Duffy v. Piazza Construction, Inc.

Washington Court of Appeals · 1991 · Corporations

815 P.2d 267 (1991)

Updated August 22, 2026

CorporationsJoint venturesPartnership dutiesNegligencejoint venturepartnership analogymanagement of venturegood faith

Facts

The Duffys and John Piazza, president of Piazza Construction, signed a letter agreement to joint venture in submitting a proposal to the United States Forest Service for office facilities. Under the agreement, Piazza was to supply drawings, building specifications, and cost items, while the Duffys were to make land available. Piazza's final proposal included only 15,000 square feet of net usable office space, although the solicitation required at least 15,500 square feet, and the Forest Service rejected the bid as nonresponsive. The Duffys sued Piazza for negligence, seeking the lost profits they expected from the venture.

Issue

May one joint venturer sue another for negligence in the management of the joint venture where the alleged negligence occurred within the scope of the venture's business and the claim is only for economic loss, with no allegation of bad faith or physical injury to person or property?

Rule

The relationship between joint venturers is governed generally by the same rules as partnerships. Although joint venturers owe each other duties of good faith, fairness, candid disclosure, and honesty, one joint venturer generally is not liable to another for negligence in the ordinary management or operation of the venture. A negligence action may lie if the negligence causes injury to the person or property of the claimant, and the opinion also recognizes authorities stating liability may exist for breach of trust or where the venture calls for a particular or extraordinary degree of diligence and skill.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Spokane, Nora Kim and Elias Reed signed a written agreement to jointly pursue a city parking-garage project. Elias was responsible for preparing and submitting the proposal, but he accidentally omitted a required financial schedule, and the city rejected the bid; Nora sued him for negligence seeking her share of the venture's expected profits.

If Nora alleges only careless preparation of the bid and no bad faith or physical injury, what is the most likely result?

Explanation. The majority treated joint ventures like partnerships and stated that, generally, one joint venturer is not liable to another for negligence in the ordinary management or operation of the venture. Where the alleged misconduct is only negligent business management and the claimed harm is lost profits or similar economic loss, the negligence claim does not lie absent bad faith or physical injury to person or property.