## Facts

- A landscape architect contracted to provide design services for reconstruction of university athletic fields.
- She retained a turfgrass consulting corporation to prepare turfgrass specifications and provide related construction-monitoring services.
- A softball field was completed without reported issues, but a later-built soccer field developed standing water and severe drainage problems shortly after completion.
- A subsequent consultant concluded the soccer field was built according to the provided specifications, but the specifications were defectively prepared because the designed rootzone hindered drainage.
- The landscape architect prepared replacement specifications and paid about $351,000 to reconstruct the soccer field.
- The consulting agreement did not require professional liability insurance or a performance bond.
- The landscape architect sued the corporation and two corporate officers, asserting negligence-based and contract-based claims and seeking to hold the officers personally liable based on their direct involvement in preparing the specifications.
- The plaintiff voluntarily dismissed the corporate defendant, leaving only the officers as defendants.

## Issues

1. Whether corporate officers may be held personally liable under the participation theory for alleged negligence consisting of the corporation’s deficient performance of contractual obligations.
2. Whether claims framed as negligent design and related tort theories are actionable in tort when the alleged duty and losses are defined by the parties’ contract and are purely economic.

## Decision

- The Supreme Court of New Jersey reversed the appellate ruling and reinstated summary judgment for the corporate officers.
- The court held the participation theory did not apply because the alleged wrongdoing was, in substance, a breach of contractual obligations rather than an independent tort.
- The court concluded no duty imposed by law, separate from the contract, was identified as having been breached by the officers.
- The court treated the claimed damages as purely economic losses tied to contractual expectations, not tort injury.

## Legal Principles

- Corporate officers may be personally liable under the participation theory only when the corporation commits a tort and the officer sufficiently participates in the tortious conduct causing the plaintiff’s injury.
- A failure to perform contractual duties, even if described as “negligent,” does not become a tort absent a duty of care independent of the contract.
- Where the alleged duty arises solely from a professional services contract and the damages sought are economic losses from disappointed contractual expectations, tort remedies generally are unavailable against individual corporate officers on a participation-theory rationale.
- Contract law, including negotiated risk allocation (such as insurance or bonding requirements), governs losses flowing from deficient contractual performance when no independent tort duty is shown.

## Conclusion

The court held that corporate officers were not personally liable for the allegedly defective turfgrass specifications because the asserted misconduct and damages stemmed from the corporation’s contractual performance and no independent tort duty supported applying the participation theory.


Saltiel v. GSI Consultants, Inc., 170 N.J. 297, 788 A.2d 268 (N.J. 2002)