In the case of Greenview Local School Dist. Bd. of Edn. v. Staffco Constr., Inc., 2016-Ohio-7321, an Ohio appellate court found that purely economic losses do not arise from tangible physical harm to persons or property and are, therefore, insufficient to satisfy an exception to political subdivision immunity.
The case arises out of the construction of a new high school. Defendant, a construction company, served as the general contractor on the project. The board of education sued the company alleging that the company failed to perform its work in a workmanlike manner and that this failure led to defects in the building. The company countersued the board of education alleging that any defects in the building were caused by the board’s failure to inspect and maintain the high school after the construction and that these deficiencies constituted a “physical defects” in the building which would constitute an exception to the board’s statutory immunity.
The state appellate court dismissed the countersuit finding that “the only damages [the company] suffered as a result of the Board’s alleged negligence are the money expenditures it incurred to perform remedial repairs to the high school buildings after the original work had been completed.” Staffco at ¶ 18. In other words, the company only suffered economic losses not losses due directly from the actual defects. Since purely economic losses can only be recovered in contract, the company could not establish an exception to political subdivision immunity, which only applies to damages that are recoverable under tort law and not contract.
To read this case, please click here.
Authors: Matthew John Markling and Patrick Vrobel
Note: This blog entry does not constitute – nor does it contain – legal advice. Legal jurisprudence is like the always changing Midwestern weather. As a result, this single blog entry cannot substitute for consultation with a McGown & Markling attorney. If legal advice is needed with respect to a specific factual situation, please feel free to contact a McGown & Markling attorney.