Article
Source: Under Construction Vol. 19, No. 2
Article
10.30.17
The economic loss doctrine has long stood for the proposition that one cannot recover purely economic damages (i.e., harm without property damage and/or personal injury) in tort, generally leaving the potential for recovery of economic losses available only to those in privity of contract. In the construction context — with many extracontractual parties involved in work that necessarily implicates the others— the economic loss doctrine can present serious hurdles to a harmed party’s recovery of damages actually incurred.
As a case in point, design professionals commonly contract directly with only the owner of a project, but issue reports, plans, and specifications that are for the purpose of, and must be relied upon by, other parties for the performance of their work on the project. If purely economic losses result from delays to the construction schedule or costs to repair or replace work as a result of design deficiencies, these impacted parties have limited recourse against the design professional under traditional applications of the economic loss doctrine.
As a result, various jurisdictions continue to struggle with the question of whether third parties may sue design professionals for purely economic loss, resulting in inconsistent applications of the doctrine.[1]
This article discusses the different approaches taken by New York and California in applying the economic loss doctrine with regard to damages resulting from services provided by design professionals on a construction project.