Terracon Consultants Western, Inc. v. Mandalay Resort Group

Mandalay Resort Group and related entities (collectively, Mandalay) (plaintiffs) managed the construction of a resort and casino in Las Vegas, Nevada. Mandalay hired numerous subcontractors, including Terracon Consultants Western, Inc. (Terracon) (defendant). Under the contract between Mandalay and Terracon, Terracon agreed to provide professional engineering advice related to the design of the resort’s foundation. Terracon would not be involved with the actual construction of the foundation. Based on Terracon’s analysis of the soil and the anticipated weight of the building, Terracon predicted a certain amount of settling underneath the foundation. The final amount of settling was greater, and county officials required Mandalay to repair and reinforce the foundation before proceeding with construction. Mandalay sued Terracon for damages in state court, asserting claims of breach of contract and professional negligence. Terracon removed the matter to federal district court and filed a motion for partial summary judgment on the professional-negligence claim. Terracon argued that Mandalay’s negligence-based claim was barred as a matter of law by the economic-loss doctrine. It was undisputed that Terracon’s allegedly deficient engineering advice did not cause Mandalay to suffer personal injury or property damage. The Nevada Supreme Court accepted a certified legal question from the district court on the scope of the economic-loss doctrine.