economic loss doctrine in Maryland

2007This Court further explicated the application of the exception to the economic loss rule in Morris v. Osmose, 340 Md. 519 , 667 A.2d 624 (1995).

2007This Court further explicated the application of the exception to the economic loss rule in Morris v. Osmose, 340 Md. 519 , 667 A.2d 624 (1995).

2016The Supreme Court held that the contractor was barred from bringing a negligent misrepresentation claim by the economic loss rule because the construction industry has the “freedom to allocate economic risk through contract.” As stated in Whiting-Turner , “[t]he tort of negligent misrepresentation has been recognized in this State.” 308 Md. at 41-42 , 517 A.2d 336 (citing Flaherty v. Weinberg, 303 Md. 116, 135 , 492 A.2d 618 (1985); Martens Chevrolet, Inc. v. Seney, 292 Md. 328 , 439 A.2d 534 (1982)).

2016The Supreme Court held that the contractor was barred from bringing a negligent misrepresentation claim by the economic loss rule because the construction industry has the “freedom to allocate economic risk through contract.” As stated in Whiting-Turner , “[t]he tort of negligent misrepresentation has been recognized in this State.” 308 Md. at 41-42 , 517 A.2d 336 (citing Flaherty v. Weinberg, 303 Md. 116, 135 , 492 A.2d 618 (1985); Martens Chevrolet, Inc. v. Seney, 292 Md. 328 , 439 A.2d 534 (1982)).

2017Privity, Tort Duty, and the Economic Loss Doctrine The economic loss doctrine represents a judicial refusal to extend tort liability to negligence that causes purely economic harm in the absence of privity, physical injury, or risk of physical injury. 8 See Seely v. White Motor Co., 63 Cal.2d 9 , 45 Cal.Rptr. 17 , 403 P.2d 145, 150-51 (1965); E. *612 River S.S.

2017Privity, Tort Duty, and the Economic Loss Doctrine The economic loss doctrine represents a judicial refusal to extend tort liability to negligence that causes purely economic harm in the absence of privity, physical injury, or risk of physical injury. 8 See Seely v. White Motor Co., 63 Cal.2d 9 , 45 Cal.Rptr. 17 , 403 P.2d 145, 150-51 (1965); E. *612 River S.S.

2017Library, 929 N.E.2d at 740 (“[Wjhen it comes to claims for pure economic loss, the participants in a major construction project define for themselves their respective risks, duties, and remedies in the network or chain of *623 contracts governing the project.”); Terracon Consultants W., Inc. v. Mandalay Resort Grp., 125 Nev. 66 , 206 P.3d 81, 89 (2009) (“In the context of engineers and architects, the bar created by the economic loss doctrine applies to commercial activity for which contract law is better suited to resolve professional negligence claims.”); LAN/STV, 435 S.W.3d at 249 (“[Cjourt

2016See Berschauer/Phillips Construction Co. v. Seattle School District, 124 Wash.2d 816 , 881 P.2d 986 (1994) (holding that, under the economic loss rule, a contractor was not allowed to recover purely economic damages from a design professional in tort and recovery was limited to remedies provided by the construction contract); BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo.2004) (holding that the economic loss rule barred the subcontractor’s negligence and negligent misrepresenta *449 tion claims against an engineering firm and inspector), declined to extend by S K Peightal Engineers, LTD

2017Eby Const. Co., 435 S.W.3d 234, 249 (Tex. 2014) (“[T]he courts are fairly evenly divided over whether to apply the economic loss rule in [design professional liability to third party] situation^].” (footnote omitted)).

2017Library, 929 N.E.2d at 740 (“[Wjhen it comes to claims for pure economic loss, the participants in a major construction project define for themselves their respective risks, duties, and remedies in the network or chain of *623 contracts governing the project.”); Terracon Consultants W., Inc. v. Mandalay Resort Grp., 125 Nev. 66 , 206 P.3d 81, 89 (2009) (“In the context of engineers and architects, the bar created by the economic loss doctrine applies to commercial activity for which contract law is better suited to resolve professional negligence claims.”); LAN/STV, 435 S.W.3d at 249 (“[Cjourt

2016In Cash & Carry America, we observed that the economic loss doctrine has been expanded in some states, limited in others, and given way to " 'vast confusion over this area of law.' " 223 Md.App. at 466, n. 6 , 117 A.3d 52 (quoting David v. Hett, 293 Kan. 679 , 270 P.3d 1102, 1105 (2011)); see also LAN/STV v. Martin K.

