Prestress Services Industries of TN, LLC v. W. G. Yates & Sons Construction Company et al
ORDER granting in part and denying in part 173 Motion for Partial Summary Judgment; denying 177 Motion for Partial Summary Judgment; dismissing 181 Motion for Partial Summary Judgment. Signed by District Judge Michael P. Mills on 11/16/2017. (rmw)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
PRESTRESS SERVICES INDUSTRIES OF TN, LLC
CIVIL ACTION NO. 3:15-CV-080-MPM-RDP
W. G. YATES & SONS CONSTRUCTION
COMPANY; OLE MISS ATHLETICS FOUNDATION;
AECOM DESIGN, A PROFESSIONAL CORPORATION;
AND HOCH ASSOCIATES P.C.
HOCH ASSOCIATES P.C.
THIRD PARTY PLAINTIFF
NANGIA ENGINEERING OF TEXAS, LTD.
THIRD PARTY DEFENDANT
This court presently has before it three motions for partial summary judgment filed in the
above-entitled action. Having considered the memoranda and submissions of the parties, it is
now prepared to rule.
This action arises out of the construction of the Parking Garage adjacent to the
Pavilion on the Ole Miss Campus, a project which saw numerous delays and cost overruns which
spawned the instant litigation. The factual and procedural history of this case is, unfortunately,
quite complex, and this court will not attempt to recount in full the many failures, by many
parties, which are alleged to have contributed to the project’s delays. Indeed, many of these
alleged failures are no longer directly relevant to this case, since several settlement agreements
have been reached which significantly limit the scope of this action.
Broadly, however, this court notes that in 2014, the Ole Miss Athletic Foundation (“the
Foundation”) entered into agreements with Prestress Services Industries of TN, LLC (“PSI”) for
the purchase of precast components for the Garage. PSI, in turn, contracted with Hoch
Associates (“Hoch”) to design these components. Hoch, a Texas engineering firm, found it
necessary to engage the services of Nangia Engineering of Texas, Ltd. (“Nangia”) since the latter
firm had on staff the required engineer licensed to practice in Mississippi. In his deposition,
however, Robert Nangia testified that he made no actual marks on Hoch’s drawings sent to him
to review, and he appeared to describe his role as simply rubber-stamping the work done by
Hoch. The Foundation entered into a separate contract with W. G. Yates & Sons Construction
Company to construct the Garage, and AECOM Design (“AECOM”) served as the architect of
record on the project.
PSI was the original plaintiff in this case, and, in its complaint, it assigned a considerable
amount of blame to the architect AECOM, which has since settled the claims against it.
Specifically, PSI maintained that AECOM’s design for the garage made it exceedingly difficult
to build it with the seven-foot clearance between floors which is required by applicable building
standards. As discussed below, now that AECOM and PSI have each settled, Yates, as the
assignee of PSI’s claims, seeks to hold Hoch (and by extension Nangia) liable for their part in
what the parties refer to as the “minimum clearance design bust.”1 Consideration of the
minimum clearance issue is complicated, however, by the fact that it was far from the only
In addition, Yates continues to assert the claims which it made against Hoch in its cross-
difficulty experienced by the project. To the contrary, there is quite substantial evidence that
Yates and Hoch each contributed to the delays suffered by the project with their own errors,
discussed below, which are unrelated to the minimum clearance issue.
In light of the above facts, it is unsurprising that sorting out the relative fault and liability
of the large number of contractors involved in the project has proven quite difficult.
Nevertheless, several settlements and assignments have been entered into among the parties, and
they have served to re-arrange the order of battle in this lawsuit to a very significant degree.
