economic loss rule in Virginia

2025If the source of the duty in question is determined to stem from contract, then the economic loss doctrine applies to bar the recovery related to “[n]othing more than disappointed economic expectations” arising from the contractual “package.” Sensenbrenner v. Rust, Orling & Neale, Architects, Inc., 236 Va. 419, 425 (1988); see Abi-Najm v. Concord Condo., LLC, 280 Va. 350, 361 (2010) (holding that “the question whether the economic loss doctrine applies requires a court first to determine ‘whether a cause of action sounds in contract or tort’” (quoting Richmond Metro., 256 Va. at 558 )).

2025If the source of the duty in question is determined to stem from contract, then the economic loss doctrine applies to bar the recovery related to “[n]othing more than disappointed economic expectations” arising from the contractual “package.” Sensenbrenner v. Rust, Orling & Neale, Architects, Inc., 236 Va. 419, 425 (1988); see Abi-Najm v. Concord Condo., LLC, 280 Va. 350, 361 (2010) (holding that “the question whether the economic loss doctrine applies requires a court first to determine ‘whether a cause of action sounds in contract or tort’” (quoting Richmond Metro., 256 Va. at 558 )).

2025If the source of the duty in question is determined to stem from contract, then the economic loss doctrine applies to bar the recovery related to “[n]othing more than disappointed economic expectations” arising from the contractual “package.” Sensenbrenner v. Rust, Orling & Neale, Architects, Inc., 236 Va. 419, 425 (1988); see Abi-Najm v. Concord Condo., LLC, 280 Va. 350, 361 (2010) (holding that “the question whether the economic loss doctrine applies requires a court first to determine ‘whether a cause of action sounds in contract or tort’” (quoting Richmond Metro., 256 Va. at 558 )).

2025Bovis, Inc., 256 Va. 553, 558 (1998)) (discussing the distinction between tort and contract actions in the context of the economic loss doctrine).

1999Co. v. Fredericksburg, 762 F.2d 1192 (4th Cir. 1985). la Blake Const. Co. v. Alley, 233 Va. 31 (1987), the Court considered the economic loss rule in the context of a construction project.

1988In Blake Construction Co, v. Alley, 233 Va. 31 , 353 S.E.2d 724 (1987), we considered the economic loss rule in the context of a construction project.

2026Under the economic-loss doctrine, “claims for ‘damages [that] were within the contemplation of the parties when framing their agreement’ . . . remain ‘the particular province of the law of contracts.’” Id. at 98-99 (quoting Abi-Najm, 280 Va. at 360 ). 9 Despite the possibility of overlap, Virginia has historically been reluctant to allow tort claims to be brought alongside claims for breach of contract.

2026Under the economic-loss doctrine, “claims for ‘damages [that] were within the contemplation of the parties when framing their agreement’ . . . remain ‘the particular province of the law of contracts.’” Id. at 98-99 (quoting Abi-Najm, 280 Va. at 360 ). 9 Despite the possibility of overlap, Virginia has historically been reluctant to allow tort claims to be brought alongside claims for breach of contract.

2010In determining whether the economic loss doctrine precludes an action in tort, we have observed: The law of torts is well equipped to offer redress for losses suffered by reason of a "breach of some duty imposed by law to protect the broad interests of social policy." Kamlar [Corp. v. Haley, 224 Va. 699, 706 , 299 S.E.2d 514, 517 (1983).] Tort law is not designed, however, to compensate parties for losses suffered as a result of a breach of duties assumed only by agreement.

2010In determining whether the economic loss doctrine precludes an action in tort, we have observed: The law of torts is well equipped to offer redress for losses suffered by reason of a "breach of some duty imposed by law to protect the broad interests of social policy." Kamlar [Corp. v. Haley, 224 Va. 699, 706 , 299 S.E.2d 514, 517 (1983).] Tort law is not designed, however, to compensate parties for losses suffered as a result of a breach of duties assumed only by agreement.

2013Ward v. Ernst & Young, 246 Va. 317, 324 , 435 S.E.2d 628, 631 (1993).

1999The Court applied the economic loss rule again in Copenhaver v. Rogers, 238 Va. 361 (1989), and Ward v. Ernst & Young, 246 Va. 317 (1993).

1994Reasoning that the economic loss rule is designed to prevent a plaintiff from collecting tort damages when only a contract has been breached between the parties, the Richmond court found the rule not applicable when “plaintiff’s case reveals a genuine foundation for a tort claim.” Richmond, 918 F.2d at 446 .

1992The economic loss rule preserves the principle that contract damages be limited to those “within the contemplation and control of the parties in framing the agreement.” City of Richmond v. Madison Management Group, 918 F.2d 438, 446 (4th Cir. 1990) (quoting Kamlar Corp. v. Haley, 224 Va. 699, 706 (1983)).

