MID CONTINENT AIRCRAFT CORPORATION, Petitioner, v. CURRY COUNTY SPRAYING SERVICE, INC., et al., Respondents.
No. B-7030.
Supreme Court of Texas.
July 12, 1978.
Rehearing Denied Oct. 4, 1978.
572 S.W.2d 308
It is further stated that the coverage provided in this Article shall be applicable “unless the insured named in the policy rejects the coverage in writing . . . .” We believe this calls for an express written rejection in language demonstrating that the insured has some knowledge of what he is rejecting. Because the provision of such mandated coverage is a matter of public policy, a claim of rejection thereof should not be determined simply by reference to the rules which courts otherwise apply to determine the intent and acts of contracting parties. Rejection of the coverage should not be on a “tantamount,” “legal effect,” or “consequence” basis. The manifest public policy requires that the “rejection in writing” of this particular statutory coverage be in clear and express language. There was no such rejection in the present case. On the contrary, Unigard sold the coverage and took the premium therefor. Under such circumstances it should pay the benefits as provided in Endorsement 243.
Unigard points out that a decision against partial rejection by indirection (use of Endorsement 119) would be contrary to the holding of a divided Beaumont Court of Civil Appeals (three opinions) in Greene v. Great American Insurance Company, 516 S.W.2d 739 (Tex.Civ.App.1974, writ ref. n. r. e.). There it was held that Endorsement 119 was effective as a partial rejection of Uninsured Motorists Coverage. We have studied the Greene case carefully in connection with this case and have concluded that there are enough differences between the the Uninsured Motorists Act, Article 5.06-1, and the Personal Injury Protection, Article 5.06-3, that the two decisions can be distinguished, especially in view of Endorsement 243, applicable to Article 5.06-3 coverage. Yet, we realize that the two coverages are so much alike on the public policy aspects and the need for clear and express rejection of either coverage, if desired, that we disapprove all language in Greene which is contrary to our holding in this case.
Accordingly, the judgment of the Court of Civil Appeals is affirmed.
Aldridge, Harding, Aycock & Actkinson, Johnny W. Actkinson, Farwell, for respondents.
DANIEL, Justice.
This is a products liability case which presents the question of whether, in an “as is” sale to a commercial buyer, the seller‘s disclaimer of liability for physical damage caused to the product itself is effective under the Uniform Commercial Code.
Defendant Mid Continent Aircraft Corp. is a Missouri corporation engaged in the business of buying and selling small aircraft. It sold a reconditioned and overhauled single engine spray plane to the plaintiff, Curry County Spraying Service, Inc., a New Mexico corporation, to be used in Curry County‘s business of spraying crops. The plane was acquired by Mid Continent from co-defendant, Bobby Shivers, d/b/a Shivers Flying Service in Vernon, Texas, who had purchased the plane in a wrecked condition. Shivers repaired the airframe of the plane and had the engine overhauled by co-defendant, Robert Hawkins, a Federal Aviation Administration licensed engine mechanic, who maintained the independent Hawkins Aircraft shop in Quanah, Texas. In the transaction between Mid Continent and Curry County, the contract of sale stated that the purchase of the airplane was “subject to the terms and conditions of an ‘as is’ sale.”
Curry sued Shivers, Hawkins, and Mid Continent. The trial court, without aid of a jury, held that all three of the defendants were liable in tort in spite of the “as is” provision in Curry County‘s purchase contract. Only Mid Continent appealed and the Court of Civil Appeals affirmed. 553S.W.2d 935. The judgment against Shivers and Hawkins has become final. The cause of action against Mid Continent is severed and the judgments of the courts below as to Mid Continent are reversed. Judgment is here rendered that plaintiffs take nothing against Mid Continent.
