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Alloway v. General Marine Industries6/30/1997
repairing the boat under theories of negligence and strict liability. Thus, this action raises the question whether a consumer and his insurer can maintain an action in tort for economic loss only.
Alloway insured against the risk that gave rise to his economic loss. In a sense, the question becomes whether the better risk bearer is his insurer, New Hampshire, or GMI, the purchaser of the assets of the bankrupt boat manufacturer. To impose liability on GMI is to impose on it, in addition to the price it paid for Glasstream's assets in the bankruptcy proceeding, the added cost of the loss of a boat that it never owned. The imposition of that cost would dislocate the allocation of responsibility in the U.C.C. and impose the cost of an uncertain liability on one that did not agree to assume that cost. Alloway, on the other hand, relied not on any warranty or other contractual undertaking from GMI, but on the warranties issued by the boat dealer, Mullica, and the New Hampshire policy. Under both the warranties and the insurance policy, Alloway has been reimbursed.
Over thirty years ago, before the adoption of the U.C.C., this Court, concerned about the ability of consumers to reach remote parties in a chain of distribution, perceived the need to provide those consumers with a tort action. In the interim, the U.C.C. has taken effect. By providing for express and implied warranties, that statute amply protects all buyers -- commercial purchasers and consumers alike -- from economic loss arising out of the purchase of a defective product. In addition, many buyers insure against the risk of the purchase of defective goods either directly through the purchase of an insurance policy, such as Alloway's purchase of the New Hampshire policy, or through insurance provided indirectly through many credit card purchases. Under the U.C.C. as construed by this Court, moreover, the absence of privity no longer bars a buyer from reaching through the chain of distribution to the manufacturer. See Spring Motors, supra, 98 N.J. at 582, 586-87; Santor, (supra) , 44 N.J. at 63. In addition, the United States Supreme Court, the overwhelming majority of state courts, and legal scholars have recognized the unfairness of imposing on a seller tort liability for economic loss. Accordingly, we hold that plaintiffs' tort claims are barred.
Before this Court, GMI argues primarily, as it has in the lower courts, that it is not liable to plaintiffs in tort. Alternatively, GMI argues for the first time that admiralty law, not state law, should determine this case. In view of our finding that GMI is not liable in tort for plaintiffs' economic loss under New Jersey law, we need not reach GMI's belated argument. Cf. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234, 300 A.2d 142 (1973) (finding that "it is a well-settled principle that our Appellate Courts will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available" unless the matter involves the trial court's jurisdiction or is of public importance); see also Maisonet v. Department of Human Services, Div. of Family Dev., 140 N.J. 214, 222-23, 657 A.2d 1209 (1995) (holding that courts not required by Supremacy Clause to exercise original jurisdiction over civil-rights claim when asserted for first time on appeal); R. 2:10-5 (indicating that exercise of original jurisdiction is discretionary). Similarly, we need not reach the additional issues concerning GMI's liability as Glasstream's successor or the effect on GMI of the purchase in bankruptcy of Glasstream's assets free and clear of all claims.
The judgment of the Appellate Division is reversed, and the judgment of the Law Div
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