The structural engineer on the Harmon Tower will not be liable to the steel subcontractor, per the Nevada Supreme Court. In a lawsuit that is likely to wend its way through the courts for months and years to come, at least one claim has been nipped in the bud. Nevada has extended the economic loss doctrine to bar claims for negligent misrepresentation, when the only damages are monetary losses. A summary of the decision is available here.
As is typical, there was no contract between Century Steel, the steel subcontractor on the Harmon Tower, and Halcrow, the structural engineering sub-consultant to the prime architect. Century Steel claimed that it was required to follow Halcrow's design, that Halcrow had represented it would conduct timely inspections of the steel installation, and that Halcrow would direct on-site adjustments in the steel to alleviate any errors in its plans. Century Steel was obviously claiming that, should it be liable for problems with the steel erection, it should recover from Halcrow as a result. But the Nevada Supreme Court held that such claims do not give rise to a cause of action under Nevada law.
This recent decision reinforces one area where the highest courts of the various states have not come to the same conclusion. (On March 12, 2013, we reported in this blog on a Florida case that effectively abolished the economic loss doctrine in that state.) Some states have abolished the economic loss doctrine, some states enforce it, and some states fall somewhere in between, e.g., enforcing the doctrine for claims of negligence, but not for claims of negligent misrepresentation. This remains an issue where choice of prevailing law may indeed make a huge difference. Just ask Century Steel and Halcrow.
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