Case Title: CONTINENTAL INSURANCE, FIREMAN'S FUND INSURANCE COMPANY; ST. PAUL INSURANCE COMPANY; ROYAL INSURANCE COMPANY; CENTENNIAL INSURANCE COMPANY; AND AMERICAN HOME INSURANCE COMPANY v. PAGE ENGINEERING COMPANY, DOES I-X, INCLUSIVE

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1989-12-05T00:00:00Z

Document:
CONTINENTAL INSURANCE, FIREMAN'S FUND INSURANCE COMPANY; ST. PAUL INSURANCE COMPANY; ROYAL INSURANCE COMPANY; CENTENNIAL INSURANCE COMPANY; AND AMERICAN HOME INSURANCE COMPANY v. PAGE ENGINEERING COMPANY, DOES I-X, INCLUSIVE1989 WY 214783 P.2d 641Case Number: 87-295Decided: 12/05/1989Supreme Court of Wyoming
CONTINENTAL INSURANCE, 
FIREMAN'S FUND INSURANCE COMPANY; ST. PAUL INSURANCE COMPANY; ROYAL INSURANCE 
COMPANY; CENTENNIAL INSURANCE COMPANY; AND AMERICAN HOME INSURANCE COMPANY, 
APPELLANTS (PLAINTIFFS), 

v. 

PAGE ENGINEERING COMPANY, 
DOES I-X, INCLUSIVE, APPELLEES (DEFENDANTS).

Appeal from the District 
Court, SweetwaterCounty, Kenneth G. Hamm, J.

Vincent J. Horn, 
Jr., Cheyenne, and Larry D. Henson, Henson & Henson, San Francisco, Cal., for appellants.

Gary M. 
Greenhalgh, Greenhalgh, Bussart, West & Rosetti, Rock Springs, and John H. 
Anderson, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Ill., for appellees.

Before CARDINE, C.J., 
THOMAS, URBIGKIT, and MACY, JJ., and BROWN, J., Retired.

THOMAS, Justice.

[¶1.]     The essential 
determination that the court must make in this case is whether tort theories may 
be invoked by a purchaser of a product in an instance in which the failure of 
the product causes damage only to the product that failed (economic loss in the 
parlance of the authorities). An additional issue is raised questioning the 
propriety of the entry of a summary judgment in favor of the seller when the 
buyer asserts that a genuine issue of material fact exists concerning the 
contractual duties owed by the seller to the buyer. The parties also have argued 
the applicability of the law relating to an insurance company acting as a 
volunteer in the payment of the claim for insurance proceeds filed by the buyer. 
The trial court ruled that the complaint of Continental Insurance, Fireman's 
Fund Insurance Company, St. Paul Insurance Company, Royal Insurance Company, 
Centennial Insurance Company, and American Home Insurance Company (Appellants 
collectively referred to as Continental) failed to state a claim in those counts 
asserting negligence, strict liability, or failure to warn against Page 
Engineering (Page) because the only damages asserted were the economic loss to 
Bridger Coal (Bridger), the buyer of the product. With respect to contractual 
claims that were asserted, the trial court found that the contract was not 
ambiguous and that Page's duties expired long before any cause of action 
accrued. In addition, the district court ruled that Continental was a volunteer 
with respect to its payment of Bridger's insurance claim. We hold that the trial 
court correctly ruled that Continental's claims of negligence, strict liability, 
and failure to warn do not state a claim upon which relief can be granted. We 
are in accord with the district court's ruling that Page had no existing duty 
under the contract that related to Bridger's loss in this case. Given those 
determinations, the question of whether Continental acted as a volunteer in 
paying Bridger's claims for insurance is moot, and we need not address it. We 
affirm the trial court's entry of summary judgment in favor of Page, recognizing 
that, in substance, the judgment constituted a dismissal with prejudice of the 
claims for relief under tort theories and was a true summary judgment with 
respect to claims based upon breach of an express or implied 
contract.

[¶2.]     This case arose out of 
the failure of a reeving block on a very large dragline that Bridger had 
purchased from Page. A break in the reeving block caused the 100 yard long boom 
to separate from the rest of the dragline structure and, when it fell, the boom 
was destroyed. Continental paid Bridger for its damages, which were caused by 
the collapse of the dragline, and then sought to recover from Page asserting its 
rights as a subrogee of Bridger.

[¶3.]     In the Appellants' 
Brief, Continental sets forth five primary issues to be addressed, each of which 
encompasses several sub-issues and arguments. Those are stated as: 

"A. Whether a district 
court in treating a Wyoming Rules of Civil Procedure Rule 12(B)(6) motion to 
dismiss as a summary judgment motion may make factual assumptions as to the type 
of loss, cause of loss, and insurance coverage for the loss; deny plaintiff the 
right to conduct further discovery; and then grant summary judgment to defendant 
on the basis of the assumed type of loss, cause of loss, and insurance 
coverage?

"B. Whether a 
manufacturer who sells heavy machinery in Wyoming and later discovers that one component 
of said machinery has a correctable unreasonably dangerous defect may escape 
liability for `negligent failure to warn' under the `economic loss' doctrine 
when the dangerously defective component fails in a foreseeable manner and 
destroys a non-defective component of 
the machinery?

"C. Whether the `economic 
loss' limitation on product liability actions should entirely preclude a product 
liability action which sounds in negligence or strict liability where an 
unreasonably dangerous defective component of a product fails in a foreseeable 
manner and destroys a non-defective 
component?

"D. Whether the district 
court may make factual assumptions as to cause of loss and based thereon enter 
summary judgment that the loss was not covered by insurance and thus that 
insurers are not entitled to subrogation?

"E. Whether any 
continuing obligation should be implied under a contract for sale of heavy 
machinery where, after the sale, the manufacturer continues to conduct 
technical, training and assistance visits to the jobsite; and, if there is no 
such continuing obligation, whether discovery should be allowed to ascertain the 
obligations and requirements understood by the manufacturer or imposed by 
industry custom and practice as to the subsequent visits to the 
jobsite?"

[¶4.]     Page Engineering, in 
its Brief of Appellee, states the issues presented in this way:

"I. Whether the trial 
court properly applied the economic loss doctrine, which is cited with approval 
by the Wyoming Supreme Court and is the controlling law in a clear majority of 
jurisdictions, to enter summary judgment for appellee on appellants' tort claims 
(Counts I, II, IV-VI) which seek to recover only for loss to the dragline 
boom?

"II. Whether any finding 
of fact was necessary to the district court's award of summary judgment for 
appellee as a matter of law?

"III. Whether the courts 
recognize an exception to the doctrine approved by the United States Supreme 
Court in the East 
River decision denying recovery for economic loss (damage to the 
product itself) when the failure of one component of a product damages another 
component?

"IV. Whether the economic 
loss doctrine bars strict liability claims for damage to the product 
itself?

"V. Whether the economic 
loss doctrine bars claims for negligent failure to warn?

"VI. Whether the trial 
court properly awarded summary judgment for appellee on appellants' claim for 
breach of contract for failure to maintain insurance (Count III), negligent 
failure to maintain insurance (Count IV) and express indemnity (Count V) where 
the clear and unambiguous language of the 1974 agreement, the only contract 
relied on by appellants in the record, provides that appellee's duties to 
Bridger lapsed under the 1974 agreement eight years before the collapse of the 
dragline?

"VII. Whether the trial 
court properly denied appellants' motion for continuance of discovery where 
appellants only sought discovery of facts to establish their theory of failure 
to warn and the trial court had already found this theory legally 
insufficient?

"VIII. Whether the trial 
court properly awarded summary judgment for appellee because appellants were not 
entitled to subrogation since appellants admitted that the loss to the dragline 
was due to a latent defect in the dragline and recovery for loss due to a latent 
defect was excluded from coverage under appellants' insurance 
policy."

 

[¶5.]     In 1974, Bridger 
commenced negotiations with Page to purchase a dragline, to be used in its open 
pit mining operations in Wyoming, which Page would manufacture. Those 
negotiations culminated in a Purchase Contract which demonstrates a carefully 
negotiated and prepared agreement of the parties with respect to the 
responsibilities of both the buyer and the seller. That Purchase Contract 
provided for integration with a merger clause, which stated:

"This Purchase Contract, 
including these terms and conditions, the specifications attached hereto and any 
additional terms and conditions incorporated in and attached hereto constitutes 
the sole and entire agreement between the parties. The Seller's proposal is 
incorporated in and made a part of this Purchase Contract only to the extent of 
specifying the nature and description of the Equipment ordered, and then only to 
the extent that such terms are consistent with the terms of this Purchase 
Contract. No other items or conditions shall be binding upon Buyer unless 
accepted by it in writing."

In paragraph ten 
of the purchase agreement, Page's warranty of the dragline was set forth in this 
language:

"Seller warrants that the 
Equipment and all parts thereof shall be free from defects in design, material, 
workmanship and title, and shall conform in all respects to the terms of this 
Purchase Contract, and, if no quality is specified, shall be of the best quality 
consistent with the nature and type of equipment usual and customary for 
draglines. If within one (1) year from (a) the date that the equipment is 
available for commercial operation (capable of stripping overburden) or (b) 
thirty (30) days after the date the dragline first walks, whichever is earlier, 
the Equipment, or any part thereof, does not conform to these warranties, and 
Buyer shall have notified the Seller within a reasonable time after its 
discovery of such nonconformity, Seller shall thereupon promptly correct such 
nonconformity at its sole expense. The conditions of any subsequent tests shall 
be mutually agreed upon and Seller shall be notified of and may be represented 
at all tests that may be made. In the event that the Equipment or any component 
parts are replaced pursuant to this warranty, such replacement Equipment and 
parts shall be warranted and guaranteed as provided herein for a period of one 
(1) year after such replacement and acceptance thereof by Buyer. The Seller 
shall not be liable hereunder for any damages as defined and excluded in 
paragraph 6.0 of this contract [relating to consequential or special damages] 
nor shall Seller be responsible under any breach of this warranty for any injury 
to any person proximately resulting from the breach of this warranty. THIS 
WARRANTY IS THE ONLY WARRANTY MADE AND THERE ARE NO OTHER WARRANTIES OR 
GUARANTEES, EXPRESSED OR IMPLIED, INCLUDING MERCHANTABILITY OR FITNESS FOR 
PARTICULAR USE."

[¶6.]     The contractual duties 
which Continental contends were not performed by Page are found in paragraphs 
eighteen, nineteen, and twenty of the Purchase Contract. According to paragraph 
eighteen, Page would furnish consultants during the erection, which was defined 
to terminate when the dragline became operable, and for a period not in excess 
of sixty days after completion of the erection of the dragline. In paragraph 
nineteen, Page agreed to "continuously carry" insurance on the dragline in the 
amount of one million dollars "to protect against and from all loss by reason of 
injury to persons or damage to property including Seller's own employees and 
third persons, and property of Buyer and third parties, based upon or arising 
out of Seller's operations hereunder including the operations of his 
subcontractors or sub-subcontractors." In paragraph twenty, Page agreed that it 
would indemnify Bridger for any "damage to or destruction of property" of 
Bridger's "resulting from, arising out of, or in any way connected with Seller's 
operations hereunder at the job site, excepting only such injury or harm as may 
be caused solely by the fault or negligence of Buyer, its directors, officers, 
employees or agents." 

[¶7.]     In accordance with, and 
in performance of, the Purchase Contract, Page delivered the dragline to Bridger 
and placed it in operation by March of 1978. While words may be inadequate to 
describe this gigantic machine, some idea of its size and function can be 
gleaned from Page's brief. It is there explained that:

"* * * The dragline has a 
boom 100 yards long from which is suspended a bucket capable of holding 50 to 75 
cubic yards of material. The bucket scoops up material as it is dragged along 
the ground. The bucket is then lifted by the boom and the entire dragline, 
including the housing and boom, then turns so that the contents of the bucket 
may be dropped into a spoil pile. The dragline then turns back to its original 
position, the bucket is dropped and dragged again, and the procedure is 
repeated. The dragline is moved to a new position by `walking' on large legs 
attached to its sides.

"The reeving block is a 
large steel `pulley' through which steel cables pass from a mast to the dragline 
housing. Other lines run from the mast to the tip of the boom to support the 
boom. Engines in the housing are used to raise the boom during erection by 
tightening the lines which pass through the reeving block. After erection of the 
boom, static lines are attached to the sides of the reeving block to hold the 
mast and boom in position."

[¶8.]     This dragline was used 
by Bridger in its mining operations, without any apparent complaints, from 1978 
until March of 1983. Then Bridger notified Page of several problems that it was 
experiencing with the machine. One of those complaints related to the reeving 
block. Bridger had noticed some cracking in that part of the dragline. According 
to Continental's brief, Bridger had observed the cracking earlier and had welded 
it. The record supports only a reference in a letter from Page to Bridger 
referring to a notification by Bridger to Page of cracking in the reeving block 
in a letter dated March 30, 1983.

[¶9.]     Bridger requested Page 
to send personnel to the mine site to inspect the dragline, and Page did that. 
After completing the inspection, Page sent Bridger a letter which related Page's 
findings and recommendations. The letter includes advice by Page to Bridger that 
many of the problems were attributable to improper use and maintenance of the 
dragline. Specifically with respect to the cracking in the reeving block, Page 
suggested that those cracks be welded properly. There is no claim by Continental 
that Page was responsible for accomplishing any of these suggested corrections, 
and there is no evidence or allegation that Page performed any of the suggested 
repairs for Bridger.

[¶10.]  In the same month, March of 1983, Page 
instructed its company engineers to design a reeving block model that would 
support a greater stress load. Officers of Page stated that this was sheer 
coincidence because the modifications were requested in response to a purchase 
order for a dragline that would be required to tolerate greater stress 
conditions than those of draglines previously manufactured and sold, including 
the dragline furnished to Bridger. Several structural changes were made in the 
design of the reeving block that permitted the boom to apply a straight pull on 
the load. The new design also employed a thicker gauge of steel, providing 
greater "impact properties in cold weather." Continental, in this action, 
alleged that the redesign developed not only a more durable reeving block, but a 
safer one as well, and Continental claims that Bridger should have been told of 
its availability. It is clear that Page did not advise any of its prior 
purchasers of the redesign of the reeving block, nor did it recommend to Bridger 
that it should, or could, replace the reeving block on Bridger's dragline with 
the redesigned model.