Curry County had operated the rebuilt plane for approximately 30 hours when the engine failed and the plane crashed while spraying insecticide on crops in Parmer County, Texas. The crash stemmed from Hawkins’ failure to attach a small crankshaft gear bolt lock plate when the engine was overhauled. Because of the missing lock plate, the gear bolt failed to remain tight and permitted the crankshaft gear to become loose, separating approximately 3/16 of an inch from the rear of the crankshaft. The timing dowel pin that anchors the gear on the crankshaft was sheared off, causing the gear to stop rotating. The ignition magnetos, which are turned by the crankshaft gear, stopped; thus killing the engine. Without power, the pilot made a forced landing on a rough country road. This resulted in substantial damage to the fuselage and wings of the plane. However, the pilot suffered no personal injury and no property other than the aircraft itself was damaged.
In this action against the three defendants, Curry County alleged negligence, breach of warranty, and strict liability. Curry County‘s insurer, who had paid a substantial portion of the cost of repairing the airplane and thus was subrogated to part of Curry County‘s cause of action, was joined as a party plaintiff. Mid Continent filed a cross-action against Shivers and Hawkins for contribution or full indemnity. However, on joint motion of Mid Continent and Shivers, the cross-action was severed from this suit for a separate trial.
In rendering judgment for Curry County and its insurer, the trial court held the defendants jointly and severally liable for the amount of $4,658.49 for damage to the airplane and $3,690.00 for its loss of use. Hawkins was found to have been negligent in failing to install the crankshaft gear bolt lock plate. Shivers and Mid Continent were held liable under strict liability in tort as sellers of the airplane in the business of selling such a product with a defect that rendered it unreasonably dangerous.
As indicated, only Mid Continent appealed. The Court of Civil Appeals, with one justice dissenting, held that Curry County was entitled to recover from Mid Continent for physical damage to the product itself under strict liability in tort as defined in
Heretofore, Texas courts have not been presented with the issue of whether a seller can contract against liability for harm caused by a defective product to itself. The question is whether injury to the product itself is a type of loss that requires contract language explicitly allocating the loss to the buyer before the seller can avoid liability, or should a general contract of purchase “as is” be sufficient to place the loss on the buyer?
TYPE OF LOSS
Pivotal to the question of disclaimer applicability is the determination of whether the product loss is recoverable under a contract theory of breach of warranty or whether it is a tort loss. Generally, disclaimers are enforced less readily in strict liability cases than in those of contract warranty. McMillen Feeds, Inc. v. Harlow, 405 S.W.2d 123 (Tex.Civ.App.—Austin 1966, writ ref‘d n. r. e.); Keystone Aeronautics Corp. v. R. J. Enstrom Corp., 499 F.2d 146 (3d Cir. 1974); Sterner Aero AB v. Page Airmotive, Inc., 499 F.2d 709 (10th Cir. 1974); Vandermark v. Ford Motor Company, 61 Cal.2d 256, 37 Cal.Rptr. 896, 391 P.2d 168 (1964). See
Strict liability in tort and contract have had an entangled relationship in the area of products liability. The entanglement is to be expected since strict liability resulted from the combination of tort and contract theories. See Shamrock Fuel & Oil Sales Company v. Tunks, 416 S.W.2d 779 (Tex.1967); Jacob E. Decker & Sons, Inc. v. Capps, 139 Tex. 609, 164 S.W.2d 828 (1942). With the codification of the Uniform Commercial Code,
The applicability of strict liability has been defined in Texas for personal injuries resulting from unreasonably dangerous products. Bristol-Myers Company v. Gonzales, 561 S.W.2d 801 (Tex.1978); General Motors Corp. v. Hopkins, 548 S.W.2d 344 (Tex.1977); Rourke v. Garza, 530 S.W.2d 794 (Tex.1975); Crocker v. Winthrop Laboratories, Inc., 514 S.W.2d 429 (Tex.1974); Pittsburg Coca-Cola Bottling Works v. Ponder, 443 S.W.2d 546 (Tex.1969); Darryl v. Ford Motor Company, 440 S.W.2d 630 (Tex.1969); McKisson v. Sales Affiliates, Inc., supra. Physical injuries to a consumer‘s other property caused by a defective product has also been held to be included under strict liability. O. M. Franklin Serum Company v. C. A. Hoover & Son, 418 S.W.2d 482 (Tex.1967).
