Balfour Beatty Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP, No. 14, September 

Term, 2016, Opinion by Adkins, J.

TORTS — DUTY — ECONOMIC LOSS DOCTRINE: In the absence of privity,

physical injury, or risk of physical injury, the economic loss doctrine bars parties from 

bringing negligence claims for purely economic losses. 

TORTS — DUTY — PRIVITY-EQUIVALENT INTIMATE NEXUS: The privityequivalent duty analysis of the intimate nexus test from Jacques v. First National Bank of 

Maryland, 307 Md. 527 (1986), does not extend to design professionals on public 

construction projects. Therefore, in the absence of privity, physical injury, or risk of 

physical injury, a design professional cannot be held liable to a contractor on the same 

government construction project for purely economic losses. Accordingly, a general 

contractor’s professional negligence and negligent misrepresentation causes of action 

against a government construction project’s engineer fail. Additionally, because we 

decline to apply the privity-equivalent duty analysis in the public construction context, a 

general contractor’s cause of action based on the Restatement (Second) of Torts § 552, a 

privity equivalent, also fails. 
Circuit Court for Baltimore City

Case No.: 24-C-14-000060

Argued: October 6, 2016

IN THE COURT OF APPEALS

OF MARYLAND

No. 14

September Term, 2016

BALFOUR BEATTY INFRASTRUCTURE, INC.

v.

RUMMEL KLEPPER & KAHL, LLP

Barbera, C.J.

Greene

Adkins

McDonald

Watts

Getty

Battaglia, Lynne A. (Senior Judge, 

Specially Assigned),

JJ.

Opinion by Adkins, J.

Filed: February 21, 2017
In this appeal we revisit the elusive economic loss doctrine, to decide whether to 

extend a duty in tort to persons not in privity for the recovery of purely economic losses. 

Petitioner, a general contractor who successfully bid for work on a City of Baltimore 

construction project, argues that Respondent, the project’s design engineering firm, owes 

it a tort duty of care because Respondent knew that Petitioner would rely on its designs in 

bidding and constructing the project. We shall hold, that, in the absence of contractual 

privity, physical injury, or risk of physical injury, design professionals in large government 

construction projects do not owe a tort duty to those who bid for and contract with a 

government entity.

FACTS AND LEGAL PROCEEDINGS

The City of Baltimore (“City”) contracted with Rummel Klepper & Kahl, LLP 

(“Engineer”) to design upgrades to the Patapsco Wastewater Treatment Plant. Under the 

contract, Engineer was tasked with designing the plans for two interrelated projects, 

Sanitary Contract 852R (“SC 852R”) and Sanitary Contract 845R (“the companion 

project”).

1

 According to Balfour Beatty Infrastructure, Inc.’s (“Contractor”) complaint, 

Engineer’s responsibilities under the contract included:

 Developing the design for SC 852R and its companion 

project;

 Developing drawings and specifications for prospective 

contractors to use when submitting bids and for the 

successful contractor to use for construction;

 

1 The full names of these projects, as alleged in Balfour Beatty Infrastructure, Inc.’s 

(“Contractor”) complaint, are “SC 845R - Nitrification Filters and Related Work for the 

Enhanced Nutrient Removal Facilities at Patapsco Wastewater Treatment Plant” and “SC 

852R - Denitrification and Related Work for the Enhanced Nutrient Removal Facilities at 

Patapsco Wastewater Treatment Plant.”
2

 Developing construction timetables for the projects;

 Providing responses to questions from prospective bidders 

regarding the design of the projects;

 Evaluating and commenting on contractors’ bids;

 Evaluating and approving submissions from the successful

contractor during construction;

 Inspecting the successful contractor’s work during 

construction to ensure conformance with Engineer’s 

design; and

 Evaluating and accepting the successful contractor’s work 

and certifying the work to the City.

The City opened both projects up to bids through its competitive bidding process.2

Contractors that submitted bids had to be prequalified as being able to complete the work 

required by the designs. Contractor3 was the successful bidder for SC 852R.4 Under its 

contract with the City, Contractor agreed to construct 34 denitrification filter cells (“DNF 

cells”), which are concrete tubs that hold untreated wastewater, next to the existing

wastewater treatment facility. Contractor was also to construct “pipes and pipe support 

systems” for SC 852R. During construction, Contractor encountered leaking and other 

problems, which resulted in delays and cost overruns.

 

2 The City of Baltimore (“City”) solicited bids for SC 852R before SC 845R (“the 

companion project”) even though both projects were to be completed around the same time. 

3 Fru-Con Construction Corporation (“Fru-Con”), Contractor’s predecessor in 

interest, was prequalified to submit a bid for SC 852R. In 2009, Fru-Con secured the 

contract for the construction of SC 852R. The City then permitted Fru-Con to assign its 

agreement to Fru-Con Construction, LLC (“Fru-Con LLC”). Contractor later acquired all 

of the membership interests in Fru-Con LLC. In 2014, Contractor ultimately “fully 

absorbed” Fru-Con LLC as one of its divisions. 

4 Engineer claimed that Contractor secured contracts for the construction of both SC 

852R and the companion project, but “[f]or reasons only known to the pleader,” Contractor 

“has declined to allege that it holds the contracts with the City for both of the projects.”
3

In 2014, Contractor filed a complaint against Engineer in the Circuit Court for 

Baltimore City seeking to recover its financial losses. According to Contractor’s 

complaint, Engineer designed the DNF cells using expansion and contraction joints that 

were meant to accommodate changes in water pressure in the cells. On completion, the 

water retention ability of the DNF cells was tested. The testing revealed leaks due to cracks 

in the expansion joints. Contractor averred that it constructed the DNF cells according to 

Engineer’s design, and any leaking from the expansion joints was a “direct result of 

deficiencies in [Engineer’s] design.” It alleged “substantial additional costs, expenses and

time to remediate the leaks.” Contractor also claimed that Engineer’s “design of the pipe 

support system was defective,” which caused it to suffer additional financial losses and 

delays. 

Finally, Contractor averred that Engineer failed to timely complete the design for 

SC 852R’s companion project, which “hindered and delayed” Contractor’s construction of 

SC 852R. Engineer also allegedly failed to warn SC 852R’s prospective bidders of the 

delayed completion of the companion project’s design and established an unreasonable 

time line for the completion of SC 852R, which Contractor relied on when submitting its 

bid. As a result, Contractor claimed, it “incurred significant cost, expense and time for 

which [Engineer] is responsible.” 

