Indiana Federal Court Bars City’s Negligence Claim Against Subcontractor, Allows Breach of Contract Claim Despite Lack of Privity

An Indiana federal court applied the Indiana economic loss rule to bar the city of Whiting from recovering most of the negligence damages it claimed against a marine engineering subcontractor that allegedly performed defective design work in connection with a lakefront park project. However, the decision then allowed the city to pursue its breach of contract damages directly against the subcontractor despite lack of privity as a third-party beneficiary.