No. 60194 

FILED 

JUN 2 7 ZO13 

SUPREME COURT 

OF 

NEVADA 

(0) 1947A /3-/Y199 

129 Nev., Advance Opinion 42. 

IN THE SUPREME COURT OF THE STATE OF NEVADA 

HALCROW, INC., 

Petitioner, 

vs. 

THE EIGHTH JUDICIAL DISTRICT 

COURT OF THE STATE OF NEVADA, 

IN AND FOR THE COUNTY OF 

CLARK; AND THE HONORABLE 

ELIZABETH GOFF GONZALEZ, 

DISTRICT JUDGE, 

Respondents, 

and 

PACIFIC COAST STEEL; AND 

CENTURY STEEL, INC., 

Real Parties in Interest. 

Original petition for a writ of mandamus challenging a district 

court order granting real parties in interest's motions for leave to amend 

their third- and fourth-party complaints in order to plead claims for 

negligent misrepresentation, indemnity, contribution, and apportionment. 

Petition granted. 

Backus Carranza & Burden and Leland Eugene Backus and Shea A. 

Backus, Las Vegas; Lloyd, Gray, Whitehead & Monroe, P.C., and E. 

Britton Monroe and Burns L. Logan, Birmingham, Alabama, 

for Petitioner. 

Gordon & Rees, LLP, and Robert E. Schumacher, Las Vegas; Procopio, 

Cory, Hargreaves & Savitch, LLP, and Scott R. Omohundro, Craig A. 

Ramseyer, and Timothy E. Salter, San Diego, California, 

for Real Party in Interest Pacific Coast Steel. 
Hutchison & Steffen, LLC, and Michael K. Wall, James H. Randall, L. 

Kristopher Rath, and Cynthia G. Milanowski, Las Vegas; Koeller, 

Nebeker, Carlson & Haluck, LLP, and Megan K. Dorsey and Robert C. 

Carlson, Las Vegas, 

for Real Party in Interest Century Steel, Inc. 

Watt, Tieder, Hoffar & Fitzgerald, LLP, and David R. Johnson and Jared 

M. Sechrist, Las Vegas, 

for Amicus Curiae Tishman Construction Corporation of Nevada. 

BEFORE THE COURT EN BANC. 1 

OPINION 

By the Court, SAITTA, J.: 

In this opinion, we address whether the economic loss doctrine 

applies to bar a claim alleging negligent misrepresentation against a 

structural steel engineer on a commercial construction project. We 

exercise our discretion to review this petition for extraordinary writ relief, 

as our intervention will help resolve related future litigation by addressing 

an important legal issue, which our decision in Terracon Consultants 

Western, Inc. v. Mandalay Resort Group, 125 Nev. 66, 206 P.3d 81 (2009), 

left open. Ultimately, we conclude that the economic loss doctrine bars 

negligent misrepresentation claims against commercial construction 

design professionals where the recovery sought is solely for economic 

losses. 

1The Honorable Kristina Pickering, Chief Justice, voluntarily 

recused herself from participation in the decision of this matter. 

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4741-....VP,F(1.11414)`-'n 
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PROCEDURAL HISTORY AND FACTS 

This original proceeding stems from the construction of, and 

subsequent litigation regarding, the Harmon Tower (the Harmon) located 

within CityCenter, a mixed-use urban development in Las Vegas owned 

and developed in part by MGM Mirage Design Group. MGM retained an 

architectural firm and a general contractor, Perini Building Company, 

Inc., to assist in the project's development. The architectural firm 

retained petitioner Halcrow, Inc., to design the Harmon's structure, 

prepare drawings, and perform ongoing structural engineering services, 

including observations and inspections, throughout the construction of 

multiple structures in CityCenter. Perini hired real party in interest 

Century Steel, Inc., to provide the steel installation. Following the 

construction of a portion of the Harmon, Century assigned its assets, 

including the contract for the Harmon, to real party in interest Pacific 

Coast Steel (PCS). 

All parties agree that Halcrow had no contract with PCS, 

Century, or Perini. Nonetheless, pursuant to PCS's and Century's 

contractual obligations to Perini, they were required to follow Halcrow's 

design and specifications for installing reinforcing steel in the Harmon. 