In its three-count complaint against Engineer, Contractor brought a professional 

negligence claim, a negligent misrepresentation claim, and a cause of action based on 

Restatement (Second) of Torts § 552. As to the professional negligence claim, Contractor

alleged that an “intimate nexus” and “contractual privity equivalent” existed between it and 
4

Engineer, and that Engineer owed it a duty of reasonable care “exercised by similarly 

situated design professionals.” Contractor further alleged that it was a foreseeable party 

who “would utilize and directly rely upon [Engineer’s] professional services including, but 

not limited to, the preliminary and final design of [SC 852R].” 

In its negligent misrepresentation claim, Contractor asserted that because Engineer

designed the interrelated projects, it was aware that any delay in the design of the 

companion project would impact SC 852R. Contractor also claimed that Engineer intended 

prospective bidders like Contractor to rely on the time line it had developed for SC 852R 

when submitting bids for the project, and an intimate nexus and privity equivalent existed 

between it and Engineer, establishing a duty. In Contractor’s words, Engineer owed it “a 

duty to fairly and accurately describe the contract duration for [SC 852R] as well as the 

status of the [companion project’s] design.” In addition, Contractor alleged, Engineer

knew that the companion project’s design was not sufficiently complete to allow for timely 

completion of SC 852R. Therefore, Contractor claimed, Engineer had a duty to advise 

prospective bidders, including Contractor, that SC 852R could not be completed within the 

time frame it had established. Finally, in its Restatement (Second) of Torts § 552 cause of 

action, Contractor alleged that Engineer provided designs, plans, and specifications for the 

construction of SC 852R, which contained deficiencies, and knew or should have known 

that Contractor would rely on those documents, causing it damages. 

Engineer filed a motion to dismiss for failure to state a claim. In its motion, 

Engineer argued that without privity between the parties, no legally cognizable tort duty 

ran from Engineer to Contractor that would permit recovery of purely economic losses. 
5

Engineer also argued that the intimate nexus test and Restatement (Second) of Torts § 552 

concepts of extra-contractual duty do not apply to design professionals and, even if they 

did, Contractor failed to allege facts satisfying these tests. 

The Circuit Court granted Engineer’s motion to dismiss due to lack of privity 

between Contractor and Engineer. Contractor appealed. The Court of Special Appeals 

affirmed the dismissal of Contractor’s complaint based on lack of privity. Balfour Beatty 

Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP, 226 Md. App. 420 (2016). It held

that the economic loss doctrine barred Contractor’s negligence and negligent 

misrepresentation claims, and that privity equivalent concepts of extra-contractual duty did 

not apply in Contractor’s case. Id. at 445, 452–53, 459–60. 

We granted Contractor’s Petition for Writ of Certiorari to consider the following 

questions:

1. Does the economic loss doctrine bar a general contractor’s

professional negligence claim against a design professional 

on a government construction project under the privityequivalent analysis of the intimate nexus test?

2. Does the economic loss doctrine bar a general contractor’s 

action for negligent misrepresentation against a design 

professional on a government construction project?

3. Does the economic loss doctrine bar a general contractor’s 

action under the Restatement (Second) of Torts § 552 

against a design professional on a government construction 

project?

5

 

5 We have edited, rephrased, and reordered the questions presented in Contractor’s 

Petition for Writ of Certiorari: 

1. Did the [Court of Special Appeals] err by applying the 

economic loss doctrine to a limited class of professionals–
6

Because we answer yes to all three questions and decline to apply the privityequivalent component of the intimate nexus test, we shall affirm the judgment of the Court 

of Special Appeals. 

STANDARD OF REVIEW

We review a trial court’s grant of a motion to dismiss to determine whether it was 

legally correct. Kiriakos v. Phillips, 448 Md. 440, 454 (2016) (citation omitted). In 

conducting this review, we assume that the facts and allegations in the complaint, and any

inferences that may be drawn from them, are true and view them in a light most favorable 

to the non-moving party. Rounds v. Md.-Nat’l Capital Park & Planning Comm’n, 441 Md. 

621, 636 (2015) (citation omitted). The Court does not, however, accept conclusory 

 

designers in government contracts–to shield an engineer 

from liability to a contractor when the engineer knows that 

its services will be relied upon to the contractor’s detriment 

if the engineer’s services are negligently performed; i.e., 

[do] the intimate nexus and privity equivalent “tests” apply 

to an action by a contractor against an engineer?

2. Does the economic loss doctrine bar a government 

contractor’s action under the Restatement (Second) of Torts 

§ 552 against an engineer who negligently supplied 

information when all other elements are met and when 

other professional providers of information are not so 

protected?

3. Does the economic loss doctrine bar a government 

contractor’s action for negligent misrepresentation against 

an engineer when the engineer: (a) intended the contractor 

to rely upon the representations (i.e., [its] design); (b) knew 

that the contractor would rely upon the design; and, (c) 

knew that the contractor would be harmed if the design was 

negligently performed?
7

allegations and assertions containing insufficient facts as true. State Ctr., LLC v. Lexington 

Charles Ltd. P’ship, 438 Md. 451, 497 (2014) (citation omitted). We only consider the 

well-pleaded facts to determine whether the complaint states a cause of action for which 

relief may be granted. Id.

DISCUSSION

Contractor’s overarching contention is that the economic loss doctrine6 does not 

apply to its claims of professional negligence, Restatement (Second) of Torts § 552, and 

negligent misrepresentation because it only applies in products liability cases. Instead, 

Contractor avers, the intimate nexus test applies to its claims, and the allegations in its 

complaint satisfy the test. Therefore, Contractor asserts, Engineer owes it a duty of care

and may be held liable in tort for the economic losses it has incurred. 

Engineer urges us to apply the economic loss doctrine, which is a principle courts 

have used to limit the expansion of tort liability absent privity. Engineer avers that under 

this doctrine there is no liability without privity when a plaintiff has suffered only economic 

loss without physical injury or risk thereof. 

Professional Negligence

Contractor contends that Engineer is liable for damages it sustained under a 

negligence theory. Contractor asserts that Engineer owed it a duty of care, and Engineer

breached that duty when it failed to: (1) properly design DNF cells and a pipe support 

system for the SC 852R project; (2) establish a reasonable timetable for the SC 852R 

 

6 The economic loss doctrine is also referred to as the “economic loss rule.” We 

will use “economic loss doctrine” throughout this opinion for consistency. 
8

project; (3) timely design the companion project; and (4) inform Contractor that completion 

of the companion project’s design was delayed. Contractor avers that the allegations 

contained in its complaint establish a privity-equivalent intimate nexus between it and 

Engineer.

