Hayes v. Intermountain GeoEnvironmental Services

2021 UT 62IN THE
SUPREME COURT OF THE STATE OF UTAH
KIM HAYES and NANCY HAYES,
Petitioners,
v.
INTERMOUNTAIN GEOENVIRONMENTAL SERVICES, INC.,
Respondent.
No. 20190764
Heard November 13, 2020
Filed November 4, 2021
On Certiorari to the Utah Court of Appeals
Second District, Davis County
The Honorable Glen R. Dawson
No. 170700693
Attorneys:1
Damian C. Smith, Lehi, for petitioners
Anna Nelson, Salt Lake City, for respondent
JUSTICE PETERSEN authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
JUSTICE HIMONAS, and JUSTICE PEARCE joined.
JUSTICE PETERSEN, opinion of the Court:
INTRODUCTION
¶1 Shortly after moving into their new home, Kim and
Nancy Hayes noticed the walls and foundation were cracking.
__________________________________________________________
1Attorney for amicus curiae Utah League of Cities and Towns:
Cameron B. Diehl, Salt Lake City; attorneys for amicus curiae
Layton City: Gary R. Crane, Steven L. Garside, and J. Mason Kjar,
Layton; attorney for amicus curiae West Jordan City: Paul D. Dodd,
West Jordan.
HAYES v. INTERMOUNTAIN GEOENVIRONMENTAL SERVICES, INC.
Opinion of the Court
They discovered that this was caused by ―failure surfaces‖ in the
soil approximately sixty-five feet beneath their home. The
Hayeses filed suit, asserting a variety of tort and contract claims
against the contractor, the developer, and Respondent
Intermountain GeoEnvironmental Services, Inc. (IGES)—a
geotechnical engineering firm that provided a geotechnical report
opining the site was safe for residential construction, provided
certain recommendations were met.2
¶2 Each of the Hayeses‘ claims against IGES were tort claims
asserting negligence. IGES moved to dismiss the claims, arguing
they were barred by both the common law and statutory
economic loss rules, which place limits on tort claims for purely
economic losses. The district court agreed and dismissed the
Hayeses‘ claims against IGES. And the court of appeals affirmed,
holding that the claims were proscribed by Utah‘s statutory
economic loss rule (Economic Loss Statute or Statute), which
limits any ―action for defective design or construction‖ to claims
for breach of contract, with narrow exceptions. UTAH CODE § 78B-
4-513(1) to (2). The court of appeals concluded that the Hayeses‘
negligence claims were subject to the Economic Loss Statute
because they amounted to ―an action for defective design or
construction.‖
¶3 On certiorari, the question before us is whether the court
of appeals correctly construed the Economic Loss Statute to reach
the Hayeses‘ negligence claims. The Hayeses also argue that the
court of appeals should have analyzed whether a common law
independent duty exception applies to their claims.
¶4 Because we agree with the court of appeals that the
Hayeses have brought an ―action for defective design,‖ the
Economic Loss Statute applies and bars the Hayeses‘ negligence
claims. Further, no common law exception is available because the
Statute is controlling. We affirm.
__________________________________________________________
2Only the claims against IGES are before us. We note that the
Hayeses and the other remaining defendants stipulated to a
dismissal without prejudice to allow for this appeal.
2
Cite as: 2021 UT 62Opinion of the Court
BACKGROUND3
¶5 Kim and Nancy Hayes built a home in the Quail Hollow
subdivision in Layton, Utah. The subdivision was developed by
K.C. Halls Construction, Inc. Halls Construction acted as an agent
for Roger Nuttal, who sold the building lot to the Hayeses. The
Hayeses then hired Bob Stevenson to construct the house. About
fourteen months after completion, the Hayeses noticed cracking in
the home‘s walls and foundation.