Problems arose when defects were discovered relating to the reinforcing 

steel's installation. Ultimately, the Harmon, which originally was to 

consist of over 40 floors, could not be built above 26 floors due to flaws in 

the steel installation. 

After construction was stopped on the Harmon, Perini filed a 

complaint against MGM for allegedly failing to make timely payments. 

MGM filed a counterclaim against Perini for the alleged reinforcing steel 

defects and other nonconforming work on the Harmon. Perini then filed a 

third-party complaint against Century and PCS, among others, asserting 

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claims for contractual indemnity. Century and PCS in turn filed their own 

third- and fourth-party complaints against several entities, including 

Halcrow, alleging claims for negligence, equitable indemnity, and 

contribution and apportionment, and seeking declaratory relief. 

Halcrow filed a motion to dismiss Century's and PCS's thirdand fourth-party complaints for failure to state a claim on which relief can 

be granted, based on this court's holding in Terracon Consultants Western, 

Inc. v. Mandalay Resort Group, 125 Nev. 66, 206 P.3d 81 (2009). Halcrow 

argued that Terracon bars unintentional tort claims against design 

professionals in commercial construction projects when the claimant 

incurs purely economic losses. The district court granted Halcrow's 

motion and dismissed Century's and PCS's claims for negligence, 

indemnity, contribution, and declaratory relief. 

PCS then sought leave to amend its third-party complaint in 

order to include a cause of action for negligent misrepresentation. 

Century followed suit and filed a motion for leave to amend its fourthparty complaint against Halcrow and others, to allege a claim for 

negligent misrepresentation. Halcrow filed an opposition to Century's and 

PCS's motions to amend their complaints, arguing that Terracon did not 

carve out an exception to the economic loss doctrine for negligent 

misrepresentation claims, and thus, PCS and Century should not be 

permitted to maintain such claims. Century and PCS on the other hand 

argued that Halcrow owed them a duty to act with reasonable care, 

pursuant to the Restatement (Second) of Torts section 552, in 

communicating information to Century and PCS about the steel 

installation. Specifically, they alleged that Halcrow failed to conduct 

timely inspections in accordance with its representations that inspections 

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would take place and erroneously stated that on-site adjustments would 

alleviate errors in its plans. Century and PCS therefore contended that as 

a result of their foreseeable reliance on Halcrow's false representations 

regarding the steel installation inspection and correction process, Halcrow 

could be held liable for negligent misrepresentation. 

Following a hearing, the district court granted the motions to 

amend but stayed the proceedings pending resolution of the legal issues by 

this court. This petition for extraordinary writ relief followed. 

DISCUSSION 

Writ of mandamus 

A writ of mandamus is available to compel the performance of 

an act that the law requires as "a duty resulting from an office, trust or 

station." NRS 34.160. Mandamus relief may also be proper "to control an 

arbitrary or capricious exercise of discretion." Int'l Game Tech., Inc. v. 

Second Judicial Dist. Court, 124 Nev. 193, 197, 179 P.3d 556, 558 (2008). 

Mandamus is an extraordinary remedy, and we have full discretion to 

determine whether a petition will be considered. Cote H. v. Eighth 

Judicial Dist. Court, 124 Nev. 36, 39, 175 P.3d 906, 908 (2008). Writ relief 

will not be available when an adequate and speedy legal remedy exists. 

NRS 34.170. "Whether a future appeal is sufficiently adequate and speedy 

necessarily turns on the underlying proceedings' status, the types of issues 

raised in the writ petition, and whether a future appeal will permit this 

court to meaningfully review the issues presented." D.R. Horton, Inc. v. 

Eighth Judicial Dist. Court, 123 Nev. 468, 474-75, 168 P.3d 731, 736 

(2007); see also Smith v. Eighth Judicial Dist. Court, 113 Nev. 1343, 1344- 

45, 950 P.2d 280, 281 (1997) (indicating that this court will consider a 

petition challenging an order denying motions to dismiss when an 

important issue of law needs clarification and considerations of sound 

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judicial economy and administration militate in favor of granting the 

petition). 

