Nationwide Mutual Insurance Company et al v. Total Property Care, Inc.
OPINION AND ORDER: The Court GRANTS Defendants Design Collaborative, Inc. and Rich Busfield's 32 Motion for Summary Judgment. All remaining claims against Total Property Care, Inc. remain pending. Signed by Chief Judge Theresa L Springmann on 10/10/2017. (jss)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
SCOTTSDALE INSURANCE COMPANY,
as subrogee of DORADO ENTERPRISES
and DORADO ENTERPRISES,
TOTAL PROPERTY CARE, INC.,
DESIGN COLLABORATIVE, INC., and
CAUSE NO.: 1:16-CV-227-TLS
OPINION AND ORDER
This 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.
The 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.
Platinum 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.)
STANDARD OF REVIEW
Summary 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 nonmovant 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. Id.
The 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
Indiana 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.
“[I]n 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.
Thus, 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.
For these reasons, the Court GRANTS Defendants Design Collaborative, Inc. and Rich
Busfield’s Motion for Summary Judgment [ECF. No. 33]. All remaining claims against Total
Property Care, Inc. remain pending.
SO ORDERED on October 10, 2017.
s/ Theresa L. Springmann
CHIEF JUDGE THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT
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