¶6 More than ten years prior to construction of the
residence, Halls Construction contracted with IGES to provide a
geotechnical report for the planned development, as required by
Layton City. IGES reviewed geological maps of the area;
conducted a field investigation during which it completed three
borings to depths of twenty-five, twenty-five, and fifty feet deep;
and tested the resulting soil samples in a laboratory to ―assess the
soil‘s pertinent engineering properties.‖ IGES prepared a
geotechnical report for Halls Construction, in which it included
the findings obtained from the drillings and concluded that
―[b]ased on the subsurface conditions encountered at the site and
slope stability analysis, it is our opinion that the subject site is
suitable for the proposed construction provided that the
recommendations contained in this report are complied with.‖
The report made recommendations pertinent to future
construction, including that: all structures be placed on structural
fill, structures be founded on spread footings, the maximum
allowable bearing pressure4 be 2,000 pounds per square foot,
__________________________________________________________
3 With respect to a district court‘s grant of a motion to dismiss,
―we accept the factual allegations in the complaint as true and
consider them, and all reasonable inferences to be drawn from
them, in the light most favorable to the non-moving party. . . . We
recite the facts accordingly.‖ Christensen v. Utah State Tax Comm’n,
2020 UT 45, n.1, 469 P.3d 962 (alteration in original) (citation
omitted).
4 The bearing capacity (or bearing pressure) is ―the maximum
stress or pressure that a footing can sustain without failure of the
soil or rock that is supporting the footing.‖ Jeffrey R. Keaton,
Bearing Capacity, in ENCYCLOPEDIA OF ENG‘G GEOLOGY (Peter T.
Bobrowsky & Brian Marker eds., 2018), https://link.
(continued . . .)
3
HAYES v. INTERMOUNTAIN GEOENVIRONMENTAL SERVICES, INC.
Opinion of the Court
concrete slabs be designed by a structural engineer, and subdrains
be considered.
¶7 After the cracks manifested, the Hayeses hired a different
engineering firm, CMT Engineering Laboratories, to conduct
another geotechnical exploration. CMT found a subsurface
problem that IGES had not, concluding: ―[T]he existing slope at
the site fails to meet the minimum factors of safety. Failure
surfaces within the slope analysis model extend about [sixty-five]
feet below the existing structure.‖ The Hayeses attempted to hire
a contractor to remediate the issue but were unable to find anyone
to take on the project. According to the complaint, ―no contractor
was willing to submit a bid based on their inability to guarantee
that the remedial actions would result in stabilization of the
structure,‖ and they were unwilling to assume liability for the
work.
¶8 The Hayeses ultimately concluded that their property
was unsafe and could not support their home. They filed a
complaint against Halls Construction, Stevenson, and IGES.
Relevant here, the Hayeses sued IGES for negligence, negligent
misrepresentation for ―wrongly concluding that the [lot] was safe
and suitable for residential construction,‖ and negligent infliction
of emotional distress caused by ―witnessing the continuing
destruction of‖ their home.5 The Hayeses‘ core allegation was that
IGES‘s report had been wrong. They asserted that although IGES
reported that the property was ―safe and suitable‖ for residential
construction, it ―was not and is not suitable or safe for
construction of a residence.‖ They sought compensation for the
damage and eventual destruction of their home, damage to the lot
on which the home was built, moving expenses, and their
emotional distress.
¶9 IGES moved to dismiss the Hayeses‘ complaint, arguing
their negligence claims were barred by both the common law
economic loss rule and the Economic Loss Statute because the
springer.com/referenceworkentry/10.1007%2F978-3-319-73568-
9_27 (last visited Aug. 27, 2021).
5 The Hayeses also asserted a breach of contract claim,
asserting they were third party beneficiaries of the contract
between IGES and Halls Construction. The district court
dismissed this claim, and it is not before us.
4
Cite as: 2021 UT 62Opinion of the Court
Hayeses were seeking compensation in tort for purely economic
losses. IGES noted that the common law economic loss rule
recognizes an exception, permitting tort claims for economic
losses when a defendant has a duty to the plaintiff independent of
any contractual relationship. IGES argued that it had no
independent duty to the Hayeses. But it asserted that even if it
did, the Economic Loss Statute applies to the Hayeses‘ complaint,
and because the Statute does not contain an independent duty
exception, no exception would apply. The district court granted
the motion and the Hayeses appealed.
¶10 The court of appeals affirmed. It held that the Hayeses‘
tort claims against IGES were subject to the Economic Loss Statute
because, in substance, they constituted an ―action for defective
design or construction.‖6 Hayes v. Intermountain GeoEnvironmental
Servs. Inc., 2019 UT App 112, ¶ 22, 446 P.3d 594. The court also
concluded that because the Economic Loss Statute applied, it did
not need to consider the applicability of the common law
economic loss rule or its independent duty exception. Id. ¶ 8.
