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McLean v. Bourget's Bike Works10/7/2005
grounds in Bourget's' motion were well-taken.
A. Mr. McLean's Products Liability Claim
Mr. McLean sought only damages for economic loss when he sued Bourget's. Accordingly, Bourget's requested a summary dismissal of Mr. McLean's products liability claim on the ground that purely economic damages were not recoverable in a products liability action. This defense was well-taken. Mr. McLean's products liability claim founders on the rocks of the economic loss rule.
The economic loss rule is a judicially created principle that requires parties to live by their contracts rather than to pursue tort actions for purely economic losses arising out of the contract. The rule comes into play when the purchaser of a product sustains economic loss without personal injury or damage to property other than the product itself. In that circumstance, the purchaser must seek a remedy in contract, not in tort. Ritter v. Custom Chemicides, Inc., 912 S.W.2d 128, 133 (Tenn. 1995); Trinity Indus., Inc. v. McKinnon Bridge Co., 77 S.W.3d 159, 171 (Tenn. Ct. App. 2001). Thus, when a purchaser's expectations in a sale are frustrated because a product does not work properly, the purchaser's remedies are limited to those prescribed by the law of contract. See, e.g., Palmetto Linen Servs., Inc. v. U.N.X., Inc., 205 F.3d 126, 128 (4th Cir. 2000); Neibarger v. Universal Coops., Inc., 486 N.W.2d 612, 615 (Mich. 1992).
Economic losses can take two forms - direct economic losses and consequential economic losses attributable to the product. Restatement (Third) of Torts: Products Liability § 21 cmt. d, at 294-95; 3 J. D. Lee & Barry H. Lindahl, Modern Tort Law: Liability & Litigation § 27:21 (rev. ed. 2002). Direct economic losses relate to the product itself and include costs of repairing or replacing the product or the diminution in the product's value because it is of an inferior quality or does not work for the general purposes for which it was manufactured and sold. See, e.g., Moorman Mfg. Co. v. Nat'l Tank Co., 435 N.E.2d 443, 449 (Ill. 1982); Messer Griesheim Indus., Inc. v. Cryotech of Kingsport, Inc., 131 S.W.3d 457, 465 (Tenn. Ct. App. 2003); Tietsworth v. Harley-Davidson, Inc., 677 N.W.2d 233, 241-42 (Wis. 2004). Consequential economic losses include all other economic losses attributable to the product itself such as the loss of profits resulting from an inability to use the defective product. See, e.g., Bank of America v. Musselman, 240 F. Supp. 2d 547, 554 (E.D. Va. 2003); Casa Clara Condo. Ass'n v. Charley Toppino & Sons, Inc., 620 So. 2d 1244, 1246 (Fla. 1993); Prent Corp. v. Martek Holdings, Inc., 618 N.W.2d 201, 206 (WiS.Ct. App. 2000).
The economic loss rule applies to consumer transactions. Tennessee Farmers Mut. Ins. Co. v. Ford Motor Co., No. W2001-00046-COA-R3-CV, 2002 WL 1332492, at *4 (Tenn. Ct. App. June 17, 2002) (No Tenn. R. App. P. 11 application filed). Here, Mr. McLean, according to the plain language of his complaint, is seeking to recover damages only for economic loss - chiefly the diminished value of the motorcycle because of its allegedly defective aluminum frame. He has not alleged that the failure of the frame caused personal injury or damaged any property other than the motorcycle itself. In the absence of any allegations or evidence of personal injury or damage to property other than the motorcycle, Bourget's was entitled as a matter of law to a judgment dismissing Mr. McLean's products liability claim.
B. Mr. McLean's Tennessee Consumer Protection Act Claim
Mr. McLean also alleged that Bourget's violated the Tennessee Consumer Protection Act simply by placing its motorcycle into the stream of commerce. He insists
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