If you have been involved in a personal injury product liability dispute (or some other types of cases) you may hear your attorney speak about your claim is subject to the “economic loss doctrine” or the “economic loss rule”. To a layman this could mean anything and nothing, however, in legal terms it has its own meaning. This article will discuss what the economic loss doctrine is and how it is applicable to your case.
Economic losses [https://legal-dictionary.thefreedictionary.com/economic+loss] refer to financial loss and damage suffered by a person such as on a balance sheet rather than as a physical injury to a person or property. For example, if a new car breaks down but no one is injured the only loss is the diminished value of a non-functioning car. Those are considered to be purely economic losses.
Without the economic loss rule economic losses, especially in negligence, would not be recoverable as damages or otherwise. Recovery would be limited to an economic theory of recovery so damages would be the value of the bargain. The concept is that parties to a contract should be able to anticipate any potential injuries that may result from a breach of that agreement, and the tort damages on top of contract damages should not be allowed. This would thus result in ‘damages in tort for such claims to be virtually unlimited in some circumstances and without an economic loss rule, companies could be exposed to crushing liability stemming from a relatively minor defect’.
The state of California, in 1979, was the first of state supreme courts in the United States to have departed from the majority rule and authorize recovery for pure economic loss through tort causes of action, usually negligence. The state of California was then followed by the state of New Jersey and Alaska.
One article stated the following with regards to the economic loss doctrine in respect of Alaska and design professionals [https://www.researchgate.net/publication/316671982_The_Economic_Loss_Doctrine_in_Alaska_and_the_Design_Professional_Exception]; “the economic loss doctrine has prevented countless plaintiffs from recovering their economic losses in tort. However, over the last several decades, numerous courts have found exceptions to this doctrine. Alaska currently provides two important exceptions: the independent duty exception and the design professional exception. These two exceptions as applied provide for inconsistent results which create liability for design professionals and cut off liability for non-design professionals, providing the same approach and analysis for all professionals creates greater consistency and predictability and provides an opportunity for design professionals to limit their exposure to negligence claims.”
These laws are changing on a regular basis, therefore, if you find yourself with questions as to whether the economic loss rule is applicable to you it is necessary for you to contact product liability lawyers in Anchorage to advise you appropriately. It must be noted in some cases, while injuries may be limited under one theory by the economic loss doctrine, another theory may allow it. Therefore, it is of the utmost importance for the plaintiff or victim to seek advice of counsel if in doubt; as it may be likely that you may end up shortchanging yourself when seeking compensation alone.