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Owner Can't Skirt Economic Loss And Pin Negligence On Engineer

Monday, November 30, 2009 03:15 am


Warranty -- Economic Loss Doctrine

American Stores Properties, Inc. v. Spotts, Stevens & McCoy, Inc. et al

U.S. District Court for the Eastern District of Pennsylvania 2009 U.S. Dist. LEXIS 71214 (August 13, 2009)

Although no privity of contract existed between them, an owner tried to hold an engineering subcontractor liable for allegedly faulty construction via two avenues: breach of warranty and negligent design. Both roads were closed.

American Stores Properties, Inc. (ASPI) contracted with  High Associates, Ltd. (High), among others, for construction of three gabion retaining walls at its food distribution center in Denver, Pennsylvania. Alleging improper construction, ASPI sued Timothy E. Debes (Debes), who was an employee of CBL Service Corporation (CBL), one of High's subcontractors responsible for providing geotechnical engineering services. During the project, Debes signed and professionally sealed a Subsurface Exploration Report (the soil report). After the project, the installed walls, which were designed to last more than 25 years, began to show signs of distress from excessive movement.

Owner isn't beneficiary of all project warranties

In response to ASPI's breach of warranty claim, Debes argued that ASPI failed to establish it was a third-party beneficiary  of the Debes-CBL employment contract. Debes also claimed he made no warranties, express or implied, to ASPI.

Indeed, the court found that ASPI failed to demonstrate it was the intended beneficiary of any warranty Debes made. [...]

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