[¶11.]  On February 24, 1986, the reeving block 
on the Bridger dragline broke at one of the previously welded cracks. 
Continental alleged that the break in the reeving block caused the boom to 
separate from the housing of the dragline resulting in destruction of the boom 
with damages in excess of $2,500,000. After learning of the collapse of the 
Bridger dragline, Page notified other purchasers of its draglines that they 
should inspect their "super-structure system" for possible cracking. Several 
purchasers responded that they had observed cracking in the reeving blocks on 
their draglines. Page's response to that advice was to recommend to those 
companies that they replace their reeving blocks with the reeving block model 
designed in 1983.

[¶12.]  After the destruction of the boom on its 
dragline, Bridger filed a claim with Continental for the damages it had 
suffered. Continental paid Bridger's claim, and it then filed its complaint in 
the district court seeking to recover from Page for any cause of action that 
Bridger could have brought against Page on the ground that Continental was 
subrogated to Bridger's claims. Continental's complaint set forth five claims 
for recovery that included theories of negligent design of the reeving block, 
negligent failure to warn Bridger of the redesign of the reeving block, breach 
of contract for failure to maintain insurance on the dragline, negligent failure 
to maintain insurance, and express indemnification. Page answered Continental's 
complaint, and Page and Continental began to pursue discovery.

[¶13.]  Approximately one year later, on July 16, 
1987, Page filed a Motion to Dismiss and to Stay Proceedings Pending Disposition 
of This Motion, pursuant to Rule 12(b)(6), W.R.C.P., asserting that (1) an 
action in tort to recover only economic loss fails to state a cause of action; 
(2) any contractual duties which Page might have been responsible for under the 
1974 contract had ended at least eight years before the collapse of the Bridger 
dragline; and (3) Continental was a volunteer in making its payment to Bridger, 
thereby preventing any claim of Continental to a right of subrogation because 
the policy which Continental had written for Bridger did not cover the type of 
damage experienced by the dragline. Continental then filed an Opposition to 
Defendant's Motion to Dismiss in which it argued that the economic loss doctrine 
did not apply to a cause of action which alleged a failure to warn or to any 
cause of action which alleged negligence because the defect in the product 
created an unreasonably dangerous condition. In addition, Continental contended 
that Page's contractual duties extended beyond the warranty period in the 
Purchase Contract so that Bridger's claim was covered by the policy or that, in 
the alternative, Continental had paid Bridger's claim in good faith believing 
that the claim was covered. Continental therefore asserted that it did have a 
right of subrogation to any claim Bridger could have brought against Page. 
Continental also filed a Motion for Leave to File Amended and Supplemental 
Complaint seeking to amend its complaint by supplementing it to include an 
additional cause of action for strict products liability.

[¶14.]  The district court then furnished to the 
parties a decision letter in which the court stated that it intended to treat 
the Motion to Dismiss filed by Page as a motion for summary judgment and that it 
would allow Continental two weeks to either approve of or object to the court's 
proposed action. Continental did not file an objection, but it did file a Motion 
for Continuance of Discovery in which it was asserted that additional time was 
necessary to develop its argument that Page should be held strictly liable in 
tort due to the unreasonably dangerous condition created by the defect in the 
reeving block. After additional briefing, the trial court entered an order 
denying Continental's motion for additional discovery time and its motion to 
amend the complaint to add an additional claim of strict product liability. The 
court then entered a Summary Judgment for Page with respect to all pending 
claims.

[¶15.]  Initially, Continental asserts that the 
district court erred in granting summary judgment because of the existence of 
genuine issues of material fact relating to the cause of Bridger's damages. 
Continental quotes language from the decision of the district court that 
suggests a finding that the damage to the reeving block, which in turn caused 
the collapse of the boom, was a gradual deterioration caused by a latent defect. 
It is Continental's contention that such a finding was prejudicial because 
several courts have distinguished between damages caused by gradual 
deterioration and those caused by a catastrophic event and also because its 
insurance policy excluded latent but not patent defects. Continental continues 
its argument by urging that the error was exacerbated by the district court's 
denial of its motion to continue discovery to permit it to develop facts showing 
that the damage of the dragline was not due to gradual deterioration but was, 
instead, a catastrophic event.

[¶16.]  In a prior case, we reversed the decision 
of the district court granting a summary judgment prematurely and denying 
reasonable time for the parties to conduct their desired discovery. Pace v. Hadley, 742 P.2d 1283 
(Wyo. 1987). 
It was clear in Pace that the 
decision of the trial court to convert the defendant's motion to dismiss into a 
motion for a summary judgment, without giving sufficient notice to the parties 
and without allowing a reasonable opportunity for discovery, resulted in 
prejudice to the rights of the parties. We do not retreat from, or diminish, the 
stance we took in Pace. We continue 
to recognize the necessity of affording parties adequate time for discovery 
before a motion for summary judgment may be granted. The difference in this case 
is that, because of the rule of law followed by the district court, which we 
espouse, affording an opportunity for additional discovery would be an exercise 
in futility and would serve only to increase the expense of litigation to the 
parties.

[¶17.]  The recognized majority rule is that a 
claim for pure economic loss (the damage is only to the defective product) does 
not lie on a theory of negligence or strict liability. East River S.S. Corp. v. Transamerica 
Delaval, Inc., 476 U.S. 858, 106 S. Ct. 2295, 90 L. Ed. 2d 865 (1986); Aloe Coal Company v. Clark Equipment 
Company, 816 F.2d 110 (3d Cir. 1987), cert. denied 484 U.S. 853, 108 S. Ct. 156; 98 L. Ed. 2d 111 (1987); Hart 
Engineering Company v. FMC Corporation, 593 F. Supp. 1471 (D.R.I. 1984); Spring Motors Distributors, Inc. v. Ford 
Motor Company, 98 N.J. 555, 489 A.2d 660 (1985). See also Buckley v. Bell, 703 P.2d 1089 
(Wyo. 1985) 
(recognizing the majority rule). This rule is founded on solid policy 
justifications. The concern of tort law in the area of products liability has 
focused on the need to protect the purchaser or consumer, who often is not in a 
position to withstand the financial impact if he, or his property, is damaged by 
a defective product. The social need to spread the resulting, and often 
catastrophic, losses across a spectrum of consumers thus increasing the cost of 
the product is, however, substantially lessened when the injury is only to the 
product itself. Furthermore, this kind of loss relates essentially to the 
purchaser's benefit of the bargain which has been made between himself and the 
seller. The authorities recognize that the law of contracts is far better suited 
to deal with the dissatisfaction on the part of a purchaser under such 
circumstances.

"Contract law, and the 
law of warranty in particular, is well suited to commercial controversies of the 
sort involved in this case because the parties may set the terms of their own 
agreements. The manufacturer can restrict its liability, within limits, by 
disclaiming warranties or limiting remedies. See U.C.C. §§ 2-316, 2-719. In 
exchange, the purchaser pays less for the product. Since a commercial situation 
generally does not involve large disparities in bargaining power, cf. Henningsen v. Bloomfield Motors, Inc., 
32 N.J. 358, 161 A.2d 69 (1960), we see no reason to intrude into the parties' 
allocation of the risk." East River, 
476 U.S.  at 873, 106 S. Ct.  at 
2303.

In addition, we 
are in accord with those courts that have concluded it is unwise to intrude, 
without more justification, into the remedies that legislatures have chosen and 
which have been provided by the adoption of Article 2 of the Uniform Commercial 
Code - Sales. Sections 34-21-201 through 34-21-299.5, W.S. 1977. See Sacramento Regional Transit District v. 
Grumman Flxible, 204 Cal. Rptr. 736, 158 Cal. App. 3d 289 (Cal.App. 3 Dist., 
1984); Clark v. International Harvester 
Company, 99 Idaho 326, 581 P.2d 784 (1978).

[¶18.]  Continental argues vigorously that this 
court should not espouse the majority rule, but should, instead, adopt the 
rationale of those courts that permit recovery of economic damages for damage to 
the product itself when the damage is caused by a sudden, calamitous event that 
creates an unreasonably dangerous condition. Those courts which have recognized 
a distinction between loss caused by gradual deterioration and loss caused by a 
sudden, catastrophic event producing an unreasonably dangerous condition 
generally relate the latter situation as being more akin to property than to 
economic damage. See Pennsylvania Glass 
Sand Corporation v. Caterpillar Tractor Company, 652 F.2d 1165 (1981); Kodiak Electric Association, Inc. v. Delaval 
Turbine, Inc., 694 P.2d 150 (Alaska 1984), reh. denied 696 P.2d 665 (1985); Arrow Leasing Corporation v. Cummins Arizona 
Diesel, Inc., 136 Ariz. 444, 666 P.2d 544 (1983); Roxalana Hills, Ltd. v. Masonite Corp., 
627 F. Supp. 1194 (S.D.W.Va. 1986), aff'd 813 F.2d 1228 (1987). The Supreme 
Court of the United 
States, in a unanimous opinion, found such a 
distinction not to be persuasive:

"* * * We realize that 
the damage may be qualitative, occurring through gradual deterioration or 
internal breakage. Or it may be calamitous. [Citations]. But either way, since 
by definition no person or other property is damaged, the resulting loss is 
purely economic. Even when the harm to the product itself occurs through an 
abrupt, accident-like event, the resulting loss due to repair costs, decreased 
value, and lost profits is essentially the failure of the purchaser to recover 
the benefit of its bargain - traditionally the core concern of contract law. See 
E. Farnsworth, Contracts Section 12.8, pp. 839-840 (1982)." East River, 476 U.S.  at 870, 106 S. Ct.  at 2301.

[¶19.]  After the Supreme Court articulated its 
resolution of this issue, the United States Court of Appeals for the Third 
Circuit reexamined the wisdom of its decision in Pennsylvania, in which that court had 
held that tort principles could be invoked in an action seeking recovery for 
damage to the defective equipment when the defect resulted in a hazardous 
condition and the loss flowing from the defect was caused by an accident that 
was a sudden and catastrophic event. In that case, the court predicted that the 
rule ultimately adopted in Pennsylvania 
would be consistent. In Aloe, 
however, the court determined that, by applying the concepts of East River, "a murky trudge through sophisticated 
nuances gives way to an unencumbered flight to basics." Aloe, 816 F.2d  at 119. The court then 
held that tort principles could not be invoked if the only damage was harm to 
the defective product. See also Wisconsin 
Power & Light Company v. Westinghouse Electric Corp., 645 F. Supp. 1129 
(W.D.Wis. 1986). In his treatise, Professor Keeton also advises against the 
adoption of a rule that attempts to distinguish "accidental" damage to a product 
from the pure economic loss:

"Making liability depend 
upon whether or not the loss results from an `accident' creates a difficult 
issue and arguably an irrelevant issue with respect to the validity of contract 
provisions allocating a risk of loss for harm to the defective product itself to 
the purchaser. Distinguishing `accidental' damage to the product from mere 
economic loss is difficult in many cases, such as defect in a component of a 
television set that burns out the tubes, or an electric connection to the engine 
of a refrigerator that destroys the engine." W. Keeton, Professor and Keeton on the Law of Torts 
§ 101 at 709 (5th ed. 1984).

Furthermore, 
drawing a distinction between a sudden, calamitous event and gradual 
deterioration may simply turn on the arbitrary factor of whether the purchaser 
noticed the gradual deterioration of a component part that, left unattended, 
could result in a calamitous occurrence. This difficulty was noted in S.J. Groves & Sons Company v. 
Aerospatiale Helicopter Corporation, 374 N.W.2d 431 (Minn. 1985).

[¶20.]  We have no quarrel with Continental's 
contention that there may be no incentive for manufacturers to produce safer 
products unless they are held liable for those defective products placed in the 
hands of purchasers and consumers. We are satisfied, as other courts have been, 
that rules which permit recovery in negligence and strict liability for damage 
to property other than the product itself or for personal injury adequately 
serve this social function. See Ogle v. 
Caterpillar Tractor Company, 716 P.2d 334 (Wyo. 1986); O'Donnell v. City of Casper, 696 P.2d 1278 (Wyo. 1985); Caterpillar Tractor Co. v. Donahue, 674 P.2d 1276 (Wyo. 1983). We are in accord with those courts 
that have rejected the distinction between circumstances which demonstrate 
damage to the product itself caused by a calamitous event and the same economic 
loss due to gradual deterioration.

[¶21.]  We therefore hold that Wyoming does not permit 
recovery in strict liability or negligence for damage caused to the product 
itself. The corollary of this rule in context of summary judgment is that, where 
no cause of action is permitted, there obviously are no material facts. In the 
context of discovery, if there are no facts which are material, no purpose can 
be served by further discovery.

[¶22.]  In the alternative, Continental argues 
that recovery should be permitted when the alleged tort is the failure to warn 
of a known, or foreseeable, unreasonably dangerous condition. Continental refers 
us to two cases in which recovery was allowed on the theory of negligent failure 
to warn when the only damage was to the product itself. Those cases are Miller Industries v. Caterpillar Tractor 
Company, 733 F.2d 813, 81 A.L.R.Fed. 163 (11th Cir. 1984), reh. denied 738 F.2d 451 (1984), and McConnell v. Caterpillar Tractor 
Company, 646 F. Supp. 1520 (D.N.J. 1986). In Miller, Caterpillar manufactured and 
sold an engine, through one of its dealers, to a company that had contracted to 
construct a fishing vessel for Miller Industries. After the engine had been sold 
to Miller Industries, Caterpillar discovered that the model of engine that had 
been sold contained a defect that could render the engine inoperable. 
Caterpillar sent warning letters to its dealers advising them of the defect and 
the procedure for correcting it. No letter was sent to the company that had 
purchased the engine or to Miller Industries, the purchaser of the vessel in 
which the engine was installed. What followed was that the engine failed at sea 
causing a loss of fishing revenue and repair expenses. The court permitted 
recovery for the economic loss beyond that provided in the warranty invoking the 
theory of negligent failure to warn. The 11th Circuit Court of Appeals ruled 
that the general rule, which denies recovery for economic loss beyond that 
provided for in the warranty, was premised upon a different policy from that 
invoked when the tort alleged is failure to warn:

"* * * A duty to warn of 
a product's defect of which the seller becomes aware goes not to the quality of 
the product that the buyer expects from the bargain, but to the type of conduct 
which tort law governs as a matter of social and public policy. See Prosser, Section 92, p. 613; Jig the Third, 519 F.2d  at 179, 181 
(Gee, J., dissenting). To hold otherwise would impermissibly allow a 
manufacturer who is aware that it has a defective product on the market to hide 
behind its warranty while the buyer unknowingly uses it." Miller, 733 F.2d  at 818.

