Maryland’s “Economic Loss Doctrine” Limits Contractor’s Ability to Recover against Design Professionals

The Maryland Court of Special Appeals reaffirmed the application of the “economic loss doctrine” to a dispute between a construction contractor and a design professional, holding that the lack of a contractual relationship between the two parties precludes the contractor from recovering damages, arising out of a negligence claim, from the design professional.  In Balfour Beatty Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP, No. 496, Sept. Term 2014, 2016 Md. App. LEXIS 3 (Md. Ct. Spec. App. Jan 28, 2016), the Court held that no duty of care in tort runs from an engineer or architect to a contractor for purely economic losses on a public construction project, resulting in a dismissal of the lawsuit.

In this case, the general contractor, Balfour Beatty Infrastructure, Inc. (“BBII”) claimed to have suffered from costly delays on a design-bid-built contract as a result of the design engineering firm’s defective and negligent misrepresentations concerning project timeline projections.  Rummel Klepper & Kahl, LLP (“RKK”), the design engineering firm, had previously contracted with the City of Baltimore to produce construction designs for the Patapsco Wastewater Treatment Plant project.  Both RKK and BBII contracted directly with the City of Baltimore, the project’s owner.  No contract existed between RKK and BBII.

The Court of Special Appeals affirmed the Circuit Court of Baltimore City’s granting of RKK’s Motion to Dismiss, holding that a party cannot recover against another in tort where the damages are solely for economic loss and the parties have no contract between them.  Maryland law does not completely bar tort claims for purely economic loss between parties with no contractual privity, but it limits them to situations involving death, personal injury, property damage, or the risk of death or serious personal injury.

Thus, in this matter, the contractor could not bring forth a claim against the design professional.  The contractor may, however, have potential claims against the owner of the project related to the contractor’s damages.

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