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LAN/STV v. Martin K. Eby Construction Co. | 435 S.W.3d 234 (2014)
Tort law teaches that a party engaging in negligent conduct is liable for the conduct’s consequences. But how far does that liability extend? In LAN/ S T V versus Martin K. Eby Construction Company, we explore whether a party is liable for indirect, purely economic harm.
The Dallas Area Rapid Transportation Authority, or DART, hired architect LAN/ S T V to create plans for a new light rail line. The architect was contractually liable to DART for damages caused by negligent services. Once completed, the architect’s plans were included in DART’s solicitation of bids for general contractors, which was won by Martin K. Eby Construction Company. The DART-Eby contract allowed Eby to seek damages from DART if the plans were inaccurate. But there was no contractual relationship between Eby and the architect.
When Eby started construction, it discovered pervasive plan errors. Waiting for and implementing corrections caused Eby to incur significant additional costs. Eby sought damages from DART for breach of contract, resulting in a settlement for four point seven million dollars. Eby then filed a tort suit against the architect for, among other things, negligently misrepresenting the necessary work. In response, the architect argued that the economic-loss rule, which limited purely economic damages in negligence actions, prevented recovery.
At trial, the jury held in favor of Eby, but limited damages based on a finding of joint fault. The state appeals court affirmed, and both parties appealed to the Texas Supreme Court.
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