The present case involves an unreasonably dangerous product whose defect has caused harm to itself. No personal injury or injury to other property was involved. The critical question is whether, in a commercial sale, strict liability should be extended to cover loss resulting from damage to the product itself.2
Texas has recently adopted the rule that economic loss resulting from a product with defective workmanship and materials is not recoverable in strict liability. Nobility Homes of Texas, Inc. v. Shivers, supra. That loss is merely loss of value resulting from a failure of the product to perform according to the contractual bargain and therefore is governed by the Uniform Commercial Code.
Mid Continent contends that the damage to the airplane in the present case is also an economic loss under the reasoning of Nobility Homes. It argues that there is no difference between a product that is unusable because of defects and one that causes physical harm to itself because of a defect that is unreasonably dangerous. While Texas courts have not before considered this question, it has arisen in other jurisdictions. There is no concensus in the decisions. Some courts have concluded that the loss is recoverable under strict liability. Cloud v. Kit Manufacturing Company, 563
“A distinction should be made between the type of ‘dangerous condition’ that causes damage only to the product itself and the type that is dangerous to other property or persons. A hazardous product that has harmed something or someone can be labeled as part of the accident problem; tort law seeks to protect against this type of harm through allocation of risk. In contrast, a damaging event that harms only the product should be treated as irrelevant to policy considerations directing liability placement in tort. Consequently, if a defect causes damage limited solely to the property, recovery should be available, if at all, on a contract-warranty theory.”3
The Uniform Commercial Code was adopted by the Legislature as a comprehensive and integrated act to facilitate the continued expansion of commercial practices.
Strict liability arose initially to compensate consumers for personal injuries caused by defective products, although it was sometimes referred to as “implied warranty in law as a matter of public policy.” Jacob E. Decker & Sons, Inc. v. Capps, supra; McKisson v. Sales Affiliates, Inc., supra; Greenman v. Yuba Power Products, Inc., 59 Cal.2d 57, 27 Cal.Rptr. 697, 377 P.2d 897 (1962). It was reasoned that injured consumers should not be made to depend on the intricacies of sales law for compensation. Greenman v. Yuba Power Products, Inc., supra, 377 P.2d at 901. The present case does not involve personal injury but concerns only economic loss to the purchased product itself. Distinguished from personal injury and injury to other proper-
The consumer protection needs upon which strict liability is based are not sufficiently strong to impose that theory of recovery over the existing sales law remedies for Curry County‘s loss in this case. In transactions between a commercial seller and commercial buyer, when no physical injury has occurred to persons or other property, injury to the defective product itself is an economic loss governed by the Uniform Commercial Code. Curry County‘s cause of action for the damage of the airplane lies in breach of warranty as provided by the Code.
THE “AS IS” DISCLAIMER
Liability in warranty arises where damage is caused by the failure of a product to measure up to the seller‘s express or implied representations.
Mid Continent made no representation of quality of performance of the airplane which would give rise to an express warranty under the Code. With regard to the implied warranties of merchantability and fitness,
Plaintiffs’ cause of action against Mid Continent is severed from that against Bobby Shivers and Robert Hawkins, who did not appeal from the judgment against them. Judgment is here rendered that plaintiffs take nothing in their suit against Mid Continent.
Dissenting opinion by POPE, J., joined by JOHNSON, J.
POPE, Justice, dissenting.