[¶23.]  In McConnell, 646 F. Supp. 1520, a similar 
situation was involved. A defective crankshaft was placed in the engine of a 
fishing vessel while the engine was being repaired. That defect resulted in 
damage to the engine, towing costs, loss of salaries paid, and loss of revenues 
paid. The district court, in that instance, adopted the reasoning of Miller and concluded that recovery for 
the economic loss should be allowed for failure to warn of a known defect in a 
product placed on the market.

[¶24.]  This case is different from those because 
it involves a single manufacturer that was responsible for a single, integrated 
product, even though it was made up of several components. Cf. Fordyce Concrete, Inc. v. Mack Trucks, 
Inc., 535 F. Supp. 118 (D.Kan. 1982) (damage to a mixer that was attached to 
the chassis of a truck was damage to other property). While those cases are 
factually distinguishable, we rest our rejection of Continental's argument 
squarely upon the proposition that recovery for pure economic loss should not be 
permitted when the tort alleged is failure to warn. Recognizing the conclusion 
to the contrary in Miller, we 
perceive that both styles of tort concern the conduct of the manufacturer, 
albeit that conduct may occur at different times in connection with the 
manufacturer's business. Certainly, it may be argued that the manufacturer who 
intentionally, or negligently, fails to warn of a known defect in a product that 
has been placed on the market is more culpable for his actions. The rejection of 
recovery for pure economic loss under theories of negligence and strict 
liability, however, has not been because of the absence of culpability, but 
because of the policy that economic loss is better adjusted by contract rules 
than by tort principles. What is true with respect to strict liability and 
negligence, i.e. the risk associated with a product which does not meet the 
expectations of a buyer is a risk better suited to resolution by agreement 
between sophisticated bargaining parties rather than shifting the economic 
burden through tort principles, also is true with respect to the tort of failure 
to warn. See W. Keeton, Prosser and 
Keeton on the Law of Torts, § 101 at 709.

[¶25.]  Recognition of a cause of action based 
upon duty to warn, in these circumstances, well could impose a duty on the 
manufacturer to advise each customer of every change in the design of its 
product that, in some way, might lengthen the useful life of that product. There 
does not appear to be any inherent wisdom in imposing such a duty. We also have 
considered, and rejected, the adoption of any distinction based upon whether the 
defect could create an unreasonably dangerous condition. Imposing liability for 
damages caused to the user or consumer or to other property is ample incentive 
to encourage manufacturers to warn of a dangerous defect of which they are, or 
should be, aware. To permit recovery in the instance in which the product 
damages only itself simply because the plaintiff has alleged failure to warn of 
the defect will only encourage plaintiffs to present "a products liability 
argument clothed in `failure to warn' language," if for nothing more than its 
settlement potential. Zidell, Inc. v. 
Cargo, Freight and Subfreight of Barge ZPC 404, 661 F. Supp. 960, 964 
(W.D.Wash. 1987). Stated another way, adoption of the tort theory of failure to 
warn would simply permit the damaged party to reach through a rear door that 
sanctuary from which he is foreclosed by a bar on the main entrance.

[¶26.]  This case is a classic example of the 
proposition that expectancies with respect to the performance of a product 
should be a matter of contract between the parties. If a purchaser desires to 
extend the warranty period, or obtain some form of insurance as to the 
reliability or worthiness of the product, that may be done through bargaining 
for an extended warranty at an increased cost or by payment of premiums for 
insurance. Bridger decided to obtain insurance from Continental to cover certain 
defects in the dragline beyond the protection furnished in the warranty 
provision of its contract with Page. As consideration for that coverage, 
Continental accepted premium payments in accordance with its insurance policy. 
That decision to obtain, or provide, additional insurance through contractual 
arrangements represents the business expectancies of each of the parties with 
respect to the worthiness of the product. The injection of tort principles into 
the resolution of that bargain, without any compelling justification for doing 
so, serves only to obfuscate the decision making process by which sophisticated 
entities conduct their business. We hold that the district court did not err in 
dismissing, by the entry of summary judgment, Continental's claims alleging a 
right to recover economic damages in tort, including the theory of failure to 
warn.

[¶27.]  Continental seeks reversal also upon its 
right to recover under perceived contractual obligations owed by Page. It 
contends that there are present in the record genuine issues of material fact 
which foreclose the entry of summary judgment with respect to contract claims. 
More specifically, Continental argues that the purchase agreement established a 
continuing obligation on the part of Page to insure the dragline and to 
indemnify Bridger against any loss. Alternatively, Continental urges the 
proposition that, if there was no continuing obligation under the contract, the 
subsequent actions of Page in inspecting the dragline for defects, at the 
request of Bridger, created an implied contract between Bridger and 
Page.

[¶28.]  The rule is clear that the interpretation 
of an unambiguous contract presents simply a question of law for the court, and 
disposition of disputes relating to such a contract properly may be accomplished 
by a summary judgment. SeeState v. Pennzoil Company, 752 P.2d 975 
(Wyo. 1988). 
The existence of an ambiguity in this purchase agreement can be supported only 
if language is removed from any contextual background. The reading of the 
agreement that Continental chooses would impose duties on the part of Page to 
carry insurance and indemnify Bridger for any loss, ad infinitum, despite the 
express time limitations clearly promulgated in the agreement. The established 
rule does not support Continental but, instead, requires that the contract be 
read as a whole. SeeState v. Moncrief, 720 P.2d 470 (Wyo. 1986). Examining 
this contract as an entity, we are in complete accord with the district court 
that the language clearly provides that the contractual duties with respect to 
maintenance of insurance and indemnification of Bridger against any loss 
terminated at the completion of the period for erection of the dragline or 
shortly thereafter. We agree with the perceptive observation of the district 
court that:

"It is readily apparent 
from the contract, when it is read as a whole, that Page's `operations' under 
that contract consisted of erecting the dragline at Bridger, and that once it 
was erected, Page had no further obligation to maintain insurance for its 
`operations' under this agreement, as its operations were complete. Also, it was 
clearly intended by the parties that Bridger would have the benefit of the 
limited warranty after Page's operations in erecting the dragline under the 
agreement were completed, and that there would be no further requirement for 
Page to maintain insurance. Plaintiffs' reading of Paragraph 19 to the effect 
that Page has to maintain insurance on the dragline `continuously' until the end 
of the world is a nonsensical reading of that provision which totally ignores 
the rest of the contract and the context in which it is made."

The assertion of 
an absurd reading of an unambiguous contract to support a claim does not justify 
a conclusion of ambiguity in the contract nor require a court to deny summary 
judgment because a genuine question of material fact exists as to a duty owed 
under the contract.

[¶29.]  Insofar as Continental urges an implied 
contract between Page and Bridger that extended beyond the period of the express 
agreement, Continental admits that the terms of such an agreement are unknown to 
either of the parties. It simply suggests that a jury be allowed to decide what 
the terms were. It is an axiom of the law of contracts that, in the absence of a 
meeting of the minds, there is no contract. Thus, in an instance in which the 
terms of the contract are so uncertain that mutuality of agreement cannot be 
discerned, the contract is unenforceable because of uncertainty. See Elder v. Jones, 608 P.2d 654 (Wyo. 1980); Engle v. First National Bank of 
Chugwater, 590 P.2d 826 (Wyo. 1979). Certainly, parties can create an 
implied contract by their conduct, but the conduct from which that inference is 
drawn must be sufficient to support the conclusion that the parties expressed a 
mutual manifestation of an intent to enter into an agreement. See J. Calamari 
and J. Perillo, The Law of Contracts 
§ 1-12 at 19-20 (3rd ed. 1987). Although the question of whether particular 
conduct is sufficient to support a finding that an implied contract exists is 
generally submitted to a trier of fact, the question may be resolved by summary 
judgment if reasonable minds could not differ. 1 A. Corbin, Corbin on Contracts, § 18 at 21-22 (1964 
& Supp. 1984); cf. Petersen v. 
Campbell County Memorial Hospital District, 760 P.2d 992 (Wyo. 1988).

[¶30.]  In this regard, Continental's reliance is 
upon Page's response to Bridger's request to investigate certain problems that 
it was experiencing with the dragline and to offer suggested solutions. This 
request, and Bridger's response, occurred after the warranty period had expired. 
We cannot justify a holding that this activity, without more, would serve to 
extend an express warranty in derogation of the specific terms of a written 
agreement or result in the creation of a new contract, the terms of which are 
unknown to either party. Page demonstrated that the only agreement between these 
parties was that expressed in the written contract, and Continental furnished no 
evidence which would refute the evidence of Page or, in any way, demonstrate the 
existence of a genuine issue of material fact in this regard. For this reason, 
the summary judgment was properly entered on the claims asserted under contract 
theories.

[¶31.]  While Continental does present arguments 
relating to the matter of payment as a volunteer, we see no need to address 
those contentions. The status of Continental as a volunteer would only serve as 
a defense to valid claims which might have existed in favor of Bridger assigned 
by subrogation to Continental. In view of our conclusion that Bridger has no 
valid claims as a matter of law, Continental's status as a volunteer is not 
material.

[¶32.]  While greater precision might have 
produced an order by the district court granting the motion to dismiss with 
respect to the tort theories asserted by Continental and then granting summary 
judgment with respect to contract claims, we have no difficulty in perceiving 
the premise for the ruling of the district court. Since there are no factual 
issues which have any materiality, and this case is controlled by principles of 
law, the denial of further discovery proceedings by the district court was 
correct. The disposition of the case by the entry of summary judgment in favor 
of Page is an appropriate resolution. The order granting summary judgment to 
Page is affirmed.

URBIGKIT, J., filed a dissenting 
opinion.

URBIGKIT, Justice, 
dissenting.

[¶33.]  Denied completion of discovery and 
rejected right for leave to amend, appellants lost their product liability 
damage claims on a granted motion for summary judgment which was never 
made.

[¶34.]  This appeal should be remanded to permit 
appellants to amend their complaint and complete their discovery to correct the 
treatment they received at the hands of the trial court which denied them due 
process. Procedurally, the trial court improperly treated a motion to dismiss as 
a motion for summary judgment and then used that summary judgment to foreclose 
the discovery appellants considered necessary to sustain their claims of 
contractual right, product strict liability and a post-sale duty to warn.1 What was done procedurally to 
appellants was not in compliance with procedural rules, accomplished due process 
or provided justice. Substantively, by incorrect attribution of the existence of 
a majority rule, this court adopts a minority posture when it holds none of 
appellants' tort claims as pleaded in this appeal state a claim by an economic 
loss attribution upon which relief can be granted. Although I believe the 
majority should not adopt a minority position to exclude product liability, 
strict liability and negligence to permit damage recovery of over two million 
dollars sustained by the coal company for which this suit was commenced, that 
attitude does have some minority support. However, there is essentially no 
corresponding authority to deny recovery of damages by deprecating the post-sale 
duty to warn cause of action. From these singular failures in precedent, logic 
and justice, I strongly dissent.

[¶35.]  First, I will address the procedural 
mistreatment inflicted upon the appellants and thereafter substantively address 
case law and concepts which lead me to reject the majority's holding that 
appellants' claims of negligence, strict liability, and failure to warn did not 
state a claim upon which relief could be granted.2

I. PROCEDURAL 
MISADVENTURES

[¶36.]  Page Engineering Company (Page) 
manufactured and sold a strip mine dragline to Bridger Coal Company (Bridger 
Coal) for its coal production operation. The two corporations remained in 
contact during Page's periodic inspections of and consultations about the 
machine's use. During this time, Page came to understand the reeving block 
equipment was faulty in design and could easily fail, but neglected to warn 
Bridger Coal. Not surprisingly, the reeving block did fail and brought down the 
boom.3 This appeal questions who should 
pay the $2,536,957 following the catastrophic collapse of the boom caused by the 
failed reeving block.4

[¶37.]  Suit was filed June 16, 1986 including 
allegations of the product liability claims of negligence and defective design, 
and also failure to warn, failure to maintain insurance, and violation of 
express warranty. Page answered by general denial and affirmative allegations of 
failure to state a claim, lack of privity, comparative negligence, assumption of 
risk and unavoidable accident. The lawsuit proceeded normally until July 1, 1987 
when the Wyoming attorney for Page suddenly 
"took sick" during a discovery deposition and document production being pursued 
by Continental Insurance Company (Continental) in Chicago, Illinois. Page brought the depositions to a 
halt even though the "ill" counsel was not lead counsel and then refused 
Continental the opportunity to copy documents already produced.

[¶38.]  Back in Sweetwater County, Wyoming, an ex parte motion was then quickly 
filed by defendant for a protective order. This motion assured the trial court 
judge that a motion for Mr. Greenhalgh (Page's Wyoming counsel who became "ill" during 
discovery) to withdraw as counsel would be made as soon as new counsel could be 
retained. That assurance proved to be false since the "ill" Wyoming counsel never 
withdrew from the case. A restraining order against continued discovery was 
issued without any apparent opportunity for response or objection by Continental 
who had been attempting to pursue deposition and documentary examination 
discovery from Page's personnel and records in Chicago.

[¶39.]  With the ex parte protective order 
deterring discovery in effect, Page filed its motion to dismiss on July 16, 
1987, thirteen months after the commencement of the lawsuit. The brief 
supporting the motion argued that product liability theories would not support a 
claim for economic loss. Prominently cited was Buckley v. Bell, 703 P.2d 1089 
(Wyo. 1985). 
See McLaughlin v. Michelin Tire Corp., 
778 P.2d 59 (Wyo. 1989), Urbigkit, J., 
dissenting.

[¶40.]  The trial court gave Continental fourteen 
days to respond to Page's motion to dismiss (less mailing time) and gave Page 
fifteen days thereafter to reply. Continental responded, including the 
contention that the motion to dismiss was untimely and Page filed a reply brief 
on August 21, 1987. Three days later, Continental filed a motion for leave to 
file an amended and supplemental complaint. Continental also moved to disqualify 
the previously "ill" but never withdrawn local counsel on a conflict basis. The 
brief supporting this motion stated in part that "we were given to believe that 
discovery was aborted at the Page plant in Illinois because [Wyoming counsel] was withdrawing not only not 
from this case, but from litigation altogether." The attached transcript to the 
brief related what occurred in Chicago on June 30, 1987:

[WYOMING COUNSEL]: I 
would like to say for the record that I 
don't feel I can participate in any depositions for health reasons. I have a 
history of heart problems.

* * * I don't think I can 
sit through another deposition today.

* * * * * *

* * * I am not physically 
prepared to sit through any more depositions today. * * *

MR. HENSON: Since you 
spent the weekend on the treadmill at the gym, I don't know that sitting through 
a deposition would cause any more stress than that.

