El= DEPUTY CLERK 

BY 

140 Nev., Advance Opinion 5q 

IN THE SUPREME COURT OF THE STATE OF NEVADA 

No. 86320 

FRED 

SEP 19 2024 

EL ETH BROWN 

CL SUP, E CO T 

HI-TECH AGGREGATE, LLC, 

Appellant, 

vs. 

PAVESTONE, LLC, A FOREIGN 

LIMITED LIABILITY CORPORATION 

AUTHORIZED TO DO BUSINESS IN 

NEVADA, 

Respondent. 

Appeal from a district court amended judgment following a 

bench trial in a contract and tort action. Eighth Judicial District Court, 

Clark County; Mark R. Denton, Judge. 

Affirmed in part and reversed in part. 

Dennett Winspear, LLP, and Ryan L. Dennett and Matthew A. Sarnoski, 

Las Vegas, 

for Appellant. 

Lipson Neilson P.C. and J. William Ebert, Las Vegas: Smith, Currie & 

Hancock LLP and Ronald G. Robey, Las Vegas, 

for Respondent. 

BEFORE THE SUPREME COURT, STIGLICH, PICKERING, and 

PARRAGUIRRE, JJ. 

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OPINION 

By the Court, STIGLICH, J.: 

In this opinion, we reach the issues of what level of knowledge 

a supplier must have to be held liable for breach of the warranty of fitness 

for a particular purpose and whether the economic loss doctrine precludes 

relief on negligence and products liability claims. Here, Hi-Tech Aggregate, 

LLC, supplied Pavestone, LLC, with aggregate, which Pavestone used to 

manufacture pavers. After receiving customer complaints of efflorescence 

developing on the pavers, Pavestone sued Hi-Tech under contract and torts 

theories, including breach of warranty and products liability. The district 

court ruled for Pavestone on both claims. 

In determining that Hi-Tech's sale of aggregate to Pavestone 

carried with it an implied warranty of fitness for a particular purpose 

because Hi-Tech had reason to know of Pavestone's intended usage for the 

goods it purchased, we adopt the reasoning of Uniform Commercial Code 

§ 2-315 official comment 1 that a buyer does not need to prove a seller's 

actual knowledge where the seller had reason to know of the product's 

intended purpose. Similarly, in holding that Pavestone was excused from 

failing to test the aggregate for the defect, we adopt UCC § 2-316 comment 

8, which states that a warranty is not excluded when there is a latent defect 

in the goods and a simple examination would not reveal the latent defect. 

We reverse the district court, however, as to its determination 

that the economic loss doctrine does not bar Pavestone's noncontractual 

claims. In so doing, we take this opportunity to reiterate that the economic 

loss doctrine applies only when the damage is to the product itself, not when 

there is damage to other property. Here, we hold that the economic loss 

doctrine precludes Pavestone's noncontractual claims because Pavestone 

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did not provide sufficient facts to show there was damage to property other 

than the product itself. Accordingly, we affirm in part and reverse in part. 

FACTS 

Hi-Tech operates a rnining and processing operation. It sells 

gravel and sand, known as aggregate. Pavestone manufactures pavers used 

to construct sidewalks and driveways. In 2019, Pavestone purchased 

aggregate from Hi-Tech to make into pavers. The arrangement was 

informal. Pavestone would call Hi-Tech to order, and Hi-Tech would send 

a written invoice in response. Pavestone would send trucks to pick up the 

aggregate and then would test the aggregate's particle size. It never tested 

any other attribute of the aggregate. Pavestone's only specification to HiTech was for "washed alluvial aggregate," which comes from the bottom of 

a riverbed. Each invoice contained only one line that read either "Pavestone 

sand," "masonry sand," or "mortar sand." 

In December 201.9, Pavestone began to receive complaints from 

customers that their driveways and sidewalks had developed an "unsightly 

crust" on the surface of the pavers. Some rocks and landscaping adjacent 

to the driveways also developed this crust. In response, Pavestone replaced 

the defective pavers with its existing inventory. When Pavestone received 

more complaints from customers about the efflorescence on the pavers, it 

investigated its production process and determined that the cause of the 

efflorescence was sodium carbonate in Hi-Tech's aggregate that nianifested 

when the pavers became wet. At the time, no one in the industry tested 

aggregate for sodium carbonate, which is why Pavestone had not tested for 

it earlier. Furthermore, the sodium ions were not visible to the naked eye 

and would not have been spotted without a test. Because Hi-Tech was its 

only supplier of aggregate at the time, Pavestone identified Hi-Tech's 

aggregate as the cause of the defect and switched suppliers. 

