous design professional.  The attorney must simply assert that he has reviewed the facts of the case and consulted with at least one design professional who the attorney "reasonably believes is knowledgeable in the relevant issues" and that, based on the consultation, the attorney believes there is a reasonable cause for bringing the action.  Such a low barrier hardly exceeds an attorney's ethical obligations and the ABA's Model Rules of Professional Conduct.

California's certificate of merit statute becomes even more anemic when an attorney cannot easily find a willing expert. The statute provides that the attorney may complete the certificate of merit and satisfy the statutory requirement without the required consultation if the attorney submits an affidavit representing that he or she made three good faith attempts to consult with a design professional but no consultation was obtained because no architect or engineer would agree to the consultation.  Thus, arguably, whether the cause of action is actually supported by an architect or engineer is, essentially, immaterial.

Other states that generally follow a more relaxed approach to certificate of merit compliance include Arizona, Colorado, Hawaii, Minnesota, Oregon, and Pennsylvania.

2.      The Hard Way

Conversely, several states have implemented certificate of merit statutes that are more difficult to satisfy.  Texas' certificate of merit statute serves as a prime example, and one that has been described as "utterly unforgiving and procedurally draconian." For instance, the Texas statute departs from the model rule which prescribes that a certificate of merit be required in actions arising out of professional negligence<\/u>; instead, the Texas statute takes this a step further and provides that a certificate of merit is required in actions "arising out of the provision of professional services<\/u>.The significance of this disparity cannot be overstated as it broadly expands the application of the certificate of merit statute to apply to actions sounding in contract, in addition to those sounding in tort.

The Texas certificate of merit statute has been revised several times to impose progressively more onerous requirements on potential claimants. Recently, the Texas legislature expanded the number of actions to which its certificate of merit statute applies. Prior to 2019, only plaintiffs<\/u> were required to comply with Texas' certificate of merit requirements. Such an interpretation was in line with the spirit of the law, namely, to preserve judicial resources and protect design professionals from frivolous lawsuits by keeping meritless claims out of the courts.  As set forth in 2014 by the Texas Supreme Court's plurality holding in Jaster v. Comet II Construction, Inc., the certificate of merit requirements applied only "to a party who initiates the lawsuit, and not<\/u> to defendants or third-party defendants who assert claims for relief within a suit."

However, the Texas legislature reacted to the Jaster decision by revising its certificate of merit statute in 2019.  These revisions significantly broadened the statute's application by rendering it applicable to all claimants<\/u> (as opposed to plaintiffs). Now, a design professional can initiate an action and subject itself to a court's jurisdiction, but is nonetheless afforded the protection of the statute from counter, cross, and third-party complaints.  It is an open question whether, under the revised law, a defendant raising indemnity, contribution, or other defenses against the design professional would be required to comply with the certificate of merit statute. Such an interpretation would seem absurd at first blush, but Texas has repeatedly displayed its willingness to apply the statute in increasingly broad fashion.

As a final example of Texas' arduous approach, the 2019 legislative revisions also effectively limited the pool of experts available to potential claimants.  Previously, the law required the affiant to be knowledgeable<\/u> in the area of practice of the defendant.  Under the prior "knowledgeable" standard, Texas courts rejected arguments that an expert must relate to a particular practice area or specialty.  In 2019, however, the legislature revised the statute to require that the expert "practice<\/u> in the area of practice of the defendant." The full implications of the revised language is unknown, but it is almost certain design professionals will challenge certificates of merit on grounds that the affiant does not "practice" in the same area as the defendant if the expert is not of the same sub-specialty as the defendant.  

IV. Considerations

Practitioners should not take the duty to procure and timely file a certificate of merit lightly. Procuring a certificate can be a costly, time-consuming process and the consequences of failing to do so can be severe, as every certificate of merit statute provides a procedural mechanism for dismissal if the statutory requirements are not met. In some states, like Texas, an untimely or insufficient certificate may result in dismissal of the action with prejudice, with the potential for a legal malpractice suit to follow.

