MANUFACTURERS AND SUPPLIERS WIN BIG IN
PENNSYLVANIA ECONOMIC LOSS DOCTRINE ARGUMENT
By Gordon S. Woodward
The economic loss doctrine (ELD) in Pennsylvania
“precludes recovery for negligence ‘if the plaintiff
suffers a loss that is exclusively economic,
unaccompanied by an injury to either property or
person.’” Elliot-Lewis Corp v. Skanaka USA
Building, Inc., 2015 U.S. Dist. Lexis 98405 (E.D. Pa.
July 27, 2015) (quoting Bouriez v. Carnegie Mellon
Univ., 430 F. App’x 182, 187 (3d Cir. 2 011)). There
is, however, a significant exception to the ELD
based on Section 552 of the Restatement (Second)
of Torts, which allows tort claims for negligent
misrepresentation (even absent injury to property
or person) against an entity that is “ in the business
of supplying information.” Bilt-Rite Contractors,
Inc. v. The Architectural Studio, 866 A.2d 270, 285
(Pa. 2005). The prototypical examples of such
entities are architects and design professionals. Id.
Over the summer, in Elliot-Lewis Corp v. Skanaka, a
group of design professional defendants sought to
extend the Bilt-Rite exception to product
manufacturers and suppliers. In an opinion of
which product manufacturers and suppliers should
be aware, the Skanaka court refused to expand the
exception.
Skanaka involved HVAC renovations at The
Franklin Institute in Philadelphia. The HVAC system
was not operational within the time frame
required by the construction schedule, and it was
eventually determined that the problem involved
condenser pumps. The pumps were manufactured
by Patterson Pump Company (Patterson). The
subcontractor who performed the work necessary
to complete the renovation project sued the
general contractor, Skanaka, for payment. Skanaka
filed a third-party claim against the design
professionals for negligent misrepresentation,
alleging errors in the project drawings and
specifications. The design professionals then filed a
fourth-party negligence claim against Patterson
and Clapp Associates, Inc. (Clapp) (Clapp was
Patterson’s representative o n the project) alleging
that information provided by Patterson and Clapp,
and which the design professionals relied upon,
was inaccurate.
Patterson and Clapp moved to dismiss the fourth-
party claims based on the ELD. In response, the
design professionals argued that Patterson and
Clapp, by providing information about the
condenser pumps, were “in the business of
supplying information.” Therefore, the design
professionals asserted that Patterson and Clapp
were within the exception that would allow a
negligence claim to proceed against them, even
absent physical injury to persons or property. In
analyzing the parties’ arguments, the Skanaka
court reached two very significant conclusions.
First, the court concluded that the Bilt-Rite
exception was intended to be a narrow exception
applicable only to those who are engaged in the
NOVEMBER
2015
P R O D U C T L I A B I L I T Y
A L E R T
