Court Holds That Acceptance Rule and Economic Loss Doctrine Did Not Bar Claim Brought by Real Estate Purchaser

In a prior post, we highlighted a decision from the Indiana Supreme Court’s applying the so-called “acceptance rule,” which shields contractors from liability to third parties after the work is completed and the owner has accepted the work. In U.S. Automatic Sprinkler Corp. v. Erie Ins. Exch. a majority of the Indiana Supreme Court refused to adopt an exception to the acceptance rule for reasonably foreseeable property damage, holding that the reasonable foreseeability exception applies only where personal injury is a foreseeable consequence of a contractor’s allegedly negligent work. The majority held that the exception did not apply to claims for property damage.