IN THE COURT OF COMMON PLEAS FOR THE STATE OF DELAWARE
IN AND FOR NEW CAS'I`LE COUN'I`Y
JUSTIN ROY CONNOR and
FELICIA BALDWIN CONNOR,
Plaintiffs,
v. Case No. CPU4-14-001279
DALE E. MARTIN, Jr.,
Defendant.
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Submitted: August l, 2014
Decided: August S, 2014
Donald L. Gouge, Jr. Justin P. Callaway, Esquire
800 N. King Street, Suite 303 222 Delaware Avenue, llth Floor
Wilrnington, DE 19801 Wilmington, DE l980l
Artorneyfor Plaintw@ Attorney for Dej%ndant
ORDER ON DEFENDANT’S MOTION T0 DISMISS
Dear Mr. Gouge and Mr. Callaway:
Plaintiffs Justin Roy Connor and Felicia Baldwin Connor (referred to collectively herein
as ‘“Connors") initiated this negligence-property action on May 20, 2014. In its Complaint,
Connors allege that they entered an agreement with Cynthia A. Jenis0n ("Jenison") for the
purchase of real property located at 518 Holly Knoll Road in I-Iockessin, Delaware (the
"Property"). Jenison also presented a Sellers’ Disclosure, which stated that the property was
serviced by public sewer. According to Connors, Jenison made this representation based on a
home inspection conducted by Defendant Dale E. Martin, Jr. (“Martin").l Plaintiff alleges that
the Property is in fact serviced by a septic system which is defective and must be replaced at a
l In the Complaint, Connors note that the report prepared by Martin first states that the Property
was serviced by "Public Sewer System," but later indicates that the inspection is not required to
determine if the water supply and waste disposal system was serviced by public sewer.
Complaint at 11 11 9, 10.
cost of $23,000.00. Connors set forth three causes of action: (l) negligence, (2) breach of
contract, and (3) negligent misrepresentation.
On June 24, 2014, Martin filed a Motion to Dismiss pursuant to Court of Common Pleas
Civil Rule l2(b)(l) and Rule l2(b)(6). A hearing on the Motion was held on August l, 2014, and
the Court heard oral argument from both parties. At the conclusion of the hearing, the Court
reserved its decision.
lt is l\/Iartin’s position that the negligence claim is barred by Delaware’s economic loss
doctrine. Martin also maintains that this Court lacks jurisdiction to hear the claim for negligent
misrepresentation since the Court of Chancery has exclusive jurisdiction over such actions. As
to the breach of contract claim, Martin contends that the agreement between Martin and Jenison
was made before the Connors came into the picture as potential buyers of the Property; thus,
there was no privity of contract between Connors and Martin, and Connors were not an intended
third-party beneficiary of the agreement between Martin and Jenison.
lt is Connors’ position that dismissal is premature and discovery is needed to determine
whether the claim for negligence falls within an exception to the economic loss doctrine. As to
the negligent misrepresentation action, Connors represented that they may amend the Complaint
to pursue the claim under the Consumer Fraud Act, which is within this Court’s jurisdiction
Finally, Connors argue that the breach of contract claim should not be dismissed because Martin
is, in fact, a third-party beneficiary
DISCUSSION
ln considering a motion to dismiss, the Court must assume that all well-pleaded facts in
the complaint are true.z "A complaint will not be dismissed unless plaintiffs would not be
entitled to recover under any reasonably conceivable set of circumstances susceptible of proof."?`
a. Count I: Negligence and the Ec0nomic Loss Doctrine
The economic loss doctrine prevents recovery in tort where only economic loss is
alleged.4 "‘Economic loss" includes "damages for inadequate value, costs of repair and
replacement of the defective product."’§ Here the economic loss doctrine applies because
Connors assert a negligence claim against Martin, and seek the cost of repair and replacement of
the allegedly defective sewer.é However, an exception to the economic loss doctrine, set forth in
the Restatement (Second) of Torts § 552, has been utilized by Delaware courts.? To bring a
claim for economic loss under the § 552 exception, the plaintiff must prove two elements: (1)
that the defendant supplied the information to the plaintiff for use in business transactions with
third parties, and (2) that the defendant is in the business of supplying information.g
Even considering all facts in the Complaint as true, there is nothing in the facts presented
that brings the negligence claim within the purview of the § 552 exception The Complaint does
not indicate, and Connors have not otherwise suggested, that the sewage system information was
conveyed to Connors for their use in transactions with other parties. ln fact, it is abundantly