2024Economic “losses suffered as a result of the breach of a duty assumed only by agreement, rather than a duty imposed by law, remain the sole province of the law of contracts.” Filak, 267 Va. at 618 (emphasis added) (citing Sensenbrenner, 236 Va. at 425 ).

2024The circuit court erred in dismissing appellants’ negligence claims because their alternative pleading was valid and the economic-loss rule does not apply unless the duty arose “only by agreement.”7 Filak, 267 Va. at 618 .

2026See, e.g., Tingler, 298 Va. at 90-93 (holding that the source-of-duty rule applied to preclude negligence claims after the contractor failed to build the home in workmanlike manner as required by the contract); MCR Fed., 294 Va. at 459-60 (holding that the misrepresentation related to the contract even though the duty breached was a condition precedent to closing rather than one specifically in the contract); Dunn Constr., 278 Va. at 268 (holding that the misrepresentation occurred within the contractual relationship because, although it involved repairs, those repairs related back to a duty t

2024To determine “whether a cause of action sounds in tort, contract, or both,” the court must ascertain “the source of the duty violated.” Tingler v. Graystone Homes, Inc., 298 Va. 63 , 81 (2019) (quoting MCR Fed., LLC v. JB&A, Inc., 294 Va. 446, 458 (2017)).

2000See Miller v. U.S. Steel Corp., 902 F.2d 573, 574 (7th Cir. 1990) (“Privity of contract is not an element of the economic loss doctrine.”).

1998The court refused to adopt plaintiffs argument that because the parties had privity, the court should not apply the economic loss doctrine: “Privity of contract is not an element of the economic loss doctrine.” Fournier, supra (quoting Miller v. U.S. Steel Corp., 902 F.2d 573, 574 (7th Cir. 1990)).

2002In Rotonda Condominium Unit Owners Ass’n v. Rotonda Assocs., 238 Va. 85 , 380 S.E.2d 876 (1989), the Virginia Supreme Court held that a condominium owners association, which was in privity with the defendant developer, could not sue on behalf of individual owners to recover damages for structural defects in the common elements.

2002In Rotonda Condominium Unit Owners Ass’n v. Rotonda Assocs., 238 Va. 85 , 380 S.E.2d 876 (1989), the Virginia Supreme Court held that a condominium owners association, which was in privity with the defendant developer, could not sue on behalf of individual owners to recover damages for structural defects in the common elements.

1999The Court applied the economic loss rule again in Copenhaver v. Rogers, 238 Va. 361 (1989), and Ward v. Ernst & Young, 246 Va. 317 (1993).

1997The Court has studied the recent line of cases addressing the economic loss rule: Sensenbrenner, id.; Copenhaver v. Rogers, 238 Va. 361 (1989); West v. Ernst and Young, 246 Va. 327 (1993); and Moore v. Drewry, 251 Va. 277 (1996).

2022“An economic loss analysis . . . require[s] proof that a claimant suffered an actual economic loss in the labor market” because of his compensable injury “and did not merely lose the theoretical capacity to perform abstract job functions.” 1 Id. 1 By contrast, a totally disabled claimant is entitled to benefits under Code § 65.2-500 upon proof that “the injury caused a loss of earning capacity.” Jones, 66 Va. App. at 541 ; McKellar, 290 Va. at 357 (contrasting the different standards for claims of total disability under Code § 65.2-500 and claims of partial disability under Code § 65.2-502). -

2022“An economic loss analysis . . . require[s] proof that a claimant suffered an actual economic loss in the labor market” because of his compensable injury “and did not merely lose the theoretical capacity to perform abstract job functions.” 1 Id. 1 By contrast, a totally disabled claimant is entitled to benefits under Code § 65.2-500 upon proof that “the injury caused a loss of earning capacity.” Jones, 66 Va. App. at 541 ; McKellar, 290 Va. at 357 (contrasting the different standards for claims of total disability under Code § 65.2-500 and claims of partial disability under Code § 65.2-502). -

2013Beard Plumbing and Heating, Inc. v. Thompson Plastics, Inc., 152 F.3d 313 (4th Cir. 1998); Pulte Home Corp. v. Parex, Inc., 265 Va. 518 , 579 S.E.2d 188 (2003); Sensenbrenner v. Rust, Orling & Neale, Architects, Inc., 236 Va. 419 , 374 S.E.2d 55 (1988); Va. Code §§ 8.01-223, 8.2-318.

