Pure Economic Loss Personal Injury In California
The California Supreme Court summarized the economic loss rule in Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979 (Robinson Helicopter):
"Economic loss consists of '"'"damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits -- without any claim of personal injury or damages to other property. . . ."'" ' Simply stated, the economic loss rule provides:
'"'Where a purchaser's expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only "economic" losses.'"
This doctrine hinges on a distinction drawn between transactions involving the sale of goods for commercial purposes where economic expectations are protected by commercial and contract law, and those involving the sale of defective products to individual consumers who are injured in a manner which has traditionally been remedied by resort to the law of torts.'
The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise. Quite simply, the economic loss rule 'prevents the law of contract and the law of tort from dissolving one into the other.'
"In Jimenez v. Superior Court (2002) 29 Cal.4th 473, . . . , we set forth the rationale for the economic loss rule:
'"The distinction that the law has drawn between tort recovery for physical injuries and warranty recovery for economic loss is not arbitrary and does not rest on the 'luck' of one plaintiff in having an accident causing physical injury. the distinction rests, rather, on an understanding of the nature of the responsibility a manufacturer must undertake in distributing his products."
We concluded that the nature of this responsibility meant that a manufacturer could appropriately be held liable for physical injuries (including both personal injury and damage to property other than the product itself), regardless of the terms of any warranty. But the manufacturer could not be held liable for "the level of performance of his products in the consumer's business unless he agrees that the product was designed to meet the consumer's demands."
"In Jimenez, we applied the economic loss rule in the strict liability context. We explained the principles surrounding the economic loss rule in that context: 'Recovery under the doctrine of strict liability is limited solely to "physical harm to person or property."
Damages available under strict products liability do not include economic loss, which includes "'"damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits -- without any claim of personal injury or damages to other property. . . ."'" . . . In summary, the economic loss rule allows a plaintiff to recover in strict products liability in tort when a product defect causes damage to "other property," that is, property other than the product itself.
The law of contractual warranty governs damage to the product itself.' We have also applied the economic loss rule to negligence actions." (Robinson Helicopter, supra, 34 Cal.4th at pp. 988-989.)
"Under the economic loss rule, 'appreciable, nonspeculative, present injury is an essential element of a tort cause of action.' 'Construction defects that have not ripened into property damage, or at least into involuntary out-of-pocket losses,' . . . 'do not comfortably fit the definition of "'appreciable harm'" -- an essential element of a negligence claim.'" (Rosen v. State Farm General Ins. Co. (2003) 30 Cal.4th 1070, 1079.)
In Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194 (Greystone), this court, relying on Rosen, explained: "Importantly, the economic loss rule is not a defense to a cause of action. Rather, the existence of damages, other than purely economic loss, is an element of a plaintiff's common law cause of action." (Greystone, 168 Cal.App.4th at p. 1215; see also San Francisco Unified School Dist. v. W.R. Grace & Co.-Connecticut (1995) 37 Cal.App.4th 1318, 1327 "Until physical injury occurs -- until damage rises above the level of mere economic loss -- a plaintiff cannot state a cause of action for strict liability or negligence"; Aas v. Superior Court (2000) 24 Cal.4th 627, 646 "appreciable, nonspeculative, present injury is an essential element of a tort cause of action", superceded by statute on another ground as stated in Rosen v. State Farm General Ins. Co., supra, 30 Cal.4th at pp. 1079-1080.)