economic loss doctrine in New Jersey

2026F. Finally, the economic loss doctrine prohibits the "recover[y] in tort economic losses to which their entitlement only flows from a contract." Bracco Diagnostics, Inc. v. Bergen Brunswig Drug Co., 226 F. Supp. 2d 557, 562 (D.N.J. 2002) (quoting Duquesne Light Co. v. Westinghouse Elec.

2025The economic loss doctrine prohibits the "recover[y] in tort economic losses to which their entitlement only flows from a contract." Bracco Diagnostics, Inc. v. Bergen Brunswig Drug Co., 226 F. Supp. 2d 557, 562 (D.N.J. 2002) (quoting Duquesne Light Co. v. Westinghouse Elec.

2025The economic loss doctrine evolved as part of the common law "as an effort to establish the boundary line between contract and tort remedies." Dean A-2560-23 21 v. Barrett Homes, Inc., 204 N.J. 286, 295 (2010).

2021A-1920-19 9 such as negligence, are better suited for resolving claims involving unanticipated physical injury, particularly those arising out of an accident[,]" and "[c]ontract principles … are generally more appropriate for determining claims for consequential damage that the parties have, or could have, addressed in their agreement[,]" ultimately concluding that "economic expectations … protected by the [Uniform Commercial Code] are not entitled to supplemental protection by negligence principles[]"), Dean v. Barrett Homes, Inc., 204 N.J. 286, 294-95 (2010) (holding that the economic loss d

2025In Saltiel v. GSI Consultants, Inc., the Court held that the economic loss doctrine precludes the tort liability of parties when the relationship between them is based on a contract, "unless the breaching party owes an independent duty imposed by law." 170 N.J. 297 , 316- 17 (2002).

2025See Saltiel v. GSI Consultants, Inc., 170 N.J. 297, 316 (2002) ("a tort remedy does not arise from A-2560-23 19 a contractual relationship unless the breaching party owes an independent duty imposed by law"); Spring Motors Distribs.

2025Thus, under the economic loss doctrine, "the [Products Liability Act, N.J.S.A. 2A:58C-1 to -11] and common law tort actions do not apply to damage caused to the product itself, or to consequential but purely economic losses caused to the consumer because of a defective product." Ford Motor Credit Co., LLC v. Mendola, 427 N.J.

2020Thus, under the economic loss doctrine, “the [PLA] and common law tort actions do not apply to damage caused to the product itself, or to consequential but purely economic losses caused to the consumer because of a defective product.” Ford Motor Credit Co., LLC v. Mendola, 427 N.J.

2025Co. v. Dammann & Co., 594 F.3d 238, 248 (3d Cir. 2010) ("New Jersey courts have consistently held that contract law is better suited to resolve disputes between parties where a plaintiff alleges direct and consequential losses that were within the contemplation of sophisticated business entities with equal bargaining power and that could have been the subject of their negotiations.") There are two exceptions to the economic loss doctrine.

2017The purpose of the economic loss doctrine "is to strike an equitable balance between countervailing public policies[] that exist in tort and contracts law." Ibid. (internal quotation marks and citations omitted).

2020Marine Indus., L.P., 149 N.J. 620 (1997), Spring Motors Distribs., Inc. v. Ford Motor Co., 98 N.J. 555 (1985), "[n]o New Jersey Supreme Court case [has held] that a fraud A-4903-18T3 15 claim cannot be maintained if based on the same underlying facts as a contract claim." Gleason v. Norwest Mortg., Inc., 243 F. 3d 130, 144 (3d Cir. 2001).

2020Marine Indus., L.P., 149 N.J. 620 (1997), Spring Motors Distribs., Inc. v. Ford Motor Co., 98 N.J. 555 (1985), "[n]o New Jersey Supreme Court case [has held] that a fraud A-4903-18T3 15 claim cannot be maintained if based on the same underlying facts as a contract claim." Gleason v. Norwest Mortg., Inc., 243 F. 3d 130, 144 (3d Cir. 2001).

2010As this Court long ago noted, the economic loss rule was developed in conjunction with strict liability theories that were "a judicial response to inadequacies in sales law with respect to consumers who sustained physical injuries from defective goods made or distributed by remote parties in the marketing chain." Spring Motors Distribs., Inc. v. Ford Motor Co., 98 N.J. 555, 576 , 489 A. 2d 660 (1985).

2010As this Court long ago noted, the economic loss rule was developed in conjunction with strict liability theories that were "a judicial response to inadequacies in sales law with respect to consumers who sustained physical injuries from defective goods made or distributed by remote parties in the marketing chain." Spring Motors Distribs., Inc. v. Ford Motor Co., 98 N.J. 555, 576 , 489 A. 2d 660 (1985).

2026Co., 66 F.3d 604 , 619 (3d Cir. 1995)).

