Pierce Associates, Inc. v. Nemours Foundation

Nemours Foundation (Nemours) (plaintiff) hired Gilbane Building Company (Gilbane) to build the interior of a hospital. The contract stated that the agreement was under the following American Institute of Architects (AIA) guideline: “Nothing contained in the Contract Documents shall create any contractual relationship between the Owner [Nemours] or the Architect and any Subcontractor or Sub-subcontractor.” In addition, Exhibit A of the contract stated that Gilbane “shall have sole and total responsibility for completing the [general] contract . . . and is responsible to [Nemours] for the full, proper, and timely performance of all work under the contract.” Gilbane subcontracted with Pierce Associates, Inc. (Pierce) (defendant) to perform the mechanical work necessary for the interior of the hospital. Section 6 of the subcontract stated that Pierce “agrees to be bound to [Gilbane] by the terms and conditions of the Agreement . . . and to assume toward [Gilbane] all the obligations and responsibilities that [Gilbane], by these documents, assumes toward [Nemours].” The subcontract also incorporated the AIA guideline quoted above. Nemours approved the subcontract, stating in the approval letter “nothing herein shall be deemed or construed to create any contractual relationship between [Nemours] and said subcontractor.” During the project, a number of disputes between the parties arose and the project was eventually completed 21 months late. Nemours brought suit against Pierce on a third party beneficiary theory. The district court found in favor of Nemours. Pierce appealed.