For example, it appears that Yates, formerly a defendant, now essentially has the status of a
plaintiff asserting claims against Hoch, which has itself asserted third party claims against
Nangia. For the purposes of this order, however, Hoch and Nangia assert common defenses to
the claims asserted by Yates, and they have joined each others’ motions. Thus, for the sake of
simplicity, this order will sometimes refer to Yates as “plaintiff” and Hoch and Nangia as
“defendants,” even though Nangia is, once again, more accurately regarded as a third party
In light of the aforementioned settlements, the remaining claims asserted by Yates are
twofold. The first of these claims is partly conceded, namely that Hoch failed to design certain
precast concrete parts in accordance with relevant seismic standards. Contemporaneous emails
from Hoch conceded that it made errors in this regard, and, as discussed below, it now appears to
limit its defense on this issue to that of causation, rather than breach of duty. More specifically,
Hoch (and Nangia) each contend that, whatever acts of negligence they may have committed in
failing to account for seismic standards, these failures did not cause the delays suffered by the
project. That is, defendants argue that the project would have been delayed an even greater
period of time by Yates’ own errors in building (and, at times, tearing down and re-building)
certain portions of the garage, regardless of any seismic design errors. And, indeed, the record
does contain findings from independent engineers hired by the Foundation suggesting that Yates
may have made errors in this regard.
Sorting out the “concurrent delay” causation issues arising from potential acts of
professional negligence by both of the remaining sides to this litigation seems likely to be a tall
order at trial. The consideration of these issues will likely be made even more complex by the
existence of Yates’ second claim, which involves the aforementioned minimum clearance design
issue. While AECOM paid a rather large sum to settle the claims asserted against it on this issue,
Yates maintains that Hoch (and by extension Nangia) must still account for their portion of the
blame in this context. In asserting liability in this regard, the complaint clearly alleges that Hoch
failed to warn of AECOM’s design errors, and, as discussed below, Hoch presently seeks
dismissal of that failure to warn claim. In its summary judgment briefing, however, Yates insists
that the complaint asserts not only a failure to warn claim against Hoch, but also a design defect
claim as well. Hoch disputes that the complaint asserts any such design defect claim and it
argues that, even if it does, Yates failed to adequately support it with expert testimony.
With the foregoing in mind, this court now turns to the three motions for partial summary
judgment presently before it, two of which are mentioned above. This court first addresses
Nangia’s summary judgment motion (joined by Hoch) on the concurrent delay issue. As noted
previously, Nangia and Hoch each contend that Yates committed its own errors in building and
rebuilding the garage and that, in light of the serious delays caused by those errors, the overall
project suffered no additional delays resulting from the corrections required to the seismic work
performed by Hoch and Nangia.
Specifically, defendants argue that:
[I]n seeking delay damages from Nangia, Yates wholly disregards its own
concurrent and unrelated delay which exceeded the completion date for the
seismic issue by two months. Yates fails to mention in that delay claim that they
had other remediation obligations to the Owner, Ole Miss Athletics Foundation
(“Ole Miss”), in repairing the P4 level topping slab that took multiple pours and
repairs to complete. Yates’ P4 remediation was in fact not completed and
accepted until June 10, 2015. In contrast, the seismic remediation was completed
on March 26, 2015, and accepted by Hoch on April 9, 2015.
The P4 topping slab remediation was required, under the contract documents, to
be completed before substantial completion would be declared. As the facts will
show, substantial completion was not declared until June 10, 2015 after Yates
completed work on the P4 topping slab. Thus, as a matter of contract
interpretation and Mississippi law, Yates cannot recover delay damages against
Hoch, as its own P4 remediation caused a delay which exceeded the completion
date for the seismic remediation by several months. Thus, the contracts preclude
Yates’ recovery against Hoch and/or Nangia for seismic remediation delay as a
matter of law.
[Nangia and Hoch brief at 2]. This strikes this court as being a rather classic jury issue, and, in
order to prevail on this issue as a matter of law, defendants would presumably be required to
demonstrate that the “critical path” of the project was not delayed to even a small degree by their
own errors on the seismic issue. This court finds that defendants’ evidence falls well short of
establishing this, and barring such, summary judgment is inappropriate.
