Bakke v. Magi-Touch Carpet One Floor & Home, Inc.

Supreme Court of North Dakota
2018 ND 273 (2018)

ELI5:

Rule of Law:

A party that delegates its duties under a contract to an independent contractor remains liable to the other contracting party for a breach of that contract, including the breach of any implied warranties.

Facts:

Shannon Bakke entered into a contract with Magi-Touch Carpet One Floor & Home, Inc. (Magi-Touch) for the installation of floor tiles, a shower base, and related products in her bathroom.
Magi-Touch hired an independent contractor, VA Solutions, LLC, to perform the installation work.
The shower door was improperly installed by VA Solutions.
As a result of the improper installation, the shower door imploded.
The implosion caused property damage to the surrounding bathroom door and trim, which required repainting.
Magi-Touch refused to compensate Bakke for the cost of repainting the damaged door and trim.

Procedural Posture:

Shannon Bakke initiated litigation against Magi-Touch Carpet One Floor & Home, Inc. in small claims court.
Magi-Touch filed an answer, demanded a jury trial, and had the case removed to the district court.
In the district court, Magi-Touch moved for summary judgment, arguing it could not be held liable for the negligence of an independent contractor.
Bakke filed a motion to amend her complaint to explicitly add claims for breach of contract, negligence, fraud, and others.
The district court granted summary judgment for Magi-Touch and denied Bakke's motion to amend her complaint as futile.
Bakke, as appellant, appealed the judgment and the denial of her motion to amend to the Supreme Court of North Dakota.

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Issue:

Does a contracting party escape liability for breach of contract by delegating the performance of its contractual duties to an independent contractor whose work is defective?

Opinions:

Majority - Jensen, Justice

No. A contracting party does not escape liability for breach of contract by delegating performance to an independent contractor. The court reasoned that while a party can delegate the performance of its duties, it cannot delegate away its ultimate liability for a breach of those duties. The court distinguished this case from a tort claim for negligence, where the independent contractor rule might shield a party from liability. Here, Bakke's core claim is for breach of contract, specifically the implied warranty of fitness for a particular purpose inherent in construction contracts. Citing North Dakota precedent and well-established contract law principles, the court held that Magi-Touch remained fully liable for fulfilling its contractual obligations, including the quality of the installation, regardless of its decision to hire VA Solutions to perform the work. Therefore, the district court erred in denying Bakke's motion to amend her complaint to assert a breach of contract claim, as such a claim was not futile.

Analysis:

This decision reaffirms the fundamental contract law principle that liability is not delegable, even when performance is. It draws a clear line between tort liability, where the independent contractor doctrine can provide a defense, and contract liability, where it does not. The case serves as a critical precedent for general contractors, holding them accountable for the quality of work performed by their subcontractors and ensuring that customers have a direct remedy against the party with whom they originally contracted. This clarifies that a party cannot use subcontractors as a shield to evade its contractual promises, thereby strengthening consumer protection in construction and service agreements.

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