If you had told us last 
Friday that you weren't going to be engaging in depositions here, then we 
wouldn't have spent the weekend preparing for depositions and spent the weekend 
here.

* * * * * *

Mr. Anderson came 
yesterday at a quarter till 5:00 while we were looking at documents and said 
that he wanted to get involved in the case and that he was going to have to take 
some time to become familiar with it and that his client would pay our clients' 
expenses for having to come back here for these depositions, which were suddenly 
aborted here at the last minute.

* * * * * *

Are you saying that you 
are withdrawing from the defense of Page Engineering at this point?

[WYOMING COUNSEL]: I intend to notify the insurance company 
that I am withdrawing for health reasons.

(Emphasis 
added.)

[¶41.]  Based on Page's motion to dismiss and 
faced with a motion for leave to amend, the trial court granted a non-requested summary judgment on 
September 1, 1987. The sixteen page decision letter concluded:

Rule 12(c), W.R.C.P. 
provides that on a motion for judgment on the pleadings, if matters outside the 
pleadings are presented, the motion shall be treated as one for summary 
judgment. I don't think it matters much in this case how it is treated. However, 
the contract, the insurance policy and the subrogation receipts are all before 
the Court and have been referred to extensively by all counsel. Inasmuch as the 
parties have briefed the matter as they have, I am going to answer in kind, and 
treat the case as though a motion for summary judgment had been filed, pursuant 
to Rule 56, W.R.C.P., and if anyone chooses to do so, and, as provided by Rule 
12(b)(c) "all parties shall be given reasonable opportunity to present all 
material made pertinent to such a motion by Rule 56", assuming there is indeed 
any more to be said.

[Wyoming counsel] will 
please prepare an order granting a motion for summary judgment and a summary 
judgment, submit it to opposing 
counsel for approval as to form and to me for signature. Opposing counsel have 
to and including September 15, 1987 to give such approval, or objections 
thereto, failing in which it will be deemed they have approved.

One last observation. I 
own a 1978 Oldsmobile on [which] the warranty expired years ago, and I have it 
insured. Suppose a wheel breaks causing an accident and extensive damage to the 
car and my insurance company pays me. Is it then "subrogated" to my claim 
against General Motors for negligent design? It appears here that plaintiffs 
don't seem to understand that machines wear out eventually, somewhat like the 
"one hoss shay."[5]

(Emphasis 
added.) Procedurally, Continental was denied the opportunity to object when the 
trial court converted Page's motion to dismiss into a summary judgment which 
should have been foreclosed not only by Pace v. Hadley, 742 P.2d 1283, 1286 
(Wyo. 1987) (completion of discovery), but also the summary judgment notice of 
conversion case of Torrey v. Twiford, 
713 P.2d 1160 (Wyo. 1986).

[¶42.]  The trial judge had decided the case and 
nothing thereafter would change his decision. In his further decision letter of 
October 21, 1987, the trial judge explained:

I do not believe the 
decision in Pace v. Hadley (9/22/87) appropriate here. As a matter of fact I do 
not even agree with Pace, supra. In that case the Supreme 
Court had no difficulty at all in finding what the facts were, (3rd paragraph, 
of slip opinion) but also held that the "plaintiffs were not allowed a 
reasonable time for discovery." If the Court could discern the facts so readily, 
so could the plaintiffs. In my experience as a lawyer, I never filed a lawsuit 
until I knew what the facts were as I wanted to be sure I had a cause of action. 
Today, apparently, the theory is shoot first and ask questions later. The 
additional discovery requested by plaintiffs is unnecessary and 
unwarranted.

(Emphasis 
added.) After railing for two full pages against discovery, the trial judge 
concluded:

Plaintiffs' Motion For 
Continuance of Discovery is denied. [Wyoming counsel] will please prepare an 
order denying the motion, an order granting Page's motion for summary judgment 
and a summary judgment, submit it to opposing counsel for approval as to form, 
and to me for signature. Opposing counsel have to and including November 2, 
1987, within which to give such approval, failing in which it will be deemed 
they have approved.

[¶43.]  Responding to such an untimely and 
unjustified decision by the trial court to convert a motion to dismiss into 
summary judgment without notice, Continental filed a declaration of its counsel 
in support of the motion to reconsider and the motion to allow the continuance 
of discovery, a motion for continuance of discovery on September 15, 1987, and a 
memorandum in support of the motion for continuance of discovery with 
comprehensive attachments. The trial court entered an order on September 22, 
1987 giving Page until October 5, 1987 to file its brief in answer to the 
motions for continuance and giving Continental until October 12, 1987 to reply. 
Resolution, of course, was the second decision letter of October 21, 1987 which 
denied the motion for leave to amend and the motion for a complete discovery and 
restated a decision which granted a motion for summary judgment which had never 
been made.

[¶44.]  We are presented with a very troubling 
record where a litigant was clearly denied due process and somehow out of that 
morass, this court is able to perceive that a contractual issue was not created 
as a matter of partially completed discovery with a motion to file an amended 
complaint never considered. In view of the obvious resolution by the majority 
which is, in essence, that due process does not matter if a substantive right 
might not exist, I will not pursue the subject of the contractual issues of 
litigation. It should, however, be noted the Wyoming counsel who "became ill" in 
Chicago never withdrew and, in fact, did appear for oral argument before this 
tribunal. It must also be recognized that summary judgment disposition of 
contractual claims has occurred without completion of discovery in contravention 
of this court's empirical direction to the same trial judge in the earlier case 
of Pace, 742 P.2d  at 1288.

II. SUBSTANTIVE ERROR - 
DENIAL OF CONSIDERATION OF CLAIM FOR VIOLATION OF DUTY TO WARN POST-SALE 
(UNWARNED DANGERS KNOW NO MASTER)

[¶45.]  Although not always a legal duty, the 
duty to warn can arise from obligations of people on the street to not stand 
mute while a young woman is brutally killed or the traveler who ignores the 
missing bridge in an unwillingness to warn anyone who might follow. Here, in an 
area of responsibility within product liability cases, we encounter 
manufacturers or vendors who know their products may cause damage or injury but 
remain stonefaced and silent. These products can range from the exploding 
lighter to a motor vehicle which tends to roll over easily. Schwartz, The Post-Sale Duty to Warn: Two Unfortunate 
Forks in the Road to a Reasonable Doctrine, 58 N.Y.U.L.Rev. 892 (1983); 
Annotation, Failure to Warn as Basis of 
Liability Under Doctrine of Strict Liability in Tort, 53 A.L.R.3d 239 
(1973).

[¶46.]  More egregious is this majority's 
misappreciation of the problem presented in what it does to disregard or destroy 
the parallel tort of failure to warn. The doctrine of economic loss has no 
application or validity to the tort of failure to warn and neither litigant nor 
this court provide precedent to the contrary.6 The tort of failure to warn is 
parallel to but not intrinsically within product liability case law. Failure to 
warn liability can arise and frequently does outside of the law in merchant and 
commercial transaction contract issues. Conversely, failure to warn frequently 
may not be an issue in product defect strict liability cases. See McLaughlin, 778 P.2d 59, Urbigkit, 
J., dissenting.7

[¶47.]  In product defect strict liability cases, 
the failure to warn tort remedy exists in states that have never adopted the 
Restatement (Second) of Torts § 402A (1965) remedies of strict liability. When 
the manufacturer knows harm is possible, notice for an opportunity to replace is 
required. Two examples will serve to illustrate. A broad recall campaign has 
recently been pursued involving a brand name propane gas control unit for 
residential furnaces. After a passage of time, perhaps a long time, certain 
units tend to fail and create an extreme danger of explosion and fire. The 
manufacturer has made a total effort at identification and recall. See, for 
example, Young v. Robertshaw Controls 
Co., 104 A.D.2d 84, 481 N.Y.S.2d 891. (1984). That control unit is a 
separate part from the house and even from the furnace itself with a separate 
identifiable manufacturer. Consider then the hypothetical but comparable example 
of a car fuel pump which may fail in loss of confinement of gasoline and 
consequently sprays gasoline on the motor of the vehicle. See Capitol Fuels, Inc. v. Clark Equipment 
Co., 382 S.E.2d 311 (W. Va. 1989). Three dangers exist. The fuel pump might 
cause the vehicle to burn up, it might cause the vehicle to burn up with the 
garage and house and it might burn up the occupants if the car explodes. Cases 
in application of the tort of failure to warn present no difference whether the 
damage resulting from the integrated part destroys the car, the house or a life. 
Economic loss, consequently, has no significance. Tested by tort is duty from 
knowledge of danger, failure to warn, and resulting damage and loss.

[¶48.]  Existing separately from the faulty 
manufactured or faulty designed merchandise disputes, the duty to warn has two 
separately identified applications. The first, which is not presented here, is 
the vendor/manufacturer responsibility upon initial sale if the product or its 
intended use is intrinsically dangerous and that danger may not be equally known 
to the user. This sale date duty to warn tort responsibility has an extensive 
and long-standing history.8 Conversely, as presented here, the 
post-sale duty to warn cause of action as a more recently developing theory of 
liability now has a significant litigation impact. However, until East River S.S. Corp. v. TransAmerica 
Delaval, Inc., 476 U.S. 858, 106 S. Ct. 2295, 90 L. Ed. 2d 865 (1986) and its 
protegee, the differentiation of elements of damage between the sale time duty 
and the post-sale acquired knowledge duty had not occasioned particularized 
discussion. "The duty to warn is an independent duty not determined by the 
contractual agreement between the predecessor-seller and successor-buyer 
corporations. L.R. Fumer, M.I. Friedman, Products Liability, § 2.06[5] (1988). 
The duty may arise despite `the nature of the transfer.' Id." Florom v. Elliott Mfg., 879 F.2d 801, 802 (10th Cir. 1989). The character of the post-sale duty to warn is 
illuminated in that case where the tort is asserted against a business successor 
to the vendor.

Where such a duty arises, 
it stems from the existence of the relationship between the successor and the 
customers of the predecessor. Polius v. 
Clark Equipment Co., 802 F.2d 75, 84 (3rd Cir. 1986); accord Mozingo v. Correct Manufacturing 
Corp., 752 F.2d 168, 177 and n. 12 (5th Cir. 1985) (duty arises from 
continuation of relationship between successor and predecessor's customers); Travis v. Harris Corp., 565 F.2d 443, 
448-49 (7th Cir. 1977). "The successor corporation's liability stems not from 
its status as a successor, but from its establishment of a relationship with the 
customer that imposes certain duties and responsibilities." Polius, 802 F.2d  at 84; Mozingo, 752 F.2d  at 177; Travis, 565 F.2d  at 449.

The court must look at 
factors such as the succession to service contracts, coverage of the particular 
machine by a contract, service of that machine by the successor, and the 
successor's knowledge of the defect and of the machine owner's location. Polius, 802 F.2d  at 84; Mozingo, 752 F.2d  at 177; Travis, 565 F.2d  at 449; see also Downing v. Overhead Door Corp., 707 P.2d 1027, 1033 (Colo. App. 1985) (duty to warn exists where a danger concerning the 
product becomes known to the manufacturer subsequent to the sale and delivery of 
the product, even though it was not known at the time of the sale).

Florom v. Elliott 
Mfg., 
867 F.2d 570, 577, reh'g denied 879 F.2d 801 (10th Cir. 1989). In Florom, 
which involved a "cherry picker" as equipment not totally dissimilar from the 
crane involved here, the Tenth Circuit Court of Appeals further 
recognized:

The claim of breach of 
the duty to warn was not proper for disposition by summary judgment. Leannais [v. Cincinnati, Inc.], 565 F.2d 
[437] at 442 [(7th Cir. 1977)]. While our conclusion is based on the federal 
rules of procedure, we note that Colorado's procedural and substantive law 
mandates the same result. E.g., Union 
Supply v. Pust, 196 Colo. 162, 583 P.2d 276, 279, 283 (1978) (failure to 
warn is jury question and "trial judge should only invade the fact-finding 
function of the jury in the clearest cases when the facts are not in dispute."). 
Thus the summary judgment on this claim must be reversed.

Florom, 867 F.2d  at 577.9

[¶49.]  The principal case considered as 
precedent on the function and criteria of the post-sale duty to warn is Cover v. Cohen, 61 N Y2d 261, 473 N.Y.S.2d 378, 461 N.E.2d 864 (1984), where an accelerator problem on a Chevrolet 
caused bystander injury. That case addressed admissibility of post-sale 
technical service bulletins issued by the manufacturer in conjunction with 
consideration of the cause of action of negligent failure to warn, including 
inadmissibility of evidence of any "failure to warn cause of action insofar as 
it turned on the design and risk status of the vehicle at the time of delivery." Id. 461 N.E.2d  
at 871 (emphasis added).

[¶50.]  The court went on to discuss:

A manufacturer or 
retailer may, however, incur liability for failing to warn concerning dangers in 
the use of a product which come to his attention after manufacture or sale, 
through advancements in the state of the art, with which he is expected to stay 
abreast, or through being made aware of later accidents involving dangers in the 
product of which warning should be given to users * * *.

Although a product be 
reasonably safe when manufactured and sold and involves no then known risks of 
which warning need be given, risks thereafter revealed by user operation and 
brought to the attention of the manufacturer or vendor may impose upon one or 
both a duty to warn * * *.

What notice to a 
manufacturer or vendor of problems revealed by use of the product will trigger 
his postdelivery duty to warn appears to be a function of the degree of danger 
which the problem involves and the number of instances reported * * 
*.

The nature of the warning 
to be given and to whom it should be given likewise turn upon a number of 
factors, including the harm that may result from use of the product without 
notice, the reliability and any possible adverse interest of the person, if 
other than the user, to whom notice is given, the burden on the manufacturer or 
vendor involved in locating the persons to whom notice is required to be given, 
the attention which it can be expected a notice in the form given will receive 
from the recipient, the kind of product involved and the number manufactured or 
sold, and the steps taken, other than the giving of notice, to correct the 
problem * * *.

Id. 461 N.E.2d  at 
871-72.