7

 Therefore, Contractor contends, Engineer owed it a tort duty. 

To establish a negligence claim, a plaintiff must allege facts showing that: (1) the 

defendant owes the plaintiff a duty of care; (2) the defendant breached that duty; (3) the 

plaintiff sustained an injury or loss; and (4) the defendant’s breach of the duty was the 

proximate cause of the plaintiff’s injury. 100 Inv. Ltd. P’ship v. Columbia Town Ctr. Title 

Co., 430 Md. 197, 213 (2013) (citation omitted). In a negligence claim against a provider 

of professional services, the professional is held to the standard of care of his or her 

profession. See Schultz v. Bank of Am., N.A., 413 Md. 15, 28–29 (2010). But without a 

duty of care, there is no liability in negligence. Walpert, Smullian & Blumenthal, P.A. v. 

Katz, 361 Md. 645, 655 (2000) (citations omitted).

Maryland defines “duty” as “an obligation to which the law will give effect and 

recognition to conform to a particular standard of conduct toward another.” Jacques v. 

First Nat’l Bank of Md., 307 Md. 527, 532 (1986) (quoting J. Dooley, Modern Tort 

Law § 3.03, at 18–19 (1982, 1985 Cum. Supp.)). As Professors Prosser and Keeton have 

explained, duty is “an expression of the sum total of those considerations of policy which 

lead the law to say that the plaintiff is entitled to protection.” W. Page Keeton et al., Prosser 

and Keeton on the Law of Torts § 53, at 358 (5th ed. 1984). “To determine whether a tort 

 

7 Contractor concedes that it does not have a contract with Engineer. 
9

duty exists in a particular context, we examine: (1) ‘the nature of the harm likely to result 

from a failure to exercise due care,’ and (2) ‘the relationship that exists between the 

parties.’” 100 Inv. Ltd. P’ship, 430 Md. at 213–14 (quoting Jacques, 307 Md. at 534). 

Privity, 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., 403 P.2d 145, 150–51 (Cal. 1965); 

E. River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 870–71 (1986) (applying 

the economic loss doctrine “to maintain a realistic limitation on damages”); Lloyd v. Gen. 

Motors Corp., 397 Md. 108, 128–29 (2007); 3 Dan B. Dobbs, Paul T. Hayden & Ellen M. 

Bublick, The Law of Torts § 607, at 462 (2d ed. 2011). Courts imposed this limitation on 

the recovery of purely economic losses in response to the elimination of the privity 

requirement in tort law.9 See Seely, 403 P.2d at 150–51. In Maryland, the economic loss 

 

8 Before the rise of negligence in the early twentieth century, courts typically 

required privity of contract to find a tort duty, even in cases of physical injury. This rule 

originated from the 1842 English case, Winterbottom v. Wright, 152 Eng. Rep. 402 (1842). 

In Winterbottom, the Court of the Exchequer ruled that the driver of a stagecoach who was 

injured when its wheel collapsed had no cause of action against the defendant who had 

been hired to maintain the coach because there was no privity of contract between them. 

Although the court only held that there was no breach of contract action, courts interpreting 

the case took it to mean that a tort action was also precluded. See W. Page Keeton et al., 

Prosser and Keeton on the Law of Torts § 104A, at 668 (5th ed. 1984); Council of CoOwners Atlantis Condo., Inc. v. Whiting-Turner Contracting Co., 308 Md. 18, 27 n.3 

(1986). 

9 The origin of the economic loss doctrine in its modern form is typically traced to 

Seely v. White Motor Company, 403 P.2d 145 (Cal. 1965) (Traynor, C.J.), a products 

liability case. 5 Philip L. Bruner & Patrick J. O’Connor, Jr., Bruner & O’Connor 

Construction Law § 17:89 (2002). In Seely, David Seely purchased a truck manufactured 
10

doctrine bars recovery when the parties are not in privity with one another or the alleged 

negligent conduct did not result in physical injury or risk of severe physical injury or death. 

Lloyd, 397 Md. at 128–29; see also Morris v. Osmose Wood Preserving, 340 Md. 519, 

531–32 (1995); U.S. Gypsum Co. v. Mayor & City Council of Balt., 336 Md. 145, 156 

(1994); A.J. Decoster Co. v. Westinghouse Elec. Corp., 333 Md. 245, 251 (1994); Council 

of Co-Owners Atlantis Condo., Inc. v. Whiting-Turner Contracting Co., 308 Md. 18, 22

(1986).

We discussed the evolution of tort law and the economic loss doctrine in the 

construction context in Whiting-Turner. In that case, condominium owners brought a 

negligence suit against the general contractor and architect who constructed their 

condominiums, alleging that defectively constructed electrical ductwork had created a fire 

hazard, rendering the units uninhabitable.10 We recognized that 

 

by White Motor Company from Southern Truck Sales for his heavy-load hauling business. 

Right after purchase, Seely noticed that the truck “bounced violently.” Seely, 403 P.2d at 

147. Ultimately the brakes on the truck failed and the truck flipped over, but Seely did not 

sustain any injuries. Seely then sued Southern and White for damages to repair the truck,

lost profits, and the money he had paid toward the purchase price. Id. at 147–48. 

The California Supreme Court held that Seely could recover damages for lost profits 

and money paid toward the purchase price of the truck on a warranty theory of liability. 

Id. at 148. In so holding, the court rejected a strict products liability theory of recovery 

because consumers do not typically communicate their economic expectations to 

manufacturers and manufacturers cannot use disclaimers to limit their liability. Id. at 150. 

If this were the case, the court reasoned, the manufacturer “would be liable for damages of 

unknown and unlimited scope.” Id. at 150–51. Thus, absent an agreement, the 

manufacturer should not be held liable for losses that were purely economic. Id. at 151. 

10 The owners did not allege that the ductwork was negligently designed. WhitingTurner, 308 Md. at 22–23.
11

privity is not an absolute prerequisite to the existence of a tort 

duty in this type of case, and that the duty of builders and 

architects to use due care in the design, inspection, and 

construction of a building extends to those persons foreseeably 

subjected to the risk of personal injury because of a latent and 

unreasonably dangerous condition resulting from that 

negligence.

Whiting-Turner, 308 Md. at 22. Therefore, we concluded, the condominium owners could 

recover the reasonable cost of fixing the defective ductwork even without privity or actual 

physical harm. Id. at 35. 

