Background
The federal government funded rural internet expansion through the USDA Rural Utilities Service under the American Recovery and Reinvestment Act. Casair, an internet service provider, received funds to finance a 400-mile fiber-optic cable project in central Michigan. After becoming dissatisfied with the initial engineering firm, Casair hired JDF as the professional engineer in 2012 to manage the project. JDF, in turn, hired FiberSmith to serve as resident engineers supervising contractors.
The project encountered numerous issues, including incomplete contractor work, permit failures, and inadequate cleanup, but the parties met the federal operational deadline of July 31, 2015. A 2016 third-party review revealed extensive deficiencies: exposed infrastructure, open trenches, and exposed fiber-optic cable. Despite these findings, the parties continued communicating about closing the contract and obtaining required permits through July 2019, when Casair indicated it would not finalize the contract until all permits were secured.
In September 2019, JDF sued for unpaid engineering fees. Casair countersued for breach of contract and professional negligence. A jury found JDF liable for professional negligence but not breach of contract, awarding $1.5 million in damages. The trial court then issued judgment notwithstanding the verdict, reforming the award to reflect a breach of contract finding that the jury had rejected. JDF appealed.
The Court’s Holding
The Michigan Court of Appeals reversed the trial court’s reformation of the jury verdict. The court held that the trial court improperly granted Casair’s motion for judgment notwithstanding the verdict on the breach of contract claim. Because the contract required JDF to render services consistent with sound professional practices, reasonable jurors could have concluded that JDF’s work, though deficient as professional engineering, nonetheless satisfied the express contractual requirements. The jury’s verdict finding professional negligence but not breach of contract was legally reconcilable and fell within the jury’s province to decide.
On the statute of limitations issue, the court rejected JDF’s argument that Casair’s claims were time-barred under the two-year professional malpractice limitation period. The relationship between JDF and Casair never terminated; the parties continued communicating about permits, cleanup, and project closure through July 2019. JDF sent invoices as late as March 2018 for work performed in May 2017 and continued addressing issues identified by a third-party engineering review. This ongoing professional engagement meant the statute of limitations had not accrued when the lawsuit was filed in September 2019.
The court also affirmed the trial court’s damages ruling, holding that the $1.5 million award was not clearly excessive and was supported by evidence concerning lost revenue, project cost overruns, cleanup expenses, contractor negligence (including a sewage line incident), and diminished infrastructure value. The trial court properly denied JDF’s motion for a new trial and properly capped JDF’s potential recovery at $38,992.19 based on the contract’s requirement that engineering fee increases exceeding 20% must be approved by RUS through a formal amendment—a requirement JDF never satisfied.
Key Takeaways
- A professional relationship continues until actually terminated; ongoing communications about unfinished project work, even if unpaid, may preserve the relationship and delay statute of limitations accrual.
- Trial courts lack authority to override jury verdicts through judgment notwithstanding the verdict when reasonable jurors could have reached different conclusions on disputed factual issues.
- Contract language incorporating federal regulatory requirements—such as approval limits for cost increases—must be strictly enforced and cannot be circumvented by subsequent performance of work.
- Damages awards need not be mathematically precise and may be based on evidence of various losses, even when the exact amount cannot be proven with precision.
Why It Matters
This decision clarifies the accrual rule for professional malpractice claims in ongoing projects. Engineers, architects, attorneys, and other professionals should understand that if they continue providing services—particularly services tied to project closure, regulatory compliance, or follow-up review work—they remain in a professional relationship for statute of limitations purposes. The relationship does not end simply because major construction or substantive work has been completed; follow-up work on permits, inspections, and project closeout can extend the professional engagement indefinitely until the relationship is explicitly terminated.
The opinion reinforces that trial courts must respect jury verdicts on disputed factual issues and cannot use judgment notwithstanding the verdict as a tool to impose their own judgment about contract performance or causation of damages. When federal funding is involved and federal forms are incorporated into contracts, those forms’ restrictions—including compensation limits tied to regulatory approval—are enforceable contractual provisions that contractors cannot ignore by performing work beyond the compensation cap without securing a formal amendment.