Having said that, this court does note that defendants appear to have evidence which
might, at the very least, seriously limit their eventual liability in this context. For example,
defendants point to a February 2015 change order entered into between the Foundation and Yates
which re-defined the date of substantial completion to include a requirement that any “punchlist
work” not exceed $50,000 in estimated cost. Defendants further argue that “Yates, through Chet
Nadolski, indicated that the P4 topping slab remediation exceeded $50,000 in repair” and that, as
such, “Yates could not possibly be at substantial completion, under the written language of these
construction agreements, until June 10, 2015, when Yates was certified as having completed the
P4 remediation.” [Brief at 11].
In the court’s view, defendants’ arguments on this issue appear to be at least potentially
strong ones, but, at the end of the day, they are arguments which are properly addressed to a jury.
This court is certainly not prepared to state, based on the record and summary judgment evidence
before it, that any errors made by defendants in complying with seismic standards had no effect
whatsoever in producing the overall project delays. Indeed, this court notes that Yates’
contention is that it was itself forced to perform a great deal of additional work on the precast
concrete materials to make them compliant with seismic standards, and a jury might well
conclude that the time it spent in doing so contributed to its failure to complete the remediation
work earlier than it did.
In so stating, this court notes that Yates counters with robust arguments of its own on the
concurrent delay issue. For example, Yates characterizes the “enhancements” which it made in
2015 to its earlier repairs on the P4 slab as “extremely minor” ones. Yates also takes issue with
defendants’ timeline, arguing that:
Nangia asserts that “Yates’ remedial construction on P4 topping slab continues
past April 9, 2015, not concluding until June 10, 2015.” This implies that the P4
slab remediation was a continuous process. As stated there was no substantive
work on the P4 slab between December 31, 2014 and June 1, 2015. The critical
path shifted to the seismic code retrofit on January 21, 2015. There was no time
that the seismic code retrofit and the P4 slab remediation were concurrent
activities on the critical path.
[Brief at 5]. It is thus apparent that the parties disagree regarding fundamental factual issues
relevant to the concurrent delay issue, and it seems clear that a jury will be required to resolve
these issues. Indeed, this court regards the concurrent delay issue as not only involving triable
jury issues, but some of the more complex jury issues which it can recall.2 This court therefore
has little difficulty in concluding that this issue is not a proper one for resolution on summary
judgment, and defendants’ motion will therefore be denied.
This court now turns to Hoch’s motion (joined by Nangia) for partial summary judgment
on the minimum clearance design issue. As noted previously, Yates’ claims in this context
include both a failure to warn claim which Hoch concedes was properly assserted in the
complaint and a design defect claim which, it insists, was not. In arguing that triable jury issues
exist regarding its failure to warn claim against Hoch, Yates argues that:
In addition, Yates did also allege that Hoch failed to warn of its design error. In a
construction context, a construction professional has a duty to perform in
accordance with the project plans and specifications. However, under Mississippi
law, if the plans and specifications create “a construction problem of which the
builder/contractor, the man with expertise should be well aware,” then the
contractor has a duty to warn. George B. Gilmore Company v. Garrett, 582 So.
2d 387, 396 (Miss. 1991). Thus, “[t]he jury was warranted in finding [the
contractor] negligent in failing to warn the [owner] of a possible problem [with
Yazoo Clay], and in undertaking to construct the house without making a soil test,
and such failures alone or in combination proximately caused the damage to the
house.” Id. at 393. While Garrett specifically dealt with the contractor’s common
law duty to warn of a possible problem, Yates believes that this reasoning as
regards a duty to warn should be applied to Hoch with respect to its failure to
produce a workable design both as an implied contractual obligation and as a duty
under common law.
[Brief at 8].
Thus, Yates relies upon the Mississippi Supreme Court’s decision in Garrett in support of
It appears to this court that the fact issues in this case are sufficiently complex that the
parties might legitimately decide that a mediator experienced in resolving construction disputes
would likely produce a more reliable result than a jury lacking in experience in these matters.
