United States District Court, N.D. Indiana, Fort Wayne Division
SCOTTSDALE INSURANCE COMPANY, as subrogee of DORADO ENTERPRISES and DORADO ENTERPRISES, Plaintiffs,
TOTAL PROPERTY CARE, INC., DESIGN COLLABORATIVE, INC., and RICH BUS FIELD, Defendants.
OPINION AND ORDER
THERESA L. SPRINGMANN, CHIEF JUDGE.
matter comes before the Court on a Motion for Summary
Judgment [ECF No. 32] filed by Defendants Design
Collaborative, Inc. and Rich Busfield (“the
Movants”). The Plaintiffs, Scottsdale Insurance
Company, as subrogee of Dorado Enterprises, and Dorado
Enterprises (“the Plaintiffs”), filed their
Second Amended Complaint [ECF No. 21] on November 8, 2016,
asserting breach of the implied warranty of merchantability
and breach of contract against TPC and negligence against the
Movants. The Movants now argue that the Plaintiffs are barred
as to their negligence claim under Indiana's economic
loss doctrine. On July 25, 2017, the Court granted the
Plaintiffs an extension of time in which to respond to the
Motion [ECF No. 44], setting a deadline of August 28, 2017.
The Plaintiffs have failed to file a response.
following background is taken from the pleadings as well as
the Movants' statement of material facts included in
their Motion for Summary Judgment. Scottsdale's insured,
Dorado Enterprises (“Dorado”) contracted with the
owner of Eddie Merlot's Restaurants, Platinum
Restaurants, LLC (“Platinum”), to act as the
general contractor for the build-outs of three restaurants in
various states. TPC manufactured and sold the lighting
fixtures, or “rafts, ” to be installed at these
restaurants. Defendants Design Collaborative and Rich
Busfield were responsible for designing the restaurants and
the rafts, which housed can lights and fire sprinklers and
were designed to be suspended from the ceiling. Shortly after
installation, the laminate to which the rafts were attached
failed, resulting in repair and replacement costs.
was the party responsible for contracting with the Movants
for the architectural design of the restaurants and the
rafts. There is no contract regarding such design between the
Movants and the Plaintiffs. Because the Plaintiffs presumably
have no breach of contract claim against the Movants relating
to the current action, the Plaintiffs assert that the Movants
were negligent in the design and installation of the rafts.
The Plaintiffs seek to recover monetary damages in “the
amounts it has paid to Platinum to resolve the issues caused
by the defectively designed or manufactured rafts.”
(Compl. ¶ 14.)
judgment is proper where the evidence of record shows that
there is no genuine issue of material fact and that the
moving party is entitled to judgment as a matter of law.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986). The moving party bears the initial burden of
informing the court of the basis for its motion and
identifying those portions of the record it believes
demonstrate the absence of a genuine issue of material fact.
Id. at 323. The burden then shifts to the non-movant
to “go beyond the pleadings” to cite evidence of
a genuine factual dispute precluding summary judgment.
Id. at 324. “[A] court has one task and one
task only: to decide, based on the evidence of record,
whether there is any material dispute of fact that requires a
trial.” Waldridge v. Am. Heochst Corp., 24
F.3d 918, 920 (7th Cir. 1994). If the non-movant does not
come forward with evidence that would reasonably permit the
finder of fact to find in its favor on a material issue, then
the Court must enter summary judgment against it.
Movants argue that the Plaintiffs' claim of negligence
must fail under the economic loss doctrine. In Indiana,
“under general negligence law . . . damage from a
defective product or service may be recoverable under a tort
theory if the defect causes personal injury or damage to
other property, but contract law governs damage to the
product or service itself and purely economic loss arising
from the failure of the product or service to perform as
expected.” Gunkel v. Renovations, Inc., 822
N.E.2d 150, 153 (Ind. 2005). That is, “where the loss
is solely economic in nature, as where the only claim of loss
relates to the product's failure to live up to
expectations, and in the absence of damage to other property
or person, ” a party's available remedy sounds only
in contract. Id. at 152 (quoting Reed v. Central
Soya Co., Inc., 621 N.E.2d 1069, 1074-75 (Ind. 1993).
“[E]conomic loss has been defined by Indiana courts as
‘the diminution in the value of a product and
consequent loss of profits because the product is inferior in
quality and does not work for the general purposes for which
it was manufactured and sold.'” Id. at 154
(quoting Reed, 621 N.E.2d at 1074). “Damage to
the product itself, including costs of its repair or
reconstruction, is an ‘economic loss' even though
it may have a component of physical destruction.”
Id. (citing Progressive Ins. Co. v. Gen. Motors
Corp., 749 N.E.2d 484, 488 (Ind. 2001)).
courts have expanded the scope of the doctrine to include
cases involving real property and contracts for services,
see, e.g., Jordan v. Talaga, 532 N.E.2d
1174, 1181-82 (Ind.Ct.App. 1989); Choung v. Iemma,
708 N.E.2d 7, 14 (Ind.Ct.App. 1999); Gunkel, 822
N.E.2d at 155, and to include construction claims and
disputes, see, e.g., Indianapolis-Marion Cty
Pub. Library v. Charlier, Clark & Linard, P.C., 929
N.E.2d 722, 735-36 (Ind. 2010); Gunkel, 822 N.E.2d
at 155; Stelko Elec., Inc. v. Taylor Comm. Schools Bldg.
Corp., 826 N.E.2d 152, 159-60 (Ind.Ct.App. 2005);
Peyronnin Const. Co. v. Weiss, 208 N.E.2d 489,
494-96 (Ind.Ct.App. 1965).
general there is no liability in tort for pure economic
loss caused unintentionally.” Indianapolis-Marion
Cty. Pub. Library, 929 N.E.2d at 736 (emphasis in
original). “Economic losses may be defined as
‘damage for inadequate value, costs of repair and
replacement of the defective product . . . to recover in
negligence there must be a showing of harm above and beyond
disappointed expectations.'” Jordan, 532
N.E.2d at 1181 (quoting Redarowicz v. Ohlendorf, 441
N.E.2d 324, 327 (Ill. 1982)). This analysis applies equally
to negligence claims against professionals, such as
architects and engineers, for claims arising out of the
performance of their services on construction projects.
Id. at 741.
the only issue the Court must decide for the purposes of the
instant Motion is whether the damages sustained by the
Plaintiffs are solely economic in nature. In this case, the
Plaintiffs seek only monetary damages related to the failed
rafts in their Complaint. Specifically, the Plaintiffs seek
monetary damages in an amount to pay “for the
replacement of all defective rafts.” (Compl. ¶
13.) There are no allegations of physical harm, there are no
allegations of damage to “other property, ” and
there are no allegations of “harm above and beyond
disappointed expectations.” Thus, the Court finds that
the Plaintiffs seek only economic damages; their remedy
therefore sounds in contract law. Because no contract has
been alleged between the Plaintiffs and the Movants, as a
matter of law, the Plaintiffs cannot recover against either
Design Collaborative, Inc. or Rich Busfield.
these reasons, the Court GRANTS Defendants Design
Collaborative, Inc. and Rich Busfield's Motion for
Summary Judgment [ECF. No. 33]. All remaining claims ...