Case:
Crandall v. Seagate Tech., Case No. 1:10-CV-128-MHW
Court:
United States District Court, District of Idaho
Title of Opinion:
Memorandum Decision and Order
Date Issued:
January 25, 2011
Judge:
Mikel H. Williams, United States Magistrate Judge
Issue:
Whether the economic loss rule bars a negligence claim for damage to property, where the damaged property was dependent on the property that was the subject of the transaction.
Summary of Ruling:
The plaintiff asserted a negligence claim against the retailer of several hard drives, alleging that the hard drives were defective. The plaintiff sought to recover damages for the loss of functionality to computer systems and other devices when the hard drives malfunctioned. The retailer defendant argued that these damages were barred by the economic loss rule.
Under Idaho law, economic loss is generally not recoverable in negligence actions. Pursuant to Idaho Supreme Court precedent, economic loss includes “costs of repair and replacement of defective property which is the subject of the transaction, as well as commercial loss for inadequate value and consequent loss of profits or use.” Duffin v. Id. Crop Imp. Ass’n, 895 P.2d 1195, 1199 (Idaho 1995). Economic damages are recoverable in negligence actions, however, if they stem from personal injury or from damage to property that is not the subject of the transaction.
The plaintiff argued that the loss of functionality to computer systems and other devices constituted damage to property that was not the subject of the transaction, thus taking his negligence claim outside the scope of the economic loss rule.
The court rejected this argument, reasoning:
This is not separate property loss that occurred due to the defective hard drive. A loss of functionality of a dependent device is not property damage. For Plaintiff to proceed under this theory would be akin to finding that a car that broke down due to a defective engine caused injury to the car itself because it was unable to function without an engine.
The court therefore granted the retailer defendant’s motion for summary judgment on the negligence claim.
Link to Opinion:
January 25, 2011 Opinion
Link to Court:
http://www.id.uscourts.gov/
Summary Author:
Wendy Gerwick Couture
