Kuhn Construction Co. v. Ocean & Coastal Consultants, Inc.
844 F. Supp. 2d 519
D. Del.2012Background
- Kuhn Construction sued OCC and Waite for injuries arising from the Wharf 2 reconstruction, asserting negligence, negligent misrepresentation, fraud, misrepresentation, contract interference, and conspiracy.
- DSPC retained OCC to assist in bid preparation; OCC produced bid documents marked FOR BID PURPOSES ONLY, which Kuhn allegedly relied upon when bidding and winning the contract worth $10,750,000.
- Kuhn contends OCC undisclosed or obscured changes to bid documents after award, including welding requirements for upper sections of piles.
- Kuhn alleges undisclosed subsurface conditions and tidal datum/elevation changes that affected construction and caused increased costs and delays.
- Kuhn asserts OCC provided a weld acceptance criteria and, through Waite, issued reports with allegedly faulty conclusions about weld quality, influencing project concerns.
- The court previously denied 12(b)(7) and 12(b)(1) motions to dismiss, and Kuhn later filed an amended complaint; Waite moved under 12(b)(6) and OCC separately moved under 12(b)(6). The court now denies Waite’s motion but grants OCC’s motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Waite's negligent misrepresentation claim is adequately pleaded | Waite made false, material representations | Statements were opinions/professional judgments not actionable | Waite's motion denied; allegations sufficient |
| Whether OCC's negligent misrepresentation is barred by the economic loss doctrine or saved by §552 | Defendant supplied information in business transactions and is subject to §552 | Information was ancillary to product/service; no information business | OCC not in the information business; §552 not applicable; doctrine bars negligence claim |
| Whether the fraud/misrepresentation claim meets Rule 9(b) pleading requirements and shows scienter | OCC made knowingly false bid representations to induce contract | No pleaded motive, content, or scienter; insufficient specificity | Fraud claim implausible; fails to plead scienter and content with specificity |
| Whether Kuhn can state a viable claim for tortious interference with contracts against OCC | OCC interfered with DSPC-Kuhn contract by improper actions | OCC was DSPC's agent or shared a legitimate economic interest; privilege applies | Interference privileged; claim dismissed |
| Whether the conspiracy claim stands independent of underlying tort claims | Conspiracy based on the above torts and intentional misconduct | Conspiracy requires underlying torts, which fail; dismissal follows | Conspiracy claim dismissed |
Key Cases Cited
- Lincoln Nat. Life Ins. Co. v. Snyder, 722 F. Supp. 2d 546 (D. Del. 2010) ( Delaware negligent misrepresentation standard)
- Guardian Construction Co. v. Tetra Tech Richardson, Inc., 583 A.2d 1378 (Del. Super. 1990) (§ 552 information-supplier exception recognized)
- Tolan & Son, Inc. v. KLLM Architects, Inc., 241 Ill. Dec. 427, 719 N.E.2d 291 (Ill. 1999) (architect/engineer information treated as incidental to finished product)
- Millsboro Fire Co. v. Constr. Mgmt. Servs., Inc., 2006 WL 1867705 (Del. Super. 2006) (economic loss doctrine; information exception not applicable)
- Christiana Marine Serv. Corp. v. Texaco Fuel and Marine Mktg., No. Civ. A. 98C-02-217WCC, 2002 WL 1335360 (Del. Super. 2002) (Restatement § 552 applied narrowly in Delaware)