PeakCM, LLC v. Mountainview Metal Systems, LLC , 2025 VT 50 [8/22/2025]
EATON, J. In 2019, multiple siding panels fell off a newly constructed hotel in St. Albans, Vermont. Plaintiff, PeakCM, LLC, the general contractor responsible for the hotel’s construction, sued the siding-panel installer, Mountainview Metal Systems, LLC. Plaintiff amended its complaint to add a product-liability claim against the siding-panel manufacturer, ATAS International, Inc. Plaintiff appeals from the trial court’s decision to grant ATAS summary judgment. Plaintiff argues that the trial court erred in granting summary judgment to ATAS on plaintiff’s product-liability claim because both the “other-property” and “special-relationship” exceptions to the economic-loss rule apply. Plaintiff also argues that the court improperly granted summary judgment to ATAS on Mountainview’s implied-indemnity claim. We affirm
Product-Liability Claim and the Economic-Loss Rule..
The trial court granted ATAS’s motion for summary judgment on plaintiff’s product-liability claim because it concluded that the economic-loss rule barred the claim. Plaintiff argues that the trial court erred in granting summary judgment to ATAS because both the “other-property” and “special-relationship” exceptions to the economic-loss rule apply.
Plaintiff does not contest that the economic-loss rule
applies generally. The economic-loss
rule generally “prohibits recovery in tort for purely economic losses.” Veljovic v. TD Bank, N.A., 2025 VT 38, ¶ 11
The economic-loss rule functions to separate claims that should be brought
under contract law from those that should be brought under tort law. “Economic
loss is defined as ‘damages other than physical harm to persons or property.’
” Id. ¶ 10 In the construction context, “the remedy for
purely economic losses resulting from the reduced value or costs of repairs of
. . . construction defects sound [s] in
contract rather than tort” law. LongTrail House Condo. Ass’n, 2012 VT 80, ¶ 11
This Court recognizes two exceptions to the economic-loss
rule: the “other property” exception and the “special-relationship”
exception. See Walsh v. Cluba, 2015 VT
2, ¶ 28, 198 Vt. 453, 117 A.3d 789 (recognizing other-property exception); Veljovic, 2025 VT 38, ¶ 12 (describing special-relationship exception) Plaintiff
argues that one or both of the exceptions to the rule allow plaintiff to bring
its product-liability claim against ATAS.
We disagree. Plaintiff failed to demonstrate that either exception to
the economic-loss rule applies here; accordingly, the economic-loss rule bars
plaintiff’s product liability claim.
Thus, the trial court appropriately granted ATAS’s motion for summary
judgment.
Under the
other-property exception, the economic-loss rule does not apply if there has
been some “accompanying physical harm” beyond purely economic loss. Walsh , 2015 VT 2, ¶ 28 “The physical
harm may be to property rather than persons, but injury to the product or
property that is the subject of a contract is generally considered a
disappointed economic expectation for which relief lies in contract rather than
tort law.” Id. In the trial court, plaintiff argued that the
other-property exception to the economic loss rule applied because the hotel
was damaged in addition to the splice plates, and plaintiff was required to pay
for the damage. On appeal, rather than
relying on damage to the hotel as it did in the trial court, plaintiff now
argues for the first time that the other-property exception applies because
there was minimal damage to “abutting properties”— namely, the neighboring
building’s roof. This argument was not preserved, and we decline to consider it.
Under the special-relationship
exception to the economic-loss rule a plaintiff asserting a negligence claim
may be able to recover for purely economic losses where there is a special
relationship between the plaintiff and the defendant. The exception typically involves the
defendant has assumed the responsibility not to violate a professional duty
owed to the plaintiff.” Facts other than
a professional relationship
may support the establishment of a
special relationship Veljovic, 2025 VT
38, ¶ 14; Sutton v. Vt. Reg’l Ctr., 2019 VT 71A, ¶ 33, 212 Vt. 612, 238 A.3d
608). Sutton is the sole case where this Court has held that a special relationship existed
sufficient for the exception to apply. In this case, unlike in Sutton, there is no evidence that plaintiff and ATAS
had a “close relationship” where “exceptional oversight and management” was
promised or performed. Id. ¶ 33. ATAS neither “personally solicited” the work,
nor did it enter into an ongoing “individualized relationship[]” with plaintiff
See EBWS,LLC v. Britly Corp, 2007 VT 37, ¶ 32 (holding no special relationship existed even when
defendant designed and built creamery for plaintiff because plaintiff “did not
rely on the defendant to provide it with a professional service, and,
consequently paid for the services of a contractor not a professional
architect”); see also Restatement (Third) of Torts: Liab. for Econ. Harm § 4
(2020) (describing special-relationship exception justified by heightened
standard of care and describing construction contractors and tradesmen as
nonprofessionals).
