Present: All the Justices 

GERALD M. MOORE AND SON, INCORPORATED 

v. Record No. 951365 OPINION BY JUSTICE ELIZABETH B. LACY 

 March 1, 1996 

JOSEPH S. DREWRY, JR., AND 

DREWRY AND ASSOCIATES, INCORPORATED 

UPON A QUESTION OF LAW CERTIFIED BY THE UNITED STATES 

COURT OF APPEALS FOR THE FOURTH CIRCUIT 

 Pursuant to our Rule 5:42, the United States Court of 

Appeals for the Fourth Circuit certified a question of Virginia 

law to this Court which we accepted by order entered September 

22, 1995. The question involves the application of the economic 

loss doctrine to an award of damages for negligent performance of 

a contract in the absence of privity. 

 The following facts are set forth in the Court of Appeals' 

order of certification. Gerald M. Moore and Son, Inc. (Moore) 

owns and operates an industrial plant in Nassawadox, Virginia. 

In 1990, Moore entered into a contract with an engineering firm, 

Drewry and Associates, Inc. (D&A), to engineer, design, and 

furnish a reduction furnace for Moore's use in the process of 

thermal remediation of petroleum contaminated soil. The contract 

was signed by Joseph S. Drewry, Jr., as president of D&A. Drewry 

performed all the engineering work required by the contract. 

 The reduction furnace provided by D&A did not work properly 

because of design and engineering defects. Moore filed suit 

against D&A alleging breach of contract, breach of warranties, 

and negligence. By amended complaint, Moore added Drewry as a 

defendant in the negligence count. D&A was found liable for 

breach of contract and both D&A and Drewry were found liable for 
negligence. Moore was awarded damages of $107,182.70, based 

entirely on its economic loss. D&A and Drewry were held jointly 

and severally liable for the judgment amount. 

 In considering Drewry's appeal, the Court of Appeals 

certified the following question to us and stated that the 

resolution of the issue will be determinative of the proceeding 

in that court: 

 Whether Drewry, the president of D&A, as the engineer 

who performed the work for which the contract between 

D&A and Moore called, is liable for the purely economic 

losses resulting from the negligent performance of that 

contract. 

The Court of Appeals also suggested that in answering the 

question we may need to consider the following issues: 

 A. Does the economic loss doctrine bar recovery 

for negligence where the defendant, Drewry, was not a 

party to the contract? 

 B. Under Miller v. Quarles, 242 Va. 343, 410 

S.E.2d 639 (1991), did Drewry's position as D&A's 

licensed engineer on the project create a liability for 

negligent acts performed as an agent for D&A, even 

though solely economic loss was involved? 

 Although not specifically stated in the certified question, 

the issues suggested by the Court of Appeals indicate that Drewry 

was not a party to the contract between Moore and D&A. 

Therefore, our response to the certified question assumes that 

there is no privity between Drewry and Moore. 

 As recognized by the Court of Appeals, under Virginia law, 

an agent can be held liable for negligent performance of a 

contract to which he is not a party, but to which his principal 

is a party. Allen Realty Corp. v. Holbert, 227 Va. 441, 450, 318 

S.E.2d 592, 597 (1984). However, even if the agent's negligence 
is established, absent privity of contract, Virginia's economic 

loss doctrine precludes the recovery of damages based on economic 

loss alone. Sensenbrenner v. Rust, Orling & Neale, 236 Va. 419, 

425, 374 S.E.2d 55, 58 (1988); Blake Constr. Co. v. Alley, 233 

Va. 31, 34-36, 353 S.E.2d 724, 726-27 (1987). 

 Our recent case of Miller v. Quarles, 242 Va. 343, 410 

S.E.2d 639 (1991), does not alter the privity requirement for 

recovery of purely economic loss damages in negligence actions. 

In Miller, Commonwealth Capital Corporation agreed to arrange 

financing for Colonial Electric Company, Inc. to purchase and 

develop property. At the request of Fred H. Quarles, a vicepresident of Commonwealth Capital, Colonial Electric delivered an 

escrow deposit to Quarles. Quarles subsequently gave a portion 

of the deposit, $50,000, to a third party who never secured the 

financing and absconded with the funds. Assignees of Colonial 

Electric sued Commonwealth Capital and Quarles individually for 

breach of contract and negligent performance of the contract. 

242 Va. at 344-45, 410 S.E.2d at 640-41. 

 Quarles was held liable for his negligent performance of the 

contract between Commonwealth Capital and Colonial Electric. In 

accepting the escrow deposit, Quarles and Commonwealth Capital 

assumed a common law duty of reasonable care in safeguarding 

Colonial Electric's property. Quarles breached this duty when he 

gave the funds to the third party. Id. at 347, 410 S.E.2d at 

641-42. The damages sought and recovered against Quarles, 

although stated in terms of dollars, reflected the direct loss of 

specific property, the escrow deposit, not an economic loss 
suffered by Colonial Electric. Miller did not involve recovery 

of economic loss damages and, therefore, is inapposite to the 

certified question presented here. 

 Accordingly, in the absence of privity, a person cannot be 

held liable for economic loss damages caused by his negligent 

performance of a contract, and the certified question is answered 

in the negative. 

The certified question is answered in the negative.