2016In Cash & Carry America, we observed that the economic loss doctrine has been expanded in some states, limited in others, and given way to " 'vast confusion over this area of law.' " 223 Md.App. at 466, n. 6 , 117 A.3d 52 (quoting David v. Hett, 293 Kan. 679 , 270 P.3d 1102, 1105 (2011)); see also LAN/STV v. Martin K.

2017Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 870-71 , 106 S.Ct. 2295 , 90 L.Ed.2d 865 (1986) (applying the economic loss doctrine “to maintain a realistic limitation on damages”); Lloyd v. Gen.

2017Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 870-71 , 106 S.Ct. 2295 , 90 L.Ed.2d 865 (1986) (applying the economic loss doctrine “to maintain a realistic limitation on damages”); Lloyd v. Gen.

2021In its memorandum in support of this motion, Hamilton Bank argued that Bel Air Carpet could not “prevail on its negligence claim against Hamilton Bank as a matter of law because Hamilton Bank had no obligation to ensure that Korey Homes paid subcontractors such as Bel Air [Carpet].” Invoking the economic loss rule as articulated in Jacques v. First National Bank of Maryland, 307 Md. 527, 534 (1986), Hamilton Bank asserted that “[i]t is well-settled that, ‘[w]here the failure to exercise due care creates a risk of economic loss only, courts have generally required an intimate nexus between the

2018Jacques , 307 Md. at 534 n.4, 515 A.2d 756 . 6 "The economic loss doctrine, which developed in product liability cases, prohibits a plaintiff from recovering tort damages for what in fact is a breach of contract." Cash & Carry America , 223 Md.

2018After clarifying the nature and purpose of the economic loss doctrine 6 , we concluded that CCA's claim, that *254 in negligently carrying out the roof replacement work, Depaula and Roof Solutions carelessly used a torch so as to accidentally set fire to the roof, constituted "a tort claim to which the economic loss doctrine has no relevance." Id. at 467 , 117 A.3d 52 .

2018After clarifying the nature and purpose of the economic loss doctrine 6 , we concluded that CCA's claim, that *254 in negligently carrying out the roof replacement work, Depaula and Roof Solutions carelessly used a torch so as to accidentally set fire to the roof, constituted "a tort claim to which the economic loss doctrine has no relevance." Id. at 467 , 117 A.3d 52 .

2017See BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66, 74, 75 (Colo. 2004) (economic loss doctrine barred subcontractor’s negligence and negligent misrepresentation claims against engineering firm and inspector); Indianapolis-Marion Cty.

2016See Berschauer/Phillips Construction Co. v. Seattle School District, 124 Wash.2d 816 , 881 P.2d 986 (1994) (holding that, under the economic loss rule, a contractor was not allowed to recover purely economic damages from a design professional in tort and recovery was limited to remedies provided by the construction contract); BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo.2004) (holding that the economic loss rule barred the subcontractor’s negligence and negligent misrepresenta *449 tion claims against an engineering firm and inspector), declined to extend by S K Peightal Engineers, LTD

2017Motors Corp., 397 Md. 108, 128-29 , 916 A.2d 257 (2007); 3 Dan B.

2016See, e.g., Lloyd, 397 Md. at 121 , 916 A.2d 257 (stating that the economic loss doctrine will not bar a claim for products liability where the product at issue [defective car seats that collapse rearward in rear-impact collisions] creates a dangerous condition that “gives rise to a clear danger of death or personal injury.” (citation omitted)); A.J.

2021In its memorandum in support of this motion, Hamilton Bank argued that Bel Air Carpet could not “prevail on its negligence claim against Hamilton Bank as a matter of law because Hamilton Bank had no obligation to ensure that Korey Homes paid subcontractors such as Bel Air [Carpet].” Invoking the economic loss rule as articulated in Jacques v. First National Bank of Maryland, 307 Md. 527, 534 (1986), Hamilton Bank asserted that “[i]t is well-settled that, ‘[w]here the failure to exercise due care creates a risk of economic loss only, courts have generally required an intimate nexus between the

2021We would render Hamilton Bank the “insurer of the subcontractors’ interest”— a concern we enunciated in Kline. 102 Md.

