ILNews

Justices address economic loss rule in 2 opinions

Back to TopE-mailPrintBookmark and Share

In two separate rulings involving the “economic loss rule,” the Indiana Supreme Court ruled against a library seeking to hold subcontractors and an engineer responsible for negligence, and in favor of a bank in its tort claim against a title company.

In Indianapolis-Marion County Public Library v. Charlier Clark & Linard, P.C., et al., No. 06S05-0907-CV-332, the justices dealt the library a blow in its attempt to recover damages for repair costs and other fees because of a delay in the construction of the Central Library in Indianapolis. Construction was delayed after problems were discovered in the concrete used for the parking garage and foundation of the library. The library brought a lawsuit against the architect, general contractor, and various subcontractors for negligence. The library settled with the architect and general contractor, with whom it had a contractual relationship.

The trial court granted the remaining defendants’ motion for summary judgment, finding the negligence claims were barred by the economic loss rule. The Indiana Court of Appeals majority affirmed.

In the IMCPL case, the justices extensively examined the economic loss rule and held that it applies in the instant case. The library is connected with the defendants through a network or chain of contracts in which the parties allocated their respective risks, duties, and remedies, and those contracts - not negligence law - govern the outcome of the library’s claims, wrote Justice Frank Sullivan.

“From the outset of the project, the Library looked to a series of contracts to establish the relative expectations of the parties. And reliance on contract law in this regard is perhaps greater in construction projects than any other industry,  …” wrote the justice.

The Supreme Court also emphasized that the economic loss rule operates as a general rule to preclude recovery in tort for economic loss and does so only for purely economic loss. There are exceptions to the general rule, but those don’t apply in the library’s case.
 
But one of those exceptions does apply in the case of U.S. Bank, N.A. v. Integrity Land Title Corp., No. 17S03-1002-CV-120, which is a case of first impression. The issue is whether or not a title company, after issuing an incorrect title commitment on which the lender relied to its detriment, owes a duty in tort to the recipient to which it certified clear title to the subject real property.

The facts of this case fit within the tort of negligent misrepresentation, so applicable tort law allows U.S. Bank’s tort claim to go forward, the justices ruled.

A buyer of real property got a mortgage from lender Texcorp Mortgage Bankers, who prior to lending the money, contracted with Integrity Land Title Corp. to prepare a title commitment, close the mortgage, and provide the company with an insured first and superior mortgage lien against the subject real property. Integrity’s search uncovered no judgments against the seller of the real property, but the search failed to show a 1998 foreclosure judgment from LPP mortgage.

U.S. Bank, as successor of Texcorp’s interests, intervened in LPP’s action to foreclose the 1998 judgment lien. The bank asserted claims against Integrity of breach of contract and tort of negligent real estate closing. The trial court found Integrity wasn’t in breach of contract and not negligent because it owed no duty to U.S. Bank in tort. The two parties did not have a contract.

Justice Sullivan noted that the existence or non-existence of a contract is not the dispositive factor for determining whether a tort action is allowable where special circumstances and overriding public polices have created exceptions.

Integrity should have known that Texcorp would act in justifiable reliance on the statement in the preliminary commitment that the title was free and clear. The relationship between Integrity and Texcorp was of an advisory nature and Integrity deliberately provided specific information in response to a request by Texcorp to guide Texcorp into its transaction with a third party. Integrity also affirmatively vouched for the accuracy of the information.

 Based on this, applicable tort law allows U.S. Bank’s tort claim to go forward.
 

ADVERTISEMENT

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. I'm going to court the beginning of Oct. 2015 to establish visitation and request my daughters visits while she is in jail. I raised my grandchild for the first two and half years. She was born out of wedlock and the father and his adopted mother wantwd her aborted, they went as far as sueing my daughter for abortion money back 5mo. After my grandchild was born. Now because of depression and drug abuse my daughter lost custody 2 and a half years ago. Everyting went wrong in court when i went for custody my lawyer was thrown out and a replacment could only stay 45 min. The judge would not allow a postponement. So the father won. Now he is aleinating me and my daughter. No matter the amount of time spent getting help for my daughter and her doing better he runs her in the ground to the point of suicide because he wants her to be in a relationship with him. It is a sick game of using my grandchild as a pawn to make my daughter suffer for not wanting to be with him. I became the intervener in the case when my daughter first got into trouble. Because of this they gave me her visitation. Im hoping to get it again there is questions of abuse on his part and I want to make sure my grandchild is doing alright. I really dont understand how the parents have rights to walk in and do whatever they want when the refuse to stand up and raise the child at first . Why should it take two and a half years to decide you want to raise your child.The father used me so he could finish college get a job and stop paying support by getting custody. Support he was paying my daughter that I never saw.