2025Under the economic loss doctrine, a plaintiff is prohibited "from recovering in tort economic losses to which their entitlement only flows from contract." Bracco Diagnostics, Inc. v. Bergen Brunswig Drug Co., 226 F. Supp. 2d 557, 562 (D.N.J. 2002) (quoting Duquesne Light Co. 66 F.3d at 618).

2020When New Jersey federal courts "have permitted a fraud claim to proceed with a breach of contract claim" as an exception to the economic loss doctrine, such cases "generally appear to have involved a fraud in the inducement of a contract" as opposed to "fraud in the performance of a contract . . . ." G&F Graphic Servs., 18 F. Supp. 3d at 593 (quoting Bracco Diagnostics, Inc., 226 F. Supp. 2d at 563 ).

2020When New Jersey federal courts "have permitted a fraud claim to proceed with a breach of contract claim" as an exception to the economic loss doctrine, such cases "generally appear to have involved a fraud in the inducement of a contract" as opposed to "fraud in the performance of a contract . . . ." G&F Graphic Servs., 18 F. Supp. 3d at 593 (quoting Bracco Diagnostics, Inc., 226 F. Supp. 2d at 563 ).

2025See BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66, 72 (Colo. 2004) (explaining that the economic loss doctrine applies where there is a series of interrelated contracts, even despite privity, because the parties have the ability to allocate risk); Am.

2025See BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66, 72 (Colo. 2004) (explaining that the economic loss doctrine applies where there is a series of interrelated contracts, even despite privity, because the parties have the ability to allocate risk); Am.

2025First, "a tort remedy does not arise from a contractual relationship unless the breaching party owes an independent duty imposed by law." Saltiel, 170 N.J. at 316 ; see also Int'l Mins. & Mining Corp. v. Citicorp N. Am., Inc., 736 F. Supp. 587, 597 (D.N.J.1990); New Mea, 203 N.J.

2025Stores Props., Inc. v. Spotts, Stevens & McCoy, Inc., 648 F. Supp. 2d 707, 713 (E.D.

2010The California Supreme Court has held that "the economic loss rule does not necessarily bar recovery in tort for damage that a defective product . . . causes to other portions of a larger product . . . into which the former has been incorporated." Jimenez v. Superior Court, 29 Cal. 4th 473 , 127 Cal.Rptr. 2d 614 , 58 P. 3d 450, 457 (2002).

2010The California Supreme Court has held that "the economic loss rule does not necessarily bar recovery in tort for damage that a defective product . . . causes to other portions of a larger product . . . into which the former has been incorporated." Jimenez v. Superior Court, 29 Cal. 4th 473 , 127 Cal.Rptr. 2d 614 , 58 P. 3d 450, 457 (2002).

2010Corp. v. Transamerica Delaval, 476 U.S. 858 , 106 S.Ct. 2295 , 90 L.Ed.2d 865 (1986) (barring recovery in tort for damages caused by defective turbine engines installed by manufacturer in four ships); HDM Flugservice GmbH v. Parker Hannifin Corp., 332 F.3d 1025, 1030 (6th Cir.2003) (barring recovery for damage to helicopter from allegedly defective landing gear under a species of integrated product rule); All Alaskan Seafoods, Inc. v. Raychem Corp., 197 F.3d 992, 995 (9th Cir.1999) (referring to integrated product rule as "component part rule" and describing it as "[a] corollary to the economi

2010Corp. v. Transamerica Delaval, 476 U.S. 858 , 106 S.Ct. 2295 , 90 L.Ed. 2d 865 (1986) (barring recovery in tort for damages caused by defective turbine engines installed by manufacturer in four ships); HDM Flugservice GmbH v. Parker Hannifin Corp., 332 F. 3d 1025, 1030 (6th Cir.2003) (barring recovery for damage to helicopter from allegedly defective landing gear under a species of integrated product rule); All Alaskan Seafoods, Inc. v. Raychem Corp., 197 F.3d 992, 995 (9th Cir. 1999) (referring to integrated product rule as "component part rule" and describing it as "[a] corollary to the econ

2010Alaska: N. Power & Eng’g Corp. v. Caterpillar Tractor Co., 623 P.2d 324, 330 (Alaska 1981) (applying integrated product rule where component parts “are provided by one supplier as part of a complete and integrated package”).

2010Alaska: N. Power & Eng'g Corp. v. Caterpillar Tractor Co., 623 P. 2d 324, 330 (Alaska 1981) (applying integrated product rule where component parts "are provided by one supplier as part of a complete and integrated package").

2010See, e.g., King v. Hilton-Davis, 855 F.2d 1047, 1051 (3d Cir.1988) (applying Pennsylvania law; concluding that potato starter fungicide was integrated into potato starters, precluding tort claim for crop failure), cert. denied, 488 U.S. 1030 , 109 S.Ct. 839 , 102 L.Ed.2d 971 (1989).

