Nevada Supreme Court bars negligent misrepresentation claims against design professionals
Today, the Nevada Supreme Court granted a petition for writ of mandamus in the CityCenter Litigation barring under the economic loss doctrine negligent misrepresentation claims against design professionals on a commercial construction project. Gene Backus presented oral argument to the en banc Court for the successful structural engineering firm. Specifically, this significant appellate decision in favor of design professionals such as architects and engineers precluded a negligent misrepresentation claim under Restatement (Second) of Torts section 552.
Today’s holding by Nevada’s highest court continues to uphold the fundamental boundary between contract law and tort law in construction law where only economic damages are sought. The Court confirmed that contract law was designed to enforce the expectancy of the parties and in these commercial construction matters, the parties are sophisticated and negotiate risk management allocation in their contracts and subcontracts.
This case involved a claim by a subcontractor responsible for reinforced steel placement trying to directly seek relief for negligent misrepresentation, indemnity, contribution and apportionment from the structural engineer on the project, alleging that the structural engineer negligently misrepresented its observations and inspections of the steel placement work and negligently misrepresented its design would be constructable. The Court refused to allow such a loophole wherein the requested negligent misrepresentation exception to the economic loss doctrine would extinguish the rule.
The Court noted this decision did not bar the subcontractor from relying on the Spearin doctrine if the plans and specifications were defective and the plans were indeed followed by the subcontractor.
This decision of the Nevada Supreme Court is cited as 129 Nev. Advance Opinion 42 and captioned Halcrow, Inc., Petitioner, vs. The Eighth Judicial District Court of the State of Nevada, in and for the County of Clark; and The Honorable Elizabeth Goff Gonzalez, District Judge, Respondents, and Pacific Coast Steel; and Century Steel, Inc., Real Parties in Interest.