The opinion
STATE OF MAINE BUSINESS AND CONSUMER COURT
Cumberland, ss.
EYE CARE & EYE WEAR CENTER OF MAINE
Plaintiff
v. Docket No. BCD-CV-14-55V"
ENABLES IT, INC., f/k/a Nexus Management, Inc.
Defendant and Third-Party Plaintiff
and
UNIFIED TECHNOLOGIES, INC., n/k/ a
U T WIND-DOWN
Defendant and Third-Party Defendant
ORDER ON DEFENDANT'S MOTION
FOR PARTIAL SUMMARY JUDGMENT
The Motion for Partial Summary Judgment filed by Defendant Enables, It, Inc.,
formerly known as Nexus Management, Inc., is before the court for decision, along with the
opposition filed by Plaintiff Eye Wear and Eye Care Center ofMaine and Defendant's reply.
The court elects to decide the Motion without oral argument. See M.R. Civ. P. 7(b)(7).
Summary judgment is proper when there exist no genuine issues ofmaterial fact and
the moving party is entitled to judgment as a matter oflaw. M.R. Civ. P. 56( c); see also Levine v.
R.B.K. Caly Corp., 2001 ME 77, ~ 4, 770 A.2d 65.3, 655. A genuine issue is raised "when
sufficient evidence requires a fact-finder to choose between competing versions of the truth at
trial." Parrish v. Wright, 200.3 ME 90, ~ 8, 828 A.2d 778,781 (quotations omitted). A material
fact is a fact that has "the potential to affect the outcome of the suit." Burdzel v. Sobus, 2000 ME
84, ~ 6, 7 50 A.2d 57 .3, 57 5. "If material facts are disputed, the dispute must be resolved through
fact-finding." Curtis v. Porter, 2001 ME 158, ~ 7, 784 A.2d 18, 22.
Defendant is a provider of information technology (IT) consulting services, and entered
into a contract with Plaintiff, to provide such services. Plaintiffs First Amended Complaint
claims that Defendant is liable for breach of the contract, but also that Defendant is liable to
Plaintiff for negligence in the provision of the contracted for services. Defendant's Motion
seeks partial summary judgment on the ground that the negligence claims asserted against it in
Counts II and III of Plaintiffs First Amended Complaint are barred by the economic loss
doctrine. Plaintiff responds on several fronts, including that the economic loss doctrine, at least
as applied in Maine, does not extend beyond contracts for the sale of goods.
The material facts are not in dispute. Specifically, there is no dispute as to the following
pertinent facts:
• Plaintiff does not allege that any negligent act or omission of the Defendant caused
either personal injury or physical damage or destruction of tangible property. Plaintiff
does allege that Defendant's negligence caused Plaintiffto lose information in the form
of computer data.
• There are no requirements in Maine that IT service providers like Defendant be
licensed or regulated. Likewise, the record does not indicate that there is a uniform or
widely established system of accreditation for IT service providers. Although Plaintiff
has designated an expert witness regarding the standard of care for IT service
providers, the record does not establish that there are any uniformly accepted standards
of care for IT service providers comparable to the standards for lawyers and doctors.
Rather than focusing on questions of fact, Defendant's Motion raises two as yet
unsettled questions oflaw about the scope of the economic loss doctrine. The two questions
are:
• Whether in Maine the economic loss doctrine applies to contracts for services in
addition to contracts for the sale of goods?
• If so, whether the doctrine bars a negligence claim for economic loss arising out ofiT
services provided under contract?
Both are questions oflaw, centered on whether, given that there is no claim for personal
injury or physical damage to tangible property, the Defendant owes Plaintiff a duty of care to
avoid economic loss only. See Bryan R. v. Watchtower Bible & Tract Soc'y, Inc., 1999 ME 144,
2
~ 11, 738 A.2d 839, 844 ("Whether a defendant owes a duty of care to a plaintiff is a matter of
law for the court.")
It is perhaps symptomatic of the confusion surrounding the economic loss doctrine that
each of the parties to the Motion argues that the other's position falls outside an exception to
the general rule, meaning that the parties disagree about what is the general rule and what is
the exception. Plaintiff contends that the general rule is a seller of products or services can be
liable in tort for negligence as well as liable for breach of contract, except when the sale is of a
product and the buyer's loss is limited to injury or loss of the good itself, in which case only
contract remedies apply. Defendant contends that the general rule is that, when the plaintiffs
loss does not involve personal injury or property damage, tort claims arising out of services
provided under contract are cognizable only in a narrow range of cases involving professional
negligence, which Defendant contends this case does not involve.
