OPINION AND ORDER
I. INTRODUCTION
Thе above-captioned matter is a complex construction ease stemming from the alleged failure to properly construct three retaining walls at Plaintiff American Stores Properties, Inc.’s (“ASPI”) food distribution center located in Denver, Pennsylvania. Plaintiff commenced this action on March 29, 2005 and filed its Amended Complaint (Doc. No. 2) on July 22, 2005, naming as defendants twelve parties alleged to have been involved in various aspects of the construction of the retaining walls. This action was transferred to the docket of this Court on April 30, 2009. The named defendants are: (1) Spоtts, Stevens, & McCoy, Inc. (“SSM”); (2) Clark/Epstein; 1 (3) The Clark Construction Group, Inc.; (4) A. Epstein & Sons, International, Inc.; (5) Earth Engineering, Inc. (“EEI”); (6) Handwerk Contractors (“Handwerk”); 2 (7) MacCaferri Gabions, Inc. (“MGI”); (8) Baseline Contracting, Inc. (“BCI”); (9) Haines & Kibbelhouse, Inc. (“Haines”); (10) High Associates, Ltd. (“High”); (11) CBL Service Corporation (f/k/a Lenders Support Group, Inc.) (“CBL”); and (12) Timothy E. Debes (“Debes”).
Five Motions to Dismiss are currently before the Court. In the Motions, Defendants seek dismissal of Counts which contain allegations of negligent or tortious conduct in regard to their participation in building the distribution center. The Motions were filed by Haines, BCI, Handwerk, EEI and MGI (“Moving Defendants”). Defendant Haines filed its Motion to Dismiss Pursuant to Federal Rule оf Civil Procedure 12(b)(6) on August 12, 2005 (Doc. No. 3). Plaintiff filed a Response in Opposition to Haines’ Motion to Dismiss on August 29, 2005 (Doc. No. 27). Defendants BCI and Handwerk each filed Motions entitled: “Response to and Joinder in Defendant Haines & Kibbelhouse, Inc.’s Motion Pursuant to Rule 12(b)” on August 26, 2005 and August 31, 2005, respectively (Doc. Nos. 26 and 31). 3 Plaintiff subsequently filed Responses in Opposition to BCI and Handwerks’ Motions to Dismiss on September 7, 2005 and September 9, 2005, respectively (Doc. Nos. 32 and 35). 4
*709 Defendant EEI filed a Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) on September 13, 2005 (Doc. No. 36). Plaintiff filed a Response in Opposition to EEI’s Motion to Dismiss on October 13, 2005 (Doc. No. 69). Defendant MGI filed a Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) on October 20, 2005 (Doc. No. 78). Plaintiff filed a Response in Opposition to MGI’s Motion to Dismiss on November 7, 2005 (Doc. No. 88).
For the reasons that follow, Moving Defendants’ Motions to Dismiss will be granted. 5
II. FACTUAL BACKGROUND
This litigation stems from the construction of a food and warehouse distribution center (“the Distribution Center” or “Building No. 264”) 6 owned by Plaintiff ASPI, located in Denver, Pennsylvania. (PL Am. Comp. ¶ 15.) Due to the uneven geological foundation of the land on which the Distribution Center was to be constructed, gabion retaining walls were required as pаrt of the foundation for the building. (Id. ¶ 22.) A gabion retaining wall is composed of gabions, or stone-filled wire baskets, which are stacked together to create an earth retaining wall. (Id. ¶ 28.) Plaintiff alleges that each of the named Defendants had roles in the design and/or construction of the site’s gabion retaining walls.
Five gabion retaining walls were designed and constructed at the Distribution Center. (PL Am. Comp. ¶ 41.) The walls were identified on the construction plans as Wall Nos. 1, 2, 3, 4 and 5. (Id.) Plaintiff alleges that Wall No. 1 shows signs of distress from excessive movement and will eventually fail in its entirety if it is not repaired or replaсed. (Id.) Wall No. 2 also shows signs of distress. A 40-foot section of Wall No. 2 has already faked. (Id.) Portions of Wall No. 4 show signs of distress as well. (Id.) Plaintiff contends that the failure of Wall No. 2 and the evident distress in the other walls have progressed to the point where they will only become worse unless repaired or replaced. (Id.) The walls were designed to have a “useful life” in excess of 25 years and the distress and signs of movement within the walls are not normal and were not expected. (Id. ¶ ¶ 42, 43.)