2 Battfsta v. Chrysler Corp., 454 A.2d 286, 287 (Del. Super. 1982).
3 Nz`x v. Sawyer, 466 A.Zd 407, at 410 (Del. Super. 1983) (citation omitted).
4 Danforth v. Acorn Structures, Inc., 608 A.Zd l194, 1195 (Del. 1992).
5 Palma, Inc. v. Claymont Fire Co., No. l, et af., 2009 WL 3865395, at *1 (Del. Super. Nov. 18,
2009)(quoting Danforth, ., 608 A.2d 1l94, 1196 n. 3)).
6 Complaint at 11 11 13, 20.
7 See Restatemenr (Secona) ofTorts § 552 (1977); see also Palrna, Inc., 2009 WL 3865395, at *l
(Del. Super. Nov. 18, 2009).
8 Riverbend Communz'ty, LLC v. Green Stone Engineering, LLC, 2012 WL1409013, at *4 (Del.
Super. April 4, 2012).
clear that the information was supplied from Martin directly to Janison for her use in transactions
with third parties. Thus, Connors has not pled facts necessary to demonstrate an exception to the
economic loss doctrine. Accordingly, Martin’s Motion to Dismiss as to Count l for negligence is
GRAN'I`ED.
b. Count II: Negligent Misrepresentation
Claims for negligent misrepresentation lie squarely within the exclusive jurisdiction of the
Court of Chancery.9 "ln addition to developing the concept of claims for negligent or innocent
misrepresentation, the Court of Chancery has retained exclusive, rather than concurrent,
jurisdiction over such causes of action." I-Iowever, "[t]he one exception to the
exclusive jurisdiction of the Court of Chancery would be cases where l the negligent
misrepresentation claim is raised in the context of the Consumer Fraud Act."l°
`l`he facts as they exist do not set forth a cause of action in the context of the Consumer Fraud
Act. This Court lacks jurisdiction as to Count ll for negligent misrepresentation. Accordingly,
Martin’s Motion to Dismiss as to Count ll for negligent misrepresentation is GRANTED
without prejudice Connors may seek to amend their Complaint to assert a claim in the context
of the Consumer Fraud Act, or alternatively, Connors may seek to transfer Count ll to the Court
of Chancery pursuant to 10 Del. C. § l902.
c. Count III: Breach of Contract
Generally, a person not in privity of contract can only recover where the contract was
made for his or her benef`it.'l To seek recovery as a third-party beneficiary, the contracting
9 See Van Lake v. Sorz'n CRM USA, Inc., 2013 WL 1087583, at *ll (Del. Super. Feb. 15, 2013).
w Iacono v. Barici, 2006 WL 3844208, at *5 (Del. Super. Dec. 29, 2006).
ll Guard:'an Const. C0. v. Tetra Tech Rz`chardson, Inc., 583 A.2d 1378, 1386 (Del. Super. 1990).
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parties must have intended to confer a benefit on the third-party,lz and the "beneficial effect . . .
should be a material part of the contract’s purpose."n ln determining whether a third-party is an
intended beneficiary of a contract, the Court must consider the language of the contract itself.M
Considering the facts set forth in the Complaint as true, the Court carmot, at this juncture,
conclude that Connors were not intended third-party beneficiaries of the agreement between
Martin and Janison. Although the Court is skeptical as to whether this claim will prevail after
the parties have had an opportunity to review the relevant contract, further discovery is required
before such a determination is made. Accordingly, dismissal as to Count llI for breach of
contract is DENIED.
CONCLUSION
For the reasons discussed herein, Martin’s Motion to Dismiss is GRANTED as to Count
I for negligence, GRANTED without prejudice as to Count ll and ENIED as to Count llI for
breach of contract.
IT is so oiu)nni:i) this s‘*‘ day or Augusr 2014.
§
Sheldon
.ludge
‘2 harmar News v_ Jawbs 011 C@., 854 A.zd 531, 534 (Del. super 1990).
13 Guararan const co, 533 A.zd 1373, ar 1386.
*" Br»omwi¢h v. Hanby, 2010 WL 3250796, at *2(1)¢1. Super. Juiy i, 2010).
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