Economic Loss Doctrine Alive and Well in Indiana
Although there is some movement in other jurisdictions to extend a design professional’s liability to an owner with whom it had no contractual relationship, Indiana has recently rejected such an expansion. In recent a recent decision from the Indiana Court of Appeals in Indianapolis-Marion County Public Library v. Thornton Tomasetti Engineers the Court affirmed summary judgment for the structural engineer on the owner’s claims of negligence. The owner had entered into a contract with an architectural firm who subsequently retained the structural engineer to provide structural engineering services for the project. When issues arose with regard to the design and construction of the project, the owner sued the architect and the structural engineer directly for the costs associated with the repair of the structure.
In response to the owner’s claims that it should be permitted to assert a direct claim against a design professional with whom it had no direct contract, the court held that the owner had purchased a package through the architect for the design of the entire project. The “design” was the “product” purchased by the owner. This “product” included the structural design. The damages related to the repair and reconstruction of the structural engineer’s product, constituted economic loss for which the owner’s sole remedy lies in contract.
The Court further rejected the owner’s assertion that its negligence claim should be allowed to proceed because the structural engineer owes professional duties akin to those owed by other professionals such as attorneys and accountants. “Where the loss is solely economic in nature, as where the claim of loss relates to the product’s failure to live up to expectations, and in the absence of damage to other property or person, then such losses are more appropriately recovered by contract remedies.”
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Attorney Spotlight
C. Michael Shull, III focuses his practice on construction law and litigation. Michael's client representations range from casinos and ENR Top 400 contractors to design firms and subcontractors.