The genesis of this conflict began in 1996, when Plaintiff entered into an “Entitlement Services Agreement” with Defendant High (“High Agreement”) to engage in the commercial dеvelopment of the Distribution Center. (Id. ¶ 17.) Under this Agreement, Defendant High had the responsibility to manage the civil design and procurement of entitlements (i.e. obtaining the necessary permits) on behalf of ASPI. (Id. ¶ 17.) The High Agreement authorized High to engage subcontractors for the preparation of engineering investigations, reports, plans and specifications for the Distribution Center site work. (Id.) On or about September 10, 1998, Plaintiff ASPI entered into an “Abbreviated Standard Form of Agreement Between Owner and Architect” with SSM (“SSM Agreement”), under which SSM agreed to provide civil *710 engineering plans and specifications for all site improvements at the Distribution Center, as well as construction, observation, and inspection of the site retaining walls. (Id. ¶ 26.) The SSM Agreement, in part, gave rise to the allegations against Defendant MGI, which are discussed below.
On or about June 29, 1998, after the design of the Distribution Center was complete, Plaintiff ASPI entered into an agreement with Clark/Epstein entitled: “Agreement Between Owner and Contractor for the Building 264 Project — Cost of the Work Plus a Fee With a Guaranteed Maximum Price.” (“Clark/Epstein Agreement”) (Id. ¶ 29; Pl.Ex. D.) Pursuant to the Clarlv'Epstein Agreement, Clark/Epstein agreed to construct the Distributiоn Center and its associated site work in accordance with the construction plans and specifications previously prepared under the High and SSM Agreements. (Id. ¶ 29.) Clark/Epstein also agreed to provide all labor and materials for the construction of the gabion retaining walls. (Id.) The Clark/Epstein Agreement gave rise to the allegations against Defendants EEI, Handwerk, BCI and Haines, which are discussed below.
Due to the complex nature of this action, the Court will describe the allegations against Moving Defendants individually.
A. Defendant MGI: Negligent Design and Inspection.
ASPI alleges one count of Negligent Design and Inspection against Defendant MGI (Count X). (PI. Am. Comp. ¶ ¶ 96-99.) MGI is alleged to be in the business of designing and manufacturing gabion retaining wall systems and component materials. 7 (Id. ¶ 38.) SSM allegedly designed the site retaining walls using software provided by MGI, which included methodologies and minimum factors of safety. 8 (Id. ¶ ¶ 28, 38.) MGI is also alleged to have reviewed SSM’s retaining wall plans and subsequently approved those plans in a letter dated February 13, 1998. (Id.; PL Ex. F.) In addition, MGI sold gabions that were used in the construction of the site retaining walls to subcontractor BCI. 9 (Pl. Am. Comp. ¶ 38.)
Plaintiff alleges that MGI owed a duty to provide advice or recommendations for the design and/or installation of the gabion retaining walls in accordance with the construction plans, specifications and industry standards. (Pl. Am. Comp. ¶ 97.) ASPI claims that MGI breached that duty when it approved SSM’s design which was allegedly made in accordance with MGI’s design specification computer software. (Id.) Plaintiff alleges that the software used improper design criteria for the backfill and retained soils, and that the walls were not designed in accordance with the known safety factors in the industry to prevent excessive movement. (Id.) Plaintiff contends that MGI was negligent in its observation and inspection of the retaining walls during construction. (Id. ¶ 98.) ASPI alleges damages in excess of $3,000,000 as a *711 result of MGI’s negligence and breach of its duty. (Id. ¶ 99.)
B. Defendant EEI: Negligent Inspection and Testing.
ASPI alleges one count of Negligent Inspection and Testing against Defendant EEI (Count IX). (PI. Am. Comp. ¶ ¶ 93-95.) EEI entered into a subcontract agreement with Clark/Epstein to provide consulting services, which included the testing and inspection of materials related to the earthwork at the Distribution Center. (Id. ¶ 36.) During the construction of the Distribution Center and its site work, EEI tested materials and performed inspections. (Id.) EEI was expressly bound to perform its work in accordance with the Clark/Epstein Agreement. (Id. ¶ 35.)
Plaintiff alleges that EEI owed a duty to Plaintiff to “provide competent gеotechnical testing and inspections” during the construction of the retaining walls. (Id. ¶ 94.) ASPI claims that the failure of Wall No. 2 and the distress in Walls Nos. 1 and 4 were caused by EEI’s failure to detect and report that construction of the walls did not conform to construction plans, specifications or industry standards. (Id. ¶ 46.) Plaintiff alleges that EEI’s negligence and breach of its duty caused damages in excess of $3,000,000. (Id. ¶ 95.)
