State Farm Mutual Automobile Insurance v. Ford Motor Co.

SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE

¶ 75. (dissenting). In this case the consumer bought a Ford Bronco "as is" and also entered into a warranty contract with Ford Motor Company, the manufacturer. After the warranty ended, the Bronco caught on fire, allegedly because of a manufacturing defect in the ignition switch. Subsequently, the consumer's insurer, State Farm, paid the fair market value of the Bronco and brought this subrogation suit in which it "stepped into the shoes" of the consumer for purposes of seeking reimbursement. The majority opinion, however, does not limit its holding to the circumstances presented in this case, but instead broadly holds "that the economic loss doctrine applies to consumer transactions and bars State Farm's tort claims for purely economic loss." Majority op. at 311-12.

¶ 76. After an extensive discussion attempting to justify its holding that the economic loss doctrine applies to all consumer transactions, the majority opinion itself admits that its holding is too broad. In the final paragraph of this lengthy decision, the majority quotes Alloway v. General Marine Industries, 695 A. 2d 264, 273 (N.J. 1997), in cautioning that "we do not reach the issue of the preclusion of a strict-liability claim when the parties are of unequal bargaining power, the product is a necessity, no alternative source for the product is readily available, and the purchaser cannot reasonably insure against consequential damages." A reader can only conclude that the majority opinion is not really holding that the economic loss doctrine applies to all consumer transactions. Yet the reader does not know which consumer transactions are *350excepted from the new rule because the very factors about which the majority opinion cautions are present in this case.

¶ 77. Although the majority opinion relies heavily on the Alloway case, the New Jersey Supreme Court in Alloway expressly refused to resolve the issue presented by the facts of this case. The New Jersey Supreme Court stated:

An unresolved issue is whether the U.C.C. or tort law should apply when a defective product poses a serious risk to other property or persons, but has caused only economic loss to the product itself. In the present case, plaintiffs have not alleged that the defective seam in the boat posed such a risk. Hence we do not resolve the issue.

Alloway, 695 A.2d at 273.

¶ 78. The majority opinion also relies on Trans States Airlines v. Pratt & Whitney Canada, 682 N.E.2d 45 (Ill. 1997), which like Alloway, involves a commercial transaction, not a consumer transaction as in this case. Trans States, like Alloway, expressed no opinion on whether "the consumer/commercial transaction distinction makes any difference when the product damages only itself." See Trans States, 682 N.E.2d at 54.

¶ 79. I would allow the consumer in this case to proceed to trial under the doctrine of strict product liability for the damage claimed, that is, the injury to the defective product itself. This case involves an allegedly defective product that poses an unreasonable risk of harm to person and property. Strict product liability law is grounded on policies of safety and risk-spreading. The theory is that manufacturers will use greater care if they are liable for defective products. Safety *351concerns are not reduced when the injury is only to the product itself.

¶ 80. A manufacturer's duty to market safe products should not depend on whether the full extent of personal or property injury actually happens. When defective products present a risk of harm, it is purely fortuitous that the resulting damage is only to the product itself. I can find no distinction for imposing different liability upon a manufacturer whose defective product causes a consumer to suffer personal injury or property damage and a manufacturer whose defective product presents an identical safety risk to the consumer but happens by chance to result only in damage to the product itself. The manufacturer remains in the best position to avoid injury to the product itself and to absorb the damage to the product itself.

¶ 81. In this case, I would adopt the reasoning of the Supreme Court of Montana in a case similar to the case at bar:

The public remains in an unfair bargaining position as compared to the manufacturer. In the case of damage arising only out of loss of the product, this inequality in bargaining position becomes more pronounced. Warranties are easily disclaimed. Negligence is difficult, if not impossible, to prove. The consumer does not generally have large damages to attract the attention of lawyers who must handle these cases on a contingent fee. We feel that the consumer should be protected by affording a legal remedy which causes the manufacturer to bear the cost of its own defective products.

Thompson v. Nebraska Mobile Homes Corp., 647 P.2d 334, 337 (Mont. 1982). See also Oklahoma Gas & Elec. Co., 834 P.2d 980, 982-85 (Okla. 1992) (Wilson, Opala and Kauger, JJ., dissenting); Jay M ZZitter, Strict *352Products Liability: Recovery for Damage to Products Alone, 72 A.L.R. 4th (1989).

¶ 82. The Restatement similarly recognizes that under the circumstances presented in this case a good argument can be made for applying products liability law. See Restatement (Third) of Torts: Products Liability § 21 (1997) (regarding harm to the defective product itself, "a plausible argument can be made that products that are dangerous, rather than merely ineffectual, should be governed by the rules governing products liability law," comment cL to § 21 at p. 294) (Reporters' Note and numerous cases cited at § 21 at p. 304).

¶ 83. I need not decide in this case any other issues presented under the economic loss doctrine.

¶ 84. For the reasons set forth, I dissent.

¶ 85. I am authorized to state that JUSTICE ANN WALSH BRADLEY joins this dissent.