A Texas appellate court recently applied the economic loss doctrine to reverse a nearly $10 million jury verdict in favor of a pipeline contractor.
The dispute arose from the construction of a 32-mile natural gas pipeline in West Texas. After disagreements developed during the project, the contractor sued the project owner for breach of contract, and that claim ultimately settled. The contractor also sued the owner’s project management (PM) firm, alleging that the firm negligently misrepresented that the owner would pay certain invoices that ultimately went unpaid.
That claim proceeded to trial, where the jury awarded the contractor nearly $10 million in damages. On appeal, however, the PM firm argued that the contractor’s negligent misrepresentation claim was barred by the economic loss doctrine. Last week, the Texas Court of Appeals agreed, reversing the jury’s verdict and rendering judgment in favor of the PM firm (see Asset Risk Management, LLC v. Comal Energy Services, LP, — S.W.3d —-, 2026 WL 2023233 (Tex. App. – Houston [1st Dist.] 2026)).
The court’s decision rests entirely on the economic loss doctrine, a common law principle recognized in some form by most states. In Texas, the doctrine generally prevents a party from recovering in tort for losses that are purely economic or contractual in nature. It applies when the alleged harm arises from a party’s failure to perform under a contract and consists only of the loss of the contractual bargain. The economic loss doctrine frequently arises in the construction setting when one party files a tort claim against another party they did not contract with. For example, a contractor’s ability to recover from the owner’s architect (or PM firm) often turns on whether the economic loss doctrine applies.
To recover under a tort theory, a plaintiff generally must identify an independent legal duty that exists apart from the contract or demonstrate a non-economic injury, such as personal injury or property damage. As with many common law doctrines, however, the economic loss doctrine has numerous exceptions. For example, it generally does not bar claims for fraudulent inducement. The doctrine also varies from state to state and, because it is a product of the common law, continues to evolve through judicial decisions.
A full copy of the court’s decision is available here. If you are evaluating potential construction claims, please give any of Bradley’s construction lawyers a call. Bradley’s Construction Practice Group is consistently ranked #1 in the United States. We would be happy to review your case.