  2. Pence said when he ordered the investigation that Indiana residents should be troubled by the allegations after the video went viral. Planned Parenthood has asked the government s top health scientists at the National Institutes of Health to convene a panel of independent experts to study the issues surrounding the little-known branch of medicine.

  3. State Farm is sad and filled with woe Edward Rust is no longer CEO He had knowledge, but wasn’t in the know The Board said it was time for him to go All American Girl starred Margaret Cho The Miami Heat coach is nicknamed Spo I hate to paddle but don’t like to row Edward Rust is no longer CEO The Board said it was time for him to go The word souffler is French for blow I love the rain but dislike the snow Ten tosses for a nickel or a penny a throw State Farm is sad and filled with woe Edward Rust is no longer CEO Bambi’s mom was a fawn who became a doe You can’t line up if you don’t get in a row My car isn’t running, “Give me a tow” He had knowledge but wasn’t in the know The Board said it was time for him to go Plant a seed and water it to make it grow Phases of the tide are ebb and flow If you head isn’t hairy you don’t have a fro You can buff your bald head to make it glow State Farm is sad and filled with woe Edward Rust is no longer CEO I like Mike Tyson more than Riddick Bowe A mug of coffee is a cup of joe Call me brother, don’t call me bro When I sing scat I sound like Al Jarreau State Farm is sad and filled with woe The Board said it was time for him to go A former Tigers pitcher was Lerrin LaGrow Ursula Andress was a Bond girl in Dr. No Brian Benben is married to Madeline Stowe Betsy Ross couldn’t knit but she sure could sew He had knowledge but wasn’t in the know Edward Rust is no longer CEO Grand Funk toured with David Allan Coe I said to Shoeless Joe, “Say it ain’t so” Brandon Lee died during the filming of The Crow In 1992 I didn’t vote for Ross Perot State Farm is sad and filled with woe The Board said it was time for him to go A hare is fast and a tortoise is slow The overhead compartment is for luggage to stow Beware from above but look out below I’m gaining momentum, I’ve got big mo He had knowledge but wasn’t in the know Edward Rust is no longer CEO I’ve travelled far but have miles to go My insurance company thinks I’m their ho I’m not their friend but I am their foe Robin Hood had arrows, a quiver and a bow State Farm has a lame duck CEO He had knowledge, but wasn’t in the know The Board said it was time for him to go State Farm is sad and filled with woe

  4. The ADA acts as a tax upon all for the benefit of a few. And, most importantly, the many have no individual say in whether they pay the tax. Those with handicaps suffered in military service should get a pass, but those who are handicapped by accident or birth do NOT deserve that pass. The drivel about "equal access" is spurious because the handicapped HAVE equal access, they just can't effectively use it. That is their problem, not society's. The burden to remediate should be that of those who seek the benefit of some social, constructional, or dimensional change, NOT society generally. Everybody wants to socialize the costs and concentrate the benefits of government intrusion so that they benefit and largely avoid the costs. This simply maintains the constant push to the slop trough, and explains, in part, why the nation is 20 trillion dollars in the hole.

  5. Hey 2 psychs is never enough, since it is statistically unlikely that three will ever agree on anything! New study admits this pseudo science is about as scientifically valid as astrology ... done by via fortune cookie ....John Ioannidis, professor of health research and policy at Stanford University, said the study was impressive and that its results had been eagerly awaited by the scientific community. “Sadly, the picture it paints - a 64% failure rate even among papers published in the best journals in the field - is not very nice about the current status of psychological science in general, and for fields like social psychology it is just devastating,” he said. http://www.theguardian.com/science/2015/aug/27/study-delivers-bleak-verdict-on-validity-of-psychology-experiment-results

ADVERTISEMENT