Dean v. Barrett Homes, Inc.
8 A.3d 766
N.J.2010Background
- Plaintiffs bought a 2002 home built in 1995 by Barrett with EIFS exterior (Sto) and inspected pre-purchase by HouseMaster; the inspection report questioned EIFS and suggested expert follow-up.
- Plaintiffs learned insurer would not transfer coverage due to EIFS; they obtained new insurance and moved in May 2002.
- Approximately one year after moving in, plaintiffs saw black lines and learned moisture trapped behind EIFS can rot mold, prompting mold concerns.
- Plaintiffs removed and replaced EIFS after discovering latent defects; they asserted multiple theories including negligent, warranty, contract, and strict products liability claims.
- Sto moved for summary judgment on a products liability claim for purely economic loss (cost to replace EIFS); trial court granted, Appellate Division affirmed, focusing on economic loss rule and integrated product doctrine.
- New Jersey Supreme Court granted certification to address (1) whether a house can be treated as a product under PLA, (2) applicability of the economic loss rule to EIFS damage to the home, and (3) whether integrated product doctrine should apply to home construction defects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a house qualifies as a product under the PLA. | Dean contends a house may be a product when the harm is beyond mere property damage to itself. | Sto argues the act excludes real estate sellers and would bar tort claims when only product damage is at issue. | No; the issue is not simply whether a house is a product, but whether EIFS damage is barred by the economic loss rule. |
| Whether damage to the home from EIFS falls within PLA harm and is barred by the economic loss rule. | Dean asserts non-commercial setting and latent defect mean PLA should permit tort recovery for home damage. | Sto argues economic losses from the product itself are barred and contract remedies exist. | Economic loss rule applies to damage to the EIFS itself, but not to damage to the house structure or environs caused by EIFS. |
| Whether the integrated product doctrine should bar tort recovery for the damaged home. | Dean argues EIFS is not integrated into the house to the extent it should be treated as the product itself. | Sto contends integrated product doctrine bars tort claims when a defective component damages the larger product. | Integrated product doctrine does not apply to these facts; damages to the house or surroundings may proceed under PLA, but EIFS damage to itself is barred. |
| What is the appropriate balance of tort vs. contract remedies under PLA in home construction with EIFS. | Plaintiffs seek tort remedies given lack of contract remedy for latent defect. | PLA is the exclusive tort remedy; contract remedies suffice and should be favored. | PLA defines harm and limits tort recovery; it does not create a broad remedial gap; excess damages for the product itself are barred. |
Key Cases Cited
- Spring Motors Distribs., Inc. v. Ford Motor Co., 98 N.J. 555 (1985) (economic loss rule origin; contract vs tort demarcation in product claims)
- Alloway v. General Marine Indus., L.P., 149 N.J. 620 (1997) (factors for delineating tort vs contract remedies, including bargaining power and insurance)
- In re Lead Paint Litig., 191 N.J. 405 (2007) (PLA framework and broad tort liability considerations)
- Jimenez v. Superior Court, 29 Cal.4th 473 (2002) (illustrates integrated product concept outside New Jersey context)
- Marrone v. Greer & Polman Constr., Inc., 405 N.J.Super. 288 (2009) (App.Div. integrated product doctrine applied to EIFS in home case)
- DiIorio v. Structural Stone & Brick Co., 368 N.J.Super. 134 (2004) (buyer claims outside UCC; alternate tort theories discussed)
- King v. Hilton-Davis, 855 F.2d 1047 (3d Cir. 1988) (integration concept in federal context)