## Facts

- A class of townhouse owners in the Huffaker Hills development alleged extensive water intrusion and structural problems caused by defective framing and related construction deficiencies.
- The homeowners sought damages consisting of repair costs and related consequential economic losses (e.g., diminished value or loss of use), not personal injury.
- The homeowners sued multiple construction participants, including subcontractors involved in construction work.
- The homeowners also sued the City of Reno, alleging negligent building inspections and approval of construction despite alleged knowledge of defects.
- The district court dismissed the homeowners’ tort claims against the subcontractors and the City under the economic loss doctrine.
- After an earlier appellate disposition was withdrawn on rehearing, the Nevada Supreme Court issued the controlling opinion resolving the appeal.

## Issues

1. Whether the economic loss doctrine bars homeowners’ negligence claims against subcontractors and a municipality when the alleged damages are purely economic losses arising from defects in the homes themselves.
2. Whether the economic loss doctrine bars a strict products liability claim seeking purely economic losses for alleged construction defects.
3. Whether residential structures qualify as “products” for purposes of strict products liability.

## Decision

- The Nevada Supreme Court held the economic loss doctrine barred the homeowners’ negligence claims against both the subcontractors and the City.
- The court held the economic loss doctrine also barred the homeowners’ strict products liability claim.
- The court held the residential structures at issue were not “products” for strict products liability purposes.
- The court affirmed the district court’s dismissal of the homeowners’ tort claims premised on purely economic loss.

## Legal Principles

- The economic loss doctrine limits liability in negligence and strict liability when the plaintiff seeks purely economic losses (e.g., repair costs, diminished value, lost profits) unaccompanied by personal injury or damage to other property.
- In construction defect disputes involving only economic loss to the structure itself, contract and warranty remedies—rather than tort—are the primary means of recovery.
- Expanding tort duties to protect purely economic expectations in construction would expose defendants to broad, potentially unlimited liability and disrupt contractual allocation of risk.
- Residential buildings, treated as integrated real property, are not “products” for strict products liability in this context.

## Conclusion

The court confined recovery for alleged construction defects causing only repair costs and related economic harm to contract and warranty remedies, holding that the economic loss doctrine barred negligence and strict products liability claims against subcontractors and the municipality, and that the townhouses were not “products” for strict liability.


Calloway v. City of Reno, 993 P.2d 1259 (Nev. 2000)