Economic Loss Rule Precludes Tort Recovery for Economic Losses Absent Personal Injury

Torts--Economic Loss Rule

Midis Greenhouses v. Global Horticultural, Inc., 598 Ariz. Adv. Rep. 33 (App. Div. II, December 22, 2010) (J. Kelly)

ECONOMIC LOSS RULE DOES NOT BAR ACTION FOR PRODUCTS LIABILITY AND MISREPRESENTATION WHERE DEFENDANT KNEW THE USE TO WHICH PLAINTIFF WOULD PUT DEFENDANT'S PRODUCT AND NONETHELESS PROVIDED A PRODUCT DEFECTIVE FOR THAT USE

Plaintiff grew crops in peat moss. Defendant offered to sell plaintiff peat moss cheaper than plaintiff's current supplier knowing the peat moss would be used to raise crops. thereafter defendant provided plaintiff peat moss that was too acidic to grow crops and plaintiff, not knowing this lost an entire crop. Plaintiff then sued for breach of contract, strict products liability and misrepresentation. The trial court granted defendant summary judgment on the tort claims.
The Arizona Court of Appeals reversed.

The economic loss rule precludes tort recovery for economic losses absent personal injury or damage to property other than the product. Here plaintiff's seeds and seedlings were damaged and destroyed in addition to the loss of use of the defective peat moss. The seeds were purchased from a different supplier than the defendant and were clearly property separate from the allegedly defective product. Consequently the policy behind the economic loss doctrine is not furthered and the tort claims should withstand summary judgment.