We exercise our discretion to consider this petition because the 

legal issue of whether a negligent misrepresentation tort claim may be 

maintained against a design professional in a commercial construction 

setting is one of first impression in Nevada and the issue has resulted in 

split decisions in Nevada state and federal district courts such that our 

clarification of this important issue now will promote sound judicial 

economy and administration. D.R. Horton, Inc., 123 Nev. at 474-75, 168 

P.3d at 736. 

The district court acted arbitrarily and capriciously in granting leave to 

amend in order to plead negligent misrepresentation 

NRCP 15(a) provides that leave to amend a complaint shall be 

"freely given when justice so requires." However, leave to amend should 

not be granted if the proposed amendment would be futile. See Allum v. 

Valley Bank of Nev., 109 Nev. 280, 287, 849 P.2d 297, 302 (1993). A 

proposed amendment may be deemed futile if the plaintiff seeks to amend 

the complaint in order to plead an impermissible claim. See Soebbing v. 

Carpet Barn, Inc., 109 Nev. 78, 84, 847 P.2d 731, 736 (1993). 

Negligent misrepresentation and the economic loss doctrine 

In Terracon, we held that the economic loss doctrine applied to 

preclude a plaintiff from asserting professional negligence claims against 

design professionals when the plaintiff sought to recover purely economic 

losses in a dispute concerning commercial construction. Specifically, we 

concluded that: 

in a commercial property construction defect 

action in which the plaintiffs seek to recover 

purely economic losses through negligence-based 

claims, the economic loss doctrine applies to bar 

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such claims against design professionals who have 

provided professional services in the commercial 

property development or improvement process. 

125 Nev. at 80, 206 P.3d at 90. In so holding, we explained that the 

economic loss doctrine is intended to mark "the fundamental boundary 

between contract law, which is designed to enforce the expectancy 

interests of the parties, and tort law, which imposes a duty of reasonable 

care and thereby [generally] encourages citizens to avoid causing physical 

harm to others." Id. at 72-73, 206 P.3d at 86 (alteration in original) 

(quoting Calloway v. City of Reno, 116 Nev. 250, 256, 993 P.2d 1259, 1263 

(2000), overruled on other grounds by Olson v. Richard, 120 Nev. 240, 241- 

44, 89 P.3d 31, 31-33 (2004)). We further explained that application of the 

doctrine protects parties from unlimited economic liability, which could 

result from negligent actions taken in commercial settings. Id. at 74, 206 

P.3d at 86-87. 

In this case, Halcrow contends that the clear and explicit 

holding in Terracon bars all negligence-based claims, including negligent 

misrepresentation. It further argues that numerous courts have refused 

to exempt negligent misrepresentation claims from the economic loss 

doctrine in cases of large commercial construction projects. In contrast, 

PCS and Century argue that Terracon left open the question of whether 

negligent misrepresentation may be an appropriate exception to the 

economic loss doctrine. Further, both PCS and Century argue that 

negligent misrepresentation should be adopted as an exception to the 

economic loss doctrine because it would not lead to the type of unlimited 

liability that the doctrine seeks to avoid. They maintain that the 

Restatement (Second) of Torts section 552 (1977) imposes on design 

professionals a duty of care, separate and apart from any duties arising 

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from Halcrow's contract with the architectural firm, and because Halcrow 

breached that duty by negligently misrepresenting that it inspected and 

made corrections to the steel work, thus causing Century and PCS 

financial damages, they should be permitted to amend their complaints to 

assert negligent misrepresentation. We disagree. 

Although Terracon recognized that exceptions to the economic 

loss doctrine exist, it answered only the specific question of whether the 

doctrine applied to preclude professional negligence claims against design 

professionals who provided services in the commercial property 

development and improvement process, when the plaintiff sought purely 

economic losses. In this case, Century's and PCS's proposed amended 

complaints include a cause of action for negligent misrepresentation, 

based on Halcrow's alleged misrepresentations that it would inspect and 

make appropriate on-site adjustments to the steel installation, and on 

which representations Century and PCS allege they relied. Terracon did 

not address whether the economic loss doctrine applied to bar plaintiffs 

from asserting such claims, and we resolve that question now. 

We have previously adopted section 552 of the Second 

Restatement of Torts in upholding a claim for negligent 

misrepresentation. That section provides: 

"One who, in the course of his business, profession 

or employment, or in any other [trans] action in 

which he has a pecuniary interest, 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 upon the information, if he fails to 

exercise reasonable care or competence in 

obtaining or communicating the information." 

