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NEWS
ASFE Publishes Bibliography of Economic Loss Doctrine Cases
May 11, 2006

The economic loss doctrine is an important protection for design professionals, who therefore need to know in which states it is and is not applied, and to what extent. The economic loss doctrine bars use of tort claims (e.g., professional negligence and negligent misrepresentation claims) to recover purely economic losses, such as those stemming from property damage or construction delays. In states that uphold the doctrine in full, purely economic damages may be recovered from design professionals only via breach of contract suits, limiting claimants to design professionals’ clients, as opposed to third parties.

According to research unveiled by ASFE/The Best People on Earth, 13 states uphold the economic loss doctrine in full, and another 13 uphold it in part. In the latter 13, third parties may file tort claims to recover economic losses only when certain conditions prevail, or for some torts but not others; e.g., for negligent misrepresentation but not professional negligence. (Exactly that development occurred in Pennsylvania (Bilt-Rite Contractors v. Architectural Studio), where the courts ruled that a contractor could seek to recover damages from an architect based on a claim that the architect had negligently misrepresented that its plans for a curtain wall were buildable as designed.)

ASFE research also indicates that six states – Georgia, Minnesota, Montana, Rhode Island, South Carolina, and West Virginia – have abandoned the economic loss doctrine altogether. There, design professionals owe a broad duty of care to any party that could foreseeably be damaged by their acts, errors, or omissions, and third parties – such as owner-clients’ contractors – are allowed to sue design professionals directly, based on professional negligence, negligent misrepresentation, and other tort theories, in efforts to collect purely economic damages.

The status of the economic loss doctrine is unclear in 18 states, ASFE says.

ASFE’s new, state-by-state status report on the economic loss doctrine – Bibliography of Economic Loss Doctrine Cases – was developed for ASFE’s Legal Affairs Committee by Skellenger Bender, P.S., a Seattle (WA) law firm. Terence J. Scanlan, Esq., a principal of the firm, is a member of the Committee. The document includes case citations that can be used for research purposes. Twice-a-year updating is planned.

Bibliography of Economic Loss Doctrine Cases is available for $95 It can be ordered from ASFE’s website (www.asfe.org) or by contacting ASFE Resources Manager Alpha Moore (alpha@asfe.org or 301/565-2733, ext. 225).


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