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HARTFORD FIRE INS. CO. v. HULS AMERICA

December 13, 1995

HARTFORD FIRE INSURANCE COMPANY
v.
HULS AMERICA, INC., KAY-FRIES HOLDING, INC., and WRIT-VITABILE ARCHITECTS, P.C.



The opinion of the court was delivered by: POLLAK

 Pollak, J.

 December 13, 1995

 In a memorandum dated July 18, 1995, I granted summary judgment in favor of the first two defendants, Huls and Kay-Fries, after finding that the economic-loss doctrine precluded Hartford from recovering tort damages when the only claimed injury was to the roof itself. See East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 871, 90 L. Ed. 2d 865, 106 S. Ct. 2295 (1986) (applying economic-loss doctrine in admiralty). Therefore, I found that any remedy to which Hartford may have been entitled was in contract and not in tort.

 On July 31, 1995, Hartford moved for reconsideration of the July 18 memorandum. "The purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence." Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985), cert. denied, 476 U.S. 1171, 90 L. Ed. 2d 982, 106 S. Ct. 2895 (1986). A party filing a motion to reconsider must rely on at least one of the following grounds: (1) the availability of new evidence that was not available when the court granted the motion for summary judgment; (2) an intervening change in the controlling law; or (3) the need to correct an error of law or to prevent manifest injustice. Reich v. Compton, 834 F. Supp. 753, 755 (E.D. Pa. 1993); Emerson v. Adult Community Total Serv., Inc., 848 F. Supp. 44, 45 (E.D. Pa.), aff'd, 39 F.3d 1169 (3d Cir. 1994).

 Hartford relies on the third of these grounds, asserting that this court made an error of law in rejecting Hartford's claim that the post-sale duty to warn is an exception to the economic-loss doctrine. Although Hartford's arguments merit close consideration, I find them to be, ultimately, unpersuasive. Accordingly, I will deny Hartford's motion for reconsideration.

 The July 18 memorandum found that the Pennsylvania courts would apply the economic-loss doctrine to this claim arising under Pennsylvania tort law because, as stated by the United States Supreme Court -- albeit in a case arising in admiralty -- "when a product injures only itself, reasons for imposing a tort duty are weak and those for leaving the party to its contractual remedies are strong." East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 871, 90 L. Ed. 2d 865, 106 S. Ct. 2295 (1986); see also Aloe Coal Co. v. Clark Equipment Co., 816 F.2d 110, 119 (3d Cir. 1987) (predicting that the Pennsylvania Supreme Court would follow East River); REM Coal Co. v. Clark Equipment Co., 386 Pa. Super. 401, 563 A.2d 128, 133 (Pa. Super. Ct. 1989) ("Since consumers of the product can insure against the loss of the product and its use, there is no need to provide them with the special protection of tort remedies."). A principal purpose of tort law is to protect persons from injury. This concern for safety is significantly reduced when the injury is only to the product itself. East River, 476 U.S. at 871. "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 868. Therefore, the economic-loss doctrine applies in cases in which the loss is purely economic and no personal injury or harm occurs. See 476 U.S. at 871.

 The second approach, typified by McConnell v. Caterpillar Tractor Co., 646 F. Supp. 1520 (D.N.J. 1986), emphasizes that information that comes to the knowledge of one of the parties after a transaction is not part of the "bargain" at issue in East River. See McConnell, 646 F. Supp. 1520 at 1526 ("A duty to warn of a product's defects of which the seller becomes aware goes not to the quality of the product that the buyer expects from the bargain, but to the type of conduct which tort law governs as a matter of social and public policy.") (quoting Miller Indus. v. Caterpillar Tractor Co., 733 F.2d 813, 818 (11th Cir. 1984)). This approach sees the intentional character of many post-sale duty to warn claims as distinguishing them from the claims for negligence or strict liability that are usually at issue in economic-loss cases. See McConnell, 646 F. Supp. at 1526 (holding that East River applied only to negligence in the manufacturing process and not to post-sale duties). *fn1"