¶11 The Hayeses petitioned for certiorari, which we granted.
We exercise jurisdiction under Utah Code section 78A-3-102(3)(a).
STANDARD OF REVIEW
¶12 ―On certiorari, this court reviews the decision of the court
of appeals for correctness, giving no deference to its conclusions
of law.‖ State v. Marquina, 2020 UT 66, ¶ 24, 478 P.3d 37 (citation
omitted).
ANALYSIS
¶13 We granted certiorari to address whether the court of
appeals erred in its interpretation and application of the Economic
Loss Statute. The court of appeals held that the Hayeses‘ tort
claims amounted to an ―action[] for defective design and
construction, as that term is used in the [S]tatute.‖ Hayes v.
Intermountain GeoEnvironmental Servs. Inc., 2019 UT App 112, ¶ 9,
446 P.3d 594. To reach this conclusion, the court examined ―the
__________________________________________________________
6 The court of appeals further held that the ―other property‖
exception in the Economic Loss Statute did not apply. Hayes v.
Intermountain GeoEnvironmental Servs. Inc., 2019 UT App 112, ¶ 28,
446 P.3d 594. The Hayeses do not challenge that conclusion and it
is not before us.
5
HAYES v. INTERMOUNTAIN GEOENVIRONMENTAL SERVICES, INC.
Opinion of the Court
relief sought by Plaintiffs against IGES, as well as Plaintiffs‘ basic
underlying theory of causation,‖ rather than looking only at the
―legal label‖ placed on each claim. Id. ¶ 14. And the court assessed
the role of geotechnical engineers in design and construction,
observing that ―[g]eotechnical engineering recommendations are
an important first step in the design and construction process,‖
and that engineers are considered ―design professionals‖
elsewhere in the Utah Code. Id. ¶ 18. The court ultimately
concluded that
A lawsuit that seeks recovery from a design
professional—including a geotechnical engineer—
for the diminution in value of (or costs to repair) a
structure that has settled or sustained damage as a
result of subsidence will nearly always be properly
categorized as a lawsuit seeking recovery for
defective design or construction.
Id. ¶ 19 (footnote omitted).
¶14 The Hayeses argue that the court of appeals erred in two
respects. First, they contend their negligence claims should not be
subject to the Economic Loss Statute because they are not alleging
that IGES provided a ―defective design.‖ Rather, they characterize
their claims as alleging only that IGES negligently missed the
subsurface fracture sixty-five feet below their home and
consequently issued the erroneous report. And they assert that ―a
geotechnical report on soil stability conditions‖ is not a ―design.‖
In the alternative, the Hayeses argue that the court of appeals
should have considered whether IGES owed them an
independent duty under the common law.
¶15 We conclude that the court of appeals correctly
interpreted and applied the Statute. We first discuss the economic
loss rule in general and then address the construction and
application of the Economic Loss Statute.
I. THE ECONOMIC LOSS RULE
¶16 In general, the economic loss rule places limits on tort
claims for purely economic losses. See UTAH CODE § 78B-4-513(1);
Gables at Sterling Vill. Homeowners Ass’n, Inc. v. Castlewood-Sterling
Vill. I, LLC, 2018 UT 04, ¶ 47, 417 P.3d 95. It is a ―judicially created
doctrine that marks the fundamental boundary between contract
law, which protects expectancy interests created through
agreement between the parties, and tort law, which protects
individuals and their property from physical harm by imposing a
6
Cite as: 2021 UT 62Opinion of the Court
duty of reasonable care.‖ Gables at Sterling Vill., 2018 UT 04, ¶ 47
(citation omitted). In Utah, the rule appears in both the common
law, see HealthBanc Int’l, LLC v. Synergy Worldwide, Inc., 2018 UT
61, ¶¶ 12–16, 435 P.3d 193 (discussing the common law rule), and
in statutory law as codified in the Economic Loss Statute, UTAH
CODE § 78B-4-513.
