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Contractor Can Hold Engineering Firm Liable For Fraud
Economic Loss Rule

Wednesday, April 04, 2007 12:00 pm

Contractor Can Hold Engineering Firm Liable For Fraud Economic Loss Rule

A Pennsylvania federal court held that the economic loss doctrine does not bar a contractor from suing an engineering firm for fraud.

The Municipal Authority of the Borough of Elverson, PA (MABE) employed Spotts, Stevens & McCoy (SSM), an engineering firm, to do the engineering work necessary to drain a lagoon and build a wastewater facility. MABE contracted with McElwee Group (McElwee) to serve as general contractor on the project.

McElwee sued MABE and SSM contending that they fraudulently misrepresented the project's complexities. The issue before the district court was whether he should dismiss the misrepresentation/fraud count McElwee brought against SSM. The issue arose before the case went to trial. SSM made two arguments in favor of dismissing the count. First, the engineering firm contended that McElwee did not file a certificate of merit wi [...]

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