State Farm Mutual Automobile Insurance Co. v. Norcold, No. 15-6410 (6th Cir. 2017)Annotate this Case
In 2007, Norcold manufactured the refrigerator and it was installed into a recreational vehicle (RV). The refrigerator had a three-year express limited warranty. In 2010, Norcold issued a recall, informing owners that they should immediately have repairs to add a temperature-monitoring controller to prevent overheating that could result in a fire. The recall repairs were performed on the RV by an authorized service center in 2011, while the RV was still owned by its original purchaser. In 2012, Swerdloff purchased the used RV, after the warranty had expired. Swerdloff insured the RV through State Farm. In 2013 a fire caused by the refrigerator destroyed the RV. The fire did not cause any personal injuries, but the RV and its contents were a total loss. State Farm paid Swerdloff $145,193.20 and sued Norcold. The district court denied Norcold’s motion for summary judgment and held that the Supreme Court of Kentucky would not apply the economic loss doctrine to consumer transactions. That rule prevents a plaintiff from recovering in tort for damage caused by a defective product when the only damages are to the product itself and consequential damages such as lost profits; it requires any recovery for those types of damages to be sought through contract claims. The Sixth Circuit affirmed, stating the policies underlying the economic loss rule justify treating commercial and consumer transactions differently.