Generally, construction managers are retained by the owners to manage the construction projects. They do not enter directly into contracts with the general contractors, but instead as agents for owners. In such instances, and as a general rule, construction managers cannot be sued by the general contractors directly for the economic losses. However, if the construction managers commit fraud on the general contractors, they can be held liable. In TRAX Construction Co. v. Village of Reminderville, the court affirmed the lower court’s ruling against the professional manager and in a favor of the general contractor. The court founds that despite having no direct contract with the general contractor, the construction manager committed fraud by concealing material information about payment status, as well as misrepresenting to the general contractor when he would be paid, in order to keep the general contractor performing on the project.
In summary, it is evident that the courts may impose liability on the construction manager if he had intentionally attempted to defraud the contractor on the project. It should be also noted that claims of fraud are not typically covered by professional liability insurance and therefore, construction managers may expose themselves to a substantial liability putting their company assets on the line.