The leading case in Maine on the economic loss doctrine is the Maine Law Court
decision in Oceanside at Pine Point Condominium Owners Assn. v. Peachtree Doors, 659 A.2d 267
(Me. 1995). In Peachtree, the Law Court defined economic loss as "damages for inadequate
value, costs ofrepair and replacement of defective product, or consequent loss of profits--
without claim of personal injury or damage to other property." !d. at 270 n.4 (quoting Moorman
Mfg. Co. v. Nat'l Tank Co., 435 N.E.2d 443, 449 (Ill. 1982)). Absent evidence of personal injury
or property damage, "[c]ourts generally ... do not permit tort recovery for a defective
product's damage to itself" !d. at 27 3; see also In re Hannaford Bros. Co. Customer Data Security
Breach Litig., 613 F. Supp. 2d 108, 127 (D. Me. 2009).
As Plaintiff points out, however, the Law Court has never applied the economic loss
doctrine to service contracts. Plaintiff also notes that the Law Court has endorsed tort claims
for economic loss arising out of contracts for legal and certain other professional services
s
rendered under contract. Plaintiff thus argues for a narrow reading of Peachtree, limited to
claims ofproducts liability.
Defendant acknowledges that the economic loss doctrine does not apply in the context
oflegal and certain other professional services, but points out that several Maine federal court
and Superior Court decisions have applied the doctrine to other types of service contracts. See,
e.g., Maine Rubber Int'l v. Envtl. Mgmt. Group, Inc., 295 F. Supp. 2d 125, 128-29 (D. Me. 2003);1
Bayreuther v. Gardner, 2000 Me. Super. LEXIS 140 (Cum. Cty. June 21, 2000). Defendant
argues for a narrow reading of what it calls the professional services exception to the economic
loss doctrine.
Two core principles help define the scope of the economic loss doctrine.
The first is that, in tort, the general negligence duty-the duty to use reasonable care-
does not extend to purely economic loss: "Generally speaking, there is no general duty to
exercise reasonable care to avoid intangible economic loss or losses to others that do not arise
from tangible physical harm to persons and tangible things." W. Keeton, D. Dobbs, R. Keeton
& D. Owen, PROSSER AND KEETON ON THE LAW OF TORTS§ 92 at 657 (5th ed. 1984). See also
RESTATEMENT (THIRD) OF TORTS: LIABILITY FOR ECONOMIC HARM§ 1 cmt. c (Tentative
Draft No. I, 2012) ("An actor has no general duty to avoid the unintentional infliction of
economic loss on another."). This means that a claim of negligence generally must be
predicated on personal injury or physical property damage, and cannot be based solely on
economic loss.
The second core principle is that the rights, duties and risks of the parties to a contract
should not be altered by injecting tort principles into the contractual relationship, unless the
1 In Malne Rubber, Judge Hornby pointed out that "[t]here is nothing in Peachtree that gives any hint
where the Law Court might come out" on the extent to which the economic loss doctrine applies to
service contracts as well as to contracts for the sale of goods. 295 F. Supp. 2d at 129. However, he
proceeded to resolve that question in favor of applying the economic loss doctrine to a contract for
services between "two commercial entities able to bargain over the terms of their agreement [that]
entered into a written contract to govern their relationship." Id. at 129-SO.
4
claim is for personal injury, property damage, fraud or other intentional wrongdoing or some
other form of harm cognizable in tort law. As one commentator expresses it, "The economic
loss doctrine marks the fundamental boundary between contract law, which is designed to
enforce the expectancy interests of the parties, and tort law, which imposes a duty ofreasonable
care and thereby encourages citizens to avoid causing physical harm to others." Sidney R.
Barrett, Jr., Recovery of Economic Loss in Tort for Construction Defects: A Critical Analysis,
40 S.C. L. REV. 891, 894 ( 1989). 2
It follows from the confluence of these principles that, with limited exceptions, "there is
no liability in tort for economic loss caused by negligence in the performance or negotiation of
a contract between the parties." RESTATEMENT (THIRD) OF TORTS-LIABILITY FOR ECONOMIC
HARM, Tentative Draft No.1, § 3, Preclusion ofTort Liability Arising from Contract
(Economic Loss Rule). 3
The exception to the economic loss doctrine that is pertinent here arises when the tort
claim for a purely economic loss is based on a professional duty arising out of the nature of the
service, a duty beyond the general duty to use ordinary care.
