## Facts

- Mandalay, a commercial developer, undertook construction of a large Las Vegas resort/casino project and hired multiple design professionals.
- Terracon contracted to provide geotechnical engineering services, including investigating subsurface conditions and recommending foundation design parameters; it was not responsible for constructing the foundation.
- Terracon issued a report predicting anticipated foundation settlement, and Mandalay relied on the recommendations in design and construction planning.
- After construction began, actual settlement exceeded Terracon’s projections.
- Building officials required foundation repair and reinforcement before construction could continue, resulting in increased costs and delays.
- Mandalay alleged only economic damages (repair/reinforcement costs and related project losses), with no personal injury and no damage to property other than the project itself.
- In litigation, Terracon sought partial summary judgment on Mandalay’s professional negligence claim, arguing the economic loss doctrine barred tort recovery for purely economic loss.
- The federal district court certified to the Nevada Supreme Court whether the economic loss doctrine precludes negligence-based claims against design professionals providing services in commercial construction projects when only economic losses are claimed.

## Issues

1. Does Nevada’s economic loss doctrine bar negligence-based claims against commercial construction design professionals (e.g., engineers and architects) when the plaintiff seeks only purely economic losses and alleges no personal injury or damage to other property?

## Decision

- The Nevada Supreme Court answered the certified question yes.
- The court held the economic loss doctrine precludes negligence-based claims against design professionals in commercial property development or improvement when the plaintiff seeks purely economic losses.
- The matter was returned to the federal district court to apply the ruling to the pending motion for partial summary judgment.

## Legal Principles

- Purely economic loss (e.g., inadequate value, repair and replacement costs, and consequential lost profits) is not recoverable in negligence absent personal injury or damage to other property.
- In commercial construction settings, contract law—not tort—governs allocation of economic risk because sophisticated parties can negotiate risk allocation, insurance, and remedies.
- Allowing negligence actions for purely economic loss against design professionals would undermine contractual allocations and expose professionals to potentially open-ended liability for economic harms.
- The economic loss doctrine applies to design professionals providing construction-related services, including services rendered before or during construction, when only economic loss is claimed.

## Conclusion

Nevada limited commercial plaintiffs to contractual remedies for purely economic losses arising from alleged negligent design services, holding that the economic loss doctrine bars negligence-based claims against engineers and architects absent personal injury or damage to other property.


Terracon Consultants W., Inc. v. Mandalay Resort Grp., 206 P.3d 81 (Nev. 2009)