We are unpersuaded by plaintiff’s argument that the
relationship between itself and ATAS rose to the level of a special
relationship for the purpose of this exception The purchase of the panels by
plaintiff’s subcontractor, plaintiff’s brief in-person encounter and emails
with ATAS representatives, and plaintiff’s reliance on web-based information
produced by ATAS, did not create a special relationship between plaintiff and
ATAS sufficient for the purpose of this exception to the economic-loss
rule.
Plaintiff finally argues that ATAS owed plaintiff a duty to provide accurate information that plaintiff was intended to rely on, and that this intended reliance is sufficient to support the existence of a special relationship. See Limoge v.People’s Tr. Co., 168 Vt. 265, 268-69, 719 A.2d 888, 890 (1998) (outlining requirements for negligent-misrepresentation[1]claim).
Essentially, plaintiff attempts to use the duty outlined in
negligent-misrepresentation claims to establish a special relationship between
ATAS and plaintiff. This interpretation
would drastically expand the special-relationship exception to the point of
swallowing the economic-loss rule. It
ignores the typical determining factor that there be a professional service
provided in the relevant interaction between the parties—with a corresponding
heightened standard of care
Implied Indemnity Claim
Finally, plaintiff argues that the trial court erred when it granted summary judgment to ATAS on Mountainview’s implied indemnity claim because equity requires implied indemnity in this case. ATAS argues that plaintiff lacks standing to bring this claim on appeal. We agree. “The plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties. Plaintiff does not explain how plaintiff—not Mountainview—has the right to appeal the trial court’s summary-judgment decision on Mountainview’s implied-indemnity claim. On appeal, plaintiff does not contest the court’s ruling that nothing in the contract allows plaintiff to assume Mountainview’s claims, and plaintiff does not identify any other legal basis for it to do so. Because plaintiff has not shown that it has the right to assert this argument on behalf of Mountainview, we decline to consider whether the trial court appropriately granted summary judgment on Mountainview’s implied-indemnity claim. Ladd v. Valerio, 2005 VT 81, ¶ 3 (mem.) (holding “courts have no jurisdiction to grant the relief sought” when “the plaintiff lacks standing”).
Affirmed.
[1] SCOVT NOTE: Limoge adopts Section 552(1) of the Restatement (Second) of Torts, which provides:
The Third Restatement takes the approach of recognizing and defining specific duties to avoid the unintentional infliction of economic loss . Among these, Section 5 of the Restatement (Third) of Torts: Liability for Economic Harm provides:
- (1) An actor who, in the course of his or her business, profession, or employment, or in any transaction in which the actor has a pecuniary interest, supplies false information for the guidance of others is subject to liability for pecuniary loss caused to them by their reliance upon the information, if the actor fails to use reasonable care in obtaining or communicating it.
- (2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered:
- (a) by the person or one of a limited group of persons for whose guidance the actor intends to supply the information, or for whose guidance the actor knows the recipient intends to supply it; and
- (b) through reliance upon the information in a transaction that the actor intends to influence, or that the actor knows the recipient intends to influence, or in a substantially similar transaction.
- (3) The liability of one who is under a public duty to supply the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them.
- (4) A plaintiff's recovery under this Section is subject to the same principles of comparative responsibility that apply to other claims of negligence.
- (5) This Section does not recognize liability for negligent misrepresentations made in the course of negotiating or performing a contract between the parties.
On its face the Restatement allows recovery against both professionals and non-professionals for certain negligently caused economic (pecuniary) loss. In Glassford v. Dufresne & Assocs. P.C., 2015 VT 77 the Court found it sufficient to analyze an economic loss claim under section 552, which is self contained and defines who is liable to whom. In another context the Court has noted that the drafters of the current Restatement reject the continued viability of a broad formulation precluding recovery for economic loss. Sutton v. Vermont Regional Center, 2019 VT 71 ¶ 31 n. 6 (noting the plethora of exceptions to the broad formulation of the economic-loss rule has induced the drafters of the current restatement to propose "a more limited principle: not that liability for economic loss is generally precluded, but that duties of care with respect to economic loss are recognized in specific circumstances.") (citing Restatement (Third) of Torts: Liba. for Econ. Harm § 1 cut. b (Tentative Draft No. 1, 2012)
Given the approach of the current Restatement and the opinion in Sutton, ¶ 31, suggesting that the economic loss rule itself is overwhelmed by "a host of exceptions" including the provisions of section 552, it is difficult to understand the PeakCM, Court’s concern that section 552 might “swallow” the economic loss rule. The simple truth is the that liability for economic loss is not generally precluded and that liability may be imposed for negligent misrepresentation as provided by section 552.
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