A. The Common Law Rule
¶17 We first adopted the common law economic loss rule in
American Towers Owners Ass’n, Inc. v. CCI Mechanical, Inc., 930 P.2d
1182, 1188–92 (Utah 1996), abrogated on other grounds by Davencourt
at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims
Landing, LC, 2009 UT 65, 221 P.3d 234. We discussed the interplay
between contract claims and tort claims and stated, ―contract
principles resolve issues when the product does not meet the
user‘s expectations, while tort principles resolve issues when the
product is unsafe to person or property.‖ Id. at 1190. We also
emphasized that the policy reasons for the economic loss rule are
―particularly applicable to claims of negligent construction.‖ Id.
We explained: ―Construction projects are characterized by
detailed and comprehensive contracts that form the foundation of
the industry‘s operations. Contracting parties are free to adjust
their respective obligations to satisfy their mutual expectations.‖
Id. In adopting the rule, we held that allowing negligence actions
in such circumstances would ―impose [plaintiffs‘] economic
expectations upon parties whom the [plaintiffs] did not know and
with whom they did not deal and upon contracts to which they
were not a party.‖ Id. at 1192.
¶18 However, we have recognized an exception to the general
common law rule:
[T]he initial inquiry in cases where the line between
contract and tort blurs is whether a duty exists
independent of any contractual obligations between
the parties. When an independent duty exists, the
economic loss rule does not bar a tort claim because
the claim is based on a recognized independent duty
of care and thus does not fall within the scope of the
rule.
Hermansen v. Tasulis, 2002 UT 52, ¶ 17, 48 P.3d 235 (citation
omitted) (internal quotation marks omitted).
7
HAYES v. INTERMOUNTAIN GEOENVIRONMENTAL SERVICES, INC.
Opinion of the Court
B. The Statutory Rule
¶19 In 2008, the legislature codified the economic loss rule
with respect to actions ―for defective design or construction.‖
UTAH CODE § 78B-4-513(1). The Statute provides that:
(1) . . . [A]n action for defective design or
construction is limited to breach of the contract,
whether written or otherwise, including both
express and implied warranties.
(2) An action for defective design or construction
may include damage to other property or physical
personal injury if the damage or injury is caused by
the defective design or construction.
....
(4) Except as provided in Subsection[] (2) . . ., an
action for defective design or construction may be
brought only by a person in privity of contract with
the original contractor, architect, engineer, or the
real estate developer.
(5) If a person in privity of contract sues for
defective design or construction under this section,
nothing in this section precludes the person from
bringing, in the same suit, another cause of action to
which the person is entitled based on an intentional
or willful breach of a duty existing in law.
Id. § 78B-4-513(1) to (2), (4) to (5).
II. INTERPRETATION AND APPLICATION OF
THE ECONOMIC LOSS STATUTE
¶20 We continue to apply the common law economic loss rule
outside the context of defective design and construction claims.
See HealthBanc Int’l, LLC v. Synergy Worldwide, Inc., 2018 UT 61,
¶¶ 12–16, 435 P.3d 193; Gables at Sterling Vill. Homeowners Ass’n,
Inc. v. Castlewood-Sterling Vill. I, LLC, 2018 UT 04, ¶¶ 47–54, 417
P.3d 95. However, any ―action for defective design or
construction‖ is subject to the Statute—meaning that it must be
brought as a breach of contract claim rather than a tort claim
unless a statutory exception applies.
¶21 The Hayeses argue that the court of appeals erred when it
concluded their complaint was subject to the Statute because it
constituted an action for defective design or construction. Neither
8
Cite as: 2021 UT 62Opinion of the Court
party contends that IGES engaged in construction, so the Hayeses
focus on arguing that their complaint is not an action for
―defective design‖ because IGES did not engage in ―design.‖ They
reason that, while some geotechnical engineers may provide
design services, that is not what IGES did here. Rather, they allege
that IGES wrote a faulty report when it erroneously concluded
their lot was safe and suitable for residential construction. And
they argue that providing an opinion about subsurface conditions
and slope stability does not constitute ―design‖ under the Statute.
