Court Opinion

ID: 9635319
Source: CourtListenerOpinion
Date Created: 2023-08-22 13:47:01.103795+00
Date Added: 2024-06-11T18:09:23.881929
License: Public Domain

CAPPY, Chief Justice,
dissenting.
I respectfully dissent. While I agree with the majority that Section 552 of the Restatement (Second) of Torts is consistent with Pennsylvania law, I would hold that Section 552 does not apply in this case. Accordingly, I would affirm the order of the Superior Court.
If I were writing on a clean slate, I would take issue with the majority’s formal adoption of Section 552. In my view, the *485common law tort of negligent misrepresentation, in requiring a particularized determination in any given case as to whether one party owed another party a duty in tort, is the vehicle that should be used to impose liability for negligent misrepresentations. See Bortz v. Noon, 556 Pa. 489, 729 A.2d 555, 561 (1999). I recognize, however, that the negligent misrepresentation tort presently set forth in Section 552 is an established part of Pennsylvania jurisprudence. In Renn v. Provident Trust Co., 328 Pa. 481, 196 A. 8 (1938), this court acknowledged the rule of tort liability that Section 552 encompasses, stating that “we have held that when it is one’s business and function to supply information he is liable, if, knowing that action will be influenced, he supplies it negligently.” Id. at 9-10 (citations omitted), cited in Pennsylvania Annotations to the Restatement (First) of Torts, Section 552 and in Reporter’s Notes to the Restatement (Second) of Torts, Section 552 regarding Comment c, Illustration 1.
That said, I would not allow Bilb-Rite Contractors Inc. (“BilNRite”) to sue The Architectural Studio (“TAS”) in tort under Section 552 for cost overruns arising out of its performance of its contractual obligations on a construction project. I would, instead, follow the economic loss doctrine, which provides that purely economic losses are not recoverable under a tort theory, and preclude Bilb-Rite’s suit. See Pennsylvania Glass Sand Corp. v. Caterpillar Tractor Co., 652 F.2d 1165, 1169 n. 12 (3d Cir.1981). See also Sidney R. Barrett, Jr., Recovery of Economic Loss in Tort for Construction Defects: A Critical Analysis, 40 S.L.C. Rev. 895 (1989) (“Barrett Article”). I believe that the doctrine’s demarcation line between the law of contracts, which is designed to enforce expectations created by agreement, and the law of torts, which is designed to protect persons and their property by imposing a duty of reasonable care upon others, should be respected in this context, where multiple parties bargain and enter into a network of contracts to allocate risks and to define their respective rights and obligations. See Barrett Article at 894-95, 941.1
*486In this regard, I agree with the reasoning and conclusion of the Supreme Court of Washington in a case on all fours with the instant matter, Berschauer/Phillips Construction Co. v. Seattle School District No. 1, 124 Wash.2d 816, 881 P.2d 986 (1994). In Berschauer/Phillips, a general contractor, who expended more funds than expected and was delayed in the completion of a construction project, brought several claims against the project’s architect in tort, alleging that the architectural plans were incomplete and inaccurate. As a general proposition, the court held that the economic loss doctrine precluded the contractor’s tort claims, stating:
[W]e maintain the fundamental boundaries of tort and contract law by limiting the recovery of economic loss due to construction delays to the remedies provided by contract. We so hold 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. We hold parties to their contracts. If tort and contract remedies were allowed to overlap, certainty and predictability in allocating risk would decrease and impede future business activity. The construction industry in particular would suffer, for it is in this industry that we see most clearly the importance of the precise allocation of risk as secured by contract. 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. We so hold 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.
Id. at 992.
Even though Section 552 had been adopted in Washington, the court also rejected the contractor’s request to permit its Section 552 claim against the architect to proceed. The court stated that “when parties have contracted to protect against *487potential economic liability, as is the case in the construction industry, contract principles override the tort principles in [Section] 552 and, thus, purely economic damages are not recoverable.” Id. at 993 (citations omitted).
Likewise, I believe that application of the economic- loss doctrine is especially warranted in the construction setting, and that bargained-for contractual arrangements should govern the parties’ legal relationships and their economic expectations. Therefore, I would not allow Bilt-Rite to sue TAS under Section 552 of the Restatement (Second) of Torts. For these reasons, I respectfully dissent.

. In its complaint, Bilt-Rite alleges that in connection with the construction project, TAS and the owner of the constriction project entered *486into a contract, and that the owner and Bilt-Rite entered into a contract, which specifically referred to and incorporated by reference certain “Contract Documents”, including the plans and specifications that TAS prepared. Complaint ¶¶ 5, 11.