BRW, Inc. v. Dufficy & Sons, Inc.

The City of Denver, Colorado (the city) contracted with engineer BRW, Inc. (defendant) to construct two steel bridges. The contract required BRW to prepare adequate plans and specifications for the project according to customary professional standards. BRW contracted with inspector Professional Service Industries, Inc. (PSI) (defendant) to ensure that work on the project complied with BRW’s specifications. PSI agreed to perform its inspection obligations carefully and non-negligently. Dufficy & Sons, Inc. (Dufficy) (plaintiff) was a subcontractor on the project responsible for painting structural steel. Dufficy was contractually required to follow BRW’s plans and specifications. Once construction was underway, unexpected delays in the painting process caused Dufficy to suffer economic losses. Dufficy submitted an administrative claim to the city for expenses caused by the delay. While the claim was pending, Dufficy sued BRW and PSI in Colorado state court. Dufficy alleged that BRW had negligently drafted the plans and specifications for the project’s painting system and that PSI had negligently inspected the work on the project. Dufficy also alleged that BRW and PSI had made negligent misrepresentations regarding the painting system. Dufficy sought only money damages on the negligence and negligent-misrepresentation claims. The trial court entered judgment for BRW and PSI, concluding that Dufficy’s claims were barred by the economic-loss rule. That rule prevents a party who suffered purely economic loss due to the breach of a contractual duty from bringing a tort action for the breach unless an independent duty of care exists under tort law. The court reasoned that Dufficy’s claims had arisen from and were subject to the interrelated construction contracts. The appellate court reversed, holding that engineers and inspectors owe independent duties of care to contractors and subcontractors under tort law. The Colorado Supreme Court granted certiorari.