Ge Prolec Transformers v. Mountain States Transformer Service, 2:23-cv-00290

Prolec manufactured a transformer used by Dominion Energy; in Jan. 2020 an oil leak from the transformer’s top was reported and the LTC (load tap changer) gearbox required replacement.
Prolec contracted Mountain States Transformer Service, Inc. (MSTS) to repair the LTC gearbox; Prolec alleges MSTS performed the work improperly, causing the transformer to fail.
Prolec sued for breach of contract and negligence; MSTS moved to partially dismiss the negligence claim under Rule 12(b)(6).
The court applied federal pleading standards (Twombly/Iqbal) and the Utah economic loss rule to assess whether the negligence claim was duplicative of the contract claim.
Prolec did not identify an independent tort duty and argued the “other property” exception by attempting to treat the transformer as separate from its components; the court rejected that separability based on Utah precedent treating finished products as integrated units.
The court granted MSTS’s motion and dismissed the negligence claim, noting Prolec may seek leave to amend only if MSTS later disputes that the contract governs the claims.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the negligence claim is barred by the economic loss rule	Negligence claim should survive despite contract because tort duty exists or alternatively pleads both theories	Economic loss rule bars tort recovery for purely contractual disputes; tort claim duplicates contract remedies	Court: Negligence claim barred — alleges only economic loss duplicative of contract remedies
Whether an independent duty exists apart from the contract	An independent duty arises from MSTS’s alleged negligent performance of work	No independent duty identified that is distinct from contractual obligations	Court: No independent duty pleaded; tort and contract overlap, so rule applies
Whether the "other property" exception applies	Contract allegedly limited to certain components, so loss of entire transformer is damage to "other property"	The transformer is an integrated unit; components are not separable from the finished product covered by the contract	Court: Exception does not apply under Utah law; finished product and components treated as one integrated unit
Whether Prolec can plead tort in the alternative	Federal Rule 8(d)(2) permits alternative pleading if coverage is disputed	There is no factual dispute that the contract governs the relationship; alternative pleading is not a basis to avoid dismissal now	Court: Alternative pleading not persuasive given the Complaint and Answer; Prolec may seek leave to amend if coverage is disputed later

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard and courts may rely on judicial experience)
GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381 (10th Cir.) (pleading factual allegations accepted as true on 12(b)(6))
SME Indus., Inc. v. Thompson, Ventulett, Stainback & Assocs., Inc., 28 P.3d 669 (Utah 2001) (economic loss rule frames tort/contract boundary)
Reighard v. Yates, 285 P.3d 1168 (Utah 2012) (economic loss rule prevents tort recovery when contract covers dispute; defines "other property")
Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 221 P.3d 234 (Utah 2009) (finished product/component separability rejected for economic loss rule)
HealthBanc Int’l, LLC v. Synergy Worldwide, Inc., 435 P.3d 193 (Utah 2018) (contract controls where tort and contract claims overlap)
Am. Towers Owners Ass’n, Inc. v. CCI Mech., Inc., 930 P.2d 1182 (Utah 1996) (supports integrated-unit approach for finished product vs components)