In ACE American Insurance Co. v. AERCO International,
Inc., 2022 WL 814788 (E.D. Mo., March 17, 2022), the United States District
Court for the Eastern District of Missouri
held the absence of privity of contract and the economic loss doctrine do not
bar a contractor’s contribution claim against an architect and its subconsultant.
Walsh Construction Company II, LLC and Alberici
Constructors, Inc. created a joint venture (“Owner”) to construct a medical clinic
in St. Louis, Missouri. Owner purchased
two AERCO Model B+II WaterWizard water heaters for the Clinic. Blackmore & Glunt, Inc. (“B&G”)
delivered and installed the water heaters.
Approximately three (3) months after installation, an
electronically controlled release valve on the water heaters discharged hot
water, which caused substantial property damage. The water heaters malfunctioned again in a
similar manner a few months later. Owner’s
insurer, ACE American Insurance Co. (“ACE”), paid approximately $4 million for
the flood damage.
ACE filed suit against AERCO and B&G, alleging
negligence and seeking subrogation for the losses it had paid. B&G filed a third-party complaint against
Christner, Inc. (“Christner”), the architectural design firm retained by the
Owner, and IMEG Corp (“IMEG”), the engineering consulting firm hired by
Christner to advise on certain mechanical, electrical and plumbing design
matters. B&G sought contribution from
Christner and IMEG on the grounds they negligently designed the mechanical room
where the water heaters were located.
Christner and IMEG moved to dismiss, arguing the claims
against them were barred by the “no privity-no duty” rule and economic loss doctrine. While the Parties agreed there was no
contract between B&G and Christner or IMEG, the Court denied the motion,
holding there is a right to contribution among persons who are liable in tort
to the same injured party for the same harm.
The Court noted B&G did not bring independent negligence claims against
Christner and IMEG; instead, B&G only sought contribution to the extent it
was liable to ACE. The Court held B&G’s
entitlement to contribution did not depend on whether Christner and IMEG owed a
duty to B&G, but rather, whether Christner and IMEG acted tortiously
towards the Owner.
The Court ruled expressly that the economic loss doctrine
did not necessarily bar B&G’s contribution claims. The economic loss doctrine “prohibits a party
from seeking to recover in tort for economic losses that are contractual in
nature.” However, Missouri law is clear
that claims for negligent rendition of professional services are not barred by
the economic loss doctrine. The Court found
that while Christner and IMEG’s alleged negligence clearly related to the contracts
for services, it was unclear whether this would equate to a professional
negligence claim “contractual in nature.”
Accordingly, the Court held the economic loss doctrine did not mandate
dismissal of the contribution claims.
