## Facts

- Richard and James Duffy and Piazza Construction, Inc. (through John Piazza) entered a written agreement to jointly submit a proposal for a U.S. Forest Service lease-construction project.
- Under the agreement, Piazza was to supply drawings, specifications, and cost items to prepare the proposal, while the Duffys were to provide land; returns were to reflect the fair market value of contributions.
- The solicitation required proposals to include at least 15,500 square feet of net usable office space.
- Piazza prepared multiple plans, including two exceeding the minimum and a third offering 15,000 square feet based on a suggested floor plan.
- The joint venture submitted the 15,000-square-foot plan as its final bid.
- The Forest Service rejected the bid as nonresponsive for failing to meet the minimum square-footage requirement, and the contract was awarded to another bidder.
- The Duffys sued Piazza for negligence, seeking lost profits from the failed bid; they alleged no personal injury, property damage, or bad-faith conduct.

## Issues

1. Whether one joint venturer may maintain a negligence action against another for mistakes in business judgment that cause only economic loss and no injury to person or property.
2. Whether the joint venture agreement imposed a particular or extraordinary degree of diligence and skill that would support intra-venture negligence liability for bid-preparation errors.

## Decision

- The Washington Court of Appeals affirmed summary judgment for Piazza Construction and dismissal of the negligence claim.
- The court held that joint-venture relations are governed by partnership principles, including duties of good faith, fairness, candid disclosure, and honesty.
- The court held that a joint venturer is not liable in negligence to co-venturers for business-judgment mistakes unless (a) the negligence causes injury to person or property, or (b) the venturer fails to exercise a particular or extraordinary degree of diligence and skill required by the venture agreement.
- Because the Duffys alleged only lost profits and did not allege personal/property injury, breach of fiduciary duty, or an agreement-based heightened duty, their negligence claim failed as a matter of law.

## Legal Principles

- The rights, duties, and liabilities of joint venturers generally follow partnership law, including fiduciary-type obligations of good faith, fairness, candid disclosure, and honesty.
- Intra-venture negligence liability for business-management errors is limited; ordinary mistakes in business judgment are not actionable between venturers absent personal/property injury or a specifically assumed heightened skill/diligence obligation.
- Purely economic losses (such as lost profits) from an unsuccessful venture decision, without personal/property injury or breach of fiduciary duty, do not support a negligence claim between joint venturers.

## Conclusion

The court refused to convert an internal joint-venture dispute over a failed, noncompliant bid into a tort claim for lost profits, holding that absent personal/property injury, breach of fiduciary duty, or an agreement-imposed heightened duty of skill, a co-venturer’s business-judgment error is not actionable in negligence.


Duffy v. Piazza Constr., Inc., 62 Wn. App. 19, 815 P.2d 267 (Wash. Ct. App. 1991)