C. Defendant Handwerk: Negligent Construction.
ASPI alleges one count of Negligent Construction against Defendant Handwerk (Count VIII). (PI. Am. Comp. ¶ ¶ 88-92.) Handwerk entered into a subcontract agreement with Clark/Epstein on or about June 22, 1998. (Id. ¶ 37; Pl.Ex. E.) According to that agreement, Handwerk was required to provide all labor, material and equipment required to furnish, deliver and install the gabion retaining walls in accordance with the Construction Specifications dated February 18, 1998. (Id.) Handwerk was expressly bound to perform its work in accordance with the Clark/Epstein Agreement. (Id. ¶ 35.)
Handwerk constructed the gabion retaining walls at the Distribution Center, which included “the supply and placement of fill, the compaction of fill into the wire baskets, the placement of the wire baskets, the placement of wire ties used to interlock the wire baskets, the plаcement into the backfill of wire reinforcing ... and the placement, compaction, and grading of fill placed behind the gabion retaining walls.” (Id. ¶ 37.) In addition, Handwerk contracted with Defendants Haines and BCI requiring them to perform certain work relating to the construction and installation of the gabion retaining walls. The details of that work is discussed below in Sections D and E regarding Defendants Haines and BCI.
Plaintiff alleges that Handwerk, as a result of its own work or that of its subcontractors, breached its duty to construct the retaining walls and supply materials in accordance with the constructiоn plans and specifications, in a “good and workmanlike manner and in accordance with industry standards.” (Id. ¶ ¶ 89, 90.) Plaintiff claims Handwerk’s negligence and breach of its duty caused damages in excess of $3,000,000. (Id. ¶ 91.)
D.Defendant Haines: Negligent Construction.
Plaintiff alleges one count of Negligent Construction against Defendant Haines (Count VIII). (PI. Am. Comp. ¶ ¶ 88-92.) Haines entered into a subcontract agreement with Handwerk to perform earthwork and/or to supply materials for the construction of the gabion retaining walls. (Id. ¶ 39.)
Plaintiff alleges that Haines breached the duty it owed to Plaintiff in the construction and/or supply of materials used in the constructiоn of the gabion retaining *712 walls. (Id. ¶ 89.) Plaintiff claims that the failure of Wall No. 2 and the distress in Walls Nos. 1 and 4 was caused by Haines failure to excavate, place, grade and compact earthwork for the retaining walls, “in accordance with the construction plans and specifications, in a good and workmanlike manner and in conformance with industry standards.” (Id. ¶ 46.) Plaintiff alleges that Haines’ negligence and breach of its duty caused damages in excess of $3,000,000. (Id. ¶ 91.)
E. Defendant BCI: Negligent Construction.
Plaintiff alleges one count of Negligent Construction against Defendant BCI (Count VIII). (PL Am. Comp. ¶ ¶ 88-92.) BCI entered into a subcontract agreement with Handwerk to build, assemble and install the gabion retaining wall baskets for the Distribution Center. (Id. ¶ 40.)
Plaintiff claims that the failure of Wall No. 2 and the distress in Walls Nos. 1 and 4 was caused by BCI’s failure to assemble and install the retaining wall baskets “in conformance with the construction plans and specifications, in a good and workmanlike manner and in accordance with industry standards.” (Id. ¶ 47.) Plaintiff again alleges that BCI’s negligence and breach of its duty caused damages in excess of $3,000,000. (Id. ¶ ¶ 90, 91.)
III. MOTION TO DISMISS STANDARD
Defendants have moved to dismiss several counts of Plaintiffs Complaint for failure to state a claim upon which relief can be grаnted under Federal Rules of Civil Procedure 12(b)(6). In deciding a motion to dismiss pursuant to Rule 12(b)(6), a court must “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under a reasonable reading of the complaint, the plaintiff may be entitled to relief.”
Phillips v. County of Allegheny,
To withstand a motion to dismiss under Rule 12(b)(6), “factual allegations must be enough to raise a right to relief above the speсulative level.”
Phillips,
IV. DISCUSSION
The Court presides over this case under diversity of citizenship jurisdiсtion. In a diversity case, the Court must apply the substantive law of Pennsylvania.
Erie R.R. v. Tompkins,
A. Plaintiff’s Negligence Claims against Defendants EEI, Handwerk, Haines, BCI and MCI are Barred by the Economic Loss Doctrine.
In Counts VIII to X of the Amended Complaint, Plaintiff is seeking damages from Moving Defendants related to the cost of repairing and/or replacing the al *713 legedly defective gabion retaining walls at its Distribution Center. The Counts claim negligent or tortious conduct by Moving Defendants. Because Plaintiff does not allege any physical injury to any person or damage to property apart from the retaining walls, its negligence claims against Moving Defendants are barred by the economic loss doctrine.