 Although both approaches carry considerable weight, this court is of the opinion that the Pennsylvania Supreme Court would find, on the present facts, that the economic-loss doctrine applied. The Pennsylvania courts which have held that the economic-loss doctrine is applicable in the Commonwealth have not directly addressed the doctrine's applicability to a cause of action based upon a post-sale duty to warn. *fn2" However, in applying the economic-loss doctrine, these courts have relied upon East River and, in particular, on its emphasis on the nature of the harm to the plaintiff. See Lower Lake Dock v. Messinger Bearing, 395 Pa. Super. 456, 577 A.2d 631, 635 (Pa. Super. Ct. 1990) (upholding dismissal of negligence claim where the only harm was economic); N.Y. State Elec. & Gas v. Westinghouse, 387 Pa. Super. 537, 564 A.2d 919, 925-26 (Pa. Super. Ct. 1990) ("Where an allegedly defective product causes damage only to itself, and other consequential damages resulting from the loss of the use of the product, the law of contract is the proper arena for redressing the harm"); REM Coal, 563 A.2d at 134 (holding that a cause of action in tort does not exist "where the only resulting damage is to the product itself.").

 In predicting that the Pennsylvania Supreme Court would adhere to the reasoning of East River on a particular set of facts, the United States Court of Appeals for the Third Circuit similarly emphasized the nature of the harm involved, stating: "As we read East River, it is the character of the plaintiff's loss that determines the nature of the available remedies." King v. Hilton-Davis, 855 F.2d 1047, 1051 (3d Cir. 1988), cert. denied, 488 U.S. 1030, 102 L. Ed. 2d 971, 109 S. Ct. 839 (1989). Thus, even though the plaintiffs in King framed their claim as one of failure to warn (although not of the post-sale variety), the court held that the economic-loss doctrine precluded the plaintiffs from recovering in tort because their damages were purely economic. Id. at 1048, 1053; see also PPG Indus., Inc. v. Sundstrand Corp., 681 F. Supp. 287, 288, 290 (W.D. Pa. 1988) (denying tort remedies where plaintiff framed complaint in terms of misrepresentation through failure to disclose); Eagle Traffic, 882 F. Supp. 417 at 419 (stating that Pennsylvania law precludes a plaintiff from recovering in tort where purely economic losses occurred due to, inter alia, negligent misrepresentation).

 In the case at bar the harm alleged is purely economic. *fn3" Moreover, at least three of the rationales for the Supreme Court's holding in East River are applicable to the present case. (Two of these rationales have also been voiced by the courts of Pennsylvania, and the third was invoked by the Third Circuit in predicting that the Pennsylvania Supreme Court would follow the reasoning of East River.) First, courts should respect the parties' initial, conscious allocations of risk. See East River, 476 U.S. at 872-73 (stating that contract law is well suited for controversies where parties had ability to set their own terms); REM Coal, 563 A.2d at 133 ("Warranty law is suited to economic loss cases because in such cases, the parties have the opportunity to have set the terms of their agreement regarding product value and quality in advance."). In the present case, the parties bargained for the sale and purchase of a roof and a ten-year warranty. Alpha then chose not to renew its warranty, instead relying on insurance in the event of losses. This appears to be a conscious and bargained-for allocation of risks. Second, permitting claims based upon a post-sale duty to warn for purely economic losses would subject manufacturers to liability for "vast sums of money." See East River, 476 U.S. 858 at 874, 90 L. Ed. 2d 865, 106 S. Ct. 2295; REM Coal, 563 A.2d at 133 ("Limitation of liability is an entirely appropriate brake on the manufacturer's liability in a case involving only the loss of the bargained for product.") Third, a rule barring post-sale duty to warn claims in cases of purely economic losses is clear and easily applied, one of the Court's principal concerns in East River. East River, 476 U.S. 858 at 875, 106 S. Ct. 2295, 90 L. Ed. 2d 865; see also Aloe Coal Co. v. Clark Equip. Co., 816 F.2d 110, 119 (3d Cir.) ("[A] murky trudge through sophisticated nuances gives way to an unencumbered flight to basics. Damage to a product means simply that the customer has received 'insufficient product value,' and maintaining value and quality is precisely the purpose of familiar contract concepts . . . .") (quoting East River, 476 U.S. at 872), cert. denied, 484 U.S. 853, 98 L. Ed. 2d 111, 108 S. Ct. 156 (1987).

 Thus, this court is of the opinion that the Pennsylvania Supreme Court would not find on these facts that Hartford's claim of a post-sale failure to warn justifies the creation of an exception to the economic-loss doctrine. The plaintiff's motion for ...


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