[¶51.]  Among other cases cited by the New York 
court involving the post-sale failure to warn cause of action include Comstock v. General Motors Corp., 358 
Mich. 163, 99 N.W.2d 627 (1959), which involved an automobile brake failure and 
quoted the seminal case of MacPherson v. 
Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 (1916). In Comstock, Buick Motors had ample warning 
of a serious brake problem. The duty to provide a post-sale warning was derived 
from the earlier Michigan case of Gerkin 
v. Brown & Sehler Co., 177 Mich. 45, 143 N.W. 48 (1913):

"When the fact is once 
established and demonstrated by experience that a certain commodity apparently 
harmless contains concealed dangers, and when distributed to the public through 
the channels of trade and used for the purposes for which it was made and sold 
is sure to cause suffering to, and injure the health of, some innocent 
purchaser, even though the percentage of those injured be not large, a duty 
arises to and a responsibility rests upon the manufacturer and dealer with 
knowledge to the extent, at least, of warning the ignorant consumer or user of 
the existence of the hidden danger. Failing to do so, the dealer, as well as the 
manufacturer, who has the knowledge and does not impart it, is liable to a 
subsequent, ignorant purchaser, reasonably within contemplation of the parties 
to the original sale, for injuries sustained through such hidden dangers. This 
is by reason of the duty the dealer owes to the public generally, which includes 
all whom it may concern, to give notice of any concealed dangers in the 
commodity in which he traffics, and to exercise a reasonable precaution for the 
protection of others commensurate with the peril involved. We think this 
principle applicable to the case at bar and fairly deducible from the many 
authorities touching manufacture and sale of dangerous commodities."

Comstock, 99 N.W.2d  at 634 
(quoting Gerkin, 143 N.W. at 53). See likewise Bottazzi v. Petroleum 
Helicopters, Inc., 664 F.2d 49 (5th Cir. 1981) and Braniff Airways, Inc. v. Curtiss-Wright 
Corp., 411 F.2d 451 (2nd Cir.), cert. 
denied 396 U.S. 959, 90 S. Ct. 431, 24 L. Ed. 2d 423 (1969), reh'g 424 F.2d 427 
(2nd Cir.), cert. denied, 400 U.S. 829, 91 S. Ct. 59, 27 L. Ed. 2d 59 (1970).

[¶52.]  In Braniff Airways, Inc., 411 F.2d  at 453, 
the court first adduced that claims based on warranty were barred by the 
appropriate contract action statute of limitations and then said, in regard to 
the airplane:

It is clear that after 
such a product has been sold and dangerous defects in design have come to the 
manufacturer's attention, the manufacturer has a duty either to remedy these or, 
if complete remedy is not feasible, at least to give users adequate warnings and 
instructions concerning methods for minimizing the danger.

See John Deere Co. v. 
May, 773 S.W.2d 369, 378 (Tex. App. 1989) and Bell 
Helicopter Co. v. Bradshaw, 594 S.W.2d 519 (Tex. Civ.App. 1979). In John Deere Co., 773 S.W.2d  at 378, a 
$2,652,000 judgment was awarded as the price for "the tragic result of its 
failure to act [warn]."

[¶53.]  A fishing vessel engine damage resulted 
from failure of an unsupported oil line in Jones v. Bender Welding & Mach. Works, 
Inc., 581 F.2d 1331 (9th Cir. 1978). Liability was justified by a finding of 
negligent notification where the problem had been bulletined to dealers but not 
to boat owners:

Nor can Caterpillar avoid 
liability by contending that it had no duty to inform its dealers of the 
bracket. While it is arguably true as Caterpillar contends that the lack of a 
bracket did not cause a safety hazard to the ship's passengers, the danger posed 
to the engine and the ship itself, if not the shipper's lost profits, is 
sufficient to create a duty to act in a reasonable fashion. * * * In light of 
the comparable development at common law of the duty to inform as reasonable 
conduct by a manufacturer and the clear implication of our recent opinion in Pan 
Alaska Fisheries, Inc. v. Marine Construction & Design Co., supra [565 F.2d 1129 (9th Cir. 1977)], we also reject Caterpillar's argument that the duty to 
inform dealers is not enforceable by the ultimate consumer.

Id. at 1335.

[¶54.]  A product similar in commercial scope of 
limited unit production as canning or packaging equipment produced the 
litigation in Kozlowski v. John E. 
Smith's Sons Co., 87 Wis.2d 882, 275 N.W.2d 915 (1979) where, while in 
operation and under maximum pressure, a piston in the machine jetted beyond the 
safety line of the machine, fractured safety rings and killed the operator. The 
appellant contended the machine was defective by design when permitting the 
existence of an unreasonably dangerous condition. It was argued there was a 
substantial risk the safety ring (as it did) would fracture when continually 
struck by the piston while in operation. At issue was the non-installation of a 
post-sale safety device raising the duty of warning by the manufacturer of an 
allegedly defective condition in light of the improvement which would have 
avoided occurrence of the accident. In analysis, that court found:

[A] jury could find it 
persuasive that prior to the accident, a Smith's sales representative made only 
two visits to the Cudahy plant. On each occasion he failed for one reason or 
another to inform Cudahy of the safety by-pass valve and the hazard it was 
designed to prevent. The representative's own testimony is that these sales 
calls were made after 1971 when the safety by-pass valve had become standard 
equipment on all new machines.

Id. 275 N.W.2d  at 
923.

[¶55.]  The differentiation between incidents of 
initial sale and subsequent post-sale duty to warn were related in Miller Industries v. Caterpillar Tractor 
Co., 733 F.2d 813, 818, reh'g 
denied 738 F.2d 451 (11th Cir. 1984):

[T]he argument for 
finding that a warranty was not intended to preclude a negligence action is even 
more compelling here than in Jig the 
Third. In Jig the Third [Jig the 
Third Company v. Puritan Marine Insurance Underwriters Corporation, 519 F.2d 171 (5th Cir. 1975)], the plaintiff's claim was premised on the negligent design 
and manufacturing of the product and thus was closely related to the quality of 
the product and the plaintiff's expectations of how the product would perform. 
Here, however, the gravamen of the plaintiffs' complaint is that the defendant 
failed to properly warn of defects that it discovered after the engine was 
already on the market. Whatever the merits of adopting a rule that views defects 
in a product as part of the parties' bargain and thus within the law of sales, 
it is much less tenable to presume that the buyer has bargained away the 
manufacturer's obligation to warn of defects that later come to the 
manufacturer's attention. A duty to warn of a product's defects of which the 
seller becomes aware goes not to the quality of the product that the buyer 
expects from the bargain, but to the type of conduct which tort law governs as a 
matter of social and public policy. * * * To hold otherwise would impermissibly 
allow a manufacturer who is aware that it has a defective product on the market 
to hide behind its warranty while the buyer unknowingly uses it.[10]

[¶56.]  Overspeed of an airplane propeller 
occasioned consideration of the failure to warn liability in Noel v. United Aircraft Corp., 342 F.2d 232 (3d Cir. 1964), where the court found the danger of the occurrence and its 
effects not hypothetical but a generally recognized danger. Evidence of 
post-sale safety improvements was admissible to establish the manufacturer's 
duty, if any, to warn the purchaser of commercial iron of any deficiency in the 
ironer's safety features in doCanto v. 
Ametek, Inc., 367 Mass. 776, 328 N.E.2d 873, 878 (1975):

There was evidence from 
which the jury could have found that the machine was negligently designed and 
its braking capacity misrepresented. When the manufacturer of such a machine 
learns or should have learned of the risk created by its fault, it has a duty to 
take reasonable steps to warn at least the purchaser of the risk. * * * One such 
reasonable step may be to warn at least the purchaser of changes which eliminate 
or tend to eliminate the risk created by the manufacturer's initial 
fault.

In Labelle v. McCauley Indus. Corp., 649 F.2d 46, 49 (1st Cir. 1981), the court stated:

The manufacturer's duty 
to warn of a defect or dangerous condition extends, however, to the purchaser of 
its product, * * *, even if defects are discovered after the initial sale. * * 
*

To be adequate, a warning 
must reasonably apprise the purchaser of the danger by direct notice or by an 
indirect notice which gives warning or eliminates the danger. That an indirect 
warning fails to reach a particular purchaser does not alone render the 
manufacturer negligent if the method of warning be adequate. Restatement 
(Second) of Torts, § 388 Comment c (1965).

A question of 
fact was created by issuance of a revision to the service manual. The airplane 
was damaged when the propeller blade sheared and created the inquiry of a duty 
to warn post-sale cause of action for which plaintiff's favorable jury verdict 
had been initially entered. That verdict for the damage to the airplane 
resulting from the propeller blade provided sufficient evidence to support a 
finding of negligent failure to warn about a defective condition in the product. 
Bottazzi, 664 F.2d 49 likewise raised 
the duty to warn as a post-sale failure which similarly justified recovery from 
an accident caused by a power shaft failure on the helicopter. The manufacturer 
knew of the potential problem and failed to warn customers of the potential 
danger and to specify corrective action in its overhaul manual.

[¶57.]  The analysis that a breach in the duty to 
warn is different from the duty breached by manufacturing a defective product 
and is also different from a breach in a post-sale duty to warn of a known 
danger, is well-stated in Nicor Supply 
Ships Associates v. General Motors Corp., 876 F.2d 501, 504 (5th Cir. 1989) 
(footnotes omitted):

Two courts, the Eleventh 
Circuit in Miller Industries v. 
Caterpillar Tractor Co., [733 F.2d 813 (11th Cir. 1984)] acting before East River, and a New Jersey District 
Court in McConnell v. Caterpillar Tractor 
Co., [646 F. Supp. 1520, 1526 (D.N.J. 1986)] acting after East River, have distinguished between a 
manufacturer's negligence occurring "as part of the manufacturing process" and a 
manufacturer's negligent failure to warn of a known defect. * * * Both courts 
reasoned that a manufacturer's negligence after manufacture has been completed 
"goes not to the quality of the product that the buyer expects from the bargain, 
but to the type of conduct which tort law governs as a matter of social and 
public policy." 

In both Miller Industries and McConnell, the failure-to-warn claim was 
predicated on knowledge gained by the manufacturer after the product had been 
delivered. * * *

While failing to warn a 
purchaser of a defect in a product known at the time of manufacture is, of 
course, different from manufacturing a defective product, both negligent acts 
occur during the manufacturing process and before delivery of the product to the 
buyer. We are unable to assign to either act a relatively higher level of 
consciousness of wrongdoing, and thus do not discern a meaningful legal 
difference between them.

[¶58.]  Examination of the cited cases supports 
the thesis presented. In McConnell v. 
Caterpillar Tractor Co., 646 F. Supp. 1520, 1526 (D.N.J. 1986), the court 
said:

Plaintiffs allege that 
both Caterpillar and Giles & Ransome were negligent in failing to notify 
them of the defect in the crankshaft. We first note that the East River decision, as we read it, does 
not bar plaintiffs' negligence claim. It is true that in East River, plaintiff-charterers, in the 
fifth count of their complaint, alleged that the defendant negligently 
supervised the installation of a valve, and that the Supreme Court disallowed 
recovery on this count as well as on the strict products-liability counts 
because the losses sustained were purely economic. However, in East River, plaintiffs alleged that the 
negligence occurred "as part of the manufacturing process." 106 S. Ct.  at 2297. 
The alleged negligence in the instant case is distinguishable; plaintiffs here 
assert, not that defendants negligently manufactured the crankshaft, but that 
they negligently failed to warn plaintiffs of a known defect in the 
crankshaft.

[¶59.]  In Strauch v. Gates Rubber Co., 879 F.2d 1282 (5th Cir. 1989), hose was purchased from Gates Rubber Co. for ammonia 
transfer purposes. The manufacturer failed to warn its customer the product had 
an average service life of thirty months. When use continued by the customer 
beyond the non-communicated service life, the hose burst and injury and damage 
resulted. Absent communication of the useful life limitation, liability could 
result from product failure.

It was reasonable for the 
jury to conclude from this evidence that the hose failed on June 28, 1985 
because it had been in service longer than its useful life and that defendant's 
failure to warn of its product's truncated serviceable life was a proximate 
cause of its failure.

Id. at 1286.

[¶60.]  The post-sale duty to warn negligence 
tort is the result of a circumstance but not a function of the sales 
transaction. 1A L. Frumer & M. Friedman, Products Liability § 2.22 (1987). The 
initiating factors arise when first the manufacturer or supplier comes to 
recognize that a previously sold product produces an unreasonable risk of injury 
or damage to the user or bystander. Secondly, the possessor of the information 
makes no reasonable effort to meet its duty of due care to provide the 
information to the possessor of the product so that potential damage can be 
avoided by disuse or correction. Finally, the user, unaware of the danger, 
continues use of the faulty product and, within the reasonably expected 
circumstances, an event of loss occurs from which damage and injury 
result.

[¶61.]  It is first apparent the duty is to 
communicate the warning. This provides the user opportunity to avoid the harm. 
Consequently, the duty itself has nothing to do with statutes of limitation 
triggered by negligence or warranty from the initial sales transaction. 
Contractual terms of implied warranty, express warranty and waiver of warranty 
are likewise not functional factors in the existence of the tort or related to a 
remedy from a failure to warn. Additionally, with one differentiated case, Bell Helicopter Co., 594 S.W.2d 519, 
avoidance of the commission of the tort is accomplished by reasonable efforts to 
communicate under the circumstances and what, if anything, the user does 
thereafter to take heed remains no responsibility for the manufacturer or 
supplier. In Rekab, Inc. v. Frank Hrubetz 
& Co., 261 Md. 141, 274 A.2d 107, 111 (1971), the court found the 
replacement of the ferris wheel shaft with agreement to install at the 
convenience of the operator constituted a "tintinabular message" sufficient to 
avoid post-sale failure to warn tort liability. For this cause of action derived 
from product liability cases, the existence of the sale of the tangible object 
subjects the parties to duties that are independent of the sales transaction in 
its initially executed terms. It is a positive duty independent of the contract 
although arising out of a state of facts created by the contract. The court in 
Tomlinson v. Armour & Co., 75 
N.J.L. 748, 70 A. 314, 317 (1908) related:

[T]he existence of the 
contract creates a situation that subjects the parties to duties that are 
independent of the obligation to perform the contract * * *.

* * * * * *

Among the most 
fundamental of personal rights, without which man could not live in a state of 
society, is the right of personal security, including the "preservation of a 
man's health from such practices as may prejudice or annoy it" (1 Black.Com. 
129, 134) - a right recognized, needless to say, in almost the first words of 
our written Constitution (Const. art. 1 par. 1). To assert, therefore, that one 
living in a state of society, organized, as ours is, according to the principles 
of the common law, need not be careful that his acts do not endanger the life or 
impair the health of his neighbor seems to offend against the 
fundamentals.