2021Negligence > Duty of Care > Economic Loss Doctrine Maryland has adopted the economic loss doctrine, which generally precludes tort liability for “negligence that causes purely economic harm in the absence of privity, physical injury, or risk of physical injury.” Balfour Beatty Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP, 451 Md. 600, 611 (2017).

2021Duty, the Economic Loss Doctrine, and the Intimate Nexus Maryland has adopted the economic loss doctrine, which generally precludes tort liability for “negligence that causes purely economic harm in the absence of privity, physical injury, or risk of physical injury.” Balfour Beatty, 451 Md. at 611 .

2017See Jim’s Excavating Serv., Inc. v. HKM Assocs., 265 Mont. 494 , 878 P.2d 248, 255 (1994) (“[W]e hold that a third party contractor may successfully recover for purely economic loss against a project engineer or architect when the design professional knew or should have foreseen that the particular plaintiff or an identifiable class of plaintiffs were at risk in relying on the information supplied.”); Bilt-Rite Contractors, Inc. v. The Architectural Studio, 581 Pa. 454 , 866 A.2d 270 , 286-87 (2005) (general contractor could bring negligent misrepresentation claim based on Restatement (Second)

2017See Jim’s Excavating Serv., Inc. v. HKM Assocs., 265 Mont. 494 , 878 P.2d 248, 255 (1994) (“[W]e hold that a third party contractor may successfully recover for purely economic loss against a project engineer or architect when the design professional knew or should have foreseen that the particular plaintiff or an identifiable class of plaintiffs were at risk in relying on the information supplied.”); Bilt-Rite Contractors, Inc. v. The Architectural Studio, 581 Pa. 454 , 866 A.2d 270 , 286-87 (2005) (general contractor could bring negligent misrepresentation claim based on Restatement (Second)

2017See Jim’s Excavating Serv., Inc. v. HKM Assocs., 265 Mont. 494 , 878 P.2d 248, 255 (1994) (“[W]e hold that a third party contractor may successfully recover for purely economic loss against a project engineer or architect when the design professional knew or should have foreseen that the particular plaintiff or an identifiable class of plaintiffs were at risk in relying on the information supplied.”); Bilt-Rite Contractors, Inc. v. The Architectural Studio, 581 Pa. 454 , 866 A.2d 270 , 286-87 (2005) (general contractor could bring negligent misrepresentation claim based on Restatement (Second)

2017Library, 929 N.E.2d at 740 (“[Wjhen it comes to claims for pure economic loss, the participants in a major construction project define for themselves their respective risks, duties, and remedies in the network or chain of *623 contracts governing the project.”); Terracon Consultants W., Inc. v. Mandalay Resort Grp., 125 Nev. 66 , 206 P.3d 81, 89 (2009) (“In the context of engineers and architects, the bar created by the economic loss doctrine applies to commercial activity for which contract law is better suited to resolve professional negligence claims.”); LAN/STV, 435 S.W.3d at 249 (“[Cjourt

2017Library, 929 N.E.2d at 740 (“[Wjhen it comes to claims for pure economic loss, the participants in a major construction project define for themselves their respective risks, duties, and remedies in the network or chain of *623 contracts governing the project.”); Terracon Consultants W., Inc. v. Mandalay Resort Grp., 125 Nev. 66 , 206 P.3d 81, 89 (2009) (“In the context of engineers and architects, the bar created by the economic loss doctrine applies to commercial activity for which contract law is better suited to resolve professional negligence claims.”); LAN/STV, 435 S.W.3d at 249 (“[Cjourt

2017Library, 929 N.E.2d at 740 (“[Wjhen it comes to claims for pure economic loss, the participants in a major construction project define for themselves their respective risks, duties, and remedies in the network or chain of *623 contracts governing the project.”); Terracon Consultants W., Inc. v. Mandalay Resort Grp., 125 Nev. 66 , 206 P.3d 81, 89 (2009) (“In the context of engineers and architects, the bar created by the economic loss doctrine applies to commercial activity for which contract law is better suited to resolve professional negligence claims.”); LAN/STV, 435 S.W.3d at 249 (“[Cjourt