This section contains the nature of the case and procedural background.

Hiltz Construction hired P to supply gravel for purposes of constructing the base for a roadway. P supplied the gravel. Keach Nordstrom & Associates (Keach), engineers hired by the Town of Pembroke, hired D to test the gravel to determine whether it met town specifications. D reported to Keach that it contained 'insufficient stone content and excessive fines.' Hiltz required the P to remove and replace the gravel at its own expense with material that met town specifications. After doing so, P tested the gravel and found that it did meet town specifications. P sued D in tort. P claimed: That D's negligence foreseeably injured P in that D knew or should have known that the town's engineer would rely upon results provided by D and would, if those results showed that applicable tests were not passed, require removal of the roadway and replacement of the base materials; that D's negligence was a proximate cause of the harm to P. D moved to dismiss, in that the damages sought were purely economic losses which are not recoverable in tort. The court granted D's motion to dismiss. P appealed contending that (1) the economic loss doctrine does not apply since there is no contractual privity with D; or (2) section 552 of the Restatement (Second) of Torts affords an exception to the economic loss doctrine, permitting recovery because D made a negligent misrepresentation.

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