United States District Court, N.D. Indiana, Hammond Division
OPINION AND ORDER
T. MOODY UNITED STATES DISTRICT JUDGE.
matter is before the court on defendants' partial motion
to dismiss. (DE # 5.) For the reasons identified below,
defendants' motion will be granted.
Travelers Property Casualty Company of America
(“Travelers”) is an insurance company that
insured plaintiff Resco Group, Inc. (“Resco”).
(DE # 1 at 2.) Defendants Campbell Machinery, LLC
(“Campbell”) and C.C.D. Engineering, Inc.
(“C.C.D”) repair and rebuild heavy manufacturing
operates a plant that manufactures refractory blocks.
(Id. at 3.) In February 2016, defendants responded
to Resco's solicitation for bids to replace the gear
pumps on one of its presses with piston pumps. (Id.)
Defendants submitted three different quotes for work on the
press: quote 1512301D; quote 160317A; and quote 160318A.
(Id. at 2-3.) Quote 1512301D was a quote for the
installation of the new motors in the press and quote 160317A
was a quote for cleaning the hydraulic tank in the press to
remove debris. (Id. at 3-4.) Defendants were
awarded the project. (Id. at 3.)
allege that defendants inaccurately determined that holes
needed to be cut in the hydraulic tank in order to
accommodate the new pumps. (Id.) Plaintiffs claim
that defendants negligently cut into the tank, and then
negligently cleaned up the resulting debris in the tank.
(Id. at 3-4.) According to plaintiffs, less than one
hour after the new pumps were activated, the debris in the
machine caused it to seize and become inoperable.
(Id.) As a result, Travelers paid Resco $377, 627 on
Resco's insurance claim, and Resco lost its deductible.
complaint alleges six counts against defendants: (1)
negligence; (2) breach of contract; (3) breach of implied
warranty; (4) negligence per se; (5) negligent
misrepresentation; and (6) strict liability. (DE # 1.)
Defendants now move to dismiss plaintiffs' negligence,
negligence per se, and strict liability claims for
failure to state a claim. (DE # 5.) Defendants argue that,
under Indiana's economic loss doctrine, plaintiffs may
not seek to recover their purely pecuniary losses related to
defendants' performance of the contract. (Id. at
6.) Defendants also make alternative arguments as to why
plaintiffs' negligence per se and strict
liability claims fail. However, because this court finds that
the economic loss doctrine precludes plaintiffs'
negligence, negligence per se, and strict liability
claims, the court need not address defendants' remaining
reviewing a complaint pursuant to Rule 12(b)(6) must construe
the allegations in the complaint in the light most favorable
to the non-moving party, accept all well-pleaded facts as
true, and draw all reasonable inferences in favor of the
non-movant. Erickson v. Pardus, 551 U.S. 89, 93
(2007); Reger Dev., LLC v. Nat'l City Bank, 595
F.3d 759, 763 (7th Cir. 2010). Under the liberal
notice-pleading requirements of the Federal Rules of Civil
Procedure, the complaint need only contain “a short and
plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). A plaintiff
must plead “factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Ashcroft v.
Iqbal, 129 S.Ct. 1937, 1949 (2009).
economic loss doctrine limits recovery for damages arising
out of a party's performance of its contractual
obligations. Gunkel v. Renovations, Inc., 822 N.E.2d
150, 153 (Ind. 2005). However, the doctrine does not apply to
damage to “other property” - property that was
not the subject of the parties' agreement. Id.
“[D]amage 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.” Id. “Whether
damaged property is ‘other property' turns on
whether it was acquired by the plaintiff as a component of
the defective product or was acquired separately.”
Id. at 151.
are two cases from the Supreme Court of Indiana that address
the “other property” exception to the economic
loss doctrine. Comparison of these cases is helpful in
demonstrating why the exception does not apply in this case.
In Gunkel, the plaintiffs contracted with a third
party for the construction of a new home. 833 N.E.2d at 151.
Six months later, the plaintiffs contracted with the
defendant construction company to install a stone
façade on the home. Id. Shortly after the
façade was installed, water began to leak through gaps
in the façade, damaging the walls, ceilings, floors,
drywall, and carpet in the home. Id. The plaintiffs
sued the construction company for negligence, and the
construction company argued that the claim was barred by the
economic loss doctrine. Id. at 151-52. The Supreme
Court of Indiana held that the negligence claim regarding the
façade was barred, but the negligence claim regarding
the damage to the rest of the home was not, as the rest of
the home qualified as “other property.”
Id. at 156. The Court found that the product or
service that the plaintiffs purchased from the defendant was
the façade, and the agreement to install the
façade was made under a contract that was wholly
independent from the contract to build the home. Id.
The home itself qualified as “other property”
because it was not the subject of plaintiffs' contract
with defendants. Therefore, plaintiffs' negligence claim
regarding the home was not precluded by the economic loss
doctrine. Id. at 156-57.
Indianapolis-Marion Cty. Pub. Library v. Charlier Clark
& Linard, P.C., a city library hired an architect to
renovate its library. 929 N.E.2d 722, 725 (Ind. 2010). The
architect then hired subcontractors to perform architectural
and engineering services. Id. After the construction
had significantly progressed, the library discovered problems
with the structural integrity of the parking garage, which
served as the foundation for the rest of the building.
Id. The library sued the subcontractors and the
subcontractors argued that the library's negligence
claims were barred by the economic loss doctrine.
Id. at 726. Here, unlike in Gunkel, the
Supreme Court of Indiana agreed that the negligence claims
were barred. The Court found that the library
“purchased a complete renovation and expansion of all
the components of its facility as part of a single,
highly-integrated transaction.” Id. at 731.
Therefore, “for purposes of the other property rule,
the product or service that the Library purchased was the
renovated and expanded library facility itself.”
Id. The Court specifically distinguished the case
before it from that in Gunkel. “The contrast
with this case is clear. Here the product or service
purchased from the Defendants was an integral part of the
entire library construction project, not independent from it.
Any damages alleged to have resulted from the Defendants'
negligence were to the ‘product' the Library
purchased, not to ‘other property.'”
Id. at 732. Thus, where property is provided or
serviced by a defendant in the same transaction, as an
integrated whole, the property is not considered “other
property” for purposes of the economic loss doctrine.
case at bar is much more akin to Indianapolis than
to Gunkel. Like in Indianapolis, here
parties' agreements contemplated service to the press as
a whole, and therefore the “other property”
exception does not apply. While plaintiffs argue that the
parties' transaction was limited to defendants'
replacement of the press pumps, this argument is belied by
the allegations in their complaint. Plaintiffs specifically
allege that defendants were hired to clean the debris in the
press, pursuant to quote 160317A. According to plaintiffs,
defendants' negligent performance of their contract to
clean the press caused the press to seize and become
inoperable. Thus, in their negligence ...