In reaching its holding, the Whiting-Turner Court discussed the traditional 

requirement of privity in construction cases and the erosion of that requirement:

In its early development, the law relating to builders and 

architects generally held that their duty did not extend to those 

with whom they had no contractual privity. Gradually, 

however, exceptions to the general rule of nonliability were 

judicially recognized. Actions in negligence were permitted, 

for example, where the contractor had practiced fraud or deceit 

or had deliberately concealed defects in the work; where 

construction created a condition that was imminently or 

inherently dangerous; or where the contractor created a 

nuisance per se. 

Id. at 24–25 (footnote omitted). Examining the gradual progression of tort law, the Court 

relied on Professors Harper, James, and Gray for their acknowledgment that in building 

and construction work “[t]he modern tendency has been to measure the scope of duty here 

by the same broad principles of negligence as are generally applied in the field of accidental 

injuries.” Id. at 26 (quoting 3 F. Harper, F. James & O. Gray, The Law of Torts § 18.5, at 

708–10 (2d ed. 1986)). The Court concluded, “[T]he rule of nonliability . . . has now 

evolved into a general rule of liability where the result of negligence is the creation of a 
12

dangerous condition.” Id. at 27 (emphasis added). To explain this duty, it used the words 

of Professors Prosser and Keeton:

[T]he contractor is liable to all those who may 

foreseeably be injured by the structure, not only when he fails 

to disclose dangerous conditions known to him, but also when 

the work is negligently done. This applies not only to 

contractors doing original work, but also to those who make 

repairs, or install parts, as well as supervising architects and 

engineers. There may be liability for negligent design, as well 

as for negligent construction.

Id. at 27–28 (emphasis in original) (quoting W. Page Keeton et al., Prosser and Keeton on 

the Law of Torts § 104A, at 723 (5th ed. 1984)). Therefore, the recovery of economic 

losses for the repair or remedy of defective conditions was permitted, provided it was 

necessary to prevent physical injury. In other words, the prospect of physical injury was 

sufficient to warrant imposing a tort duty in the absence of privity. 

The Intimate Nexus Test

In cases where there were no safety concerns and the risk was purely economic, as 

in this case, the privity requirement did not erode so quickly or so far. Instead, in such 

cases we have refrained from finding a tort duty absent privity or its equivalent—i.e., an 

“intimate nexus.”11 Jacques, 307 Md. at 537; Walpert, 361 Md. at 681; see also 100 Inv. 

Ltd. P’ship, 430 Md. at 219. Put differently, the intimate nexus test requires the 

relationship between the parties to be sufficiently close—or intimate—to support finding a 

 

11 The test’s name originates from the oft-quoted Judge Cardozo opinion, 

Ultramares Corporation v. Touche, 174 N.E. 441 (N.Y. 1931), in which he discussed the 

“intimacy of the resulting nexus” that “was so close as to approach that of privity, if not 

completely one with it” such that the relationship between the parties would warrant 

finding a duty. Id. at 445–46. 
13

tort duty. Jacques, 307 Md. at 535. In these cases, if an intimate nexus was established, a 

duty of care was owed, and the defendant could be held liable to the plaintiff for pecuniary 

losses. Id. at 534. 

In Jacques—where we adopted the intimate nexus test—the Court ruled that a bank 

owed its customers a duty of reasonable care in processing a home loan application. In 

reaching its holding, the Court discussed two leading cases from the Court of Appeals of 

New York—Glanzer v. Shepard, 135 N.E. 275 (N.Y. 1922), and Ultramares Corporation 

v. Touche, 174 N.E. 441 (N.Y. 1931)—to determine whether an intimate nexus existed 

between the parties and, consequently, a duty of care was owed. Jacques, 307 Md. at 535–

36. In Glanzer, the court permitted a bean purchaser to recover purely economic losses in 

tort from a public bean weigher even though the weigher’s contract was with the bean 

seller. Glanzer held that the weigher owed a duty in tort to the purchaser because the sale 

of the beans was the end goal of the transaction, and, as a public weigher, in undertaking 

to weigh the beans he assumed a duty to do so with reasonable care. Glanzer, 135 N.E. at 

276–77. In discussing Glanzer, the Jacques Court emphasized the nature of the contractual 

relationship between the seller and the weigher and that the weigher held itself out as 

“skilled and careful in its calling.” Jacques, 307 Md. at 535–36 (citing Glanzer, 135 N.E. 

at 276). 

In Ultramares, on the other hand, the same court declined to impose a tort duty of 

care running from accountants to recipients of their audit reports for alleged negligent 

misrepresentations in the reports. The Ultramares court reasoned that if it imposed a duty, 

a “thoughtless slip or blunder . . . may expose accountants to a liability in an indeterminate 
14

amount for an indeterminate time to an indeterminate class.” Ultramares, 174 N.E. at 444. 

Distinguishing Glanzer, the Ultramares court reasoned that the “intimacy of the resulting 

nexus” between the weigher and the purchaser “was so close as to approach that of privity, 

if not [be] completely one with it,” which warranted finding a tort duty. Id. at 445–46. The 

court found that the accountants in Ultramares, by contrast, did not have such a relationship 

with the recipients of their audit reports. Id. at 446. The Jacques Court emphasized that 

even though the accountants were generally on notice that nonclients might rely on their 

audit reports, the relationship between them and the nonclients was not close enough to

support finding an intimate nexus—and corresponding tort duty—like in Glanzer.

Jacques, 307 Md. at 536. 

The Jacques Court concluded: 

As the magnitude of the risk increases, the requirement 

of privity is relaxed—thus justifying the imposition of a duty 

in favor of a large class of persons where the risk is of death or 

personal injury. Conversely, as the magnitude of the risk 

decreases, a closer relationship between the parties must be 

shown to support a tort duty. Therefore, if the risk created by 

negligent conduct is no greater than one of economic loss, 

generally no tort duty will be found absent a showing of privity 

or its equivalent.

Id. at 537.

Relying on Glanzer and Ultramares, the Jacques Court “examin[ed] carefully the 

relationship that existed between these parties” because “the harm likely to result from 

negligent processing of a loan application is limited to economic loss.” Id. at 535. The 

Court found that the relationship between the parties amounted to a contract because the 

bank agreed to process the customers’ loan application and “lock in” a specific interest rate 
15

in exchange for a processing fee. Id. at 537–38. This contract, the Court reasoned, included 

an implied promise by the bank to use reasonable care in processing the application. Id. at 

540. The Court also considered the customers’ reliance on the bank and found that they 

were “particularly vulnerable and dependent on the [b]ank’s exercise of due care” because 

the bank was aware of the restrictive financing provisions in the customers’ contract for 

sale, which required them to settle with whatever loan they could obtain at the agreed rate 

of interest. Id. at 540–41. Therefore, we held that the bank owed the customers a duty in 

tort. 