This is a matter for the parties to decide, but this court has little difficulty in concluding that this
case is not an appropriate one for resolution at the summary judgment stage of proceedings.
its argument that Hoch had a common law duty to warn of defects in the minimum clearance
design, even if it did not commit those defects itself. Importantly, Hoch fails to even address the
Garrett decision in its twenty page reply brief, which is almost entirely devoted to Hoch’s design
defect claim. In the court’s view, Garrett does at least arguably appear to support Yates’
argument in this context, since the contractor in that case was certainly not at fault for the
presence of Yazoo Clay deposits below the house. Nevertheless, the Mississippi Supreme Court
concluded that it faced potential liability for failure to warn, since it failed to take steps to test the
soil to ascertain whether there might be a problem.
In its summary judgment brief, Hoch argues that the existence of a contractor’s duty to
warn was something Yates was required to prove with expert testimony and that it has failed to
present such testimony in this case. In relying upon Garrett, however, Yates’ contention is that
the Mississippi Supreme Court has itself established the existence of such a duty as a matter of
Mississippi law and that the question is simply whether Hoch breached that duty in this case.
Once again, Hoch has not attempted to rebut this argument. In the court’s view, there are strong
public policy considerations in favor of ensuring that buildings are constructed correctly, and it
can discern no good reason why a contractor should not have a legal incentive to speak up when
it knows, or should know, of significant defects which threaten the project. This is true even if
the mistake in question originated with someone else.
At the same time, this court acknowledges that Hoch’s initial brief on the failure to warn
issue pointed out arguable weaknesses in Yates’ proof regarding whether Hoch breached its duty
to warn of defects in AECOM’s design. While this court does not regard Hoch’s arguments in
this context as sufficiently compelling to grant summary judgment on the failure to warn issue, it
will carefully consider the sufficiency of proof presented at trial in deciding whether a directed
verdict should be granted on this issue. In particular, this court will be interested to see at trial
what proof Yates has that a reasonably competent engineer in Hoch’s position should have been
aware of potential problems involving the minimum clearance design issue. This court will also
be interested in how obvious any defects in AECOM’s design might have been, partly to assist in
determining whether any deficiencies in Yates’ expert testimony on this issue should be excused.
See, e.g. Hubbard v. Wansley, 954 So. 2d 951, 960-961 (Miss. 2007)(“where a layman [juror]
can observe and understand the negligence as a matter of common sense and practical experience
expert testimony is not necessary.”) Following the presentation of the evidence at trial, this court
will make a definitive ruling regarding whether Hoch faces potential liability in this context. At
this juncture, however, this court concludes that Hoch’s briefing fails to establish that it is
entitled to summary judgment on the failure to warn issue.
This court now turns to the design defect portion of Hoch’s briefing on the minimum
clearance issue, which the court finds to be quite persuasive. That is, this court agrees with Hoch
that the complaint in this case failed to adequately allege that Hoch committed acts of negligent
design with regard to the minimum clearance issue, and that, even if it had, Yates has failed to
adequately support such a claim with expert testimony. In contending that the complaint did, in
fact, assert a design defect claim against Hoch relating to the minimum clearance issue, Yates
Hoch’s Motion for Partial Summary Judgment is based upon a false premise.
Hoch assumes that the only allegation made by Yates against Hoch is a failure of
Hoch’s duty to warn, for which Yates, Hoch alleges, has not offered any expert
testimony. In reaching this conclusion, Hoch ignores the following paragraphs of
Yates’ Cross Claim (Doc. #42):
264. Unfortunately, this realization [of noncompliance with the 7
foot minimum clearance code requirement] did not come until
substantial work, particularly at Parking Level 4 (P4), had already
been put in place.
265. In order to overcome this massive design error, Yates was
forced to redo topping slabs by installing a thinner slab which
practically had to be custom made in order to maintain various
required dimensions for slope, concrete cover, and placement,
sizing, and spacing of rebar with zero construction tolerance.