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Bill Stremmel Motors, Inc. v. First Nat'l Bank of Nev., 94 Nev. 131, 134, 

575 P.2d 938, 940 (1978) (quoting Restatement (Second) of Torts § 552 

(1977)). Section 552 provides that in situations where only pecuniary loss 

results, liability for negligent misrepresentation is not based on general 

duty rules, but instead, on a "restricted rule of liability." Restatement 

(Second) of Torts § 552 cmt. a (1977). Liability is only imposed on a party 

who has supplied false information, where that information is for the 

guidance of others and where the party knows that the information will be 

relied upon by a foreseeable class of persons. Id. cmt. b. 

In Terracon, we left open the door for exceptions to the 

economic loss doctrine for negligent misrepresentation claims "in [a] 

certain categor[y] of cases when strong countervailing considerations 

weigh in favor of imposing liability." 125 Nev. at 73, 206 P.3d at 86. 

Liability is proper in cases where there is significant risk that "the law 

would not exert significant financial pressures to avoid such negligence." 

Id. at 76-77, 206 P.3d at 88. These types of cases encompass economic 

losses sustained, for example, as a result of defamation, intentionally 

caused harm, negligent misstatements about financial matters, and loss of 

consortium. Barber Lines AI S v. M IV Donau Maru, 764 F.2d 50, 56 (1st 

Cir. 1985) (citing numerous exceptions to the economic loss doctrine that 

have been accepted by courts). However, in the context of commercial 

construction design professionals, negligent misrepresentation claims do 

not fall into such a category because "contract law is better suited" for 

resolving such claims. Terracon, 125 Nev. at 77, 206 P.3d at 89. Further, 

in commercial construction situations, the highly interconnected network 

of contracts delineates each party's risks and liabilities in case of 

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negligence, which in turn "exert significant financial pressures to avoid 

such negligence." Id. at 77, 206 P.3d at 88. 

Additionally, complex construction contracts generally include 

provisions addressing economic losses. See Terracon, 125 Nev. at 78, 206 

P.3d at 89. Therefore, the parties' "disappointed economic expectations' 

are better determined by looking to the parties' intentions expressed in 

their agreements. Id. at 79, 206 P.3d at 90 (quoting Sensenbrenner v. 

Rust, Orling & Neale, Architects, Inc., 374 S.E.2d 55, 57-58 (Va. 1988)). 

This is further supported by the fact that design professionals supply 

plans, designs, and reports that are relied upon to create a tangible 

structure; the ultimate quality of the work can be judged against the 

contract. See id. at 79, 206 P.3d at 90; see also Fireman's Fund Ins. Co. v. 

SEC Donohue Inc., 679 N.E.2d 1197, 1202 (Ill. 1997). The drawings, 

reports, and on-site instructions are "incidental to a tangible product." 

Fireman's Fund Ins. Co., 679 N.E.2d at 1202; see also Kuhn Constr. Co. v. 

Ocean & Coastal Consultants, Inc., 844 F. Supp. 2d 519, 527-28 (D. Del. 

2012). Thus, requiring parties that are not in direct privity with one 

another but involved in a network of interrelated contracts to rely upon 

that network of contracts ensures that all parties to a complex project 

have a remedy and maintains the important distinction between contract 

and tort law. See Calloway v. City of Reno, 116 Nev. 250, 256, 993 P.2d 

1259, 1263 (2000), overruled on other grounds by Olson v. Richard, 120 

Nev. 240, 241-44, 89 P.3d 31, 31-33 (2004). 

In Terracon, we concluded that a design professional's duty to 

a party with whom it contracted is set forth in the contract, and "any duty 

breached arises from the contractual relationship only." 125 Nev. at 79, 

206 P.3d at 90 (emphasis added). Based on the foregoing discussion, we 

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see no reason to limit our conclusion in Terracon by imposing the 

extracontractual duty described in section 552 of the Second Restatement 

of Torts. See Leis Family Ltd. P'ship v. Silversword Eng'g, 273 P.3d 1218, 

1224-25 (Haw. Ct. App. 2012); 2314 Lincoln Park W. Condo. Ass'n v. 