Based on Judge Cardozo’s description of the defendants’ professions as a “public 

calling” in Glanzer and Ultramares, the Jacques Court also found relevant “the nature of 

the business of the party upon whom the burden is sought to be imposed.” Id. at 541. The 

Court emphasized the “public nature” of the bank. Id. at 542. It reasoned that the banking 

industry is “affected with the public interest” and banks and their officers have been “held 

to a high degree of integrity and responsiveness to their public calling,” which also 

supported finding a tort duty. Id. 

Fourteen years later, in Walpert, an accountant liability case, we adopted the threepart test from Credit Alliance Corporation v. Arthur Andersen & Co., 483 N.E.2d 110 

(N.Y. 1985), as one way to establish an intimate nexus between parties. Walpert, 361 Md. 

at 674. The Credit Alliance/Walpert test requires the plaintiff to show: (1) the accountants 

were aware that their financial reports were to be used for a particular purpose; (2) a known 

party was intended to rely on the reports; and (3) conduct linking the accountants to the 

party that demonstrates the accountants’ understanding of the party’s reliance. Id. In 
16

adopting the test, we noted that the reason for requiring privity or its equivalent to impose 

tort liability is “to limit the defendant’s risk exposure to an actually foreseeable extent, thus 

permitting a defendant to control the risk to which the defendant is exposed.” Id. at 671. 

After examining duty analyses from other jurisdictions, the Court concluded that the Credit 

Alliance test most closely reflected Maryland’s policy concerns because it would “limit[ ]

the unpredictable and unlimited nature of economic damages.” Id. at 675. 

Initially, the Credit Alliance/Walpert test applied only to accountants, but we have

since applied it to title examiners. See 100 Inv. Ltd. P’ship, 430 Md. at 222. But Walpert

is the only case in which we have used the test to find an intimate nexus between an 

individual and a third party not in privity.

12

 361 Md. at 693–94.

We have, however, considered whether there was an intimate nexus between parties 

without applying the Credit Alliance/Walpert test. We found that the parties’ relationship

lacked an intimate nexus in the following cases: Blondell v. Littlepage, 413 Md. 96 (2010) 

(no tort duty owed by one attorney to another in joint representation); Remsburg v. 

Montgomery, 376 Md. 568 (2003) (leader of a hunting party owed property owners no duty 

of care); Jones v. Hyatt Ins. Agency, Inc., 356 Md. 639 (1999) (insurance agent who failed 

 

12 In the only other case that applied all three of the test’s criteria and found an 

intimate nexus, 100 Investment Limited Partnership v. Columbia Town Center Title Co.,

430 Md. 197 (2013), the parties were in direct privity. Id. at 223. 

We did, however, find a privity-equivalent intimate nexus between the third-party 

drawer of a check and a depositary bank in Chicago Title Insurance Co. v. Allfirst Bank,

394 Md. 270 (2006). But, as we will discuss, infra, in Chicago Title we only examined the 

third element of Credit Alliance/Walpert test—linking conduct showing understanding of 

a party’s reliance. Id. at 299. 
17

to obtain insurance not liable to accident victim); Noble v. Bruce, 349 Md. 730 (1998) 

(attorney not liable to non-client beneficiaries of a will); Erie Ins. Co. v. Chops, 322 Md. 

79 (1991) (insurer’s failure to comply with statutory duty to report lapse in motorist’s 

coverage to the Motor Vehicle Administration did not render it liable to accident victims).

In other situations, we considered the relationship between the parties sufficient to 

establish an intimate nexus. Weisman v. Connors, 312 Md. 428 (1988), involved an 

employee who sued his employer for alleged negligent misrepresentations made during 

pre-employment negotiations—at two in-person meetings and in several phone 

conversations the employer had made certain promises to induce him to leave his previous 

employer. Id. at 432–33. Because the employer’s objective was to “sell” the employee on 

the idea of leaving his current employer during “face-to-face precontractual discussions,” 

we held that a jury could find that there was an intimate nexus between the parties. Id. at 

448–49. In reaching this conclusion, we reasoned that the employee “had a great stake in 

receiving accurate information” and the employer “had to realize that negligence on his 

part in conveying such information could result in considerable economic harm to [the 

employee].” Id. at 449. Because their relationship “more closely resemble[d] the intimacy 

of the Glanzer parties than the remoteness of the Ultramares relationship,” the jury could 

find a tort duty. Id. Similar negligent misrepresentations in “intensive communications” 

regarding employment were the basis for liability in Griesi v. Atlantic General Hospital 

Corporation, 360 Md. 1 (2000).13 Weisman and Griesi illustrate that we consider the 

 

13 The hospital’s CEO had extended a job offer to a physical therapist, which he 

accepted. Griesi v. Atl. Gen. Hosp. Corp., 360 Md. 1, 6 (2000). But when he appeared at 
18

closeness of the relationship between the parties—especially one party’s reliance on the 

other party’s exercise of due care—when determining whether there is an intimate nexus

that would support finding a duty of care. 

In Chicago Title Insurance Co. v. Allfirst Bank, 394 Md. 270 (2006), we found a 

privity-equivalent intimate nexus between the third-party drawer of a check and a 

depositary bank. Without citing the Credit Alliance/Walpert test, we used one of its criteria 

in our analysis—linking conduct.

14

 Id. at 299. The check at issue was made payable to the 

depositary bank (not the bearer) for the purpose of paying off a customer’s mortgage loan

as part of a refinancing. Id. at 278. Instead of applying the funds to the outstanding 

balance, the depositary bank credited the customer’s personal, non-mortgage account. Id. 

When the customer then defaulted on his loan, the drawer—the title company that 

conducted the settlement—learned that the funds had been misapplied and the original

 

the hospital on his start date, he was told that the hospital used outside contractors for its 

physical therapy services and, consequently, no position was available for him. Id. at 7–8. 

We concluded that “intensive communications,” including an in-person interview, several 

telephone conversations, and oral and written job offers communicating a starting date and 

salary, established an intimate nexus. Id. at 16. In our analysis, we “weigh[ed] heavily” 

that the hospital “had exclusive control” of material information the physical therapist 

needed to understand the situation, but never disclosed this information. Id. at 17. We also 

found important the physical therapist’s reliance on the CEO’s “positive and unequivocal 

representations of an employment opportunity” and his “authority, or apparent authority,” 

to make a job offer. Id.

