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The City of Whiting, Indiana (the City) undertook a 26-acre lakefront development project. It hired an engineering firm to serve as the consultant for the project. The consultant subcontracted with a subconsultant for marine engineering services, including design of a rock revetment on the lakefront for shoreline protection. According to the City, the revetment failed on three occasions, resulting in damage to the City’s property at the project site, including a walking path, landscaping and existing trees, a gazebo, and an existing Gun Club structure, which the City had planned to convert to a restaurant.
After accepting assignment of the consultant’s contract with the subconsultant, the City filed a six-count complaint and alleged that the subconsultant’s negligent revetment design caused damage to the City’s property. The subconsultant moved for summary judgment on the City’s negligence claim, arguing that the economic loss rule precluded liability against it in tort. The court noted that Indiana’s economic loss rule bars tort liability when there is damage only to the product contracted for itself, but that the rule does not preclude tort liability if there is personal injury or damage to “other property.”