Halcrow, Inc. v. Eighth Judicial District Court of the State of Nevada Ex Rel. County of Clark
129 Nev. 394
| Nev. | 2013Background
- Halcrow, a structural engineer, designed the Harmon Tower and performed ongoing structural engineering services; it had no contract with subcontractors Century Steel or Pacific Coast Steel (PCS).
- Century/PCS (steel installers) contracted to follow Halcrow’s plans; defects in steel installation halted construction above 26 floors.
- Perini (general contractor) sued and counterclaims/third-party claims followed; Century/PCS sued Halcrow in third-/fourth-party complaints for negligence, indemnity, contribution, and declaratory relief.
- District court dismissed those negligence-based claims under this court’s Terracon decision (economic loss doctrine bars professional negligence claims for purely economic loss in commercial construction).
- Century and PCS moved for leave to amend to add negligent misrepresentation claims based on alleged false statements about inspections and corrections; the district court granted leave and stayed proceedings pending appeal to this court.
- Halcrow petitioned for a writ of mandamus; the Supreme Court considered whether negligent misrepresentation is an exception to the economic loss doctrine in commercial construction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether negligent misrepresentation claims against a design professional are barred by the economic loss doctrine in commercial construction | Century/PCS: Restatement (Second) of Torts § 552 creates an independent duty; negligent misrepresentation should be an exception and would not create unlimited liability | Halcrow: Terracon bars negligence-based claims for purely economic loss, and negligent misrepresentation is not a permitted exception | Court: Negligent misrepresentation claims against design professionals are barred when damages are purely economic; amendment was futile |
| Whether leave to amend should be granted to assert negligent misrepresentation | Plaintiffs: leave should be allowed to plead reliance on Halcrow’s statements about inspections/corrections | Halcrow: amendment is futile because the claim is precluded by Terracon/economic loss doctrine | Court: Denied — district court acted arbitrarily in granting leave; mandate to vacate order |
| Whether negligent misrepresentation would create a distinct duty separate from contractual duties | Plaintiffs: § 552 imposes a restricted liability to foreseeable reliance, distinct from contract | Halcrow: recognizing § 552 here would nullify Terracon’s boundary between contract and tort | Court: § 552 not adopted to create extracontractual duties in commercial construction; contract law governs |
| Effect on related equitable claims (contribution/apportionment/indemnity) | Plaintiffs: those claims follow if negligent misrepresentation stands | Halcrow: if negligent claims barred, equitable claims fail | Court: Because negligent misrepresentation/professional negligence barred, equitable claims fail; Halcrow cannot be a joint tortfeasor |
Key Cases Cited
- Terracon Consultants West., Inc. v. Mandalay Resort Group, 125 Nev. 66 (2009) (held economic loss doctrine bars negligence claims against design professionals for purely economic loss in commercial construction)
- Bill Stremmel Motors, Inc. v. First Nat'l Bank of Nev., 94 Nev. 131 (1978) (adopted Restatement (Second) of Torts § 552 for negligent misrepresentation claims)
- Calloway v. City of Reno, 116 Nev. 250 (2000) (discussed boundary between contract and tort and purpose of economic loss rule)
- Home Furniture, Inc. v. Brunzell Constr. Co., 84 Nev. 309 (1968) (contractor following plans may be excused from liability for defects in plans)
- Black & Decker (U.S.), Inc. v. Essex Group, Inc., 105 Nev. 344 (1989) (equitable indemnity/contribution principles in Nevada)