Casa Clara Condominium Association, Inc. v. Charley Toppino & Sons, Inc

Brief Fact Summary. Casa Clara (Plaintiff) installed defective concrete, which was manufactured by Charley Toppino & Sons (Defendant). Plaintiff suffered only economic loss, but sought to recover in tort.

Synopsis of Rule of Law. For recovery in tort, there must be a showing of harm above and beyond disappointed expectations.

Facts. Plaintiff was a condominium association, which hired Defendant to supply concrete to its buildings. The concrete contained too much salt, which in turn caused reinforcing steel inserted into the concrete to rust. This ultimately caused the concrete to crack and fall off. Plaintiff sued Defendant for a common law breach of implied warranty, products liability, negligence, and violation of building codes. The circuit court dismissed all counts. Defendant did not violate building codes, because it was only a supplier. Applying the economic loss rule, the court of appeals held that because no person or property was injured, there was no cause of action against Defendant. Plaintiff appealed.

Issue. Can Plaintiff maintain a products liability claim in tort for economic loss?

Held. No. Judgment affirmed.
* The economic loss rule prohibits tort recovery when a product damages itself causing economic loss but does not cause personal injury or damage to any property other than itself.
* Plaintiff found tort recovery attractive because it permits the recovery of greater damages than available in an action on a contract. In avoiding a contract law claim, Plaintiff may also avoid the conditions of the contract.
* Contract law protects expectations of plaintiffs. Tort law is defined by the duty owed to an injured party. For recovery in tort, there must be a showing of harm above and beyond disappointed expectations. Plaintiff is seeking purely economic damages, i.e., no one has sustained any physical injuries and no property, other than the structures built with Defendant’s concrete, has sustained any damage.
* In a tort action, a manufacturer or producer of goods is liable whether or not they are negligent, because public policy demands that responsibility be fixed when it will most effectively reduce the hazards to life and health inherent in defective products that reach the market. The purpose of a duty in tort is to protect society’s interest in being free from harm, and the cost of protecting society from harm is borne by society in general. When only economic harm is involved, the question becomes whether the consuming public as a whole should bear the cost of economic losses sustained by those who failed to bargain for adequate contract remedies.

Dissent. (Chief Justice Barkett) Plaintiff is left without a remedy, but the majority was unsympathetic to this problem. (Justice Shaw) The economic loss theory should not be used to deny a third party, that the defendant knew or should have known would be injured by tortious conduct. Defendant knew Plaintiff would use the concrete.

Discussion. In order for Plaintiff to maintain a products liability action in tort, they must have suffered damage that is more than economic in nature. The proper cause of action in this case is under contract law because contract law protects the expectations of plaintiffs. Here, Plaintiff received poor quality concrete and suffered damage to their property because of it.