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Calloway v. City of Reno2/29/2000
, at 90. Appellants contend that the district court erroneously dismissed their negligence claim against the subcontractors based upon the economic loss doctrine because a defective "product," the framing, caused "other" property damage--namely, water intrusion, damage to flooring and ceilings, and structural and wood decay--thereby rendering the economic loss doctrine inapplicable.
We disagree. In Pratt and Whitney, 107 Nev. at 539, 815 P.2d at 603, we determined that an airplane engine that failed and caused the plane to crash damaged only the product (airplane) itself, and therefore, the economic loss doctrine barred recovery in tort. In concluding that a component part of the airplane injured the integrated product and caused only economic losses, our Pratt and Whitney decision relied on East River S.S. Corp. v. Transamerica Delaval, 476 U.S. 858 (1986). There, the U.S. Supreme Court determined that component parts of a product cannot cause "other property damage" compensable in tort:
n the traditional "property damage" cases, the defective product damages other property. . . . "Since all but the simplest machines have component parts, [a contrary] holding would require a finding of 'property damage' in virtually every case where a product damages itself. Such a holding would eliminate the distinction between warranty and strict products liability." Northern Power & Engineering Corp. v. Caterpillar Tractor Co., 623 P.2d 324, 330 (Alaska 1981). . . . Obviously, damage to a product itself has certain attributes of a products-liability claim. But the injury suffered –- the failure of the product to function properly –- is the essence of a warranty action, through which a contracting party can seek to recoup the benefit of its bargain.
Id. at 867-68, quoted, in part, with approval in Pratt and Whitney, 107 Nev. at 540, 815 P.2d at 604. Thus, we have unequivocally concluded, with respect to factory-assembled products, that when an integral component injures the rest of the product, only economic loss has occurred.
Determining whether part of a structure has caused economic loss or property damage is analytically more difficult than with factory-assembled products. As discussed below, buildings generally represent the cooperative work of a variety of parties at different times, and each building may involve unique materials and methods, as well as an original design. Additionally, buildings, because of their long life span, are subject to remodeling and other changes, which may involve additional designs, laborers and materials.
In Oak Grove, 99 Nev. at 625, 668 P.2d at 1080-81, we suggested, in dictum, that the owner of an apartment complex, who sued the manufacturer of fittings used in the complex's plumbing and heating system, had stated causes of action in negligence and strict liability. The fittings had allegedly increased water velocity beyond safe limits and caused extensive erosion, corrosion and leakage throughout the complex. Id. at 619, 668 P.2d at 1077. Our dictum stated that the owners were not seeking to recover purely economic losses. Id. at 625, 668 P.2d at 1080.
In our subsequent Pratt and Whitney opinion, we distinguished Oak Grove as follows:
In Oak Grove, . . . there was little factual basis for invoking the economic loss doctrine. Indeed, rather than receding from our rulings in Stern and Central Bit Supply, we concluded, by way of dictum, that the factual scenario in Oak Grove did not implicate the economic loss doctrine because it involved a defective heating and plumbing system that caused water leakage and damage throughout the apartment complex. It was thus clear that, in contrast to the instant ca
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