Maine law, like that of other states, recognizes that the providers of certain types of
services owe a duty beyond the general duty to use reasonable care to avoid personal injury and
property damage, and beyond the duties and obligations defined by the contract between the
provider and the recipient. See Graves v. S.E. Downey Registered Land Surveyor, P.A., 2005 ME
116, ~ 10, 885 A.2d 779, 782 ("Medical and legal malpractice actions are analyzed according to
~ The boundary-line role of the economic loss doctrine means that it may not apply when there is no
contract defining the parties' relationship. SeeV. Johnson, The Boundary-Line Function ofthe
Economic Loss Rule, 66 WASH & LEE L. REV. 523, 555 ( 2009) ("If there is no contract between the
parties to litigation, there is no boundary-line function to be performed by the economic loss rule.")
.~ Another exception to the economic loss rule involving fiduciary relationships has a similar conceptual
basis-a duty arising from both the nature of the service provided and reliance by the recipient. See
generally A. Esquibel, The Economic Loss Rule And Fiduciary Duty Claims: Nothing Stricter Than The
Morals Of The Marketplace?, 42 VILL. L. REV. 789 (1997).
5
tort law principles instead of contract law"). Because such an independent duty exists for
lawyers, doctors and some other members ofwhat traditionally are considered professions, this
exception to the economic loss doctrine is often called the "professional services" exception.
The current draft of the Restatement (Third) ofTorts provides that "[a] professional is
subject to liability in tort for economic loss caused by the negligent performance of an
undertaking to serve a client." Restatement (Third) ofTorts-Liability for Economic Harm,
Tentative Draft No.1,§ 3, Preclusion ofTort Liability Arising from Contract (Economic Loss
Rule), and§ 4, Professional [16] Negligence Resulting in Economic Loss (April2012). In
defining "professionals," the Restatement draft states: "Lawyers, doctors, and accountants are
invariably regarded by courts as professionals; insurance agents and architects are examples of
additional parties this Restatement would so recognize, whereas construction contractors and
tradesmen are on the other side of the line." !d.§ 4 cmt. b.
What defines "professional" services for purposes of the economic loss doctrine are
factors that include the extent to which the service in question involves specialized knowledge
and skill; the extent to which the recipient of the services relies upon the provider's specialized
knowledge and skill, and, perhaps most important, the existence of uniformly settled and
applied standards of practice and performance reflected in licensing requirements, laws and
regulations, accreditation standards, codes of conduct, local custom, or other sources. See, e.g.,
Pendleton Yacht Yard, Inc. v. Thomas H. H. Smith & Marine Design & Survey, Inc., 2003 Me.
Super. LEXIS 49; Terracon Consultants 1-Vestern Inc. v. Mandalay Resort Group, 125 Nev. 66, 206
P. sd 81, 87 (Nev. 2009); LANISTVv. Martin K. Eby Constr. Co., 435 S.W.sd 234, 244 (Tex.
2014); Sharon Acad. v. Wieczorek Ins., 2013 Vt. Super. LEXIS 34 (Wash Cty. 2013).
The reason why licensure, for example, is such an important criterion in this setting
that the license in and of itself imposes a legal duty on the licensee to adhere to a level of skill
and a standard of practice that are inherent in the rendition of the service regardless of the
6
terms of any contract. To hold such a license is thus to assume a professional duty of care,
beyond that of the duty to use ordinary care that applies generally, and apart from any duty
specified by contract. Because a professional is accountable for professional negligence
whenever the professional service is rendered, the primary justification for the economic loss
doctrine-the need to maintain a boundary between contract liability and tort liability-
disappears.
Licensure is not the only source of a professional duty of care, as accreditation and
certification standards may serve a similar function in defining such a duty. Pendleton Yacht
Yard, Inc. v. Thomas H. H. Smith & Marine Design & Survey, Inc., 200.3 Me. Super. LEXIS 49.
The services that have been recognized in Maine to be "professional" for purposes of
creating a professional duty of care include those oflawyers, doctors and surveyors-all
occupations requiring licensure and involving defined standards of practice. See Graves v. S.E.