Practitioners should expect their certificate of merit to be challenged by the design professional as a matter of course.  Scrutiny of a certificate is likely to involve a highly fact and case-specific inquiry.  Understanding applicable statutory requirements and how each are likely to be interpreted by a court under applicable case law will be critical in preparing a defensible certificate.  Counsel should consult the applicable statutory framework and case law, which is developing rapidly across the legal landscape.  In addition to statutory requirements, construction practitioners should also be aware of the practical considerations discussed below. 

1.      Timing of the Certificate of Merit

Most certificate of merit statutes require the certificate to be filed contemporaneously with the initial complaint against the design professional. In some states, failure to file a certificate contemporaneously with the first-filed complaint may warrant dismissal of the action with prejudice. As such, practitioners must provide enough lead time to identify, retain, and educate a proper expert.  Additional time should be allotted to allow for the expert to draft the certificate itself.  While each certificate will vary in content and length based on the issues at hand, it is easy to imagine that complex design liability matters will require extensive drafting efforts in order to meet the detailed requirements of a certificate of merit.

In making these timing decisions, Counsel should also contemplate any applicable statute of limitations or repose that may apply to their client's claims.  If the time limits are about to expire, it may be difficult - if not impossible - to timely procure a well-supported certificate of merit.

Preparing a timely, defensible certificate is likely to be particularly burdensome for those practitioners representing a defendant who did not initiate the original lawsuit.  Third-party plaintiffs and cross-claimants do not control the time the original suit is filed.  In some states, like Texas, counsel may have a limited amount of time to prepare and file counterclaims, which, as described above, may also require a contemporaneously-filed certificate of merit. Counsel in this situation should immediately prioritize the identification and engagement of a proper expert.

Finally, timing of the certificate will be critical if there is a desire to preserve the plaintiff role.  A designer will likely win a race to the courthouse if they sense a lawsuit is imminent.  If preserving the plaintiff role is important, counsel should ensure its certificate is complete before signaling an impending lawsuit to the designer.

2.      Engaging the Right Expert

A firm understanding of any applicable certificate of merit statute is critical to selecting the right expert to issue the certificate of merit in support of a cause of action.  Each state has different requirements that should be consulted at the outset of any expert engagement.  These criteria generally include knowledge, skill, experience, education, training, and practice and practitioners should consult case law interpreting such provisions as such understanding will be critical to the successful implementation of an action against a design professional.  Outside of the statutory framework, additional considerations should be made when engaging an expert.

As a practical matter, it may be difficult to find an expert willing to put their name on a sworn statement alleging another professional breached his or her duty of care.  Design professionals are generally hesitant to allege a peer has breached his or her professional standard of care and committed malpractice. Of course, in states like California, where the design professional may generally remain anonymous, this will pose less of an obstacle; however, in jurisdictions with stricter requirements, such as Texas, it may be decidedly more difficult to locate a qualified and willing expert. This is especially true considering that, at the certificate stage and prior to discovery, the allegations of the complaint will generally be based on a limited set of facts and documents available to the expert.  The pool of willing experts dwindles further when dealing with matters involving particular geographic areas, niche areas of engineering practice, or where timing is urgent.

A seemingly obvious solution might be to seek out a retired engineer, or perhaps a professional testifying expert witness, to serve as the basis for the certificate of merit.  While these may be viable candidates, they raise another series of questions.  For example, is a retired engineer "actively engaged" in the practice of engineering? Are his or her licenses and/or continuing education requirements current?  Is a professional expert witness, who has not prepared or stamped plans in decades actually "practicing in the area" of the defendant design professional? It is common practice for design professional defendants to raise challenges like this when seeking dismissal based on procedural grounds, without consideration to whether the action is meritorious.

V. Conclusion

Certificate of merit statutes are intended to screen out meritless claims but also serve as a trap for the unwary, as failure to strictly comply with such statutes may result in the dismissal of meritorious claims on procedural and technical grounds. It is critical for construction practitioners to know and understand the statutory requirements applicable to the jurisdictions in which they practice. It is equally important for construction practitioners to understand the practical implications associated with preparing and defending their client's certificate of merit.

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James Moye

Moye, O’Brien, Pickert, Dillon & Masterson, Maitland, FL, Division 13 (Government Construction)

Paul Bennett

Moye, O’Brien, Pickert, Dillon & Masterson, Maitland, FL, Division 13 (Government Construction)