[¶62.]  In the earlier case of Tomlinson, diseased and unfit food 
was sold. A more current example of the ignored duty to warn is found in Young, 481 N.Y.S.2d 891. Robertshaw 
Controls Company is a nationally established vendor of control units for propane 
furnace and water heaters. The court, in Young, 481 N.Y.S.2d  at 893-94, described 
that:

[E]vidence tendered by 
the plaintiff indicates, that for a number of years prior to decedent's death 
defendant was aware its control valve was defective and represented a real 
danger to the public (there had apparently been more than 100 accidents 
resulting in 32 deaths and 77 injuries), yet it did not recall the controls nor 
attempt to alert the public to the risk, but embarked instead upon an 
affirmative course of conduct designed and calculated to conceal the problems 
with the control. Allegedly this concealment, which continued for several years 
after decedent's death, was undertaken with the intention of deceiving the 
public at large as to the continued fitness for use of this control valve which 
defendant had placed in commerce and minimizing recoveries in lawsuits generated 
by the faulty control. Although generally non-disclosure or concealment alone 
does not equate to actionable fraud * * *, it is a principle of long standing 
that "one who sells an article knowing it to be dangerous by reason of concealed 
defects is guilty of a wrong, without regard to the contract, and is liable in 
damages to any person, including one not in privity of contract with him, who 
suffers an injury by reason of his willful and fraudulent deceit and 
concealment" (Kuelling v. Lean Mfg. Co., 
supra, 183 N.Y. p. 89, 75 N.E. 1098).

[¶63.]  Of similar intelligence is a case which 
is the factual converse of Buckley, 
703 P.2d 1089. In American Oil Co. and 
Capitol Oil Co. v. Nicholas, 156 Va. 1, 157 S.E. 754 (1931), gasoline was 
delivered rather than the ordered kerosene. Gasoline was a faultless product, 
but not when used by the unsuspecting purchaser to start a fire in his coal 
stove with a result which burned more than desired in the resulting explosion. 
As a matter of fact, serious injuries resulted. The Virginia court, in finding a 
duty on the distributor to warn about the improperly delivered fuel quoted an 
even earlier Virginia case, Standard Oil 
Co. v. Wakefield's Adm'r, 102 Va. 824, 47 S.E. 830 (1904):

"It seems to be a 
well-settled rule of the common law that a person who negligently uses a 
dangerous instrument or article, or causes or authorizes its use by another in 
such a manner or under such circumstances that he has reason to know that it is 
likely to produce injury, is responsible for the natural and probable 
consequences of his act to any person injured who is not himself at 
fault."

[¶64.]  In the same case Judge Buchanan quotes 
with approval from Thompson on Negligence, vol. 1, § 821, as 
follows:

"The doctrine of these 
cases, stated in a general way, is that, if a person sells goods, chattels, or 
machinery which posses some concealed defect, or tendency to do harm, such as 
will, according to the probabilities of ordinary experience, do harm to innocent 
persons, he must respond in damages if such harm ensue without the intervention 
of the negligence or fault of others; and upon principle it would be immaterial 
whether the knowledge of the concealed vice or defect was withheld from the 
purchaser through the vendor's unskillfulness, ignorance or fraud."

American Oil, 
157 S.E. 
at 757-58.

[¶65.]  Presented here is a post-sale duty when 
the manufacturer or vendor comes to know that a danger from continued use may 
exist to the product as well as other property. A post-sale duty to warn concept 
is an emerging tort concept founded upon a concept that any choice requires the 
knowledge to chose and the originator of the product retains a responsibility to 
furnish that information which permits the user to exercise a choice.11 See differentiation and 
distinguishment of the post-East 
River case in Zidell, Inc. v. Cargo, 
Freight and Subfreight of Barge ZPC 404, 661 F. Supp. 960 (W.D.Wash. 1987) 
and McConnell, 646 F. Supp. 1520. 
Non-communicated knowledge is the tort foundation. Schwartz, supra, 58 N.Y.U.L.Rev. at 896-97; 
Annotation, Strict Products Liability: 
Liability for Failure to Warn as Dependent on Defendant's Knowledge of 
Danger, 33 A.L.R.4th 368 (1984). See also Annotation, Discovery, In Products Liability Case, of 
Defendant's Knowledge As To Injury To or Complaints by Others Than Plaintiff, 
Related to Product, 20 A.L.R.3d 1430 (1968).

[¶66.]  The fallacy in this majority is in 
collapsing this post-sale duty to inform into concepts of product liability 
recovery limitation where only economic damage results from usage of a faulty 
product. A contractual thesis with corollary attributes of statute of 
limitations or limited time of warranty has nothing to do with the societal 
danger from a faulty product where the knowledge necessary to protect is encased 
in the hands of the originator. The authority supporting this misapplication of 
a differing responsibility to protect society from injury as a product liability 
concept is a current case from an intermediate appellate court which makes the 
same mistake repeated by this majority. Utah Intern., Inc. v. Caterpillar Tractor 
Co., 108 N.M. 539, 775 P.2d 741, cert. denied 108 N.M. 354, 772 P.2d 884 
(1989).12 The New Mexico court opined that 
the commercial transaction factor was determinative in denial of recovery for 
economic damage. That court then said "[w]e specifically do not address the 
question of whether the same rule should apply to non-commercial consumers who 
suffer similar injuries." Id. 775 P.2d  at 744. In regard to the separate claim for negligent failure to warn, that 
court then said:

[W]e believe that the 
same policy considerations which apply to defects in manufacturing also apply to 
failure to warn of defects. Post-East 
River cases other than McConnell 
appear to apply broadly the rule prohibiting tort recovery for economic 
loss. * * * Thus, we hold that in commercial settings claims for economic loss 
from a product injuring itself due to negligent failure to warn are also 
precluded from recovery.

Id. 775 P.2d  at 
745.

[¶67.]  This quotation reflects how bad law 
results from misquotation or improper examination of cases. The federal district 
judge in Frey Dairy v. A.O. Smith 
Harvestore Products, Inc., 680 F. Supp. 253 (E.D.Mich. 1988) (also a company 
that is a frequent visitor to these product liability cases), without discussion 
or analysis about the duty to warn which was claimed, stated the economic damage 
rule precluded plaintiff's recovery on all tort remedies by citation of a 
federal and a Michigan state case. On appeal, the Sixth Circuit Court of Appeals 
took a completely novel approach in affirming the bad decision of the trial 
court, neither of which fit Michigan case law by discerning that tort remedies 
were waived by contractual exclusion. Frey Dairy v. A.O. Smith Harvestore 
Products, Inc., 886 F.2d 128 (6th Cir. 1989). The Michigan case, McGhee v. GMC Truck & Coach Division, 
98 Mich. App. 495, 296 N.W.2d 286 (1980), did not involve or raise any issue 
of a duty to warn as a recovery claim. See, moreover, Mulholland v. DEC Intern. Corp., 432 
Mich. 395, 443 N.W.2d 340 (1989). Likewise, S.M. Wilson & Co. v. Smith Intern. 
Inc., 587 F.2d 1363 (9th Cir. 1978) did not present a duty to warn claim 
either. Florida Power & Light Co. v. 
Westinghouse Elec. Corp., 510 So. 2d 899 (Fla. 1987) involved nuclear steam 
supply systems and provided no issue or discussion of a post-sale unmet duty to 
warn.

[¶68.]  The Tenth Circuit Court of Appeals in Smith v. FMC Corp., 754 F.2d 873 (10th 
Cir. 1985) considered a safety device to protect a crane from "two-blocking." 
Reversal of a defendant's verdict came by decision of the appellate court on the 
improper inclusion of an assumption of risk instruction and in regard to a 
contested instruction on defective product liability where the appellate court 
directed that "the district court may wish to review this instruction upon 
remand, inasmuch as a manufacturer has a responsibility to warn of a defective 
product at any time after it is manufactured and sold if the manufacturer 
becomes aware of the defect." Id. at 
877.

[¶69.]  The FMC Corporation crane accident 
illustrates the theoretical invalidity of this court's economic damage 
adaptation when applied to a post-sale duty to warn cause of action claim. In 
that case, the faulty device on the crane boom caused the death of two innocent 
bystanders. In this case, it was only by blind luck that no one was killed when 
the reeving block failed, destroying the boom and the dirt bucket. The 
differentiation in thesis that no viable claim of negligent violation of the 
duty to warn after sale can be stated here and one could be stated in FMC Corporation is simply absurd. Sales 
contract conditions and warranties have absolutely nothing logically to do with 
the existence of the same tort in both cases. One only needs to recognize the 
absolute axiom of accidents that if a gamble is made from which damage and loss 
result to the product itself, sooner or later, if not most of the time, someone 
will be injured or killed or, at least, other property damaged. The comparison 
of happenstance is illustrated in Suich 
v. H & B Printing Machinery, Inc., 185 Ill. App.3d 863, 133 Ill.Dec. 
768, 541 N.E.2d 1206 (1989), where lacking appropriate warning, the gantry crane 
collapsed resulting in damage award to the injured worker of $2,800,707. The 
only difference is that here, no one was in the way when the machine collapsed. 
Again, in H & B Printing Machinery, 
Inc., the injured worker was in the wrong place at the wrong time.13

[¶70.]  The text authorities recognize a duty to 
warn even if the damages are what has been referred to generally as economic 
damage. The premises for recognizing this tort are spelled out in 1 M. Madden, 
Products Liability § 10.13 at 453-55 
(2d ed. 1988) (footnotes omitted): 

A post-sale duty to warn 
may attach even if the product was, at the time of manufacture and sale, 
reasonably safe for use (or arguably so), but through use or operation, has 
betrayed hazards not earlier known to the seller, or to other sellers of like 
products.

* * * * * *

As is equally true of the 
duty to warn at the point of sale, the doctrinal underpinning of the 
manufacturer's post-sale informational obligation is the commitment to remedying 
the asymmetry of information held by the seller, on the one hand, and by the 
consumer on the other. The object, in general terms, is to encourage 
manufacturers to impart to consumers that information the manufacturers receive 
in the ordinary course of their business, germane to product safety and 
technological advances and to the performance and accident histories of those 
products sold and in use.

See likewise, 1A 
L. Frumer & M. Friedman, supra, 
at 2-1071. "Even if there is no duty to warn at the time of the sale, facts may 
thereafter come to the attention of the manufacturer which make it imperative 
that a warning then be given." Id. at 
2-1071. See also 1 American Law of Products Liability 3d, § 1:67 at 71 (1987) 
and 3 American Law of Products Liability 3d, § 32:6 at 20 (1987). "Thus, a 
manufacturer must warn of dangers inherent in its product that it knew or should 
have known about during the time the plaintiff used the product." Id. at 21.

[¶71.]  The majority offers no real authority to 
deny recovery for a breach of post-sale duty to warn. As the authorities 
reflect, the issue is a responsibility to share information in order to afford 
the purchaser an opportunity to avoid damage and loss. Page could easily have 
warned Bridger Coal the reeving block was defective. Bridger Coal could have 
replaced the defective reeving block for $80,000 - $150,000 or continued using 
the old reeving block and risked the catastrophic loss that followed. The point 
is they would have been allowed to make an informed decision and determined whether 
to buy safety with a replacement product.

[¶72.]  The majority is wrong in precedent, wrong 
in theory, and wrong in rejection of its obligation to contribute to the 
effectiveness and efficiency of the nation's economic institutions.

III. PRODUCT LIABILITY - 
PROPERTY DAMAGE

(WHAT IS ECONOMIC 
DAMAGE?)

[¶73.]  This court is presented with a clearly 
defined substantive appeal determination whether the economic loss doctrine bars 
recovery where the reeving block failed and caused damage to the boom and shovel 
of the drag line equipment. Disregarding all contractual issues by-passed by 
denied discovery and the substantively significant concerns of implied 
warranties of merchantability and fitness for the purpose intended, we are 
presented under economic loss doctrine topics of (a) what is economic damage; 
(b) proper viability of the economic loss doctrine for application under these 
circumstances as it should properly be confined and defined within current 
literature when the occurrence is catastrophic and life threatening; and (c) 
constituent damage to other parts of the equipment.

[¶74.]  Before distilling the three substantive 
mistakes in analysis and precedent made by this court, it helps to set out what 
is meant by the terms used by courts.14 Claims for a negligently 
manufactured or improperly designed product potentially include three kinds of 
damage: (1) economic loss; (2) property damage (each of which may be direct or 
indirect); and (3) personal injury.15 Case confusion and judicial 
delusion results from the frequent mischaracterization between these three kinds 
of damage. A direct property damage claim is made when the claim is for repair 
or replacement of the damaged item. An indirect property damage claim is made 
when the claim is made to recover damages to additional property owned by the 
user or a third party. Economic loss, which addresses the different dimension of 
damage, is also divided into direct and indirect damages. Direct economic loss 
considers the diminished performance factor of that specific faulty product in 
the diminished value which results from unmet expectancy in performance and 
includes replacement or cost of repair. Indirect economic loss is the down time 
and the loss of use which includes loss of profits during repair or replacement. 
Comment, The Vexing Problem of the Purely 
Economic Loss in Products Liability: An Injury in Search of a Remedy, 4 
Seton Hall L.Rev. 145, 154-55 (1972).16 Additionally, of course, a product 
liability claim may be made for physical injury. There also is found in some 
cases to be a difference whether the product is commercial or consumer in 
nature.

[¶75.]  These economic loss product cases 
apparently address direct product damage and economic loss, as long as no 
indirect property damage results and no personal injuries are sustained by users 
or other persons. Opinion writers and scholars do not make clear what happens if 
there is also indirect property or injury damages. That confusion is engendered 
by indecision of whether the inquiry is the existence of an available theory of 
tort recovery or only a limitation on recoverable damage without regard for the 
availability of the recovery theory. Differentiation between strict liability 
and negligence adds further misconstruction and confusion. See Gaebler, Negligence, Economic Loss, and the 
U.C.C., 61 Ind.L.J. 593 (1986).

[¶76.]  The significance of a proper use of terms 
and determination of theory can be quickly recognized if economic and 
non-economic damage is considered. That would have been the case here if other 
property or an employee had been in the way when the boom folded like a 
windblown match-stick house. Whether or not there was injury or property damage 
alongside economic loss raises the inquiry of where recovery is authorized - 
under the Uniform Commercial Code and contract theory or under the tort claims 
of negligence and strict liability. Common sense indicates the existence of 
other damage should not determine whether a tort was committed. Consequently, to 
understand the structure of the cases, it is helpful to consider recoverability 
for kinds of damage and not fence with a decision of whether the tort exists. 
This is the only justification for comparing strict liability and negligent 
product liability cases to those of the independent violation of a duty to warn 
where separately located in product sales obligation and liability 
cases.

