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The Economic Loss Rule Does Not Bar Misrepresentation Claims Where There is a Special Relationship

Negligent misrepresentation claims seeking recovery of economic loss have been allowed where independent duties of care exist, such as where duties are created by a defendant’s professional obligations.[1]  In both Hermansen (licensed real estate professional) and West (appraiser), the tortfeasors owed the tort victims independent duties of care due to their professional positions.  Currently, these are the only two specified “independent duties” that fall outside the economic loss doctrine.  It is interesting to note that the plaintiffs in Hermansen did not have breach of contract claims against the tortfeasors.  The Plaintiffs in West had alleged a breach of contract claim.  The Court of Appeals upheld the dismissal of that claim.[2]  As long as there is an independent duty, the economic loss rule does not prevent tort claims regarding misrepresentations of matters as to which the contract, if there is a contract, is silent, as in Hermansen and West.

[1]See Hermansen, 2002 UT 52, 48 P.3d 235 (holding economic loss rule did not bar negligent misrepresentation claim against real estate broker and his agent because such parties had independent duties toward plaintiff as licensed real estate professionals); West, 2006 UT App 222, 139 P.3d at 1066 (holding that economic loss rule did not bar negligence claim against appraiser because appraisers have independent duties of care toward parties that may reasonably rely upon their work).

[2]West, 2006 UT App 222, 139 P.3d at 1066.

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