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Pavestone filed a complaint against Hi-Tech alleging 

negligence, products liability, breach of contract, and breach of warranty.1

The district court conducted a two-day bench trial and found for Pavestone 

on its claims for breach of the warranty of fitness for a particular purpose 

and products liability. Hi-Tech appeals. 

DISCUSSION 

Standard of review 

We review de novo a district court's legal conclusions following 

a bench trial. Wells Fargo Bank, N.A. v. Radecki, 134 Nev. 619, 621, 426 

P.3d 593, 596 (2018). "[W]e will not overturn the district court's findings of 

fact unless they are clearly erroneous or not supported by substantial 

evidence." Yount v. Criswell Radovan, LLC, 136 Nev. 409, 414, 469 P.3d 

167, 171 (2020) (internal quotation marks omitted). "Substantial evidence 

is evidence that a reasonable mind might accept as adequate to support a 

conclusion." Whiternaine v. Aniskovich, 124 Nev. 302, 308, 183 P.3d 137, 

141 (2008). 

Hi-Tech's sale carried with it an implied warranty of fitness for a particular 

purpose 

Hi-Tech argues that it did not know of Pavestone's particular 

purpose because it did not know that Pavestone needed a sodium-free 

aggregate due to its particular paver-manufacturing process, which it 

argues falls beyond the scope of any warranty. It further argues that even 

if it knew of the particular purpose, this alleged knowledge was not enough 

1We do not reach the negligence claim because neither party alleges 

that the district court erred by not addressing the negligence claim. See 

Douglas Disposal, Inc. v. Wee Haul, LLC, 123 Nev. 552, 557 n.6, 170 P.3d 

508, 512 n.6 (2007) ("The district court did not address this issue. Therefore, 

we need not reach the issue."). 

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to hold it liable because Pavestone must prove that Hi-Tech "participated 

in the selection of the product for that particular purpose." 

Pavestone counters that the evidence demonstrated a breach of 

the implied warranty of fitness for a particular purpose. It argues that HiTech knew the particular purpose for which its aggregate was intended and 

that the evidence showed that Pavestone relied on Hi-Tech because 

Pavestone had no role in selecting the aggregate. 

The Uniform Commercial Code (UCC) is codified in NRS 

Chapter 104. In Nevada, two implied warranties on sales of goods governed 

by the UCC exist. Long v. Flanigan Warehouse Co., 79 Nev. 241, 245, 382 

P.2d 399, 402 (1963). These are the warranty of merchantability and the 

warranty of fitness for a particular purpose, id., and both are implied as a 

matter of law into every contract for the sale of goods under the UCC, unless 

disclaimed in writing. NRS 104.2314(1). Relevant here, NRS 104.2315 

governs the implied warranty of fitness for a particular purpose. This 

warranty applies when "the seller at the time of contracting has reason to 

know any particular purpose for which the goods are required" and "the 

buyer is relying on the seller's skill or judgment to select or furnish suitable 

goods." NRS 104.2315. 

Comment 2 of UCC § 2-315, the analog of NRS 104.2315, 

explains that a particular purpose is different from an ordinary purpose in 

that the goods have a "specific use by the buyer which is peculiar to the 

nature of his business." U.C.C. § 2-315 cmt. 2; see Edelstein v. Bank of N.Y. 

Mellon, 128 Nev. 505, 523, 286 P.3d 249, 261 (2012) (relying on UCC official 

comments as persuasive authority). A buyer does not have to prove a 

seller's actual knowledge of the particular purpose for which the goods are 

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intended where the seller had reason to know the intended purpose. U.C.C. 

§ 2-315 cmt. 1. 

