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. Employers should not have racially discriminating mind set. It has huge impact on the society what the big players do or don't do in the industry. Background check is conducted just to verify whether information provided by the prospective employee is correct or not. It doesn't have any direct combination with the rejection of the employees. If there is rejection, there should be something effective and full-proof things on the table that may keep the company or the people associated with it in jeopardy.

  2. what a wonderful world we are living, i still doubt this spell caster how he did it!!! i am Shechan Caroline am from Los Angeles I am so happy to let the whole word know how this powerful spell caster saved my marriage.Everything was going down the drain as my husband can not stop cheating on me with other women. It became used to always heating on me. I tried to make him stop, but I couldn't help the situation, the more I tried, the harder it becomes. At times we will fight and go apart for some months and we will come back again just because of our kids. One day a friend told me about this spell caster who helped her too, his name is Dr.oku, she said he uses white magic spells to solve spiritual problems. I decided to give it a try, I contacted him and he told me it will take just 2 to 3 days and I will see great changes in my husband. He actually cast a spell, believe me after 2 to 3 days of the spell, my husband was confessing different names of woman he has slept with. He begged for forgiveness and never to try it again. From that day till now, my mind is at rest. My husband dislike every other women on earth except me. And am so happy to have him for myself alone.The spell caster’s contact is okutemple@gmail.com or add him on whasapp +2347053113465?

  3. Unlike the federal judge who refused to protect me, the Virginia State Bar gave me a hearing. After the hearing, the Virginia State Bar refused to discipline me. VSB said that attacking me with the court ADA coordinator had, " all the grace and charm of a drive-by shooting." One does wonder why the VSB was able to have a hearing and come to that conclusion, but the federal judge in Indiana slammed the door of the courthouse in my face.

  4. I agree. My husband has almost the exact same situation. Age states and all.

  5. Thanks Jim. We surprised ourselves with the first album, so we did a second one. We are releasing it 6/30/17 at the HiFi. The reviews so far are amazing! www.itsjustcraig.com Skope Mag: It’s Just Craig offers a warm intimacy with the tender folk of “Dark Corners”. Rather lovely in execution, It’s Just Craig opts for a full, rich sound. Quite ornate instrumentally, the songs unfurl with such grace and style. Everything about the album feels real and fully lived. By far the highlight of the album are the soft smooth reassuring vocals whose highly articulate lyrics have a dreamy quality to them. Stories emerge out of these small snapshots of reflective moments.... A wide variety of styles are utilized, with folk anchoring it but allowing for chamber pop, soundtrack work, and found electronics filtering their way into the mix. Without a word, It’s Just Craig sets the tone of the album with the warble of “Intro”. From there things get truly started with the hush of “Go”. Building up into a great structure, “Go” has a kindness to it. Organs glisten in the distance on the fragile textures of “Alone” whose light melody adds to the song’s gorgeousness. A wonderful bloom of color defines the spaciousness of “Captain”. Infectious grooves take hold on the otherworldly origins of “Goodnight” with precise drum work giving the song a jazzy feeling. Hazy to its very core is the tragedy of “Leaving Now”. By far the highlight of the album comes with the closing impassioned “Thirty-Nine” where many layers of sound work together possessing a poetic quality.

ADVERTISEMENT