The question presented is whether a suit for recovery of damages to an airplane that was physically damaged in a crash landing can qualify as a products liability case upon proof that the crash was caused by an unreasonably dangerous defect. I disagree with the majority holding that damages to the product itself, as a matter of law, always is a contract action. I agree with the argument of Curry County Spraying Service, Inc. that its action, based on appropriate fact findings, was a tort action. Curry Spraying purchased its airplane on an “as is” contract. All members of the court are in agreement that a sale of goods “as is” will exclude a seller‘s liability on implied warranties. The court is also in agreement that for policy reasons, an “as is” contract does not disclaim a tort action for unreasonably dangerous defects unless the agreement shows clearly that there is an intent to exclude strict liability also. Sterner Aero AB v. Page Airmotive, Inc., 499 F.2d 709 (10th Cir. 1974); Keystone Aeronautics Corp. v. R. J. Enstrom Corp., 499 F.2d 146 (3d Cir. 1974); Delta Air Lines, Inc. v. Douglas Aircraft Co., 238 Cal.App.2d 95, 47 Cal.Rptr. 518 (1965); McMillen Feeds, Inc. v. Harlow, 405 S.W.2d 123, 137 (Tex.Civ.App.—Austin 1966, writ ref‘d n. r. e.).
Nobility Rejected the Rule of the Majority Opinion
We should not so soon forget that it was the product itself for which the plaintiff sought damages in Nobility. The roof of the mobile home leaked, the floor seams had separated, doors and windows were improperly installed, and cabinets had pulled away from the walls. We did not hold that damages to the product itself defeated an action for strict liability. We relied upon two precedents in support of our decision in Nobility, Seely v. White Motor Co., 63 Cal.2d 9, 45 Cal.Rptr. 17, 403 P.2d 145 (1965), and Melody Home Mfg. Co. v. Morrison, 455 S.W.2d 825 (Tex.Civ.App.—Houston [1st Dist.] 1970, no writ). In Seely, the product itself, a truck, was damaged when it overturned by reason of a bouncing or “galloping” characteristic it had. In Melody Home, the damages were to a trailer home, also the product itself.
It would have been much easier in those cases denying recovery on a theory of strict liability to have written that strict liability does not apply to the product itself. We did not see fit to do so in Nobility, nor did Justice Traynor place his decision on so tenuous a ground in Seely. In fact, in Seely, whose rule we adopted, Justice Traynor concluded his opinion by recognizing that strict liability in an appropriate case applies to the product itself. The court said:
Plaintiff contends, that, even though the law of warranty governs the economic relations between the parties, the doctrine of strict liability in tort should be extended to govern physical injury to plaintiff‘s property, as well as personal injury. We agree with this contention. 63 Cal.2d at 19, 45 Cal.Rptr. at 24, 403 P.2d at 152.
In Melody Home, the plaintiff sued for damages to a trailer home which had a defective roof, buckling floor, a bent frame and other defects. The plaintiff also sued for personal injuries by reason of drinking contaminated water that flowed through the pipes of the trailer. The claim for personal injury went out of the case because of the absence of proof that the defect existed at the time the trailer left the manufacturer‘s hands. There was left in the case only the right to recover damages to the trailer itself in a strict liability action. Neither the court in Melody Home nor this court in discussing that case in our Nobility opinion denied the plaintiff his action in strict liability because the damages were to the product itself. See also Gherna v. Ford Motor Co., 246 Cal.App.2d 639, 55 Cal.Rptr. 94, 101 (1966).
The Majority Opinion Rejects the Criteria Adopted by Nobility Homes
Consistent with all of our many cases concerning products liability, in deciding Nobility, we looked to
(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if . . .1
The first paragraph of Nobility stated what this court considered the controlling trial court finding:
Notes
The distinction that the law has drawn between tort recovery for physical injuries and warranty recovery for economic loss is not arbitrary and does not rest on the “luck” of one plaintiff in having an accident causing physical injury. The distinction rests, rather, on an understanding of the nature of the responsibility a manufacturer must undertake in distributing his products. He can appropriately be held liable for physical injuries caused by defects by requiring his goods to match a standard of safety defined in terms of conditions that create unreasonable risks of harm. 63 Cal.2d at 18, 45 Cal.Rptr. at 23, 403 P.2d at 151.