¶22 When interpreting statutory terms, our aim ―is to
ascertain the intent of the legislature.‖ In re Adoption of B.H., 2020
UT 64, ¶ 31, 474 P.3d 981 (citation omitted). To begin this inquiry,
we look at the plain language of the statute. Id. Here, while the
Statute speaks of ―defective design,‖ UTAH CODE § 78B-4-513(1), it
does not define ―design.‖
¶23 The Hayeses propose some dictionary definitions to
interpret the meaning of design. They define design in its verb
form as ―to make or draw plans for something, for example
clothes or buildings.‖ Design, CAMBRIDGE DICTIONARY,
https://dictionary.cambridge.org/us/dictionary/english/design
?q=Design (last visited Aug. 27, 2021). And they define design in
its noun form as ―a drawing or set of drawings showing how a
building or product should be made and how it will work and
look.‖ Id.
¶24 However, ―while the ordinary meaning of a word is
powerful evidence in understanding statutory text,‖ we must also
consider the meaning intended in the particular context of the
statute. State v. Rasabout, 2015 UT 72, ¶ 10, 356 P.3d 1258. ―Words
and phrases are presumed to have been used according to their
plain, natural, and common import and usage of the language,
unless obviously used in a technical sense.‖ Parkinson v. State Bank
of Millard Cnty., 35 P.2d 814, 821 (Utah 1934). In the latter instance,
―where [the legislature] has used technical words [in a given
statutory provision] . . ., it (is) proper to explain them by reference
to the art or science to which they (are) appropriate.‖ Corning
Glass Works v. Brennan, 417 U.S. 188, 201 (1974) (fourth and fifth
alternations in original) (citation omitted) (internal quotation
marks omitted).
¶25 Here, the Economic Loss Statute is situated in the
construction context. See UTAH CODE § 78B-4-513 (addressing
actions for defective design or construction). And IGES operates
in the field of geotechnical engineering. So while the definitions
9
HAYES v. INTERMOUNTAIN GEOENVIRONMENTAL SERVICES, INC.
Opinion of the Court
proposed by the Hayeses are somewhat helpful in discerning the
parameters of the term ―design,‖ they do not tell us much about
the meaning of the word in the realms of construction or
engineering.
¶26 Since the Economic Loss Statute does not define design,
we agree with the court of appeals that it is useful to consider
―how [the legislature] has defined similar terms in analogous
contexts.‖ Hayes v. Intermountain GeoEnvironmental Servs. Inc., 2019
UT App 112, ¶ 18, 446 P.3d 594 (citing Wasatch Crest Ins. Co. v.
LWP Claims Adm’rs Corp., 2007 UT 32, ¶¶ 13–14, 158 P.3d 548). The
court of appeals correctly noted that in the Utah Code Title
involving commerce and trade, the definition of ―design
professional‖ includes engineers. See id. (citing UTAH CODE
§ 13-8-2(1)(c)). Specifically, the statute states that ―‗[d]esign
professional‘ means an architect, engineer, or land surveyor. It
includes any other person who, for a fee or other compensation,
performs services similar to the services of an architect, engineer,
or land surveyor in connection with the development of land.‖
UTAH CODE § 13-8-2(1)(c) (emphasis added).
¶27 The legislature provides another helpful definition in the
statute establishing the statute of limitations for actions related to
improvements in real property. See id. § 78B-2-225. The statute
applies to any claim for ―acts, errors, omissions, or breach of duty
arising out of or related to the design, construction, or installation of
an improvement.‖ Id. § 78B-2-225(1)(b) (emphasis added). The
persons who are protected by the statute of limitations—called
―providers‖ in the statute—are defined as ―any person . . .
contributing to, providing, or performing . . . studies, plans,
specifications, drawings, designs, value engineering, cost or
quantity estimates, surveys, staking, construction, installation, or
labor to an improvement.‖ Id. § 78B-2-225(1)(f)(i)(A). The broad
scope of this definition indicates that the legislature views the
services that constitute design and construction (and here,
installation) quite comprehensively. For example, while the
definition of provider includes persons providing ―drawings,‖ it
also includes those providing ―studies.‖ Id.
