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NOTICE: This opinion is subject to motions for rehearing under Rule 22 as well as formal revision before publication in the New Hampshire Reports. Readers are requested to notify the Reporter, Supreme Court of New Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any editorial errors in order that corrections may be made before the opinion goes to press. Errors may be reported by E-mail at the following address: reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00 a.m. on the morning of their release. The direct address of the court's home page is: http://www.courts.state.nh.us/supreme. THE SUPREME COURT OF NEW HAMPSHIRE ___________________________

Carroll No. 2010-624

STEPHEN C. WYLE v. SCOTT LEES & a. Argued: June 16, 2011 Opinion Issued: September 20, 2011 Melendy & Lee, P.A., of Conway (Fay E. Melendy on the brief and orally), for the plaintiff.

Cooper Cargill Chant, P.A., of North Conway (Christopher T. Meier on the brief and orally), for the defendants.

DUGGAN, J. The defendants, Scott and Christina Lees, appeal a decision of the Trial Court (Houran, J.) finding in favor of and granting damages to the plaintiff, Stephen C. Wyle, following a bench trial on his claim for negligent misrepresentation. We affirm. The trial court found the following facts. In 2002, the defendants purchased a two-unit apartment building located at 38 Oak Street in North Conway. The defendants lived in one unit and rented the other for income. In

2002 or 2003, the defendants sought to expand the building and Scott Lees approached a contractor to add a third, larger apartment to the back of the property. This new unit was to include a two-car garage underneath it. Lees hired the contractor to accomplish all construction work, including the necessary permitting. In August 2003, Lees and the contractor submitted a building permit application for a "28 x 28 2 car garage with upstairs apartment with a 10 x 8 breezeway attached to existing [building]." The town informed the contractor that site plan review was necessary prior to adding a third unit and issued a permit for the garage only. Conditional approval for the site plan, which provided for six parking spaces including the two-car garage underneath the unit, was granted in November 2003 and final approval was obtained in January 2004. Both notices of approval provided that a building permit and a selectman's certificate of occupancy were required prior to any use. However, the defendants did not obtain either prior to building or occupying the unit. Additionally, because the defendants did not obtain a building permit, the town's building inspector never inspected the unit. The contractor completed construction in the spring of 2004, at which point the defendants occupied the new unit. In the summer of 2004, the defendants approached the contractor regarding the possibility of adding more space to the new unit. The contractor recommended transforming one of the two new garage bays into a bedroom. Lees again hired the contractor both to complete construction and obtain any necessary permitting. However, the construction methods used to complete the renovation did not meet building and life safety codes. Additionally, the defendants again failed to secure the necessary building permits and the construction reduced the number of parking spaces below the minimum required by the site plan approval. After the completion of construction, town planning and zoning board officials visited the property a number of times in 2006 and 2007. These visits related to whether there were fewer parking spaces on the property than required by the site plan approval. Nonetheless, the town returned the defendants' bond money for the project on July 6, 2007, and informed the defendants that "[s]ave for acceptable field changes[,] the site plan requirements have been satisfied." The defendants listed the property for sale in 2007. As part of the listing, they completed a property disclosure statement, which included the question, "Are you aware of any modifications or repairs made without the necessary permits?" The defendants answered, "No." During visits to the property prior to purchase, the plaintiff met with Lees, who assured him that he had done

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"everything the Town asked me to do." The plaintiff also reviewed the property tax card for the property prior to purchase. The defendants and plaintiff executed a purchase and sale agreement on May 1, 2008. After entering into the agreement, the plaintiff had a comprehensive home inspection performed and sent a thirty-one item list of specific concerns regarding the property to the defendants. The concerns were either remedied by the defendants or waived by the plaintiff prior to closing. The defendants deeded the property to the plaintiff on July 1, 2008. Approximately six weeks after closing, the plaintiff received a letter from the town code enforcement officer raising questions regarding the legality of the removal of a garage door from the new unit. The entire property was inspected by the town building inspector and fire chief in September 2008, which revealed numerous building and life safety code violations. As a result, the plaintiff was ordered not to occupy the unit until he corrected the violations and made the site compliant with site plan regulations. After correcting the violations, the plaintiff requested a conditional occupancy permit on October 7, 2008, which was granted on October 21. The plaintiff then brought a single claim against the defendants for negligent misrepresentation. The plaintiff based his claim upon two alleged misrepresentations: (1) statements on the defendants' property disclosure form, which provided that all building modifications were done with the necessary permits; and (2) Lees's verbal representation that, "I did everything the town asked." The defendants filed a special plea asserting comparative negligence pursuant to RSA 507:7-d (2010), a DeBenedetto statement, see DeBenedetto v. CLD Consulting Eng'rs, 153 N.H. 793 (2006), and a motion in limine seeking apportionment to a number of parties, including the plaintiff. The defendants also filed a motion in limine seeking to preclude economic loss damages. Following a two-day bench trial, the trial court issued an order awarding damages to the plaintiff. This appeal followed. I The defendants first challenge the trial court's award of damages. Specifically, they argue that the economic loss doctrine precludes the plaintiff from recovering damages. The economic loss doctrine is a "judicially-created remedies principle that operates generally to preclude contracting parties from pursuing tort recovery for purely economic or commercial losses associated with the contract relationship." Plourde Sand & Gravel v. JGI Eastern, 154 N.H. 791, 794 (2007) (quotation omitted). The doctrine "is based on an understanding that contract law and the law of warranty, in particular, is better suited than tort law for dealing with purely economic loss in the commercial arena." Id. (quotation omitted); see Barton, Drowning in a Sea of

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Contract: Application of the Economic Loss Rule to Fraud and Negligent Misrepresentation Claims, 41 Wm. & Mary L. Rev. 1789, 1796-97 (2000) (explaining that while contract law presumes that contracting parties "are able to allocate risks and costs of the potential nonperformance," tort law provides a remedy where "it is impractical or impossible to negotiate either the terms of a sale or each party's duty to the other" (quotation and ellipsis omitted)). As such, the rule precludes a harmed contracting party from recovering in tort unless he is owed an independent duty of care outside the terms of the contract. Plourde Sand & Gravel, 154 N.H. at 794. While the doctrine emerged with the advent of products liability, many states, including New Hampshire, have expanded its application to other tort cases. Id. However, it remains one of the most confusing doctrines in tort law. Barton, supra at 1789. As we explained in Plourde Sand & Gravel, many courts have expanded the doctrine to apply even in the absence of a contract between the parties. Plourde Sand & Gravel, 154 N.H. at 795. However, we noted that economic loss recovery may be permitted in such a situation only where there is: (1) a "special relationship" between the plaintiff and the defendant that creates a duty owed by the defendant; or (2) a negligent misrepresentation made by a defendant who is in the business of supplying information. Id. While we have recognized an exception to the economic loss doctrine for a negligent misrepresentation claim when the plaintiff and defendant are not parties to a contract, we have never addressed the issue presently before us

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