14 Although Chicago Title did not address why the other elements of the Credit 

Alliance/Walpert test did not apply, those elements require the dissemination of reports or 

other information. See Walpert, Smullian & Blumenthal, P.A. v. Katz, 361 Md. 645, 674 

(2000). Chicago Title involved a bank that deposited a check into a customer’s account 

even though it was not made out to him; no reports or information were disseminated. 

Therefore, it was not necessary to consider those elements. 
19

mortgage had never been released. Id. at 279. In finding an intimate nexus, we reasoned 

that the depositary bank had already received one check from the drawer and a payoff 

request from the new lender. Id. at 298–99. Thus, the bank knew, or should have known, 

that the title company expected the proceeds of the check to pay off the loan. Id. As a 

result, we held that the depositary bank had a duty to the title company to exercise due care 

in handling its check. Id. at 300. 

These cases illustrate that regardless of whether we apply the Credit 

Alliance/Walpert test, our privity-equivalent analysis in economic loss cases looks for 

linking conduct—enough to show the defendant knew or should have known of the 

plaintiff’s reliance. This means, of course, that context is critical. Blondell, 413 Md. at 

122 (quoting Dan B. Dobbs, The Law of Torts § 229 (2000)) (“Relationship of the parties 

is so pervasively important in determining existence and measure of duty that it often goes 

unmentioned.”). We have yet to apply the Credit Alliance/Walpert test or the privityequivalent analysis in the public construction context and, as discussed below, Engineer 

argues that there are many reasons why we should not do so. 

The Construction Industry and the Privity-Equivalent Intimate Nexus Analysis

First, Engineer avers, the Credit Alliance/Walpert criteria only apply to accountants. 

Second, Engineer argues that in the construction industry parties “must be able to rely on 

the objective expression of their bargains,” which involves a network of contracts detailing 

liability between the parties involved in the project. Without a contract, Engineer contends, 

the economic loss doctrine bars Contractor’s claims. Contractor, on the other hand, asserts
20

that its lack of a contract with Engineer is precisely why we should permit it to bring a 

negligence claim under the intimate nexus test. 

Jurisdictions are split over whether to apply the economic loss doctrine in the 

construction context.

15

 See A. Holt Gwyn, Tort Damages, in Construction Damages and 

Remedies 207, 212 (W. Alexander Mosley ed., 2d ed. 2013); LAN/STV v. Martin K. Eby 

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[s].” (footnote omitted)). A number of states support Engineer’s position, 

applying the economic loss doctrine to parties in the construction industry to bar tort claims 

for purely economic losses and limit parties to contractual remedies. See 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. Pub. Library v. Charlier Clark & Linard, 

 

15 In the construction context, case law on the economic loss doctrine is conflicting, 

confusing, and varies widely from jurisdiction to jurisdiction. See A. Holt Gwyn, Tort 

Damages, in Construction Damages and Remedies 207, 212 (W. Alexander Mosley ed.,

2d ed. 2013). As one legal scholar remarked, 

It is in the context of construction design professional 

services that the application of the economic loss [doctrine] is 

most difficult to reconcile. No analytical theme predominates. 

It is almost as if someone had written the words “privity,” 

“special relationship,” “foreseeability,” “supervising 

architect,” “no duty,” and “covered by another contract” on the 

six sides of a die, and then passed the die to appellate 

judiciaries of various states to roll. The only constant is that

economic damages are the subject of the claim.

A. Holt Gwyn, The Economic Loss Rule, in Construction Damages and Remedies 267, 293. 
21

P.C., 929 N.E.2d 722, 740 (Ind. 2010) (economic loss doctrine precluded negligence 

claims by an owner against parties connected to it through “a network or chain of 

contracts”); LAN/STV, 435 S.W.3d at 249–50 (economic loss doctrine bars negligence and 

negligent misrepresentation claims by general contractors against architects for delay 

damages); Berschauer/Phillips Const. Co. v. Seattle Sch. Dist. No. 1, 881 P.2d 986, 990 

(Wash. 1994) (“[T]he economic loss rule does not allow a general contractor to recover 

purely economic damages in tort from a design professional.”); Rissler & McMurry Co. v. 

Sheridan Area Water Supply Joint Powers Bd., 929 P.2d 1228, 1235 (Wyo. 1996)

(economic loss doctrine barred Restatement (Second) of Torts § 552 claim by contractor 

against engineer); see also Marc Schneier, Tort Liability of Project Architect or Engineer 

for Economic Damages Suffered by Contractor or Subcontractor, 61 A.L.R.6th 445 § 11 

(2011). 

States applying the economic loss doctrine to bar recovery typically reason that the 

construction industry is governed by a network of often-complicated contracts, and because 

the parties have carefully contracted to protect against economic losses, there is no reason 

to add a tort remedy to the mix for use by parties claiming such losses. See, e.g.,

Indianapolis-Marion Cty. Pub. Library, 929 N.E.2d at 740 (“[W]hen 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 contracts governing 

the project.”); Terracon Consultants W., Inc. v. Mandalay Resort Grp., 206 P.3d 81, 89 

(Nev. 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 
22

resolve professional negligence claims.”); LAN/STV, 435 S.W.3d at 249 (“[C]ourts should 

use contract principles, not tort principles, to determine whether the architect has 

‘contractual’ obligations to the contractors and subcontractors.” (footnote omitted)); 

Berschauer/Phillips, 881 P.2d at 992 (limiting recovery of economic losses due to 

construction delays to contractual remedies “to ensure that the allocation of risk and the 

determination of potential future liability is based on what the parties bargained for in the 

contract”).

States that decline to apply the economic loss doctrine to bar recovery, on the other 

hand, typically focus on classic tort principles to decide whether a design professional owes 

a third party contractor a duty in tort in the absence of contractual privity. See Jim’s 

Excavating Serv., Inc. v. HKM Assocs., 878 P.2d 248, 255 (Mont. 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, 866 A.2d 

270, 286–87 (Pa. 2005) (general contractor could bring negligent misrepresentation claim 

based on Restatement (Second) of Torts § 552 against architect); Forte Bros., Inc. v. Nat’l 

Amusements, Inc., 525 A.2d 1301, 1303 (R.I. 1987) (not-in-privity contractor could bring 

negligence claim against supervising architect because it “directly and reasonably relied 

on [the architect’s] rendering of [its] contractual duty as supervising architect/site engineer 

of the construction project”); E. Steel Constructors, Inc. v. City of Salem, 549 S.E.2d 266, 

275 (W. Va. 2001) (holding that contractors can bring negligence claims against design 
23

professionals “notwithstanding the absence of privity of contract”); Guardian Const. Co. 

v. Tetra Tech Richardson, Inc., 583 A.2d 1378, 1386 (Del. Super. Ct. 1990) (“[P]rivity of 

contract is not an indispensable prerequisite to the recovery of economic damages in 

negligence cases . . . .”). 