And buyer reliance exists, for instance, when a buyer relies on 

the judgment and selection of the seller. Mohasco Indus., Inc. v. Anderson 

Halverson Corp., 90 Nev. 114, 119, 520 P.24:1 234, 236 (1974). There is no 

buyer reliance, however, when the buyer uses its own judgment, makes its 

own selection, or supplies the seller with its own specifications. Id. For 

example, in Mohasco, this court held that there was no buyer reliance where 

the buyer of allegedly defective carpet specified "the type and length of yarn, 

weight per square yard, type of weave, color[,] and pattern" and the 

manufacturer provided precisely what the buyer requested. Id. at 116. 520 

P.2d at 234-35. Consequently, this court concluded that a warranty of 

fitness could not be implied under the circumstances. Id. at 119, 520 P.2d 

at 236. 

We conclude that the district court properly found that 

Pavestone's purchase carried with it an implied warranty of fitness of a 

particular purpose and that Hi-Tech knew of Pavestone's intended usage. 

Pavestone intended to use the aggregate it bought from Hi-Tech to make 

pavers for driveways and sidewalks. Pavestone needed to prove only that 

Hi-Tech had reason to know the intended purpose, and the district court did 

not err in concluding it did because there is substantial evidence in the 

record showing that Hi-Tech knew that the aggregate was to be made into 

pavers for driveways. Specifically, Blaine J. Rees, the owner and manager 

of Hi-Tech, testified that he knew that Hi-Tech was supplying aggregate for 

use in pavers, although he did not know the process, and that he knew the 

pavers were used for driveways. Furthermore, the district court found that 

the aggregate was not suitable for use as pavers because the excess sodium 

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content was aesthetically unsuitable for driveways and sidewalks. Because 

Hi-Tech knew that the pavers were to be used for driveways, it had reason 

to know the importance of appearance in the paver-manufacturing process. 

There is also substantial evidence showing that Pavestone 

relied on Hi-Tech's skill or judgment to select the aggregate. Pavestone 

allowed Hi-Tech to pick the specifications of the aggregate, trusting that it 

would be suitable for its use. Unlike in Mohasco where the respondent 

asked for yarn with particular specifications, Pavestone did not provide any 

specifications except for washed alluvial sand. The record contains 

testimony that there were no "discussions between Pavestone and Hi-Tech 

about requirements for the sand aside from particle size." As there was no 

written contract, Pavestone would call Rees to order, and Hi-Tech would 

send an invoice. Other testimony established that Pavestone would request 

washed alluvial aggregate, and invoices introduced into evidence stated 

that Pavestone ordered "Pavestone sand," "masonry sand," or "mortar 

sand." Pavestone did not specify the chemical composition, level of sodium 

carbonate, or mining process. Thus, there is substantial evidence that 

Pavestone relied on Hi-Tech's skill and judgment in selecting appropriate 

aggregate. 

Furthermore, the district court's determination that Hi-Tech 

breached the implied warranty is supported by substantial evidence. The 

record shows that the aggregate was not fit for its particular purpose 

because the excess sodium caused an efflorescence that rendered it defective 

for use in the paver industry. 

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Hi-Tech, however, asserts it had a defense to Pavestone's 

implied-warranty claim due to Pavestone's failure to test the aggregate for 

anything other than particle size. Sellers have a defense for a buyer's 

failure to detect a defect if the buyer examines the goods before entering 

into a contract with the seller or refuses to examine the goods. NRS 

104.2316(3)(b). In that case, "there is no implied warranty with regard to 

any defects" that would have been revealed to the buyer through such an 

examination. Id. In contrast, a "professional buyer examining a product in 

his field will be held to have assumed the risk as to all defects which a 

professional in the field ought to observe." U.C.C. § 2-316 cmt. 8. A failure 

to notice obvious defects cannot excuse the buyer, but the buyer would be 

excused when there is an examination in circumstances that do not permit 

a certain type of testing and the examination fails to identify the defect that 

could only be ascertained by that type of testing. Id. A buyer is also excused 

when there is a latent defect and a simple examination would not reveal the 

latent defect. Id. 

Pavestone conceded it only tested the particle size of the sand 

and not the sodium content. A witness for Pavestone testified that neither 

Pavestone nor any other industry peer, however, traditionally tested for 

sodium content. Furthermore, because sodium ions are invisible to the 

naked eye, neither Pavestone nor Hi-Tech could have noticed the sodium 

without chemically testing the aggregate. Therefore, the defect in the 

aggregate was latent. Because the excess sodium content constituted a 

latent defect that could not have been observed with a simple examination, 

Pavestone was excused from an obligation to inspect the aggregate, and this 

defect falls within the scope of the implied warranty of fitness. 