266. Additionally, as a result of no tolerances allowed for
constructability, Yates had to add precast caps at Levels P3, P4,
and P5 and increase the height at the perimeter spandrels and
railings in order to maintain code requirements for minimum
267. The minimum clearance rework required chipping and
removal of the originally installed topping slab that penetrated the
pre-stressed concrete members in multiple locations in the P4
268. Upon completion of the removal of the P4 topping slab and in
preparation for replacing the topping slab, Yates requested Hoch,
the design subcontractor for PSI-TN, to inspect the conditions and
to recommend a rework protocol including patching necessitated
by the rework.
373. For its Amended Cross Claim against Hoch, pursuant to
F.R.C.P. 13(g) and F.R.C.P. 5(a)(1)(B), Yates restates its previous
allegations as if fully rewritten herein, and Yates further alleges as
374. Hoch had the obligation to design precast materials, the
topping slab, and related concrete elements in accordance with the
Project plans prepared by AECOM.
Yates’ claims against Hoch embrace Hoch’s failure to comply with the contract
documents, its violation of code, and its “massive design error”.
[Brief at 3].
This court has carefully reviewed the above-cited portions of the complaint, but it sees
nothing which alleges that Hoch committed design errors in relation to the minimum clearance
issue. Yates argues that the complaint makes reference to Hoch’s “massive design error,” but
paragraph 265 actually refers to “this massive design error,” without specifying whose error that
was. The complaint does not allege that Hoch committed that error, and, as defendant argues in
its brief, the pleading as a whole clearly alleges that it was AECOM which did so.
The above conclusion is supported by portions of the complaint which Yates failed to cite
in its brief. As quoted above, Yates’ quotation of the complaint stops at paragraph 374 of its
amended cross claim, but the very next paragraphs in the document allege as follows:
375. Because of the constraints imposed by AECOM’s design of a ten foot
(10’0”) floor-to-floor height, there were no production and field tolerances left, as
beams, spandrels, railings, topping slab thickness, topping slab rebar and
reinforcing mesh, minimum concrete coverage of reinforcing, and topping slab,
and still satisfy the seven foot (7’0”) minimum clearance height requirement of
the International Building Code (IBC-2017) for P2 through P4 levels of the
376. While AECOM is primarily responsible for the Minimum Design Clearance
Bust (Paras. 256-274), Hoch was negligent in not warning of this clearance
problem prior to shipment and installation of precast and concrete elements
which, Hoch knew or should have known, could not be constructed with normal
and allowance tolerances and still meet IBC clear height requirements.
377. To the extent Yates does not recover against the Foundation or against
AECOM for the Minimum Clearance Design Bust, Hoch is liable to Yates.
In the court’s view, the above language makes clear that it was AECOM, and not Hoch, which
allegedly committed a “massive design error” on the minimum clearance issue, and paragraph
376 merely asserts that Hoch is liable for “failure to warn” of AECOM’s design errors, not that it
made design errors of its own in this context.
In its brief, Yates also cites a portion of PSI’s complaint detailing its claims against Hoch,
which have been assigned to Yates. However, that portion of the complaint merely alleges that:
125. Hoch owed PSI a duty of care with respect to Hoch’s engineering work for
126. Hoch breached that duty by, among other things, negligently performing
engineering and design work such that, among other things, the design for the
Project did not comply with the applicable seismic code.
127. As a direct and proximate result of Hoch’s negligent breaches of the duty of
care it owed to PSI, PSI has incurred damages and demands judgment in an
amount in excess of $75,000, plus pre- and post-judgment interest, costs,
reasonable attorney’s fees, and any other relief this Court deems just.
It is thus plain that paragraph 126 makes reference to design errors made by Hoch with regard to
the seismic code issue, and, as noted previously, defendant does not appear to dispute that it
made errors in that regard (though it does deny that these errors delayed the project).