¶28 As IGES is a geotechnical engineering firm, we also find
definitions of ―design‖ within the field of engineering to be
illuminating. The Accreditation Board for Engineering
& Technology (ABET) defines ―engineering design‖ as
a process of devising a system, component, or
process to meet desired needs and specifications
10
Cite as: 2021 UT 62Opinion of the Court
within constraints. It is an iterative, creative,
decision-making process in which the basic sciences,
mathematics, and engineering sciences are applied
to convert resources into solutions. Engineering
design involves identifying opportunities,
developing requirements, performing analysis and
synthesis, generating multiple solutions, evaluating
solutions against requirements, considering risks,
and making trade-offs, for the purpose of obtaining
a high-quality solution under the given
circumstances. For illustrative purposes only,
examples of possible constraints include
accessibility, aesthetics, codes, constructability, cost,
ergonomics, extensibility, functionality,
interoperability, legal considerations,
maintainability, manufacturability, marketability,
policy, regulations, schedule, standards,
sustainability, or usability.
ACCREDITATION BD. FOR ENG‘G & TECH., CRITERIA FOR ACCREDITING
ENG‘G PROGRAMS 4 (2019).7 Under this definition, the concept of
design contemplates much more than drawing plans.
¶29 We agree with the court of appeals‘ observation that ―[a]
geotechnical engineer is often an essential participant on the
design team.‖ Hayes, 2019 UT App 112, ¶ 18 (quoting ABA, THE
CONSTR. PROJECT 47 (Marilyn Klinger & Marianne Susong eds.,
2006)). In general,
The geotechnical engineer investigates the
subsurface conditions at the project site before the
structural engineer designs the structural
foundation. The geotechnical engineer fulfills the
essential role of determining the bearing capacities
and stability of the soils present at the project site.
This allows other members of the design team, who
__________________________________________________________
7 ABET accredits ―college and university programs in . . .
engineering . . . at the associate, bachelor‘s and master‘s degree
levels.‖ About ABET, ABET, https://www.abet.org/about-abet/
(last visited Aug. 27, 2021). Holding a degree from an ABET
accredited engineering program is required for licensure as a
professional engineer in Utah. UTAH ADMIN. CODE R. 156-22-302b.
11
HAYES v. INTERMOUNTAIN GEOENVIRONMENTAL SERVICES, INC.
Opinion of the Court
typically design a building from the roof down, to
determine the appropriate loads for the building. If a
geotechnical engineer determines that the soils at the
site are unstable or that inappropriate fill material is
present on the site, such findings may ultimately
weigh against continuation with the project on the
selected site altogether. Although the owner can
modify most sites to support a structure irrespective
of the soil conditions, the expense required to do so
may dictate against proceeding. . . .
The geotechnical engineer typically drills
holes at various locations on the site and/or digs test
pits to obtain information regarding the type of soil,
water table, and locations of existing rock. After
performing these tests, the geotechnical engineer
prepares a report describing the findings obtained
from the drillings and provides recommendations
for the design of the proposed structure‘s
foundation and structural system. This information
provided by the geotechnical engineer is typically
one of the starting points for the structural engineer.
The owner may also ask the geotechnical engineer to
stay involved in the project for purposes of
inspecting footing base before the contractor pours
footings and monitoring the subsequent pour of the
footings.
ABA, THE CONSTR. PROJECT 47 (Marilyn Klinger & Marianne
Susong eds., 2006).
¶30 Further, the geotechnical report is an integral part of the
structural design of a building‘s foundation. A building‘s design
team pulls site-specific soil information from the geotechnical
report, including the bearing capacity, to design the foundation.
See Jess Lohse, The Structural Design Process of a Building, SBC
MAG. (June 10, 2019), https://www.sbcmag.info/news/2019/
jun/structural-design-process-building (last visited Aug. 27,
2021). The bearing capacity (or bearing pressure) is ―the
maximum stress or pressure that a footing can sustain without
failure of the soil or rock that is supporting the footing.‖ Jeffrey R.
Keaton, Bearing Capacity, in ENCYCLOPEDIA OF ENG‘G GEOLOGY
(Peter T. Bobrowsky & Brian Marker eds., 2018),
https://link.springer.com/ referenceworkentry/10.1007%2F978-
3-319-73568-9_27 (last visited Aug. 27, 2021). Accurately mapping
12
Cite as: 2021 UT 62Opinion of the Court
out weight distribution and other forces that may be applied to
the structure is imperative. Id.¶31 This is the role that IGES and their geotechnical report
played here. We take as true the Hayeses‘ allegation that the walls
and foundation of their home cracked because of the subsurface
instability that IGES failed to identify. Thus, the home‘s structural
design was insufficient for the site-specific soil conditions because
the design did not accurately account for the subsurface
instability. This omission, according to CMT, led to the movement
and cracking of the home.