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Accordingly, because Hi-Tech knew Pavestone's particular 

purpose for the aggregate and Pavestone relied on Hi-Tech in purchasing it, 

the sale of the aggregate contained an implied warranty of fitness. Because 

the defective aggregate caused a financial loss that was not excused by a 

defense, the district court did not err in concluding that Hi-Tech breached 

the implied warranty of fitness for a particular purpose. 

The econornic loss doctrine precludes Pavestone's noncontractual claims 

Turning to Pavestone's tort claims, Hi-Tech argues that the 

economic loss doctrine bars Pavestone's products liability claims because 

the evidence presented fails to illustrate either noneconomic injuries or 

property damage. It also argues that even if these claims were not 

precluded, the district court's finding that there was a product defect is not 

supported by substantial evidence. Pavestone counters that the economic 

loss doctrine does not bar its products liability claim because the district 

court found damage to property beyond the aggregate and pavers. It argues 

that substantial evidence supports the district court's finding of damage to 

other property and that Hi-Tech failed to refute that the aggregate caused 

damage to other property. 

"The economic loss doctrine is a judicially created rule that 

primarily emanates from products liability jurisprudence" and bars 

"unintentional tort actions when the plaintiff seeks to recover purely 

economic losses." Terracon Consultants W., Inc. v. Mandalay Resort Grp., 

125 Nev. 66, 72-73, 206 P.3d 81, 85-86 (2009) (internal quotation marks 

omitted). A purely economic loss is a loss of value, such as "the cost of repair 

and replacement of a defective product," "without any claim of personal 

injury or damage to other property." Callowcty v. City of Reno, 116 Nev. 250, 

257, 993 P.2d 1259, 1263 (2000) (internal quotation marks omitted), 

superseded by statute on other grounds as stated in Olson v. Richard, 120 

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Nev. 240, 243, 89 P.3d 31, 32-33 (2004). The policy behind the economic loss 

doctrine is that when there is no personal injury or property damage, 

"remedies are properly addressed through contract law." Terracon, 125 

Nev. at 79, 206 P.3d at 90. 

To determine whether the economic loss doctrine applies, we 

consider whether there are allegations of personal injury or damage to 

property other than the product itself. When products contain multiple 

components that make up an integrated whole, we do not consider damage 

to the component parts to be damage to other property, but rather only 

damage to the product itself. See Calloway, 116 Nev. at 262, 993 P.2d at 

1267 (holding that "component parts of a product cannot cause 'other 

property damage' compensable in tort"). For instance, the engine of an 

airplane is a component of an airplane, so if the engine explodes and injures 

the airplane, the airplane injured itself and there are only economic losses. 

Calloway, 116 Nev. at 264, 993 P.2d at 1268. In Calloway, we concluded 

that the economic loss doctrine barred claims where a heating and plumbing 

system damaged an apartment building, reasoning that the building 

"injured itself." Id. at 263-64, 993 P.2d at 1268 (internal quotation marks 

omitted). 

Comment e to Section 21 of the Third Restatement of Torts also 

articulates this rule, stating "when the product or system is deemed to be 

an integrated whole, courts treat such damage as harm to the product 

itself," and when this occurs, the damage is "excluded from the coverage of 

this Restatement." Restatement (Third) of Torts: Prod. Liab. § 21 cmt. e 

(1998). 

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In Wausau Tile, Inc. v. County Concrete Corp., the Wisconsin 

Supreme Court applied this rule in a factually similar scenario. 593 N.W.2d 

445, 452-53 (Wis. 1999). There, a company that manufactured and sold 

pavers for walkways asserted various contract and tort claims against its 

cement and aggregate suppliers when the pavers expanded and cracked. Id. 

at 449. The Wisconsin Supreme Court concluded that any damage to the 

pavers constituted solely economic loss because the pavers were integrated 

systems consisting of several components, including cement. Id. at 453. 

The court concluded that even third parties' claims of "damage to the 

property adjoining the pavers" did not allege "any personal injury or 

property damages" on the appellant's part. Id. at 454. Therefore, the 

economic loss doctrine barred the negligence and strict liability tort claims. 

Id. at 460. 