The present motion for summary judgment is concerned with Hoch’s potential liability
for the minimum clearance design issue, not with the seismic code issue. While the abovequoted language of the complaint does include rather standard language asserting that Hoch’s
design errors included the seismic issue “among other things,” this vague language is plainly
insufficient to allow Yates to inject a completely new design defect claim which was otherwise
not asserted in the complaint. In so stating, this court notes that a design defect claim of this
nature is inevitably a highly complex matter, which would almost certainly have required Hoch
to consult with expert witnesses and conduct extensive discovery. It would go against all
considerations of fairness and the Federal Rules of Civil Procedure to allow Hoch to assert a new
claim of this magnitude after the close of discovery and after the deadline for designating expert
witnesses has passed. Allowing such a design defect claim would be even more unfair in this
case, considering that AECOM has already paid a very large amount to settle a claim based on a
complaint which alleged that it, and not Hoch, had committed a “massive design error.” It seems
likely to this court that AECOM might not have been willing to pay as much to settle this claim if
the complaint alleged that Hoch shared in the liability for minimum clearance design errors.
In light of the foregoing, this court concludes that the complaint fails to properly allege a
design defect claim against Hoch relating to the minimum clearance issue, and its motion for
summary judgment is due to be granted on this basis alone. This court additionally notes,
however, that Hoch’s briefing discusses numerous weaknesses in Yates’ expert testimony on this
issue, and this court agrees that, even if the complaint could somehow be construed as asserting a
design defect claim on the minimum clearance issue, that claim would still fail for lack of expert
testimony. This court regards the pleading issue as being sufficiently clear that it will not further
discuss the expert testimony issue, but it agrees with and incorporates Hoch’s discussion of this
issue. It is therefore ordered that, with regard to the minimum clearance claim, Hoch’s motion
for summary judgment is granted with regard to the design defect issue and denied as to the
failure to warn issue.
This court now turns to the third motion for partial summary judgment, which is asserted
on the basis of the economic loss doctrine. In the court’s view, this motion involves a rather
interesting issue of tort law, which, judging by the parties’ briefing, does not appear to have been
directly addressed by either the Fifth Circuit or the Mississippi Supreme Court. Relying upon
authority arising in factually different contexts, Hoch describes the economic loss doctrine as
The precast components are products or goods. The Purchase Order between Ole
Miss and Prestress defines the materials referred to in the Purchase Order as
“Goods.” (See Ex. “1,” Purchase Order, P. 2). The Contract between Prestress
and Hoch defines the scope of services as “Structural Design for precast,
prestressed concrete products . . . .” (See Ex. “2,” Hoch Contract, P. 6). Yates
alleges the precast concrete components were defective because they did not meet
the seismic code. The economic loss doctrine restricts recovery for a defective
product to “damages for physical harm, thereby excluding recovery for purely
economic damages . . . .” Georgia Flight of Delaware, Inc. v. Gulfport Aviation
Partners, LLC, 2016 WL 3034331, *2 (S.D. Miss. May 27, 2016).
[Hoch’s brief at 5]. Thus, Hoch argues that even assuming that it acted negligently in failing to
engineer certain precast concrete materials in accordance with the seismic code, any recovery
against it should be barred by the economic loss doctrine.
In response, Yates argues that the facts of this case support a conclusion that Hoch’s
negligence was not in the manner in which it manufactured the precast concrete products, but
rather in the professional engineering services which it provided:
Despite the unambiguous terms of the Prestress-Hoch Agreement and contrary to
Hoch’s own admissions that it performed structural engineering services, Hoch
asserts that Yates’ “claims are based on product failures” barred by the economic
loss doctrine. In the first place, especially as to the seismic code violation, there
were no defective precast products. Instead, all precast remained as originally
erected. In order to bring its design into compliance with the seismic code, Hoch
had to design additional cabling, curbs, and plates to go on top of the existing
precast structures. None of these additional strengthening elements were part of
the original design, and none of them affected the existing precast members. No
precast members had to be replaced or repaired to accomplish the seismic code
compliance retrofit. (See Affidavit of John Campbell (Campbell Aff.”), attached
hereto as Exhibit “A” at ¶¶ 7, 9, 10). Thus, there were no precast members which
had any defects.
[Yates’ brief at 4-5]. Yates further argues that, as set forth in the parties’ contracts, PSI was
actually the manufacturer of the precast contract products and that Hoch’s role was merely to
provide engineering services, as to which the economic loss doctrine does not apply.
