Dean v. Barrett Homes, Inc.: A Crack in the 'Economic Loss' Rule for 'Integrated Products'


In Dean v. Barrett Homes, Inc., A-15, New Jersey Supreme Court (November 15, 2010), the New Jersey Supreme Court significantly narrowed the "economic loss rule" and its corollary, the "integrated product doctrine," when it adopted the decidedly minority view concerning the applicability of these principles in a consumer context. Given the leading role that New Jersey courts have played in this area of jurisprudence, the case has potentially broad implications for both product liability and construction cases throughout the country.

The economic loss rule was established by the New Jersey Supreme Court in 1985 in a commercial contract dispute involving defective trucks. (Spring Motors Distributors, Inc., v. Ford Motor Co., 98 N.J. 555 (1985).) The court held that when a claimant seeks recovery for injury to the product itself, the proper remedy should be sought in contract, not tort. The U.S. Supreme Court soon adopted the rule in an admiralty matter involving the purchase of defective turbines aboard several ships that led to lost revenues during repairs. (East River Steamship Corp., v. Transamerica Delaval Inc., 476 U.S. 858 (1986).) Later, in Alloway v. Gen. Marine Indus., L.P., 149 N.J. 620, 642 (1997), the New Jersey Supreme Court extended the economic loss rule to consumers when it held that the U.C.C. "amply protects all buyers – commercial purchasers and consumers alike – from economic loss arising out of the purchase of a defective product." Alloway involved a consumer's purchase of an allegedly defective boat and sought the cost of repairs and loss of value. Thus, even in the consumer context, the court sought to recognize the separate interests protected by tort and contract law.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sedgwick LLP | Attorney Advertising

Written by:


Sedgwick LLP on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.