¶32 This illustrates how the type of information contained in
IGES‘s geotechnical report is an integral part of a building‘s
design. The bearing pressure provided by IGES was a design
constraint within which a design team would have had to work.
Site-specific subsurface conditions, soil, and slope stability
information are integral to designing a home‘s foundation.
¶33 We conclude that it is impossible to separate the
information and opinions in the geotechnical report from the
design of the home. The geotechnical report is a necessary
component of the structural design of a home and is thus integral
to the design itself. Accordingly, we agree with the court of
appeals that the Hayeses‘ allegation that the report was erroneous
is, in substance, a claim for defective design. And the Hayeses‘
negligence claims against IGES are therefore subject to the
Economic Loss Statute.
III. INDEPENDENT DUTY
¶34 Next, the Hayeses argue that the court of appeals erred
by not considering whether IGES owed them an independent
duty. As explained above, under the common law economic loss
rule, an exception exists to permit a tort claim when the defendant
owes the plaintiff a duty independent of any contractual
relationship between the parties. See supra ¶ 19.
¶35 However, in the context of actions for ―defective design
or construction,‖ such as here, the Economic Loss Statute controls.
See UTAH CODE § 78B-4-513. Whether an exception is available
here is a matter of applying the Statute, not the common law. See
Gilger v. Hernandez, 2000 UT 23, ¶¶ 9–13, 997 P.2d 305 (holding
that when statutory law is intended to occupy the field it
supersedes common law doctrines).
¶36 Looking to the language of the Statute, unless an action
includes damage to ―other property or physical personal injury,‖
13
HAYES v. INTERMOUNTAIN GEOENVIRONMENTAL SERVICES, INC.
Opinion of the Court
which is not the case here, the only exception permitted by the
legislature appears in subsection five. It permits a person in
privity of contract who sues for breach of contract under the
Statute to include other claims ―to which the person is entitled
based on an intentional or willful breach of a duty existing in
law.‖ UTAH CODE § 78B-4-513(5). This exception does not apply to
the Hayeses‘ claim against IGES, because they are not in privity of
contract.
¶37 We in no way intend to diminish the hardship the
Hayeses have suffered from the destruction of their home. We
also appreciate the policy arguments that Layton City, as amicus,
has raised in urging us to find IGES owed an independent duty to
the Hayeses. But we can only interpret and apply the statute
enacted by the legislature. In the area of ―design and
construction,‖ the legislature requires parties to protect their
financial interests through contracts. Beyond that, ―we are not at
liberty to graft onto the statute an exception that our legislature
chose not to include.‖ Reperex Inc. v. Child, Van Wagoner &
Bradshaw, 2017 UT App 25, ¶ 71, 392 P.3d 905, reversed in part on
other grounds by Reperex, Inc. v. Coldwell Banker Com., 2018 UT 51,
428 P.3d 1082; see also Davencourt at Pilgrim’s Landing Homeowners
Ass’n v. Davencourt at Pilgrim’s Landing, LC, 2009 UT 65, ¶ 44, 221
P.3d 234 (―If a statutory duty is to exist that lies outside the scope
of the economic loss rule, we leave it to the decision of the
legislature.‖).8
¶38 As no independent duty exception is included in the
Economic Loss Statute, we affirm.
__________________________________________________________
8 We note that even though Davencourt was issued after the
enactment of the Economic Loss Statute, the events in question
occurred before enactment of the Statute and we applied the
common law economic loss rule. See Davencourt at Pilgrim’s
Landing Homeowners Ass’n v. Davencourt at Pilgrim’s Landing, LC,
2009 UT 65, ¶¶ 16–19, 221 P.3d 234.
14
Cite as: 2021 UT 62Opinion of the Court
CONCLUSION
¶39 We conclude that the Hayeses‘ claims against IGES
constitute ―action[s] for defective design,‖ subject to the Economic
Loss Statute. Further, none of the exceptions provided in the
Statute apply to the circumstances here.
¶40 We affirm.
15