Some of these courts hold that if there is a “special relationship” or privityequivalent relationship—like Maryland’s intimate nexus—a design professional owes a

third party a tort duty, thus permitting the recovery of purely economic damages. See, e.g.,

Ossining Union Free Sch. Dist. v. Anderson LaRocca Anderson, 539 N.E.2d 91, 94 (N.Y. 

1989) (requiring “actual privity of contract between the parties or a relationship so close as 

to approach that of privity” to recover purely economic losses); Tommy L. Griffin Plumbing 

& Heating Co. v. Jordan, Jones & Goulding, Inc., 463 S.E.2d 85, 88–89 (S.C. 1995)

(“When . . . there is a special relationship between the alleged tortfeasor and the injured 

party not arising in contract, the breach of that duty of care will support a tort action.”);

E. Steel Constructors, Inc., 549 S.E.2d at 275 (permitting contractor to bring negligence 

claim against design professional “due to the special relationship that exists between the 

two”); Clevecon, Inc. v. Ne. Ohio Reg’l Sewer Dist., 628 N.E.2d 143, 146 (Ohio Ct. App. 

1993) (“[L]ack of privity is not an absolute bar to a design professional’s malpractice action 

when there is a nexus that can serve as a substitute for privity.”). 

Both sets of cases provide good policy reasons to expand or limit tort liability in the 

construction industry, and there is no clear majority position. We are not persuaded by 

Engineer’s arguments that the Credit Alliance/Walpert test must be limited to accountants. 

As we have said, “even states which limit tort actions for negligent performance of a 
24

contract generally permit recovery in tort for economic losses caused by the negligent 

services of a professional.” 100 Inv. Ltd. P’ship, 430 Md. at 228 (citation omitted). We 

have emphasized that “in those occupations requiring peculiar skill, a tort duty to act with 

reasonable care will be imposed on those who hold themselves out as possessing the 

requisite skill,” regardless of whether the parties are in contractual privity. Jacques, 307 

Md. at 541. These occupations include “professionals such as physicians, attorneys, 

architects, and public accountants.” Id. Instead, we find persuasive the logic of states 

barring negligence claims for purely economic damages against design professionals in 

complex construction projects absent privity. But our view turns on the unique aspects of 

large-scale public construction, rather than the finer distinctions of tort law. 

The New York Court of Appeals, in Ossining, extended the Credit Alliance test to

design professionals in the construction industry.

16

 Ossining, 539 N.E.2d at 95. Although

 

16 Although New York extended the Credit Alliance test to architects and other 

design professionals, its intermediate appellate courts have consistently declined to find an 

intimate nexus between the plaintiff and the design professional. See Bri-Den Const. Co. 

v. Kapell & Kostow Architects, P.C., 867 N.Y.S.2d 437, 438 (N.Y. App. Div. 2008) (no 

intimate nexus because bidders unknown to defendants at time of alleged negligence); 

Marcellus Const. Co. v. Vill. of Broadalbin, 755 N.Y.S.2d 474, 476 (N.Y. App. Div. 2003)

(plaintiff-contractor not a known party because it was merely a potential bidder that was 

not “part of a definable class which would rely on the plans” (citation omitted)); 

Prudential-Bache Sec., Inc. v. Resnick Water St. Dev. Co., 555 N.Y.S.2d 367, 369 (N.Y. 

App. Div. 1990) (no intimate nexus between mechanical engineering consultants and 

electrical and air conditioning system contractor not in privity with one another); Briar 

Contracting Corp. v. City of N.Y., 550 N.Y.S.2d 717, 718 (N.Y. App. Div. 1989) (no 

intimate nexus between general contractor and on-site engineering services inspector 

because there was no contract between the parties and inspector’s contract with owner 

expressly limited its authority); see also Williams & Sons Erectors, Inc. v. S.C. Steel Corp., 

983 F.2d 1176, 1183 (2d Cir. 1993) (answering questions at pre-bid meeting and 

forwarding plan clarifications was “isolated contact” insufficient to establish linking 

conduct between general contractor and design professional); Travelers Cas. & Sur. Co. v. 
25

acknowledging that the Credit Alliance test had developed “in the context of cases 

involving accountants,” the court refused to draw a “categorical distinction” between 

architects and accountants. Id. at 94–95. Instead, the court emphasized, the test “reflects 

our concern for fixing an appropriate ambit of duty.” Id.

Although we share New York’s reluctance to create a categorical distinction (and 

protection) for architects, we think the complex web of contracts that typically undergirds

a public construction project should govern because parties have sufficient opportunity to 

protect themselves (and anticipate their liability) in negotiating these contracts. An Indiana 

case explains the construction industry’s contractual landscape well:

Perhaps more than any other industry, the construction 

industry is vitally enmeshed in our economy and dependent on 

settled expectations. The parties involved in a construction 

project rely on intricate, highly sophisticated contracts to 

define the relative rights and responsibilities of the many 

persons whose efforts are required—owner, architect, 

engineer, general contractor, subcontractor, materials 

supplier—and to allocate among them the risk of problems, 

delays, extra costs, unforeseen site conditions, and defects. 

Imposition of tort duties that cut across those contractual lines 

disrupts and frustrates the parties’ contractual allocation of risk 

and permits the circumvention of a carefully negotiated 

contractual balance among owner, builder, and design 

professional. 

Indianapolis-Marion Cty. Pub. Library, 929 N.E.2d at 737–38 (quoting Sidney R. Barrett, 

Jr., Recovery of Economic Loss in Tort for Construction Defects: A Critical Analysis, 40 

 

Dormitory Auth.-State of N.Y., 734 F. Supp. 2d 368, 382–85 (S.D.N.Y. 2010) (no intimate 

nexus because contractor was “one of multiple potential bidders”). But see Reliance Ins. 

Co. v. Morris Assocs., P.C., 607 N.Y.S.2d 106, 107 (N.Y. App. Div. 1994) (finding an 

intimate nexus because elements of Credit Alliance test were satisfied).
26

S.C. L. Rev. 891, 941 (1989)); see also BRW, Inc., 99 P.3d at 72 (“In the context of larger 

construction projects, multiple parties are often involved. These parties typically rely on a 

network of contracts to allocate their risks, duties, and remedies . . . . [T]he parties do have 

the opportunity to bargain and define their rights and remedies, or to decline to enter into 

the contractual relationship if they are not satisfied with it.” (citation omitted)).

