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Alloway v. General Marine Industries6/30/1997
Only a handful of jurisdictions have followed Santor. See White & Summers, (supra) , § 10-5 at 580 (criticizing Santor and stating "courts seem to have grown more willing in the last decade to label loss as economic, thus not recoverable in tort than before"); see, e.g., Sharon Steel Corp. v. Lakeshore, Inc., 753 F. 2d 851, 855-56 (10th Cir. 1985) (allowing plaintiff to recover damages for economic loss under New Mexico law when plaintiff was subjected to unreasonable risk of injury); Cova v. Harley Davidson Motor Co., 26 Mich. App. 602, 182 N.W. 2d 800, 804 (Mich. 1970) (allowing owners of golf course to recover against manufacturer in strict liability for economic losses resulting from defect in golf carts); City of La Crosse v. Schubert, Schroeder & Assoc., 72 Wis. 2d 38, 240 N.W. 2d 124, 127 (Wis. 1976) (holding that manufacturer of defective roofing materials may be liable for loss of value of roof under strict liability in tort); see also Lloyd F. Smith Co. v. Den-Tal-Ez, Inc., 491 N.W. 2d 11, 17 (Minn. 1992) (holding that although U.C.C. provides the exclusive remedy in commercial transactions, consumer could still maintain tort actions for economic loss); Livingston Bd. of Educ. v. United States Gypsum Co., 249 N.J. Super. 498, 504, 592 A.2d 653 (App. Div. 1991) (holding that school board could bring strict-liability action for costs of asbestos removal because board was not a commercial purchaser and asbestos created grave personal safety risk).
Scholars likewise have criticized the extension of strict liability to include claims for purely economic loss. See, e.g., White & Summers, (supra) , § 10-5; O'Donnell, Weiss & Kaplan, "On Differences Between Blood and Red Ink: A Second Look At The Policy Arguments For The Abrogation Of The Economic Loss Rule In Consumer Litigation," 19 Nova L. Rev. 923, 926 (1995) (urging courts to prohibit strict-liability actions for pure economic injury , even when the potential plaintiff is not a commercial entity); Franklin, "When Worlds Collide: Liability Theories and Disclaimers in Defective Product Cases," 18 Stan. L. Rev. 974, 989-90 (1966) (criticizing courts as unaware of relevance of sales law to products-liability law); Feinman, "Doctrinal Classification and Economic Negligence," 33 S.D.L. Rev. 137, 150 (1996) (stating that great majority of jurisdictions follow Spring Motors when commercial purchaser involved); Wade, "Tort Liability For Products Causing Physical Injury and Article 2 of the U.C.C.," 48 Mo. L. Rev. 1, 26 n.87 (1983) (noting that substantial majority rule is that economic loss is not actionable in tort); Speidel, "Products Liability, Economic Loss and the U.C.C.," 40 Tenn. L. Rev. 309, 316-18, 327 (1973) (pointing out that justification for imposing strict liability is less compelling where only commercial loss is suffered); Note, (supra) , 114 U. Pa. L. Rev. at 548-49 (finding that U.C.C. remedies seem more appropriate than products liability law when damage is loss of benefit of bargain).
Following the majority rule, the American Law Institute's proposed Restatement (Third) of Torts: Products Liability § 21 (Proposed Final Draft April 1, 1997), defines "economic loss" to exclude recovery under tort theories for damage to a product itself. Section 21, comment d, states that "when a product defect results in harm to the product itself, the law governing commercial transactions sets forth a comprehensive scheme governing the rights of the buyer and seller." Id. at comment d. According to the Restatement, "Santor. . . appears today to stand alone in allowing a products liability action when a product did not create an unreasonable risk of harm but merely caused economic loss when it failed to meet performance expectations." I
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