Mann, Gin, Ebel & Frazier, Ltd., 555 N.E.2d 346, 353 (Ill. 1990); 

Indianapolis-Marion Cnty. Pub. Library v. Charlier Clark Sz Linard, P.C., 

929 N.E.2d 722, 738 (Ind. 2010); Fleischer v. Hellmuth, Obata & 

Kassabaum, Inc., 870 S.W.2d 832, 837 (Mo. Ct. App. 1993); 

Berschauer I Phillips Constr. Co. v. Seattle Sch. Dist. No. 1, 881 P.2d 986, 

993 (Wash. 1994). 

Determining that design professionals have a separate and 

distinct duty, pursuant to section 552, to any subcontractor that must rely 

on their plans would essentially allow any party to recast their barred 

negligence claim into a negligent misrepresentation claim. In the context 

of commercial construction projects, the evidence that would need to be 

presented in order to prove a negligent misrepresentation claim is almost 

identical to that which would be necessary in proving a claim for 

negligence. Allowing one and not the other would create a loophole in 

Terracon's objective of foreclosing professional negligence claims against 

commercial construction design professionals and would, essentially, cause 

the economic loss doctrine to be nullified by negligent misrepresentation 

claims. 

Here, PCS and Century, the subcontractors hired to install the 

steel, sought to plead negligent misrepresentation claims against Halcrow, 

the steel engineer. Halcrow was employed on the Harmon as a design 

professional and responsible for creating the plans and overseeing the 

installation of the Harmon's steel infrastructure. PCS and Century have 

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never stated that they sought anything other than economic losses. 

Negligent misrepresentation is an unintentional tort and cannot form the 

basis of liability solely for economic damages in claims against commercial 

construction design professionals. 2Consequently, PCS and Century 

cannot assert claims of negligent misrepresentation against Halcrow. 3 

Therefore, leave to amend should not have been granted because the 

amendment to PCS's and Century's pleadings was futile. See Allum v. 

Valley Bank of Nev., 109 Nev. 280, 287, 849 P.2d 297, 302 (1993); Soebbing 

v. Carpet Barn, Inc., 109 Nev. 78, 84, 847 P.2d 731, 736 (1993). 

CONCLUSION 

We conclude that, in commercial construction defect litigation, 

the economic loss doctrine applies to bar claims against design 

professionals for negligent misrepresentation where the damages alleged 

are purely economic. 4Thus, the district court was compelled to deny 

2Intentional torts are not barred by the economic loss doctrine. See 

Terracon, 125 Nev. at 72-73, 206 P.3d at 85-86. Thus, the economic loss 

doctrine does not preclude litigants from asserting claims of intentional 

misrepresentation. 

3Our conclusions, however, do not bar PCS or Century's potential 

reliance on Home Furniture, Inc. v. Brunzell Construction Co., 84 Nev. 

309, 313-14, 440 P.2d 398, 401-02 (1968), and United States v. Spearin, 

248 U.S. 132, 136 (1918) (providing that contractors cannot be liable for 

loss or damage resulting from defects in the plans and specifications, when 

the contractors simply followed the plans as provided). 

4Because we determine that negligent misrepresentation and 

professional negligence claims cannot form a basis for liability, Terracon, 

125 Nev. at 80, 206 P.3d at 90, Halcrow cannot be deemed a joint 

tortfeasor with PCS or Century. Consequently, PCS and Century's 

equitable claims for contribution, apportionment, and indemnity 

necessarily fail. See Black & Decker (U.S.), Inc. v. Essex Grp., Inc., 105 

Nev. 344, 345, 775 P.2d 698, 699 (1989). 

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Saitta 

Gibbons 

J. 

J. 

Century's and PCS's motions to amend their third- and fourth-party 

complaints to include claims for negligent misrepresentation against 

Halcrow. Accordingly, we grant Halcrow's petition for a writ of 

mandamus. The clerk of this court shall issue a writ of mandamus 

directing the district court to vacate its order granting PCS and Century 

leave to amend their third- and fourth-party complaints and the amended 

complaints. 

1/40.4X4.-\ 

Hardesty 

J. 

Parraguirre 

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