The economic loss rule does not allow purely economic damages in a negligence action.  In a Supreme Court case the court considered whether a group of plaintiff homeowners could “recover in negligence from the entities that built their homes a money judgment representing the cost to repair, or the diminished value attributable to, construction defects that have not caused property damage.” In answering this question in the negative, the court relied on the economic loss rule, which it described as “settled law limiting the recovery of economic losses in tort actions.”

The distinction that the law has drawn between tort recovery for physical injuries and warranty recovery for economic loss,’ ‘is not arbitrary and does not rest on the “luck” of one plaintiff in having an accident causing physical injury as the court wrote. The distinction rests, rather, on an understanding of the nature of the responsibility a manufacturer must undertake in distributing his products.’

A manufacturer ‘can appropriately be held liable for physical injuries caused by defects by requiring his goods to match a standard of safety,’ but not ‘for the level of performance’ of its products unless the manufacturer ‘agrees that the product was designed to meet the consumer’s demands.’

Similarly, ‘a consumer should not be charged at the will of the manufacturer with bearing the risk of physical injury when he buys a product on the market. He can, however, be fairly charged with the risk that the product will not match his economic expectations unless the manufacturer agrees that it will.’

Bottom line is unless there is physical injury or property damage, the economic loss rule often times does not allow economic damages in negligence actions.

Robert G. Klein, Esq. is a Los Angeles trademark attorney and a Los Angeles business lawyer who specializes in trademark infringement, copyright infringement, and unfair competition.  He feels it is important to hire a Los Angeles trademark lawyer and a Los Angeles business lawyer if one is involved in litigation in that locale.  Robert G. Klein is a prominent Los Angeles business attorney and is available for consultation on matters involving trademark infringement, copyright infringement, and business law matters.  He has successfully obtained many multi-million dollar jury verdicts. Many of Mr. Klein’s court decisions have been published as case authority and he has appeared before the United States Supreme Court for oral argument. Mr. Klein has also published “Consumer List: Trade Secret or Fair Game?”, which is an article published in the Los Angeles Lawyer Magazine. Los Angeles trademark infringement attorney Robert G. Klein can be reached at (213) 996-8508 or visit our web site at http://www.kleinlitigation.com