Plourde Sand & Gravel Co. v. JGI Eastern, Inc.
917 A.2d 1250, 154 N.H. 791, 2007 N.H. LEXIS 18 (2007)
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Rule of Law:
The economic loss doctrine bars recovery in tort for purely economic losses when the parties are not in contractual privity, unless the plaintiff can establish a narrow exception such as a "special relationship" or negligent misrepresentation based on the plaintiff's own justifiable reliance.
Facts:
- Hiltz Construction, Inc., a subcontractor on a private project, hired Plourde Sand & Gravel Co. to supply gravel for a roadway base.
- After Plourde supplied the gravel, Reach Nordstrom & Associates, engineers for the Town of Pembroke, hired JGI Eastern, Inc. to test the gravel's compliance with town specifications.
- JGI tested the gravel and reported to Reach that it had insufficient stone content and excessive fines, failing to meet specifications.
- Based on JGI's report, Hiltz required Plourde to remove and replace the gravel at Plourde's own expense.
- Subsequently, Plourde had the original gravel tested and discovered that it did, in fact, meet the required town specifications.
Procedural Posture:
- Plourde Sand & Gravel Co. filed a writ in the Hooksett District Court (trial court) against JGI Eastern, Inc., alleging negligence.
- JGI Eastern, Inc. filed a motion to dismiss, arguing that the economic loss doctrine barred the plaintiff's claim for purely economic damages.
- The trial court granted the defendant's motion to dismiss.
- Plourde Sand & Gravel Co. (appellant) appealed the dismissal to the Supreme Court of New Hampshire.
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Issue:
Does the economic loss doctrine bar a negligence claim for purely economic damages brought by a subcontractor against a materials testing company, where no contractual privity exists between them and no recognized exception applies?
Opinions:
Majority - Hicks, J.
Yes. The economic loss doctrine bars the plaintiff's negligence claim because purely economic losses are not recoverable in tort absent privity of contract or a recognized exception. In New Hampshire, there is generally no tort duty to prevent economic loss to third parties. The court rejected both of the plaintiff's proposed exceptions. First, no "special relationship" existed between Plourde and JGI, as their connection was too attenuated within a multi-party construction project; creating a duty here would lead to potentially limitless liability and improperly blur the lines between contract and tort law. The plaintiff's disappointed commercial expectations were rooted in its contract with Hiltz, not in any duty owed by JGI. Second, the claim for negligent misrepresentation under Restatement (Second) of Torts § 552 fails because an essential element—justifiable reliance by the plaintiff—is missing. Plourde did not rely on JGI's report; rather, Reach relied on it, and Plourde acted only upon the instruction of its contracting partner, Hiltz. The court refused to expand the doctrine to impute a third party's reliance to the plaintiff.
Analysis:
This decision reinforces a strict application of the economic loss doctrine in New Hampshire, particularly within the context of multi-party construction projects. It clarifies that the doctrine applies even without contractual privity and establishes a high bar for invoking the "special relationship" exception, declining to extend it to the relationship between different subcontractors on the same project. By strictly adhering to the reliance element for negligent misrepresentation claims, the court signals that parties in a commercial setting should protect their financial expectations through contractual agreements rather than relying on tort law to recover for economic disappointments caused by third parties.
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