Segal McCambridge Attorneys Obtain Dismissal Of Federal Product Defect Case


April 28, 2008

Segal McCambridge attorneys, Christian H. Gannon, Robert R. Rigolosi, and Gregory N. Harris, obtained a dismissal on the pleadings in New York federal court for a product manufacturer of terrazzo floor materials in a $13,000,000 construction-defect case, utilizing the "economic loss" doctrine of negligence law.

Under the "economic loss" doctrine, a plaintiff cannot allege negligence when the subject of the lawsuit does not involve personal injury, and the property damaged only itself. Plaintiff is left to pursue claims in breaches of contract and warranty. The exception to this doctrine is the "other property" theory: if a defendant's product injured "other property," a plaintiff can maintain a negligence claim.

This case involved the construction of a 785,000 square-foot public building. The general contractor sued the building owner and other parties for payment. The building owner counter-claimed against the general contractor, alleging the failure of multiple building systems, including 78,000 square feet of terrazzo floor materials. The general contractor then sued its sub-contractors and their product manufacturers, alleging negligence, breach of contract, and breach of warranty for the installation of, amongst other things, the epoxy terrazzo flooring.

Segal McCambridge attorneys successfully argued that the general contractor could not state a claim against the terrazzo floor manufacturer. Since the plaintiff did not allege the terrazzo floor damaged "other property," the general contractor could not sue the manufacturer of the terrazzo floor materials for negligence. Since the manufacturer and the general contractor never had a contract, the Court dismissed the breach of contract claim. The Court also dismissed the breach of warranty claim.

In dismissing the negligence claim, this decision re-enforces the nuanced uses of negligence claims in commercial cases.