We are also mindful that government contracts have a special consideration—the 

public purse. Imposing a tort duty on design professionals will likely correlate with an 

increase in project costs and with a corresponding rise in price for government entities.17

See Boyle v. United Techs. Corp., 487 U.S. 500, 507 (1988) (“The imposition of liability 

on Government contractors will directly affect the terms of Government contracts: either 

the contractor will decline to manufacture the design specified by the Government, or it 

will raise its price.”); LAN/STV, 435 S.W.3d at 248 (“[I]mposing the risk of economic loss 

on the architect requires the architect to pass the cost along to the owner.”); 

Berschauer/Phillips, 881 P.2d at 992 (“If tort and contract remedies were allowed to 

overlap, certainty and predictability in allocating risk would decrease and impede future 

business activity. . . . The fees charged by architects, engineers, contractors, developers, 

vendors, and so on are founded on their expected liability exposure as bargained and 

provided for in the contract.”).

 

17 Although the same cost increase may well occur in private projects, see Terracon 

Consultants W., Inc. v. Mandalay Resort Grp., 206 P.3d 81, 87–88 (Nev. 2009), that is not 

the subject of today’s appeal, and other considerations may apply.
27

Although we decline to extend the privity-equivalent intimate nexus test to design 

professionals on government construction projects, we do not hold that the test cannot 

apply to design professionals in other contexts. 

Negligent Misrepresentation and Restatement (Second) of Torts § 552

“Negligent misrepresentation is one variety of a negligence action,” Walpert, 361 

Md. at 655, so Contractor’s negligent misrepresentation claim also depends on its ability 

to establish a duty on the part of Engineer.

18

 Because we decline to extend the privityequivalent analysis to the public construction context, Contractor cannot satisfy the duty 

element using that test. 

Relying on Village of Cross Keys, Inc. v. U.S. Gypsum Co., 315 Md. 741 (1989), a 

case decided before we adopted the Credit Alliance/Walpert test, Contractor argues that to 

establish a duty under a negligent misrepresentation theory, the defendant only needs to 

know the class of potential plaintiffs, not the specific potential plaintiff. Contractor’s 

reliance on Village of Cross Keys is misplaced. 

 

18 To establish a negligent misrepresentation claim, the plaintiff must show: 

(1) the defendant, owing a duty of care to the plaintiff,

negligently asserts a false statement; (2) the defendant intends 

that his statement will be acted upon by the plaintiff; (3) the 

defendant has knowledge that the plaintiff will probably rely 

on the statement, which, if erroneous, will cause loss or injury; 

(4) the plaintiff, justifiably, takes action in reliance on the 

statement; and (5) the plaintiff suffers damage proximately 

caused by the defendant’s negligence.

Lloyd v. Gen. Motors Corp., 397 Md. 108, 135–36 (2007) (citations omitted).
28

In Village of Cross Keys, a condominium developer and architect sued the 

manufacturer that designed a curtain wall system for negligent misrepresentation, alleging

that errors in the design documents, upon which they relied in constructing a curtain wall, 

resulted in water leaks in several condominium units. Id. at 745, 748. The manufacturer 

had paid to publish the design in a construction industry trade catalogue that design 

professionals, including the architect in the case, purchase. Id. at 757 n.6. The Court held 

that the manufacturer did not owe the developer and architect a duty of care because they 

had not used several of the manufacturer’s component parts required by the design. Id. at 

759–60. In dicta, the Court declined to foreclose the possibility that a manufacturer could 

be held liable for deficiencies in such designs. Id. at 758–59. The Court stated, “Although 

the group of persons who may be expected to rely upon information of this kind may be 

large, they are identifiable, particularly if the group is limited to architects and structural 

engineers. That their names cannot be known in advance is of no consequence.” Id. at 

758. The Court emphasized that the reason the manufacturer could be held liable was that

it would profit from the sale of its component parts as a result of publishing the design in 

the catalogue. Id. at 759. 

Contractor argues that this dicta supports imposing a tort duty on Engineer, but we 

disagree. Unlike Village of Cross Keys, this case involves an underlying web of contracts 

that allocates risk and liability. In Village of Cross Keys, the architect and developer used 

the curtain wall design specifications they found in a trade magazine. They had no 

opportunity to negotiate a contract with the manufacturer regarding the cost or remedies. 

There was no competitive bidding process or contract governing liability. Here, by 
29

contrast, Contractor had the opportunity to review Engineer’s design, ask for clarifications, 

and submit a bid detailing how much it would cost to construct the project. In other words, 

Contractor was able to evaluate whether it could complete the project and at what cost, and 

the City was free to accept or reject its bid. If Contractor was not satisfied with the City’s 

contract, it could have negotiated different terms or bid on a different project. 

Contractor also included in its complaint a “Restatement (Second) of Torts § 552” 

count. This Restatement section describes a type of negligent misrepresentation, and was 

cited with approval in our discussion of duty and what constitutes a privity equivalent in 

Swinson v. Lords Landing Village Condominium, 360 Md. 462 (2000). We said:

One “equivalent” is stated in § 552 of the [Restatement 

(Second) of Torts] (1965), which, in relevant part, provides 

that (1) a person who, in the course of its business, supplies 

false information for the guidance of others in their business 

transactions, is subject to liability for pecuniary loss caused to 

them by their justifiable reliance on that information, if the 

person fails to exercise reasonable care or competence in 

obtaining or communicating the information, and (2) the 

liability of a person who is under a public duty to give the 

information extends to loss suffered by any of the class of 

persons for whose benefit the duty is created, in any of the 

transactions in which it is intended to protect them.

Id. at 477. This description of a privity equivalent, like others, still depends upon judicial 

recognition of a tort duty. But we have already concluded that the privity-equivalent 

intimate nexus test does not apply to large-scale government construction projects such as 

this one because the complex web of contractual arrangements predominates and injecting

a tort duty is not in the public interest.
30

CONCLUSION

We apply the economic loss doctrine and decline to impose tort liability on Engineer 

for purely economic injuries alleged by Contractor that was neither in privity nor suffered 

physical injury or risk of physical injury. Accordingly, we affirm the judgment of the Court 

of Special Appeals. 

JUDGMENT OF THE COURT OF 

SPECIAL APPEALS AFFIRMED. COSTS 

TO BE PAID BY PETITIONER.