Specifically, Yates argues that:
As their Agreement confirms, Hoch had nothing to do with the production of
precast members. Precast production was done by Prestress. See Campbell Aff.,
Exhibit “A” hereto at ¶¶ 6-7. Hoch’s only obligation was “to provide structural
engineering services for the precast concrete products.” (Hoch’s Motion under I.
UNDISPUTED FACTS, page 2, item 2; Doc. #181, Page ID #2547). The
economic loss doctrine does not apply to performance of design services. Lyndon
Property Insurance Co. v. Duke Levy and Associates, LLC, 475 F. 3d 268, 274
(5th Cir. 2007) (economic loss doctrine does not apply to negligent performance
of engineering services); Mississippi Phosphates Corp. v. Furnace and Tube
Service, Inc., 2008 WL 313770 (S.D. Miss. 2008) (economic loss doctrine does
not apply in a tort action over delays in services to retube a waste heat boiler).
[Yates’ brief at 5].
This court agrees that the proof at trial regarding the exact nature of Hoch’s role in this
case is, at least potentially, relevant to whether or not it may validly raise the economic loss
doctrine as a defense. This court therefore concludes that this is an issue that would be better
raised at the directed verdict stage, after it has viewed the evidence and has a fuller picture
regarding the exact nature of Hoch’s role in this case. This court does note its concerns,
however, that, if the economic loss doctrine were held applicable here, this would leave
aggrieved parties without an effective remedy for any foreseeable losses from Hoch’s admitted
failure to design the precast concrete materials in accordance with seismic standards.
As noted above, Hoch argues that the economic loss doctrine limits Yates’ recovery to
“damages for physical harm,” and it seems undisputed that there was no “physical harm”
resulting from Hoch’s failure to design the precast materials in accordance with seismic
standards. At the same time, the parties were all aware that they were working on a construction
project on a rather tight schedule to build a parking garage in North Mississippi, which is
commonly known (at least among Mississippians) to be within the New Madrid fault’s
earthquake zone. It appears to this court that defendants’ entire role in this case was to provide
engineering services with these limitations in mind, and if their position were accepted as correct,
then this would seemingly mean that Yates would be entitled to no damages for entirely
foreseeable economic losses which it suffered in this context.
Under defendants’ theory, plaintiff would have no apparent legal recourse for their failure
to perform their duties in accordance with professional standards, unless and until “physical
harm” resulted from that failure. As best this court can tell, “physical harm” resulting from
defendants’ failure to comply with relevant seismic standards would only occur in the event that
an earthquake actually damaged the garage, resulting in physical damage and/or loss of life. This
would seemingly give a contractor in Yates’ position, upon learning of the defect in defendants’
work, a financial incentive to simply say nothing, in the hopes that no earthquake would actually
occur. Otherwise, defendants’ argument would leave plaintiff holding the financial bag for their
failure to do their jobs correctly, and this court finds this situation is one which would likely lead
to rather perverse financial incentives.
This court also has concerns that applying the economic loss doctrine in this case would
run afoul of the policy considerations underlying the economic loss doctrine. In the typical
products liability case, a court is dealing with a manufacturer which designed a product for mass
production and did not specifically tailor it for the needs of a given project. In a more typical
products liability context, the economic loss doctrine would appear to serve a quite valid
purpose, by providing some limitation upon the damages which a manufacturer might face.
Barring such a limitation, for example, a manufacturer of a car which crashed due to a design
defect might conceivably face liability for business losses suffered by individuals who were
delayed in traffic following the accident. These concerns are inapplicable in this case, however,
since (this court presumes) Hoch and Nangia knew exactly what project they were working on,
and it seems clear that it was their job to provide competent professional services in light of that
This court might ordinarily be inclined to certify this difficult issue for interlocutory
review to the Fifth Circuit, but it concludes that the public policy considerations in this particular
case are so strongly against Hoch’s position that it seems quite unlikely that its arguments will
eventually carry the day. In so concluding, this court notes once again that this case involves not
just any duty of care, but a duty to design a public building in such a manner that it might
withstand an earthquake. That being the case, if there is any context in which it seems unlikely
that an appellate court would seek to reduce the incentives for professionals to do their job
correctly, then this is it.