The economic loss doctrine provides that “no cause of action exists for negligence that results solely in economic damages unaccompanied by physical injury or property damage.”
Adams v. Copper Beach Townhome Cmtys., L.P.,
Plaintiff puts forth three arguments in opposition to the application of the economic loss doctrine to its claims against Moving Defendants: (1) that the doctrine is inapplicable absent privity between the parties; (2) that the holding in
Bilt-Rite Contractors, Inc. v. Architectural Studio,
1. The Economic Loss Doctrine Bars Plaintiffs Negligence Claims Despite the Absence of Privity Between the Parties.
Plaintiff argues that the economic loss doctrine is not applicable to its claims against Moving Defendants because no privity of contract exists between ASPI and Moving Defendants. (Doc. No. 69 at 8-9 and Doc. No. 88 at 9.) However, controlling Federal and Pennsylvania state law hold that privity of contract is not required for application of the economic loss doctrine to Plaintiffs negligence claims.
See e.g., Hartford Fire Ins. Co. v. Associated Const. & Mgmt. Corp.,
No. 98-45,
In a series of cases that resulted from the construction of Two-Liberty Place in Philadelphia, courts in the Eastern District of Pennsylvania consistently found that, even where the parties were not in privity of contract, Pennsylvania law does not recognize a cause of action based on negligent acts that result in only economic loss.
Gittens-Altman, A.M.A. v. HCB Contractors,
No. 90-6908,
The Pennsylvania Superior Court has consistently applied the economic loss doctrine to prevent recovery for economic loss where the parties were not in privity of contraсt.
Aikens v. Baltimore & Ohio RR. Co.,
Plaintiffs argument that the economic loss doctrine is not applicable absent privity of contract is based entirely on a single sentence found in
Duquesne Light Co. v. Westinghouse Elec. Corp.,
stating that: “the economic loss doctrine ... only covers situations in which ‘a party in privity of contract with another suffers an injury to a product itself resulting in purely economic loss.’ ”
2. Plaintiff’s Reliance on the Biltr-Rite case is Misplaced Because the Holding in Bilt-Rite is Restricted to a Negligent-Misrepresentation Claim.
Plaintiff also argues that the holding of
Bilt-Rite Contractors, Inc. v. Architectural Studio,
In
Bilt-Rite,
the East Penn School District hired The Architectural Studio (“TAS”) to provide services for the design and construction of a new school.
Bilt-Rite
does not preclude the application of the economic loss doctrine to all negligent or tortious conduct alleged against parties involved in a construction project. Its holding only applies to a claim for negligent misreрresentation under Section 522 of the Restatement (Second) of Torts (1977). While
Bilt-Rite
does carve out an exception to the economic loss doctrine to allow a commercial plaintiff to seek recourse from an “expert supplier of information” with whom the plaintiff had no contractual relationship, most courts have specifically restricted the holding in
Bilt-Rite
to negligent misrepresentation claims under Section 552.
See e.g., Sovereign Bank v. BJ’s Wholesale Club,
While the holding in Bilt-Rite is controlling on claims for negligent misrepresentation that fall under Section 522 of the Restatement (Second) of Torts, Plaintiff has not brought a negligent misrepresentation claim against any of the Moving Defendants. Therefore, the Court finds that Bilt-Rite does not prevent application of the economic loss doctrine to Plaintiffs negligence claims in this case.
3. Plaintiff Did Not Suffer Damage to “Other Property. ”
Plaintiff argues that the economic loss doctrine should not bar its claims against *716 Defendants EEI and MGI, because the damage incurred as a result of the failure of the retaining walls was not damage to the “product itself,” but was damage to “other property.” (Doc. No. 69 at 9-10 and Doc. No. 88 at-10-11.) Despite Plaintiffs argument, the finished gabion retaining walls were the “product” for which ASPI bargained. Accordingly, damages related to the cost of repair or replacement of those walls based upon the negligence claims in the Amended Complaint are not recoverable under the economic loss doctrine.
In
Hartford Fire Ins. Co. v. Associated Const. & Mgmt. Corp.,
the court applied the economic loss doctrine to a case factually similar to the instant one.
Plaintiff relies on
2-J Corp. v. Tice,
*717
In
2-J Corp.,
the plaintiff was permitted to recover damages for inventory and other goods from the manufacturer of its preengineered warehouse.