"The Restatement (Second) of Torts [§] 402A governs strict 

product liability." Rivera v. Philip Morris, 125 Nev. 185, 193, 209 P.3d. 271, 

276 (2009). It provides that 

(1) [o]ne who sells any product in a defective 

condition unreasonably dangerous to the user or 

consumer to his property is subject to liability for 

physical harm thereby caused to the ultimate user 

or consumer, or to his property, if 

(a) the seller is engaged in the business of selling 

such a product, and 

(b) it is expected to and does reach the user or 

consumer without substantial change in the 

condition in which it is sold. 

Restatement (Second) of Torts § 402A(1) (1965). To prove a strict liability 

claim, the plaintiff must demonstrate that "[(1)] the product had a defect 

which rendered it unreasonably dangerous, [(2)] the defect existed at the 

time the product left the manufacturer, and [(3)] the defect caused the 

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plaintiffs injury." Fyssakis v. Knight Equip. Corp., 108 Nev. 212, 214, 826 

P.2d 570, 571 (1992). 

We hold that the economic loss doctrine precludes Pavestone's 

tort claims because there is insufficient evidence of damage to property 

other than the product itself. Pavestone alleges two types of property 

damage: (1) to the driveways and sidewalks and (2) to the landscaping 

adjacent to the driveway. Here, the damage to the driveways and sidewalks 

is the type of damage barred by the economic loss doctrine. Because the 

defective aggregate is a component of the paver, which is a component of 

the driveway or sidewalk, the driveways and sidewalks are integrated 

systems. Any damage to the driveway or sidewalk, therefore, is the 

aggregate and paver injuring itself. Consequently, any claim to remove or 

repair damage to a driveway or sidewalk is only a claim for economic loss. 

See Terracon, 125 Nev. at 69, 206 P.3d at 83 (explaining that the cost of 

repair and replacement for a defective product is purely economic loss). 

Unlike the driveways and sidewalks, however, the landscaping 

adjacent to the driveway is not a part of the driveway. The aggregate and 

pavers do not make up the components of the landscaping, which consist of 

rocks and plants. Pavestone, however, does not support its argument that 

damage to the surrounding landscaping caused it an injury and therefore 

alleges only economic damages. Pavestone alleged below that it "removed 

and replaced" the defective pavers, but it failed to present evidence of 

alleged damage to other property, including the landscaping. Pavestone's 

expert witness offered little insight into the alleged damage, simply stating 

that the rock on the sides of the driveway turned white. The photographs 

Pavestone entered into evidence show that the rocks adjacent to the 

sidewalk are discolored. but Pavestone did not demonstrate whether the 

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discoloration was due to the defective aggregate and, if so, what was 

required to fix the damage. Furthermore, the district court's finding of 

damage to "other property," is not supported by substantial evidence. 

Absent evidence that other property was damaged, Pavestone's damages 

were purely economic loss, and the economic loss doctrine precludes 

Pavestone's tort claims, including its products liability claim. 

CONCLUSION 

The implied warranty of fitness for a particular purpose applies 

not just when a seller had actual knowledge of the buyer's intended purpose 

but also in cases in which the seller had reason to know of the particular 

purpose. Furthermore, a warranty is not excluded when there is a latent 

defect in the goods that a simple examination would not detect. 

Additionally, the economic loss doctrine precludes torts claims where the 

only damage was to the product itself. Here, we conclude that Hi-Tech's 

sale of goods carried with it an implied warranty of fitness for a particular 

purpose because Hi-Tech knew of the particular purpose of the aggregate 

and Pavestone relied on Hi-Tech's skill and judgment. Hi-Tech then 

breached the warranty when it provided Pavestone with a product unfit for 

commercial paving. Pavestone is excused from not identifying the defect 

because it was latent and could not have been detected with a simple 

examination. We also conclude that the economic loss doctrine precludes 

Pavestone's noncontractual claims because Pavestone did not provide 

sufficient evidence of other property damage. In so holding, we reiterate 

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that the economic loss doctrine bars tort claims in cases in which there is 

no personal injury or property damage. Accordingly, we affirm the district 

court's judgment as to Pavestone's warranty claim but reverse its judgment 

regarding Pavestone's products liability claims. 

Stiglich 

We concur: 

Pickering 

Parraguirre 

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