Summary of a Recent
Judicial Development in
Commercial Transactions

Product Liability Claims Barred by Economic Loss Doctrine

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In Farm Bureau Insurance v. Deere Co., No. 1:08-CV-922, 2009 WL 104139 (W.D. Mich. Jan. 14, 2009), the United States District Court for the Western District of Michigan dismissed an action filed by Farm Bureau Insurance on behalf on an insured farmer.

Background

Farm Bureau Insurance brought claims for negligence, product liability, and breach of warranty against Deere Company on behalf of an insured farmer to recover the cost of a new tractor that had caught on fire and been completely destroyed when the driver switched on the exterior lights. Id. at *1. Deere moved to dismiss. Id.

Arguments

Deere argued that Farm Bureau's claims were barred by the economic loss doctrine. Id.

Farm Bureau argued that the economic loss doctrine does not apply to unsophisticated consumer purchasers who lack privity with the manufacturer. Id.

Analysis and Holdings

The court explained that "the economic loss doctrine bars recovery in tort for an alleged product defect when the defect causes damage confined to the good itself and the losses are solely economic." Id. Relying on similar cases decided by the Michigan Court of Appeals, the court in this case held that the economic loss doctrine barred recovery in this situation regardless of the lack of privity between the parties or the purchaser's level of sophistication, and therefore granted Deere's motion to dismiss. Id. at *2.

The case was decided on January 14, 2009.