Downey Registered Land Surveyor, P.A., supra, 2005 ME 116 at~ 10, 885 A.2d at 782.
On the other hand, not every service can be said necessarily to be subject to standards of
practice so clearly and widely established as to justify imposing an independent, extra-
contractual duty of care to avoid economic loss on the service provider. 4 Hence, tradespeople
and other providers of commercial services are liable in tort for economic loss only if it is the
result of personal injury or property damage. Otherwise, their liability for economic loss is
defined by the services contract.
Thus, the issue before the court boils down to whether IT providers are within the
professional services exception to the economic loss doctrine that covers lawyers and doctors.
·~ The term "professional services" is a term of art in many insurance policies and contracts, and may
have different meanings in different contexts. Plaintiffs reliance on a decision of this court to support
its economic loss argument is misplaced-the decision interprets the term "professional services" as
used by the parties to a contract, not in the context of the economic loss doctrine, which did not apply
inasmuch as the loss claimed in the case included physical damage to tangible property. See 415 Congress
Street Properties, LP v. URS Corp., 2011 WL 9377917 (Me. Bus. & Cons. Ct. July SO, 2012).
7
On this record, the court concludes that IT service providers such as the Defendant are
not "professional" service providers for purposes of the economic loss doctrine. There are no
state licenses, laws or rules or regulations specifically for IT service providers, and therefore no
standards for IT services that are so uniformly established and applied as to be inherent in the
rendition of the service. The record also does not indicate the existence of universally accepted
accreditation standards, codes of professional conduct or other codified standards of practice
that might be the equivalent oflicensing standards. In other words, what is lacking is the basis
for defining and imposing an extra-contractual duty of professional care, enforceable in tort.
This conclusion means that the Defendant's liability in tort is limited to claims for personal
injury and physical damage, and that the Defendant's liability for pure economic loss is defined
by the services contract.
Plaintiff appears to make a fallback argument that the Defendant is liable in tort because
the Defendant's services caused damage to Plaintiffs property-computer data lost due to
negligence on the part of the Defendant. However, the loss of computer data is a loss of
intangible property-information-that does not qualify as physical damage to tangible
property for purposes of imposing liability for ordinary negligence. As noted above, "there is
no general duty to exercise reasonable care to avoid intangible economic loss or losses to others
that do not arise from tangible physical harm to persons and tangible things." W. Keeton, D. Dobbs,
R. Keeton & D. Owen, PROSSER AND KEETON ON THE LAW OF TORTS, supra§ 92 at 657 (5th ed.
1984)(emphasis added). See also Rockport Pharmacy Inc. v. Digital Simplistics, Inc., 53 F.sd 195,
198 (8th Cir. 1995).
Accordingly, because the loss or damage alleged by Plaintiff is limited to economic loss
and does not include personal injury or physical damage to tangible property, because
Defendant's services were rendered under a contract with Plaintiff, and because the Defendant's
services were not "professional" services giving rise to an independent duty of due care
8
enforceable in tort, the economic loss doctrine applies, and the Defendant is entitled to partial
summary judgment on the Plaintiffs negligence claims against it.
It is hereby ORDERED: The Motion for Partial Summary Judgment filed by
Defendant Enables, It, Inc. is granted. Defendant is granted judgment on Counts II and III of
the First Amended Complaint.
Pursuant to M.R. Civ. P. 79(a), the Clerk is hereby directed to incorporate this order by
reference in the docket. _.' )"' ./ / /'
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Dated November /b,2015 /,
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A.M. Horton
Justice, Business and Consumer Court
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Eye Care & Eye Ware Center of Maine
Plaintiff
v. DOCKET NO. BCD-CV-2014-55
Enables IT Inc., f/k/a Nexus Management, Inc.
Defendant
v.
Unified Technologies, Inc., nka UT Wind-Down
Third-Party Defendant
Jeffrey Edwards, Esq. &
Benjamin Piper, Esq.
Eye Care & Eye Ware Center of Maine
One City Center
P.O. Box 9546
Portland, ME 04112-9546
Benjamin Leoni, Esq.
One Canal Plaza
Enables IT Inc. Suite 1000
P.O. Box 7320
Portland, ME 04112-7320
William Druary, Jr., Esq.
Unified Technologies, Inc., N/K/A UT 44 Elm Street
Wind-Down P.O. Box 708
Waterville, ME 04901-0708