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Moorman Manufacturing Company v. National Tank Company, 435 N.E.2d 443 |
Supreme Court of Illinois |
1982 |
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Chapter |
16 |
Title |
Product Liability |
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Page |
689 |
Topic |
The Type of Harm: The Economic Loss Problem |
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Quick Notes |
Grain storage tank developed crack and owner suffered economic loss. Physical injury to property is so akin to personal injury that there is no reason to distinguish them. |
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Book Name |
Torts Cases, Problems, And Exercises. Weaver, Third Edition. ISBN: 978-1-4224-7220-0. |
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Issue |
o Whether you can recover for solely economic loss under the tort theories of strict liability, negligence and innocent misrepresentation? No |
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Procedure |
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Trial |
o Granted Df - motion to dismiss |
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Appellant |
o Reversed |
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Supreme |
o Reversed the appellate courts judgment |
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Facts |
Reason |
Rules |
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o Pl - Moorman Manufacturing Company o Df - National Tank Company What happened? o In 1966, Plaintiff purchased a bolted-steel grain-storage tank from defendant for use at its feed-processing plant in Alpha, Illinois. o About 10 years later, a crack developed in one of the steel plates on the second ring of the tank. Claim o Count I alleged that the tank was not reasonably safe due to certain design and manufacturing defects. o Sought damages representing the cost of repairs and reinforcement as well as loss of use of the tank. Trial Court o Granted Df - motion to dismiss. o That the cost of repair and loss of profits or income were economic losses which could not be recovered under the tort theories named in the complaint. Appellant Court o Reverse |
Suvada o Allowed a Pl - to recover from a manufacturer for personal injuries. o Does not mention economic loss.
Santor Carpet lines started to show o Held that the plaintiff could maintain a breach-of-warranty claim directly against the manufacturer despite the lack of privity between them. o The responsibility of the manufacturer should be no different where damage to the article sold or to other property is involved.
Seely Truck that bounced violently, overturned, became damaged, stopped making payments, got reposed, sued for breach of warranty and strict liability, for purchase price, and profits lost because of the trucks unsuitability. o Affirmed on basis of express warranty. o Reject Santor. Only if someone had been injured because the rug was unsafe for use would there have been any basis for imposing strict liability in tort. o Economic losses are not recoverable under strict liability in tort
Dissenting Appellate Court Opinion o The unreasonably dangerous nature of a product has particular relevance when a personal injury results and to some degree when property damage occurs. o Court: It has little relevance to economic loss when neither personal injury nor property damage is involved.
UCC 2-316 Reason o A manufacturer's strict liability for economic loss cannot be disclaimed because a manufacturer should not be permitted to define the scope of its own responsibility for defective products. Adopting strict liability in tort for economic loss would effectively eviscerate section 2 -- 316 of the UCC
Warranty Reason o Application of the rules of warranty prevents a manufacturer from being held liable for damages of unknown and unlimited scope. o The Df would be liable for business losses for failure to meet specific needs even though the needs were communicated ONLY to the dealer.
Purchase Warranty or Bargain Reason o Can protect itself against the risk of unsatisfactory performance by bargaining for a warranty
Public Policy Reason o Prefer the consumer to bargain rather than the consuming public to pay more so manufacturers can insure against the possibility that his product will not meet the business needs of some customers.
Pl Common Arg o You allow an injured party to recover for all types of harm, but you prevent a person from recovering for economic loss because he fortuitously escaped injury.
Justice Traynor Response o Distinction rests on an understanding of the nature of the responsibility a manufacturer must undertake in distributing his products. o A manufacture cannot be held liable for failure to meet performance UNLESS he agrees. o A consumer should not be charged at the will of the manufacturer with bearing the risk of physical injury when he buys a product on the market. o He can, however, be fairly charged with the risk that the product will not match his economic expectations unless the manufacturer agrees that it will.
Holding Reasoning o When a product is sold in a defective condition that is unreasonably dangerous to the user or consumer or to his property, strict liability in tort is applicable to physical injury to plaintiff's property, as well as to personal injury. o Physical injury to property is so akin to personal injury that there is no reason to distinguish them. o This is because the plaintiff has been exposed, through a hazardous product, to an unreasonable risk of injury to his person or property
Holding o hold that plaintiff cannot recover for solely economic loss under the tort theories of strict liability, negligence and innocent misrepresentation o defect must lie in the warranty provisions of the UCC. o Reversed the appellate courts judgment.
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Class Notes |
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Court said this was an economic loss.
Holding o hold that plaintiff cannot recover for solely economic loss under the tort theories of strict liability, negligence and innocent misrepresentation
Reason There is a correlation between a dangerous defective product and injury or property damage. It is not foreseeable that a defective product will cause economic loss.
UCC 2-316 Reason o A manufacturer's strict liability for economic loss cannot be disclaimed because a manufacturer should not be permitted to define the scope of its own responsibility for defective products. Adopting strict liability in tort for economic loss would effectively eviscerate section 2 - 316 of the UCC
Warranty Reason o Application of the rules of warranty prevents a manufacturer from being held liable for damages of unknown and unlimited scope. o The Df would be liable for business losses for failure to meet specific needs even though the needs were communicated ONLY to the dealer.
Summary If injury or property damage you could use: Strict liability, negligence and warranty. If injury to economic loss: Then only breach warranty is only available.
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Rules |
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Summary o If injury or property damage you could use: Strict liability, negligence and warranty. o If injury to economic loss: Then only breach warranty is only available.
Purchase Warranty or Bargain Reason o Can protect itself against the risk of unsatisfactory performance by bargaining for a warranty
Public Policy Reason o Prefer the consumer to bargain rather than the consuming public to pay more so manufacturers can insure against the possibility that his product will not meet the business needs of some customers.
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