Pennsylvania Litigation Blog

In 2006, the Superior Court of Pennsylvania and the Commonwealth Court of Pennsylvania issued decisions that may dramatically effect an injured party’s right to now recover economic (only) loss damages from “facility owners” in receipt of notices through Pennsylvania’s One Call Act and their failures to properly comply with the Act, and, “other professionals,” that are “in the business of supplying information” that provide false or inaccurate information when acting in compliance with the Act. The theory of recovery may differ between facility owner and a party that is a provider of information largely depending upon the status of the injured party and privity of contract or agreement, although the end result is the same--i.e., an aggrieved party may now be permitted to seek recovery for losses that are  purely economic that might otherwise have previously been precluded pursuant to the economic loss doctrine. 

The law, however, is far from settled. In fact, re-argument has been granted in that matter decided by Superior Court, now withdrawn and awaiting decision. Nevertheless, the cases are interesting from the standpoint of demonstrating both the courts trend of perhaps expanding the scope of recoverable economic damages, generally, where the actions sound in tort rather than contract law where privity of contract can not be established and more directly relating to actions maintained pursuant to the One Call Act. 

In the matter Excavation Technologies, Inc. v. Columbia Gas Company of Pennsylvania, (Pa. Super 2006)(re-argument granted - awaiting decision), the Superior Court permitted an excavator to seek recovery from a facility owner, and in this case, a utility company, for economic loss damages where a utility company allegedly marked several lines improperly, and, in some instances not at all. The utility company argued the excavator was precluded from maintaining an action because all of the damages were economic only and sounded only in tort, thus, were precluded pursuant to the economic loss doctrine where no privity of contract could be established. 

In its original holding, the Superior Court, relying upon Bilt-Rite Contractors, Inc. The Architectural Studio, 581 Pa. 454, 866 A.2d 270 (2005), reasoned that where information is negligently supplied by one in the business of supplying information, such as an architect, design professional, or in the instant action, a utility company, and where it is foreseeable that the information supplied will be relied upon by third persons, even absent privity of contract, a party may be held accountable for their consequences of a negligent failure to perform services in a competent fashion. The Court indicated that a duty exists to provide information accurately because parties justifiably rely upon information received from services required and provided pursuant to the One Call Act, and in fact, it is in the public’s interest for reporting companies to report accurately, the Court held that companies required to comply with the One Call Act are subject to negligent misrepresentation claims. 

At the close of 2006, in the matter Le-Nature’s, Inc. v. Latrobe Municipal Authority, 913 A.2d 988 (Pa. Cmwlth. 2006), the Commonwealth Court held that a facility owner could bring an action against a municipality for its failure to timely respond to a notice received pursuant to the One Call Act and for failing to physically mark sewer lines owned by the municipality. In Le-Nature’s Inc., the facility owner was planning construction on its own property and hired a general contractor to perform the work. The general contractor contracted a sub-contractor to perform certain drilling. The general contractor also called One Call to determine whether there were any utility lines where the sub-contractor was going to drill. Latrobe did not timely respond to the One Call notice, and, consequently, during drilling sewer lines owned/operated by Latrobe were damaged. 

Le-Nature’s Inc., paid for the repairs to the sewer line and sought recovery for economic losses sustained for the damage to the sewer line, as well as delay damages incurred with the construction project. The Court held that Latrobe, as a facility owner, had a duty to not only comply with the Act timely, but compliance with Act upon receipt of a One Call requires a facility owner to physically mark, stake and locate lines pursuant to the Act.  The duty to act was ascertained directly from the Act, privity was directly established between the parites, and as such, unlike the case decided by the Superior Court, the case did not turn on a theory of negligent misrepresentation.   

The holding of the Le-Nature’s Inc. Court may have greater implications than what appears in the text of the opinion. The Court applied strict construction of the statute holding that receipt of notice from One Call imposes a duty on facility owners to then physically mark, stake and locate lines. As such, industry terms of art sometimes relied upon that draw an artificial distinction between “design calls” versus “construction calls” could fall by the wayside as reliance upon the same may expose facility owner to future liability as to economic losses whether such losses are in the form of actual delay damages, additional construction damages or damages sustained during the planning process. Such results are not unlikely given the Act itself does not distinguish between “design calls” or “construction costs”, and, as a practical matter, the Act supports a larger public purpose where, as stated by the Superior Court in the Excavation matter, is intended be relied upon by then interested parties.