While this court declines to infer a broad “professional services” exception to the
economic loss doctrine, it does note that Hoch’s position would appear to provide it with a far
greater degree of immunity from the consequences of its professional negligence than is generally
the case, in other areas of the law. Generally speaking, when professionals are negligent in
performing their duties, they face liability for the foreseeable consequences of their actions. In
the court’s view, the facts of this case are materially indistinguishable from one involving an
attorney who is hired to prepare a will for clients known to live in a particular state. If that
attorney fails to draft the will in accordance with the state’s laws, then it seems quite likely that
he would be subject to liability for any economic harm resulting from his negligence. In such a
case, it could certainly be said that the lawyer produced a “product” of sorts, but the essential
nature of his action was the providing of professional services. It is unclear to this court why
Hoch’s negligence in this case should be treated any differently, and, once again, the public
safety implications of the project provide all the more reason why it should not be.
It seems clear that the economic loss doctrine is intended to strike a balance between
encouraging products manufacturers to design their products with care and imposing essentially
unlimited liability when they fail to do so. In this case, however, Hoch appears to seek not a
limitation of its liability, but rather a gutting of that liability. Indeed, it appears to this court that
Hoch is asking for nothing less than to be held financially immune from entirely predictable
consequences of its failure to perform core aspects of its role as an engineer on the project. To be
clear, this court is dealing with an engineering firm which was called upon to design products
for use in a specific project with specific needs and requirements which are crucial to public
It should be emphasized that nowhere in Hoch’s briefing does it assert that it did its job
correctly in this regard, and its representative has previously admitted that it did not. In its reply
brief on the minimum clearance design claim, Hoch writes that “[i]t is undisputed that plans
signed and sealed by Nangia did not conform to the seismic code.” [Brief at at 18]. In so stating,
Hoch fails to mention the fact that it actually prepared the plans which, Robert Nangia testified,
he merely rubber-stamped to provide the imprimatur of a Mississippi-licensed engineer. In filing
the instant motion, Hoch seeks to ensure that “someone else” is left holding the financial bag for
its failure to comply with relevant professional standards, but this court is not at all sympathetic
to this argument, for reasons which should be obvious.
This court is not an appellate court, and it will not attempt to fashion or define the
parameters of any exception to the economic loss doctrine in this case. If this court were to
endeavor to do so, however, then it would seriously consider whether the economic harm rule
serves any useful purpose in cases involving professional services (such as engineering services)
whose core purpose is to produce a product with certain requirements known to the professional.
This is particularly true when those requirements are essential for public safety. In such cases, a
failure to produce a product which meets those requirements involves a basic failure to do one’s
job correctly, and it strikes this court that professionals carry liability insurance for situations
such as this. Once again, this court will not definitively rule upon Hoch’s motion until the
directed verdict stage of trial, but it should be clear from its order today that it is rather strongly
disinclined to grant Hoch the relief it seeks on this issue. If Hoch wishes to change this court’s
mind on this issue, then it should be prepared to address the concerns raised above in any
arguments which it presents in seeking directed verdict. With this caveat, Hoch’s motion for
summary judgment on this issue will be dismissed without prejudice to the arguments set forth
therein being raised at a later date.
In light of the foregoing, it is ordered that defendants’ motion for summary judgment on
the concurrent delay issue [177-1] is denied, their motion for summary judgment on the
minimum clearance issue [173-1] is granted in part and denied in part, and their motion for
summary judgment [181-1] based on the economic loss doctrine is dismissed without prejudice
to the arguments asserted therein being raised at the directed verdict stage of trial.
SO ORDERED, this the 16th day of November, 2017.
/s/ Michael P. Mills
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF MISSISSIPPI
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