State Farm Mut. Auto. Ins. Co. v Ford Motor Co.
Annotate this CaseDecided on October 20, 2006
Civil Court of the City of New York, Queens County
State Farm Mutual Automobile Insurance Company a/s/o Lenny Bamberg, Plaintiff(s),
against
Ford Motor Company, Defendant(s).
102472/03
Diccia T. Pineda-Kirwan, J.
Upon the foregoing cited papers, and after conference, it is ordered that this motion for an order, pursuant to CPLR 3211(a)(7), dismissing the action on the basis that the complaint fails to state a cause of action, is granted to the extent that plaintiff's cause of action for strict products liability and negligence is dismissed. Plaintiff's cross motion for an order, pursuant to CPLR 3212, granting summary judgment is denied.
According to the complaint, plaintiff State Farm Mutual Automobile Insurance Company issued an insurance policy to Lenny Bamberg, its subrogor, who was the owner of a 1999 Lincoln Navigator motor vehicle, a vehicle that was manufactured and sold by defendant Ford Motor Company. The complaint alleges that defendant expressly warranted to plaintiff's subrogor that each part of the vehicle was free of defects, that the vehicle was fit to be used for the purpose intended, that the vehicle was of good and merchantable quality, and that said warranties were part of the basis of the bargain. The complaint further alleges that on November 5, 2002, the vehicle suffered a mechanical breakdown and failure, catching fire and sustaining property damage, due to defendant's breach of its express warranty. As a second cause of action, plaintiff alleges that the vehicle malfunctioned due to its defective design.
Defendant's answer denies the allegations in the complaint and asserts sixteen affirmative defenses including failure to state a cause of action, lack of privity, and post manufacture alteration, modification and change in the product.
It is undisputed that plaintiff's subrogor purchased the vehicle used and not from defendant.
Defendant moves to dismiss plaintiff's tort claim on the ground that the action is barred by the economic loss doctrine. [*2]
Plaintiff opposes the motion arguing that where a product is unduly dangerous as designed or manufactured, the economic loss rule does not apply, and a plaintiff may recover in strict liability.
On a motion to dismiss for failure to state a cause of action, the court must accept the factual allegations in the complaint as true and determine only whether the facts as alleged fit within any cognizable legal theory. (Leon v Martinez, 84 NY2d 83 [1994].)
The economic loss doctrine provides that tort recovery in strict products liability and negligence against a manufacturer is not available to an end-purchaser of a product where the claimed losses flow from damage to the property only and personal injury is not claimed or at issue. (532 Madison Ave Gourmet Foods, Inc v Finlandia Ctr, Inc, 96 NY2d 280 [2001]; Bocre Leasing Corp. v General Motors Corp, 84 NY2d 685 [1995]; Bellevue S. Assoc v HRH Constr Corp, 78 NY2d 282 [1991]; Manhattanville Coll v James John Romeo Consulting Engr, PC, 28 AD3d 613 [2d Dept 2006].) This doctrine bars recovery on a tort theory to a plaintiff seeking damages for purely economic loss resulting from injury to the property itself. (Bocre Leasing Corp v General Motors Corp, 84 NY2d 685, supra.) A plaintiff is so limited by the economic loss rule even where an allegedly defective product is or may be "unduly hazardous." (Id at 691; Bellevue S. Assoc v HRH Constr Corp, 78 NY2d 282, supra; Amin Realty, LLC v K & R Constr Corp, 306 AD2d 230 [2d Dept 2003]; 7 World Trade Co v Westinghouse Elec Corp, 256 AD2d 263 [1st Dept 1998].) The rule applies to the economic loss to the product itself, as well as to consequential damages resulting from the defect. (Bocre Leasing Corp. v General Motors Corp, 84 NY2d 685, supra; Atlas Air, Inc v GE, 16 AD3d 444 [2d Dept 2005]; Amin Realty, LLC v K & R Constr Corp, 306 AD2d 230, supra.)