Accordingly, the product for which Plaintiff bargained is the finished gabion retaining walls. All Moving Defendants contributed to its construction. Because Plaintiff has not alleged damages other thаn those related to the cost of repairing or replacing the walls, recovery is barred under the economic loss doctrine.
V. CONCLUSION
For the foregoing reasons, Moving Defendants’ Motions to Dismiss will be granted. Plaintiff has filed a Motion for Leave to File a Second Amended Complaint and has attached a proposed copy of that Complaint. (Doc. No. 150.) Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend should be given freely when justice so requires. Fed.R.Civ.P. Rule 15(a). This rule is liberally construed in favor of allowing disputes to be settled on their merits.
See United States v. Hougham,
ORDER
AND NOW, this 13th day of August, 2009, upon consideration of the Motions to Dismiss of Defendants Haines & Kibbelhouse, Inc. (Doc. No. 3), Baseline Contracting, Inc. (Doc. No. 26), Handwerk Contractors (Doc. No. 31), Earth Engineering, Inc. (Doc. No. 36), and MacCaferri Gabions, Inc. (Doc. No. 78), and Plaintiff American Stores Properties, Ine.’s Responses in Opposition to Defendants’ Motions to Dismiss (Doc. Nos. 27, 32, 35, 69 and 88), it is hereby ORDERED as follows:
1. Defendant Haines & Kibbelhouse, Inc.’s Motion to Dismiss Count VIII (Doc. No. 3) is GRANTED.
2. Defendant Baseline Contracting, Inc.’s Motion to Dismiss Count VIII (Doc. No. 26) is GRANTED.
3. Defendant Handwerk Contractors’ Motion to Dismiss Count VIII (Doc. No. 31) is GRANTED.
4. Defendant Earth Engineering, Inc.’s Motion to Dismiss Count IX (Doc. No. 36) is GRANTED.
5. Defendant MacCaferri Gabions, Inc.’s Motion to Dismiss Count X (Doc. No. 78) is GRANTED.
6. Plaintiff American Stores Properties, Inc.’s claims against Defendants Haines & Kibbelhouse, Inc., Baseline Contracting, Inc., Handwerk Contractors, Earth Engineering, Inc., and MacCaferri Gabions, Inc. are DISMISSED without prejudice.
7. Pursuant to the Court’s Opinions in this case filed on this date, Plaintiff *718 may file an Amended Complaint consistent with the Opinions.
Notes
. Defendant Clark/Epslein is a joint venture formed by Defendant The Clark Construction Group and Defendant A. Epstein & Sons, Internationаl, Inc. for purposes of constructing the distribution center. (PL Am. Comp. ¶ 30.)
. Handwerk is a Division of Blooming Glen Contractors, Inc. (PL Am. Comp. ¶ 7.)
. Because BCI and Handwerk adopted Haines' entire motion and supporting memorandum, their "Response to and Joinder" will be referred to as "Motions to Dismiss.”
. Plaintiff’s two Responses in Opposition to BCI and Handwerks' Motions to Dismiss incorporate by reference Plaintiff’s previously filed Response in Opposition to Haines' Motion to Dismiss (see Doc. Nos. 27, 32 and 35).
. The Moving Defendants have put forth a number of alternative arguments in support of their Motions to Dismiss, such as the "gist of the action” dоctrine and Plaintiff’s failure to comply with the alternative dispute resolution provisions contained in the Clark/Epstein Agreement. (See Doc. Nos. 3, 26, 31, 36 and 78.) Applying the reasoning of the Court’s ruling filed on this date resolving the Motion to Dismiss of Defendant CBL/LSG, the Court concludes that the "gist of the action” doctrine would also apply here and is another basis for granting Moving Defendants’ Motions to Dismiss.
. The Distribution Center was also called "Building No. 264” during the early stages of development. (Pl. Am. Comp. ¶ 29.)
. Defendant MGI claims that it is engaged only in the business of selling gabions, has never designed retaining walls, and is not licensed to do so. (Dоc. No. 78, ¶ 4.)
. MGI claims that, as with any seller of goods, it provides information about its products to design professionals and other interested persons upon request, but as noted above, it is not in the business of designing retaining walls. (Doc. No. 78, ¶ 4.)
.MGI concedes that it manufactured and sold, through its regional distributor, the gabions used at the Distribution Center. (Doc. No. 78, ¶ 4.) However, MGI emphasizes that there was no contract or agreement with either ASPI or SSM in regard to the design of the site retaining walls. (Id. ¶ 7.) MGI contends that the only connection it had with the construction of the Distribution Center was its sales contract with BCI for the gabions used at the site. (Id. at 12.)