Melody Home had earlier used the same test. Speaking of the defective roof, floor, and frame the court wrote:
It is not apparent that these defects render the house trailer unreasonably dangerous to the user, or that physical harm was thereby caused to the user.
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Here there was no physical harm to person or property caused by the defective condition of the trailer, other than the contaminated water.
I respectfully suggest that the statement in the footnote of the majority opinion that this court has not confronted this question and the majority‘s citation of Melody Home in support of its statement is not correct. The question was confronted in Melody Home, and the reasons that opinion stated in reaching its result were approved in our Nobility opinion. See Nobility Homes, Inc. v. Shivers, 557 S.W.2d 77, 79-80 & 80 n. 5 (Tex.1977).
The reason that Nobility, Melody Home, and Seely held there was no strict liability case for the product itself was the absence of proof and findings that there was a defect that was unreasonably dangerous that produced the accident. There was, of course, a sale of a product in those cases and in truth
2. That the absence of a crankshaft gear bolt lock plate in the engine of the airplane in question rendered said airplane an unreasonably dangerous product, to the person of any operator of the same, and to the property of any purchaser (consumer) of the same, at the time of the purchase of said airplane by the plaintiff, Curry County Spraying Service, Inc.
5. That the defect rendering the airplane in question unreasonably dangerous did not arise from normal use of the airplane.
It was those findings about the defect and its unreasonable dangerousness that makes this case one for products liability; it was the absence of those findings that made Nobility, Melody Home, and Seely actions in contract.
The Historic Separation of Strict Liability From Contract Actions
In Nobility we also rejected the idea that our present Texas rule of strict liability is grounded upon Jacob E. Decker & Sons, Inc. v. Capps, 139 Tex. 609, 164 S.W.2d 828 (1942). The court of civil appeals in Nobility had placed its decision upon the contract principle of “an implied warranty of reasonable fitness of a product as a matter of public policy.” 539 S.W.2d at 194. We expressly held that the protection of Texas consumers no longer requires that questionable legal basis, particularly since Texas has now adopted
The true beginning of the rule which separates the tort action of strict liability from contract actions is MacPherson v.Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 (1916). The dividing line that was there located has been adopted in Texas, and we should not substitute a confusing and different one. The case concerned a dangerously defective automobile that the plaintiff had purchased. He sued the remote manufacturer in tort, and the court permitted the suit. MacPherson was injured when the defective wooden spokes of a wheel on his Buick collapsed. In making the determination whether the action should be governed by tort or contract law, Justice Cardozo established a division line and provided a test. Justice Cardozo justified the tort action as a departure from ordinary contract law by a reliance upon precedents about defective products which presented “great danger,” possessed a “potency of danger,” or were “dangerous.” Justice Cardozo also relied upon Lord Esher‘s statement in Heaven v. Pender, 11 Q.B.D. 503 (1883) which, as Justice Cardozo expressed it, “irrespective of contract, imposed upon the manufacturer” a tort duty. The opinion quoted Lord Esher in making that distinction between contract and tort:
Whenever one person supplies goods or machinery, or the like, for the purpose of their being used by another person under such circumstances that every one of ordinary sense would, if he thought, recognize at once that unless he used ordinary care and skill with regard to the condition of the thing supplied, or the mode of supplying it, there will be danger of injury to the person or property of him for whose use the thing is supplied, and who is to use it, a duty arises to use ordinary care and skill as to the condition or manner of supplying such thing.
