## Facts

- Homeowners Daniel and Sondra Estelle contracted with Greg Allen Construction Company, Inc. to renovate their home in Ladoga, Indiana.
- Greg Allen, the corporation’s president and an employee, signed the renovation contract only in a representative corporate capacity.
- Allen personally performed substantial portions of the work (including electrical, plumbing, and carpentry) and supervised other work on the project.
- The Estelles disputed the quality of the renovations and the parties reached an impasse over payment for allegedly substandard work.
- The Estelles sued both the corporation and Allen individually, alleging breach of contract and negligent performance.
- The trial court found the corporation liable for breach of contract and awarded damages against it, but held Allen not personally liable.

## Issues

1. Whether a corporate officer who performs and supervises defective work under the corporation’s contract may be held individually liable in negligence to the contracting homeowners for purely economic losses.

## Decision

- The Indiana Supreme Court granted transfer and affirmed the trial court.
- The court held the homeowners’ allegations stated a contract dispute over nonconforming performance, not an independent tort claim.
- Because the claimed damages were purely economic and tied to the contracted-for renovations, the economic loss rule barred negligence recovery.
- Greg Allen was not personally liable in tort to the homeowners under these circumstances; the judgment against the corporation for breach of contract remained in place.

## Legal Principles

- The economic loss rule generally bars negligence recovery for purely economic loss arising from a product or service failing to meet contractual expectations, absent personal injury or damage to property other than the subject of the contract.
- A claim that a contractor failed to perform promised work in a workmanlike manner is ordinarily contractual when the alleged harm is limited to repair costs, diminished value, or similar pecuniary loss.
- Although corporate officers may be personally liable for their own torts, personal tort liability is not imposed where the alleged duty and harm are entirely defined by the corporation’s contract and the losses are purely economic.

## Conclusion

The court confined the homeowners’ remedy to contract damages against the corporate contractor and rejected an effort to impose individual negligence liability on the corporate officer for economic losses stemming from defective contractual performance.


Greg Allen Constr. Co. v. Estelle, 798 N.E.2d 171 (Ind. 2003)