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Economic Loss Loophole Too Narrow For Design Misrepresentation Claim

Sunday, April 01, 2012 02:16 am


Fraud -- Negligent Misrepresentation

Kuhn Construction Co. v. Ocean and Coastal Consultants, Inc., 2012 U.S. Dist. Lexis 17731 (D. Del. Feb. 14, 2012)

A designer did not commit fraud where there was no allegation or evidence to explain its motive for sabotage.

Contractor Kuhn Construction Company (Kuhn) brought claims against Ocean and Coastal Consultants, Inc. (OCC) for negligent misrepresentation and fraud in connection with a wharf reconstruction project. OCC had prepared the project drawings and specifications, and Kuhn claimed that OCC knowingly misrepresented the welding requirements and the effects of subsurface conditions.

OCC countered that the economic loss doctrine barred Kuhn's negligent misrepresentation claim. Delaware recognizes a narrow exception to that doctrine where the party who allegedly supplied the false information is in the business of supplying information. See 552 of the Restatement (Second) of Torts and Delaware Art Museum v. Ann Beha Architects, Inc., Civ. No. 06-481, 2007 U.S. Dist. Lexis 66636, 2007 WL 2601472, at *2 (D. Del. Sept. 11, 2007).

However, to be categorized as such, the information must be "the end and aim product of [the] work." Id. Courts have excluded from [...]

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