[¶77.]  A tort is an act that wrongfully invades 
the rights of other persons - either negligent, willful or founded on strict 
liability. In order for actionable results to follow from the occurrence of a 
tort, there is additionally required proximate cause and compensable damage. 
This case raises the recoverability for damage from a defective product which 
was put into the stream of commerce whether damage results to itself, to the 
balance of the machine to which it is attached, or to a person or other 
property. The conduct of the "wrongful action" does not change by a difference 
in damage. Consequently, the proper inquiry in product liability cases is not 
whether there was a tort definable by resulting damage, but when the tort 
exists, what resulting damages are compensable.17

[¶78.]  This court is asked to determine the 
relation of what it calls economic damage with the determination of when 
recovery for damages can be obtained. The question can be phrased in analysis 
that either the tort does not exist if a particular character of damage is 
produced or, alternatively, the tort exists but a particular character of damage 
is not recoverable. The first construction operates from result to justification 
and, in my opinion, is faulty reasoning. I perceive the tort existed without 
regard for differentiation of economic or non-economic results, such as personal 
injury damages. I would apply the question of recovery to the analysis of what 
character of rights flow from the committed wrong. One approach is only 
result-oriented while the other seeks some principle or at least direction 
within this disorganized field of law.

[¶79.]  A theory of tort law is invoked in second 
approach and a concept of a way to limit recovery by the first. Clearly, the 
conflict, confusion and illogical reasoning was fertilized by the United States 
Supreme Court in East River S.S. 
Corp., 476 U.S. 858, 106 S. Ct.  at 2295 by adaptation of its result-oriented 
effort to limit damages by denial that a responsive tort theory exists for 
recovery of economic damages (in the commercial transaction?).18

[¶80.]  A careful and comprehensive review of the 
many cases establishes a persuasive thesis in recognizing the second approach 
should be used to achieve decision. That is to simply first determine, "is there 
a tort?" If so, what damages can be recovered. It may be more provident to 
analyze losses for which tort liability will not be recoverable. Nearly 
unanimously, damages in defective product liability cases are not recoverable 
where the loss is a failure of bargain resulting from an unmet expectancy in 
product performance. This is not tort, it is contract. Conversely, the majority 
of the cases and the most pervasive reason find the tort and accompanying right 
to recover for any resulting damages in failure of a product unreasonably 
dangerous and the loss event is sudden, unexpected, calamitous or accidental 
rather than developmental.19 Appended to these concepts is the 
relation of the failed part to the productive unit as intrinsic or attached and 
whether the damage is to that part or to the entire unit, e.g., the wrist pin 
that destroys the motor or the turbine blades that eat up the generator. Another 
example is the broken truck frame that causes the separately installed cement 
mixer to break loose and damage the truck cab.

[¶81.]  All of these conflicts develop from the 
required delineation of what is recoverable damage from any product liability 
tort. States which apply any of these concepts agree unanimously the right to 
recover for sustained damage exists if personal physical injury results from the 
product failure. This is the typical bad tire and rollover bar user injury 
cases. Nearly as unanimous, recovery is permitted if the failed part causes 
"other property damage." The exploding refrigerator in Largoza v. General Elec. Co., 538 F. Supp. 1164 (E.D.Pa. 1982) and the blown up television set in Romano v. Westinghouse Elec. Co., 114 
R.I. 451, 336 A.2d 555 (1975) when the resulting fire destroyed the residence 
serve as examples.

[¶82.]  To the other extreme, if the damage is 
only to the part or if the problem is essentially a failure in expectancy, few 
if any cases find recoverable damage. This leaves the unusually dangerous or 
calamitous event occurrence as unsettled subjects. I find within this analysis 
that this majority adopts an obviously minority posture, which is a clearly 
regressive aptitude for Wyoming product liability law. Good reason for rejection 
of that misapplication can be found in the many thoughtful discussions in the 
multitude of cases. One of the clearest and best reasoned is the recent 
Washington case of Washington Water Power 
Co. v. Graybar Elec. Co., 112 Wn.2d 847, 774 P.2d 1199, amended 779 P.2d 697 
(1989). We are reminded again that only by first recognition of the factors from 
which the decision should be made can a rational and reasonable analysis be 
applied.

IV. APPROACHES TO 
ECONOMIC DAMAGE RECOVERY IN PRODUCT LIABILITY CASES: THE THREE 
DIVERGENCES

A. General 
Standards

[¶83.]  There are three possible standards to 
pick from to decide when recovery can be had where the loss is said to be 
"economic loss".20

1. Santor Standard: In addition to 
contractual remedies, obsolescence and wear out recovery may be obtained by 
product liability theories of tort of strict liability for design or 
manufacturing defect and duty to warn upon initial sale. (Obsolescence and wear 
out damage, failure of the bargain.)

2. Catastrophic Loss for Use of Unreasonably 
Dangerous Product Standard: Recovery is permitted for those tort theories if 
the event of loss was sudden or catastrophic and by some application the product 
was unreasonably dangerous within which the unexpected loss resulted. 
(Accidental loss, unreasonably dangerous nature of the occurrence and defective 
product.)21 

3. East River Standard: The East River standard denies recovery for 
loss of economic damage from a defective product except when provided by 
contract. East River is binding in 
admiralty cases and the federal courts split with review of diversity and other 
non-admiralty applications. These are the cases that deny recovery whether or 
not the event was catastrophic or unreasonable danger was created in product 
failure.

[¶84.]  There is a further divergence in the 
application of East River. Some cases 
follow the East River justification 
and result to apply the economic damage rule to non-consumer transactions for 
bargaining equals.22 If the transaction is not 
commercial in nature, the rule to be applied is in a no man's land where this 
concept is utilized. The other divergence from East River is to ignore the 
justification factor and apply the thesis uniformly that with internal product 
failure, equipment confined damage is not recoverable in tort.

[¶85.]  Permitting recovery when the loss is 
catastrophic and a product is unreasonably dangerous to use is the predominant 
standard for non-admiralty cases which is contrary to the assertions made by the 
majority.23 With the emergence of this 
standard, the Santor approach which 
permitted recovery for obsolescence and wear out was generally discarded. This 
is true even in New Jersey where Santor had initially enunciated the 
principal argument for a better coverage of product liability responsibility in 
tort to the manufacturer or supplier of the product.

[¶86.]  The conflict of which standard to apply 
is between one which allows only those remedies contracted for and one which 
allows a tort claim of negligence or strict liability when the loss is 
catastrophic and a product is unreasonably dangerous to use. Under this tort 
standard, it is not relevant that the damage was to other property or to human 
life.24

[¶87.]  The East River standard line of cases may or 
may not be confined to commercial transactions where there is equal bargaining 
power between the purchaser and vendor or manufacturer.25 Unfortunately, commentators and 
opinion writers do not know what to do if it is not a commercial transaction and 
they still want to follow the non-tort recovery precept of East River. Admiralty law is not a good 
foundation from which to build the law to control the American economic system. 
What may be appropriate for shipping may not exactly fit the farmer who is given 
bad fuel or the commercial establishment which is provided a faulty propane 
heating system regulator. I can leave for the United States Supreme Court its 
continued derivation of common law for admiralty.26 

B. Extraordinary Dangers - Catastrophic Event - 
The Majority Standard

[¶88.]  The most recent adjudication providing 
the clearest persuasion is the Washington Supreme Court decision in Washington Water Power Co. v. Graybar Elec. 
Co., 112 Wn.2d 847, 774 P.2d 1199, amended 779 P.2d 697 (1989),27 in recognition of the 
countervailing concept of East River. 
That court defined East 
River:

In its opinion, the Court 
assessed the relative merits of several different conceptions of economic loss. 
For purposes of the law of admiralty, it chose the conception that defendants 
urge us to adopt under the WPLA. When a product damages only itself, and not 
persons or other property, the Court held, the proper remedy lies in contract, 
not in tort, no matter what risk of harm the product defect poses, and no matter 
how the product injury occurred.

Washington Water Power 
Co., 774 P.2d  at 1208. Recognizing that denial of remedy might provide greater certainty, 
the Washington court rejected East 
River:

In our opinion, however, 
this increased certainty comes at too high a price. If manufacturers can 
contract successfully around liabilities for product injuries, a principal 
deterrent to unsafe practices - the threat of legal liability - will be lost. See Cloud v. Kit Mfg. Co., 563 P.2d 248, 
250-51 (Alaska 1977); Salt River Project 
Agricultural Imp. & Power Dist. v. Westinghouse Elec. Corp., 143 Ariz. 
368, 694 P.2d 198, 211 (1984); Mid 
Continent Aircraft Corp. v. Curry [Cy.] Spraying Serv., Inc., 572 S.W.2d 308, 316-18 (Tex. 1978) (Pope, J., dissenting).

Washington Water Power 
Co., 774 P.2d  at 1209. In conclusion, the court compared the reason for 
rejection:

The Court's analysis in 
East River, we believe, unjustifiably 
dismisses the safety concerns attendant to product injuries caused by hazardous 
defects. For this reason, we find East 
River's approach to economic loss unsuited to what the Legislature intended 
under the WPLA. Product injuries, the Court says, do not raise safety concerns, 
but are "essentially" a performance problem.

Id. 774 P.2d  at 
1209.

[¶89.]  Washington Water Power Co. does not 
stand alone. While the Washington court used risk of harm as the basis of 
economic damage liability for a defective product, Oregon courts use a strict 
liability standard which applies if the defect is "unreasonably dangerous to the 
user." Brown v. Western Farmers 
Assoc., 268 Or. 470, 521 P.2d 537, 540 (1974). See Heaton v. Ford Motor Co., 248 Or. 
467, 435 P.2d 806 (1967). Since East 
River, the federal courts have continued to apply the Oregon law for 
diversity cases as shown by Bancorp 
Leasing and Financial Corp. v. Agusta Aviation Corp., 813 F.2d 272 (9th Cir. 
1987). The basis of Oregon law in Brown, 521 P.2d  at 540 is justification 
for the imposition of strict liability upon suppliers of defective products when 
creating hazard to life and health by sale of a product which presents danger in 
defect. Oregon differentiated this dangerously defective product argument from 
the disappointed buyer, Price v. Gatlin, 
241 Or. 315, 405 P.2d 502 (1965), and denied product liability relief to the 
purchaser of chicken feed which, although arguably defective, was not 
unreasonably dangerous. The court left open the unreasonably dangerous test 
whether to be applied only to persons or to be applied to property. Brown, 521 P.2d  at 542. It is noteworthy 
that the special concurrence in Brown, 521 P.2d  at 543 based denial of 
the claim on being "purely economic, loss of profits" and, secondly, the loss 
was not "accidental." Brown cited Wulff v. Sprouse-Reitz Co., 262 Or. 293, 
498 P.2d 766 (1972), where the defective electric blanket burned up the 
house.

[¶90.]  The issue left open in Brown, 521 P.2d 537 of attribution of 
unreasonable dangerousness to only person or also to property was resolved in Russell v. Ford Motor Co., 281 Or. 587, 
575 P.2d 1383 (1978) as man endangering. Certainly, a reeving block on a large 
crane equally meets the test with the defective weld on the axle housing in Russell.

Insofar as the premise of 
responsibility for the marketing of a dangerously defective product states a 
norm for the producer and seller, that norm either has or has not been met at 
the time the product is sold. Whether the seller has met this responsibility 
cannot depend on the fortuitous extent of the damage done when the danger 
created by the defect subsequently comes to pass. Moreover, if a plaintiff is 
able to trace the damage to the seller's negligence, he may recover for economic 
losses of a kind that the seller should have been able to foresee.

Id. 575 P.2d  at 
1386-87.

[¶91.]  That court again distinguished between 
disappointed user and the endangered one:

The premise of his 
liability also controls its extent. The loss must be a consequence of the kind 
of danger and occur under the kind of circumstances, "accidental" or not, that 
made the condition of the product a basis for strict liability. This 
distinguishes such a loss from economic losses due only to the poor performance 
or the reduced resale value of a defective, even a dangerously defective, 
product. It is the distinction between the disappointed users in Price and 
Brown, and the endangered ones in Brownell v. White Motor Corp. [260 Or. 
251, 490 P.2d 184 (1971)] and Wulff v. 
Sprouse-Reitz Co.

Id. 575 P.2d  at 
1387.

[¶92.]  The relation between the terms given to 
damaged property and the ability to maintain a tort action under Illinois law 
was well illustrated in Kishwaukee 
Community Health Services Center v. Hospital Bldg. and Equipment Co., 638 F. Supp. 1492 (N.D.Ill. 1986). Kishwaukee 
Community Health Services Center analyzed the lead case in Illinois, Moorman Mfg. Co. v. National Tank Co., 
91 Ill. 2d 69, 61 Ill.Dec. 746, 435 N.E.2d 443 (1982). That court said Moorman Mfg. Co. could be read to 
approve one (or more) of three tests. The "bright line" test - this is the East River denial of recovery unless 
there is injury beyond the product - allows a suit in tort if the damage 
involves anything other than the product itself. The "commercial expectation" test allows a 
suit in tort if the damage caused by a product's failure was unexpected. The "sudden and dangerous" test allows a 
suit in tort if the damage occurred suddenly and dangerously. Kishwaukee Community Health Services 
Center, 638 F. Supp.  at 1497. Under Washington law, categories two and three 
would fall as a character risk of harm. The federal judge in Kishwaukee Community Health Services Center, 
638 F. Supp.  at 1499, under a post-East River exception in the Seventh 
Circuit Court of Appeals, observed "[t]he Seventh Circuit appears to reject the 
bright line test in favor of a commercial expectation approach and to be 
undecided in its views toward the sudden and dangerous test."

[¶93.]  This case becomes complicated because the 
judge seems to reject recovery which East 
River would have permitted as damage to other property. Obviously, damage to 
other property is not economic damage within the linguistic adaptations found on 
the subject in these cases. Kishwaukee 
Community Health Services Center is one of the few cases where recovery is 
denied and which East River would 
have permitted.

[¶94.]  Moorman Mfg. Co., 435 N.E.2d 443 is 
compatible with Washington Water Power 
Co., 774 P.2d 1199 when it is cited for a result not recognized in Kishwaukee Community Health Services Center. 
The majority in Moorman Mfg. Co., 
435 N.E.2d  at 451 denied tort relief where the defect was qualitative and the 
harm related to the consumer expectancy of fitness for purpose:

The policy considerations 
against allowing recovery for solely economic loss in strict liability cases 
apply to negligence actions as well. When the defect is of a qualitative nature 
and the harm relates to the consumer's expectation that a product is of a 
particular quality so that it is fit for ordinary use, contract, rather than 
tort, law provides the appropriate set of rules for recovery.

That court 
further observed:

The demarcation between 
physical harm or property damage on the one hand and economic loss on the other 
usually depends on the nature of the defect and the manner in which the damage 
occurred.