2010See, e.g., King v. Hilton-Davis, 855 F. 2d 1047, 1051 (3d Cir.1988) (applying Pennsylvania law; concluding that potato starter fungicide was integrated into potato starters, precluding tort claim for crop failure), cert. denied, 488 U.S. 1030 , 109 S.Ct. 839 , 102 L.Ed. 2d 971 (1989).

2010Corp. v. Transamerica Delaval, 476 U.S. 858 , 106 S.Ct. 2295 , 90 L.Ed.2d 865 (1986) (barring recovery in tort for damages caused by defective turbine engines installed by manufacturer in four ships); HDM Flugservice GmbH v. Parker Hannifin Corp., 332 F.3d 1025, 1030 (6th Cir.2003) (barring recovery for damage to helicopter from allegedly defective landing gear under a species of integrated product rule); All Alaskan Seafoods, Inc. v. Raychem Corp., 197 F.3d 992, 995 (9th Cir.1999) (referring to integrated product rule as "component part rule" and describing it as "[a] corollary to the economi

2010Corp. v. Transamerica Delaval, 476 U.S. 858 , 106 S.Ct. 2295 , 90 L.Ed. 2d 865 (1986) (barring recovery in tort for damages caused by defective turbine engines installed by manufacturer in four ships); HDM Flugservice GmbH v. Parker Hannifin Corp., 332 F. 3d 1025, 1030 (6th Cir.2003) (barring recovery for damage to helicopter from allegedly defective landing gear under a species of integrated product rule); All Alaskan Seafoods, Inc. v. Raychem Corp., 197 F.3d 992, 995 (9th Cir. 1999) (referring to integrated product rule as "component part rule" and describing it as "[a] corollary to the econ

2010Wisconsin: Linden v. Cascade Stone Co., 276 Wis.2d 267 , 687 N.W.2d 823, 824 (Wis.Ct.App.2004) (holding that "[t]he integrated system rule holds that once a part becomes integrated into a completed product or system, the entire product or system ceased to be 'other property' for purposes of the economic loss doctrine" and concluding that exterior stone stucco and roof systems were integrated into home); Mequon Med.

2010Wisconsin: Linden v. Cascade Stone Co., 276 Wis.2d 267 , 687 N.W.2d 823, 824 (Wis.Ct.App.2004) (holding that "[t]he integrated system rule holds that once a part becomes integrated into a completed product or system, the entire product or system ceased to be 'other property' for purposes of the economic loss doctrine" and concluding that exterior stone stucco and roof systems were integrated into home); Mequon Med.

2010Maryland: Pulte Home Corp. v. Parex, Inc., 174 Md.App. 681 , 923 A. 2d 971, 1003 (Md.Ct.

2010Maryland: Pulte Home Corp. v. Parex, Inc., 174 Md.App. 681 , 923 A. 2d 971, 1003 (Md.Ct.

2010Idaho: Tusch Enters. v. Coffin, 740 P.2d 1022, 1035-36 (Idaho 1987) (holding that “subsequent purchasers of residential dwellings, who suffer purely economic losses from latent defects manifesting themselves within a reasonable time, may maintain an action against the builder (or builder-developer, as the case may be,) of the dwelling based upon the implied warranty of habitability” but not in tort).

2010Idaho: Tusch Enters. v. Coffin, 740 P. 2d 1022, 1035-36 (Idaho 1987) (holding that "subsequent purchasers of residential dwellings, who suffer purely economic losses from latent defects manifesting themselves within a reasonable time, may maintain an action against the builder (or builder-developer, as the case may be,) of the dwelling based upon the implied warranty of habitability" but not in tort).

2010App.2001) (holding that "`damage by a defective component of an integrated system to either the system as a whole or other system components is not damage to `other property' which precludes the application of the economic loss doctrine'" (quoting Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235 , 593 N.W. 2d 445, 452 (1999))).

2010App.2001) (holding that "`damage by a defective component of an integrated system to either the system as a whole or other system components is not damage to `other property' which precludes the application of the economic loss doctrine'" (quoting Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235 , 593 N.W. 2d 445, 452 (1999))).

2010Alabama: Keck v. Dryvit Sys., 830 So.2d 1, 6, 7 (Ala.2002) (explaining, in context of EIFS system, that "[w]hether an item that is incorporated into real property may be considered [integrated] is determined by whether the item is a part of the structural integrity of the house or building that is reasonably expected to last for the useful life of the house or building[,j” describing EIFS as “a multilayered wall system that actually composes the exterior walls of a building.

2010Alabama: Keck v. Dryvit Sys., 830 So. 2d 1, 6, 7 (Ala.2002) (explaining, in context of EIFS system, that "[w]hether an item that is incorporated into real property may be considered [integrated] is determined by whether the item is a part of the structural integrity of the house or building that is reasonably expected to last for the useful life of the house or building[,]" describing EIFS as "a multilayered wall system that actually composes the exterior walls of a building.