Elliot-Lewis Corporation v. Skanska USA Building, Inc., 2016 U.S. Dist. LEXIS 59406 (May 4, 2016)

The Bilt-Rite exception to the economic loss doctrine does not apply to a service contractor who merely provided information used to troubleshoot or repair an HVAC system after it was installed.

As part of a renovation construction project, a new air conditioning system was installed at the Franklin Institute in Philadelphia. Due to errors that arose during the installation, the system was not ready for “start-up and testing” by the owner’s deadline. Disputes over the installation of the system occurred, resulting in a lawsuit by the HVAC subcontractor, Elliot-Lewis Corporation, against the general contractor, Skanska USA Building, Inc., for unpaid work. Skanska then sued the project architects and engineers (designers), asserting that any amount owed to its subcontractor arose from the designers’ negligent misrepresentations. The designers in turn sued a number of entities including Comprehensive Test & Balance, Inc. (CTB), asserting negligent misrepresentation claims.

The designers specifically asserted that CTB was retained to supply flow data for the system upon which they relied to troubleshoot the problems with the system. CTB filed a motion for judgment on the pleadings asserting that the designers’ claims were barred by the economic loss doctrine. The designers argued that the Bilt-Rite exception, which permits negligent misrepresentation claims against design professionals arising solely from economic losses, should apply as CTB negligently supplied information upon which the designers relied. The court declined to extend the narrow Bilt-Rite exception to the claims against CTB, finding that the information provided by CTB, which did not occur until after the system was installed, was not akin to the information supplied by an architect or engineer that is used during the original construction/installation. The court further distinguished the Pennsylvania Superior Court’s recent holding in Gongloff Contracting, L.L.C. v. L. Robert Kimball & Assocs., Architects & Engineers, Inc., 119 A.3d 1070 (Pa. Super. 2015), in which the court held that representations “made during the course of performance of a contract” fell within the Bilt-Rite exception. However, the court distinguished this matter because CTB was not retained and did not provide any information until after the problems with the system arose. The court granted CTB’s motion to judgment on the pleadings pursuant to the economic loss doctrine, dismissing it from the case.

Case Law Alerts, 3rd Quarter, July 2016

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