The law of products liability grew out of a public policy judgment to offer injured persons greater protection from dangerous products than is afforded by the law of warranty. (East River SS Corp v Transamerica Delaval, 476 US 858 [1986]; Bellevue S Assoc v HRH Constr Corp, 78 NY2d 282, supra.) This policy is rooted in the understanding that where personal injury is involved, " the cost of an injury and the loss of time or health may be an overwhelming misfortune,' and one the person is not prepared to meet. [citation omitted]." (East River SS Corp v Transamerica Delaval, 476 US 858, supra at 871.) As a result, products liability law extends a manufacturer's duty of care beyond that which is owed to an immediate purchaser. (Id; Bocre Leasing Corp v General Motors Corp,84 NY2d 685, supra.)
In contrast to the expansive policy supporting the law of products liability, the policy behind the economic loss doctrine is narrower. The economic loss doctrine is a bright line rule shaped by the determination that where only the product is injured, the usual tort concerns for safety are not triggered. (Bocre Leasing Corp v GMC, 84 NY2d 685, supra.) When the damage claimed is to the product itself, it "is most naturally understood as a warranty claim." (East River SS Corp v Transamerica Delaval, 476 US 858, supra at 872.) In this scenario, where only a product is injured, the owner's loss is essentially the value of the product, which is a loss that can be insured. (Id; Bocre Leasing Corp v GMC, 84 NY2d 685, supra.) As such, a product injuring itself is not the kind of harm against which public policy requires manufacturers to protect, independent of any contractual obligation. (Id; Bellevue South Assoc v HRH Constr Corp, 78 NY2d 282 supra.) To allow tort [*3]recovery to downstream purchasers when there is injury to the product only would result in "contract law [] drown[ing] in a sea of tort." (East River SS Corp v Transamerica Delaval, 476 US 858, supra at 874.)
While recovery in tort may not be available, when a plaintiff seeks to recover damages against a manufacturer for purely economic loss resulting from the failure or malfunction of a product or for damage to the product itself, the plaintiff may recover in claims for breach of contract or breach of warranty. (Id; Bellevue S Assoc v HRH Constr Corp, 78 NY2d 282, supra.)
In the instant action, the complaint alleges only economic loss to the vehicle itself. As there is no allegation that anyone sustained personal injury, the ''economic loss'' rule applies, and plaintiff cannot assert a claim in negligence or strict liability. Further, there is no exception to this rule for products that are unduly hazardous as plaintiff contends. (Bocre Leasing Corp v GMC, 84 NY2d 685, supra; Bellevue S Assoc v HRH Constr Corp, 78 NY2d 282, supra.)
Accordingly, the motion economic loss rule bars plaintiff's cause of action for tort-based claims of strict products liability design defect and negligence.
In addition, defendant moves, pursuant to CPLR 3211[a][7], for an order dismissing plaintiff's cause of action for breach of warranty. Defendant does not assert that plaintiff's failure to state a cause of action for breach of warranty is premised on a lack of a warranty or that plaintiff has not properly plead the necessary provisions of a warranty. Rather, defendant seeks dismissal on the basis that plaintiff insurer accepted premiums in consideration of an assumption of risk that the vehicle would be destroyed by a variety of factors. Defendant further claims that the cause of action should be dismissed inasmuch as allowing the insurer to pass the risk of loss to the manufacturer would give the plaintiff insurer more than the benefit of the bargain.
As above stated, while the economic loss rule bars tort recovery, a plaintiff may still recover in claims sounding in breach of contract or breach of warranty. (Bocre Leasing Corp. v General Motors Corp, 84 NY2d 685, supra; Bellevue S Assoc v HRH Constr Corp, 78 NY2d 282, supra.)
Accordingly, the motion is granted to the extent that the cause of action for strict liability and negligence is dismissed and is denied as to the cause of action for breach of warranty.
In view of the foregoing, plaintiff's cross motion for summary judgment on its claim of strict liability defective design is denied.
This constitutes the decision and order of the Court.
Dated:October 20, 2006_____________________________
DICCIA T. PINEDA-KIRWAN [*4]
Judge, Civil Court
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