The “Other” Property Test is Unsound
The majority concludes that there may be no action in strict liability for an accident resulting from an unreasonably dangerous defect if the accident happens to the product itself. It says that the accident must produce the physical harm to “other” property. But the majority has not discussed the criteria stated in
A distinction should be made between the type of “dangerous condition” that causes damage only to the product itself and the type that is dangerous to other property or persons. A hazardous product that has harmed something or someone can be labeled as part of the accident problem; tort law seeks to protect against this type of harm through allocation of risk. In contrast, a damaging event that harms only the product should be treated as irrelevant to policy considerations directing liability placement in tort. Consequently, if a defect causes damage limited solely to the property, recovery should be available, if at all, on a contract-warranty theory. Keeton, Annual Survey of Texas Law, Torts, 32 Sw. L.J. 1, 5 (1978).
Dean Keeton‘s opinion is worthy of respect, but it would merit even more if he had stated some reason for it. He concludes that “a damaging event to the product itself is irrelevant to policy considerations that determine liability in tort.” Why? In the case before us it is the same defect, the same unreasonableness, the same dangerousness, and the same accident that would have supported an action for damages for
Let us assume that Curry Spraying has purchased an executive Lear Jet at a cost of one million dollars from Mid Continent. Its pilot takes off in the jet from an airstrip where several other Curry Spraying planes are anchored near the runway. A mechanic is working on one of Curry Spraying‘s other planes on the ground. Shortly after takeoff the pilot is forced to return to the airstrip where, in an attempt to land, he crashes the plane onto and destroys the plane on which the mechanic is working. Both the pilot and the mechanic sustain crippling injuries. The Lear Jet is totally destroyed. Let us assume further, that the fact finder makes the same findings that we have in the case before us. What actions in tort do we have from that accident?
The pilot has an action in strict liability for his injuries because he proved a defect that was unreasonably dangerous, and it caused him physical harm. McKisson v. Sales Affiliates, Inc., 416 S.W.2d 787 (Tex.1967). The mechanic who was working on the ground also has a strict liability action for his injuries even though he is a third-person bystander. Rourke v. Garza, 530 S.W.2d 794 (Tex.1975); Darryl v. Ford Motor Co., 440 S.W.2d 630 (Tex.1969). Curry Spraying has a strict liability action for the damage to the plane that was anchored on the ground because the company suffered physical harm to its property. Franklin Serum Co. v. Hoover & Son, 418 S.W.2d 482 (Tex.1967). The majority agrees with this since it would be Curry Spraying‘s “other” property. Under settled Texas law each of those three actions may be asserted under
According to the majority, the supposed accident created three tort actions and one contract action. The damages for the Lear Jet that was totaled in the crash must be sought in a contract action, states the majority, because it was damage to the product itself. I confess that the law is not always consistent, but we are creating an anomalous inconsistency when neither precedent, simplicity of a rule, nor sound reasons justify it. I agree with Dean Keeton‘s statement: “A hazardous product that has harmed something or someone can be labeled a part of the accident problem . . . .” I also agree with
I agree that “economic loss” is not the same thing as “physical harm” that is required by
Property damage is usually readily distinguishable from economic loss. For example, operation of a defective radiator causes property damage when it results in a fire which destroys the plaintiff‘s store and economic harm when it results in conditions so uncomfortable that it causes the loss of customer patronage . . . . If the damage is to the defective product itself, similar distinctions
The majority opinion is grounded upon two Georgia cases, one from Idaho, one from Nebraska, and a federal district court. The only one which supports the majority opinion is the federal district court case which was passing on a South Carolina statutory adoption of
[Ga.] Code Ann. § 105-106, supra, imposes a statutory duty on manufacturers of personal property, the breach of which gives rise to an action on a theory of strict liability. The strict liability action, being predicated upon the breach of a legal duty, is an action ex delicto. See Ford Motor Company v. Carter, 141 Ga.App. 371, 233 S.E.2d 444. Therefore, the reasoning of Long v. Jim Letts Oldsmobile, Inc., 135 Ga.App. 293, 294(2), 217 S.E.2d 602, supra, is not applicable to the strict liability issue. Also distinguishable is Chrysler Corporation v. Taylor, 141 Ga.App. 671(2), 234 S.E.2d 123, where this court held that an “injury” within the context of Code Ann. § 105-106, supra, does not include damages stemming from loss of the benefit of one‘s bargain.