2001The Fourth Circuit certified this issue to the Virginia Supreme Court in Beard Plumbing & Heating, Inc. v. Thompson Plastics, Inc., 152 F.3d 313, 319 (4th Cir. 1998), with the commentary that “it would be odd if economic losses, which result from the frustration of bargained-for expectations, could not be recovered for breach of warranty, notwithstanding the lack of privity, given the especially broad reach of Virginia’s § 8.2-318.” In reply to the certified question in Beard, the Virginia Supreme Court conspicuously avoided any discussion of the reach of the economic loss rule into implied wa

2026See, e.g., Tingler, 298 Va. at 90-93 (holding that the source-of-duty rule applied to preclude negligence claims after the contractor failed to build the home in workmanlike manner as required by the contract); MCR Fed., 294 Va. at 459-60 (holding that the misrepresentation related to the contract even though the duty breached was a condition precedent to closing rather than one specifically in the contract); Dunn Constr., 278 Va. at 268 (holding that the misrepresentation occurred within the contractual relationship because, although it involved repairs, those repairs related back to a duty t

2024The elements of negligence are “a legal duty, violation of that duty, and proximate causation which results in injury.” Kellermann v. McDonough, 278 Va. 478, 487 (2009) (quoting Delk v. -7- Columbia/HCA Healthcare Corp., 259 Va. 125, 132 (2000)). “[W]hether a legal duty in tort exists is a pure question of law.” Id. (citing Yuzefovsky v. St.

2024The elements of negligence are “a legal duty, violation of that duty, and proximate causation which results in injury.” Kellermann v. McDonough, 278 Va. 478, 487 (2009) (quoting Delk v. -7- Columbia/HCA Healthcare Corp., 259 Va. 125, 132 (2000)). “[W]hether a legal duty in tort exists is a pure question of law.” Id. (citing Yuzefovsky v. St.

2024The elements of negligence are “a legal duty, violation of that duty, and proximate causation which results in injury.” Kellermann v. McDonough, 278 Va. 478, 487 (2009) (quoting Delk v. -7- Columbia/HCA Healthcare Corp., 259 Va. 125, 132 (2000)). “[W]hether a legal duty in tort exists is a pure question of law.” Id. (citing Yuzefovsky v. St.

2013Because the circuit court did not base its ruling on these portions of Davenport's demurrer, any "opinion we might express at this time would be premature and merely advisory." Mosher Steel-Virginia, Inc. v. Teig, 229 Va. 95, 105 , 327 S.E.2d 87, 94 (1985).

2013Because the circuit court did not base its ruling on these portions of Davenport's demurrer, any "opinion we might express at this time would be premature and merely advisory." Mosher Steel-Virginia, Inc. v. Teig, 229 Va. 95, 105 , 327 S.E.2d 87, 94 (1985).

2013The tort of conversion “encompasses any wrongful exercise or assumption of authority . . . over another’s goods, depriving him of their possession, and any act of dominion wrongfully exerted over property in denial of the owner’s right, or inconsistent with it.” PGI, Inc. v. Rathe Prods., Inc., 265 Va. 334, 344 , 576 S.E.2d 438 (2003) (internal citations omitted).

2013The tort of conversion “encompasses any wrongful exercise or assumption of authority . . . over another’s goods, depriving him of their possession, and any act of dominion wrongfully exerted over property in denial of the owner’s right, or inconsistent with it.” PGI, Inc. v. Rathe Prods., Inc., 265 Va. 334, 344 , 576 S.E.2d 438 (2003) (internal citations omitted).

2012California also has a legitimate and compelling interest in preserving a business climate free of fraud and deceptive practices.” (citing Diamond Multimedia Systems, Inc. v. Superior Court, 19 Cal. 4th 1036, 1064 [ 80 Cal. Rptr. 2d 828 , 968 P.2d 539 . 19 Cal. 4th 1036 , 80 Cal. Rptr. 2d 828 , 968 P.2d 539 ] (1999)); David v. Hett, 293 Kan. 679, 699 , 270 P.3d 1102 (2011) (“several jurisdictions have found the economic loss doctrine is not well suited for contracts to supply services because they are not subject to the well-developed law under the U.C.C.); id. at 701 (“the fact that the partie

2012California also has a legitimate and compelling interest in preserving a business climate free of fraud and deceptive practices.” (citing Diamond Multimedia Systems, Inc. v. Superior Court, 19 Cal. 4th 1036, 1064 [ 80 Cal. Rptr. 2d 828 , 968 P.2d 539 . 19 Cal. 4th 1036 , 80 Cal. Rptr. 2d 828 , 968 P.2d 539 ] (1999)); David v. Hett, 293 Kan. 679, 699 , 270 P.3d 1102 (2011) (“several jurisdictions have found the economic loss doctrine is not well suited for contracts to supply services because they are not subject to the well-developed law under the U.C.C.); id. at 701 (“the fact that the partie