Of interest here is the recent case of Long Manufacturing, etc., Inc. v. Grady Tractor Co., 140 Ga.App. 320, 322(4), 323, 231 S.E.2d 105, in which the opinion discusses the issue of whether or not the plaintiff might recover under a strict liability theory for the damage to a portable tobacco barn, damaged when being transported along a highway after crossing a railroad track.
In Division 4 thereof we find the language, “We do not believe recovery in strict liability in tort can be had solely for property damage to the allegedly defective property itself.” But in that case the plaintiff, a corporation and not a nat-
The court erred in granting the motion for summary judgment of defendant Butler on the strict liability issue as to plaintiff Mike Bajalia, individually. In the case sub judice, the plaintiff‘s strict liability action is not predicated solely upon his economic loss, but is also based upon the physical injuries to the building. 142 Ga.App. at 227-28, 235 S.E.2d at 666.
The case of Salmon Rivers Sportsman Camps, Inc. v. Cessna Aircraft Co., 97 Idaho 348, 544 P.2d 306 (1975), was on facts similar to this present case, but it included no claim for recovery in tort or strict liability. It was pleaded only as an action for breach of implied warranty, and it reached a result on that kind of contract action contrary to our Nobility holding that privity of contract need not be proved. Finally, the Nebraska case of Hawkins Construction Co. v. Matthews Co., 190 Neb. 546, 209 N.W.2d 643 (1973), must be understood in terms of Nebraska‘s unique version of strict liability. Nebraska does not follow
If we are to be guided by decisions of other jurisdictions, we should consider Cloud v. Kit Manufacturing Co., 563 P.2d 248 (Alaska 1977). The Clouds sued in strict liability for damages to their mobile home after their home was destroyed by fire. They proved that a rug pad was highly flammable and was ignited by reason of its proximity to an electric heating unit. Relying upon Seely and
We have granted review in order to clarify our opinion in Morrow v. New Moon Homes, Inc., 548 P.2d 279 (Alaska 1976).
* * * * * *
We note that the harm alleged in this case is much different from that alleged by the Morrows in New Moon. The Morrows’ trailer was allegedly defectively manufactured, but the defects resulted in a deprivation of the value of the Morrows’ bargain. Unlike the circumstances in the case at bar, the Morrows were plagued by a “lemon,” not an unsafe product. The Morrows’ trailer was not suited for the purpose for which it was purchased, but the defects in it were not such that they resulted in sudden, violent or calamitous harm. Having been deprived of the intended use of their product, the harm in that case was properly classified as economic loss. 563 P.2d at 251.
It will simplify this complex area of the law if we hold to the line already defined in
For these reasons I respectfully dissent.
JOHNSON, J., joins in this dissent.
STEELE, Justice.
[A] truck‘s defective brakes may give rise to either economic loss or property damage, depending upon the facts. If the defect is discovered and the truck is thereby rendered temporarily unusable, its owner may suffer economic damage consisting of the costs of repairing the brakes, as well as consequential “economic loss” of profits resulting from his inability to use the truck in his business. On the other hand, if the defect is not discovered and an accident with another vehicle occurs, the damage to both the truck and the other vehicle resulting from the impact constitutes property damage. It may be noted that damage to the defective product itself may only amount to property damage and not economic loss. It is only when damage results from non-accidental causes, such as deterioration or breakdown, that economic loss in the pure sense, rather than property damage, has occurred. Zammit, Manufacturers’ Responsibility for Economic Loss Damages in Products Liability Cases: What Result in New York? 20 N.Y.L.F. 81, 82 (1974).