Id. at 449. Cited as 
respectable authority was Cloud v. Kit 
Mfg. Co., 563 P.2d 248, 251 (Alaska 1977), which originated the sudden and 
calamitous damage factor. The special concurrence in Moorman Mfg. Co., 435 N.E.2d  at 455 
questioned defining economic loss based on absence or appearance of physical 
harm. That judge made an interesting comment which, if true, may account for the 
obvious trend toward the Washington Water 
Power Co., 774 P.2d 1199 risk of harm concept.

One should not have to 
choose wholesale between Santor v. A 
& M Karagheusian, Inc. (1965), 44 N.J. 52, 207 A.2d 305, and Seely v. White Motor Co. (1965), 63 Cal. 2d 9, 403 P.2d 145, 45 Cal. Rptr. 17; I believe the proper approach is to 
adopt the valid concerns behind each.

Moorman Mfg. 
Co., 435 N.E.2d  at 456.

[¶95.]  Scott & Fetzer Co. v. Montgomery Ward 
& Co., 112 Ill. 2d 378, 98 Ill.Dec. 1, 493 N.E.2d 1022 (1986) clarified 
that non-product property damage did not come within the economic loss doctrine 
of non-recoverable economic damage. The nature of the fire as sudden and 
dangerous was emphasized. The economic loss doctrine applied neither to fire 
damage to adjacent tenants nor to deny contribution to Montgomery Ward & Co. 
against the fire service equipment supplier. Lack of an accident in water 
damaged apartments denied punitive damages for any tort claim in Morrow v. L.A. Goldschmidt Associates 
Inc., 112 Ill. 2d 87, 96 Ill.Dec. 939, 492 N.E.2d 181 (1986). Similarly, 
faulty workmanship with damage not occurring from a sudden and dangerous 
occurrence bespoke to recovery denial within the economic damage doctrine in Foxcroft Townhome Owners Ass'n v. Hoffman 
Rosner Corp., 96 Ill. 2d 150, 70 Ill.Dec. 251, 449 N.E.2d 125 (1983). See Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 65 Ill.Dec. 411, 441 N.E.2d 324 (1982). See likewise the recognition of the 
difference between deterioration and sudden and calamitous damage, Chicago Heights Venture v. Dynamit Nobel of 
America, Inc., 782 F.2d 723 (7th Cir. 1986) (Illinois law), in finding 
economic loss within a qualitative defect reducing the consumer's expectation of 
a product's fitness.

[¶96.]  The admiralty rule of East River compared to state law 
standards of product responsibility was defined in City of Greenville v. W.R. Grace & 
Co., 827 F.2d 975 (1987), reh'g 
denied 840 F.2d 219 (4th Cir. 1988), which provided further authority for 
the Washington Water Power Co., 774 P.2d 1199 differentiation.28 City of Greenville supplied Monokote 
fireproofing for the city hall construction. Six months after the manufacturer 
developed an asbestos free product, it continued to supply the old Monokote 
which contained the dangerous asbestos material. The circuit court affirms 
substantial judgments for both actual and punitive damages on a product 
liability basis. East River was 
largely inapposite when lacking claim of injury or threat of injury to persons 
or other property. Conversely, the asbestos contained insulation material was a 
"product [which] threatens a substantial and unreasonable risk of harm * * *." 
City of Greenville, 827 F.2d  at 978. 
It was noted the defense could not be justified on the basis that no one had 
"yet developed an asbestos-related disease." Id. at 978. See also Board of Educ. of City of Chicago 
v. A, C & S, Inc., 171 Ill. App.3d 737, 121 Ill.Dec. 643, 525 N.E.2d 950 
(1988), which is also a school asbestos material case. Comparable to City of Greenville is 2000 Watermark Ass'n, Inc. v. Celotex 
Corp., 784 F.2d 1183 (4th Cir. 1986), where asphalt shingles were poorly but 
not dangerously manufactured and installed. The shingles might not shed the rain 
so long nor look so good as desired and expected when blistered, but they did 
not threaten life or other property.29

[¶97.]  The product failure similar to Washington Water Power Co., 774 P.2d 1199 was litigated in Salt River Project 
Agr. Imp. and Power Dist. v. Westinghouse Elec. Corp., 143 Ariz. 368, 694 P.2d 198 (1984) claiming tort liability of a commercial seller to a commercial 
buyer. The district purchased a gas turbine generator which proved to have 
problems within its operating P-50 computer. A course of trouble lead to the 
purchase of a manual control LMC (Local Maintenance Controller) unit. The LMC 
malfunctioned when installed and 1.9 million dollars damage to the entire 
turbine resulted. In searching the interaction of tort and contract law, the 
court reached for definitional limitations where tort recovery for internal 
product damage might occur. The manner in which the loss occurred was next 
considered whether in accident or calamity.

[¶98.]  Differentiated was the nature of the 
defect as defective in a way that poses an unreasonable danger to those that use 
or consume it or only found to be not fit for the intended purpose without 
unreasonable danger of causing injury to person or property. Last then 
considered was the type of loss or damage. The Arizona court recognized the fire 
and explosion was "not merely a commercial defect or `non-dangerous impairment 
of quality'" and recognized the endangered persons and other property from the 
accident for which tort law provides a proper rationale. Salt River Project Agr. Imp. and Power 
Dist., 694 P.2d  at 210 (quoting Posttape Associates v. Eastman Kodak Co., 
537 F.2d 751, 755 (3rd Cir. 1976)). Salt River Project Agr. Imp. and Power 
Dist. also cited Arrow Leasing Corp. 
v. Cummins Arizona Diesel, Inc., 136 Ariz. 444, 666 P.2d 544 (1983) and Cloud, 563 P.2d  at 251. That court then 
determined "[w]hether the major item of property damage is classified as a loss 
to other property of the plaintiff or a loss only to the defective product 
itself, [plaintiff] has a claim in tort * * *." Salt River Project Agr. Imp. and Power 
Dist., 694 P.2d  at 210-11.30 The court in Salt River Project Agr. Imp. and Power 
Dist. then explored a further contention which apparently arises here of 
possible denial of tort remedy to a commercial user. The court found no 
justified reason for commercial user-consumer differentiation in right of tort 
remedy access.

[¶99.]  Washington Water Power Co. and Salt River Project Agr. Imp. and Power 
Dist. both cited with approval and followed the name case on this subject 
from Alaska, Cloud, 563 P.2d 248, 
which is the progenitor of the economic damage recovery rule where unreasonable 
danger exists from faulty products. In Cloud, a rug pad ignited and caused a 
fire which destroyed the trailer house. Suit was filed in theories of strict 
liability, negligence and implied warranty. That court first recognized that 
property and personal physical injury should be similarly treated in the 
adaptation of product liability litigation. The question then was to distinguish 
between economic loss and direct property damage. The court, in adaptation of 
terms, defined that sudden and calamitous damage would almost always result in 
property damage as distinguished from deterioration, internal breakage and 
depreciation which that court defined as economic loss. The sudden, violent and 
calamitous harm justified tort recovery for the damaged trailer house and its 
contents.

[¶100.]            
West Virginia followed the same principle after review of nationwide 
precedent by statement in Star Furniture 
Co. v. Pulaski Furniture Co., 297 S.E.2d 854, 859 (W. Va. 1982):

Physical harm to the 
defective product belongs with tort principles; reduction in value merely 
because of the product flaw falls into contract law. See, e.g., Gherna v. Ford Motor Co., 246 Cal. App. 2d 639, 55 Cal. Rptr. 94 (1966); Gibson v. Reliable Chevrolet, Inc., 608 S.W.2d 471 (Mo. App. 1981); Russell v. 
Ford Motor Co., 281 Or. 587, 575 P.2d 1383 (1978).

Therefore, we reject the 
line of cases begun by Santor v. A & 
M Karagheusian, Inc., 44 N.J. 52, 207 A.2d 305 (1964), which have permitted 
use of strict liability to recover the difference between the value of the 
product received and its purchase price in the absence of a sudden calamitous 
event. See, e.g., Cova v. Harley Davidson 
Motor Co., 26 Mich. App. 602, 182 N.W.2d 800 (1971); Air Products & Chemicals, Inc. v. 
Fairbanks Morse, Inc., 58 Wis.2d 193, 206 N.W.2d 414 (1973) (applying 
Pennsylvania law). In West Virginia, property damage to defective products which 
results from a sudden calamitous event is recoverable under a strict liability 
cause of action. Damages which result merely because of a "bad bargain" are 
outside the scope of strict liability.

Star Furniture 
Co. was 
followed by a federal court certification request in Basham v. General Shale, 377 S.E.2d 830 
(W. Va. 1988), where the defective bricks in deterioration did not produce the 
required calamitous event.

[¶101.]            
In a most recent analysis, the West Virginia court effectively and 
directly considered East River and Star Furniture Co. where a 475B Michigan 
front-end loader was burned up by an alleged hydraulic fuel leak in its system 
(comparable to the fuel pump example, infra). Capitol Fuels, Inc., 382 S.E.2d 311. The 
strict liability based verdict for the buyer for the value of the destroyed 
machine was affirmed. That court continued its "intermediate position, * * *, 
where recovery is permitted for a defect in the product if it is dangerous to 
the users and destroys the product in a sudden calamitous event, * * *." Id. at 312.

What appears obvious from 
Star Furniture is that under the "bad 
bargain" concept, the fact that the product may be flawed or defective, such 
that it does not meet the purchaser's expectations or is even unusable because 
of the defect, does not mean that he may recover the value of the product under 
a strict liability in tort theory. The purchaser's remedy is through the Uniform 
Commercial Code. See Kesner v. 
Lancaster, ___ W. Va. ___, 378 S.E.2d 649 (1989). In order to recover under 
Star Furniture, the damage to the product must result from a sudden calamitous 
event attributable to the dangerous defect or design of the product 
itself.

In this case, we reaffirm 
our decision in Star Furniture. The 
front-end loader was not merely an ineffective product which failed to meet the 
customer's expectations. A defect in the front-end loader caused an abrupt fire 
which continued to burn until the loader was destroyed. The operator of the 
loader escaped without injury. The defect in the front[-]end loader created a 
potentially dangerous situation and the risk associated with the defect was not 
one ordinarily contemplated by a purchaser. Clearly, this is the type of 
property damage resulting "from a sudden calamitous event" which is recoverable 
under Star Furniture, ___ W. Va. at 
___, 297 S.E.2d  at 859.

Id. at 313.

[¶102.]            
Alaska's Cloud, 563 P.2d 248 
was also followed in Georgia for a federal certification question in Vulcan Materials Co., Inc. v. Driltech, 
Inc., 251 Ga. 383, 306 S.E.2d 253, 257 (1983) (quoting Flintkote Co. v. Dravo Corp., 678 F.2d 942, 948 (11th Cir. 1982)):

"The economic loss rule 
prevents recovery in tort when a defective product has resulted in the loss of 
the value or use of the thing sold, or the cost of repairing it. Under such 
circumstances, the duty breached is generally a contractual one and the 
plaintiff is merely suing for the benefit of his bargain. The rule does not 
prevent a tort action to recover for injury to other property and persons 
because the duty breached generally arises independent of the contract. Nor does it preclude recovery for damages to 
the defective product itself, where the injury resulted from an accident." 
(Footnote omitted.) (Emphasis supplied.)

See also Watkins v. 
Barber-Colman Co., Inc., 625 F.2d 714 (5th Cir. 
1980), where injuries resulted. Comparable in result is City of Franklin v. Badger Ford Truck Sales, 
Inc., 58 Wis.2d 641, 207 N.W.2d 866 (1973), although the court did not make 
a specific finding of dangerousness of wheels that fell off of a fire engine 
when it was being driven around a corner. Confusion in terminology again is 
recognized in Cova v. Harley Davidson 
Motor Co., 26 Mich. App. 602, 182 N.W.2d 800 (1970) permitting tort recovery 
for the damaged product but perhaps not loss of profits in consequential 
damages. See, however, Mulholland, 443 N.W.2d 340. City of La Crosse v. Schubert, Schroeder 
& Associates, Inc., 72 Wis.2d 38, 240 N.W.2d 124 (1976) followed City of Franklin, 207 N.W.2d 866 in tort 
recovery for other property as well as the faulty and damaged roof. Cova, 182 N.W.2d 800 was also cited with 
approval. Compare Sunnyslope Grading, 
Inc. v. Miller, Bradford and Risberg, Inc., 148Wis.2d 910, 437 N.W.2d 213 
(1989), where dangerousness was not an issue and the decision was premised on 
the nature of the transaction as commercial with pure economic loss where 
adverse warranty terms existed. Sunnyslope Grading, Inc. was 
distinguished and the unreasonably dangerous rule applied in Tony Spychalla Farms, Inc. v. Hopkins Agr. 
Chemical Co., 151 Wis.2d 431, 444 N.W.2d 743 (App. 1989). Defectiveness and 
unreasonable dangerous to the user or his property was the test applied for tort 
liability to a product purchased as a sprout suppressant for potatoes after an 
awarded and affirmed judgment of $227,050 for crop damage.

[¶103.]            
The potentially hazardous product was recognized in Pennsylvania in Industrial Uniform Rental Co., Inc. v. 
International Harvester Co., 317 Pa. Super. 65, 463 A.2d 1085 (1983), overruled sub nom. REM Coal Co., Inc. v. Clark Equipment 
Co., 563 A.2d 128 (Pa.Super. 1989), but the law of that state today seems 
less than definitive. Compare the federal court analysis in Pennsylvania Glass Sand Corp. v. Caterpillar 
Tractor Co., 652 F.2d 1165 (3rd Cir. 1981) with Aloe Coal Co. v. Clark Equipment Co., 
816 F.2d 110 (3rd Cir.), cert. 
denied 484 U.S. 853, 108 S. Ct. 156, 98 L. Ed. 2d 111 (1987). However, in the 
latter case, the unreasonable dangerous nature of defect was not a considered 
issue.31

[¶104.]            
The Nebraska court has employed the unreasonably dangerous test in 
discussion and case analysis. In recent opinion, it said by quotation in National Crane Corp. v. Ohio Steel Tube Co., 
213 Neb. 782, 332 N.W.2d 39, 43 (1983) to be followed in Nerud v. Haybuster Mfg., Inc., 215 Neb. 
604, 340 N.W.2d 369, 375 (1983):

A majority of courts that 
have considered the applicability of strict liability to recover damages to the 
defective product itself have permitted use of the doctrine, at least where the 
damage occurred as a result of a sudden, violent event and not as a result of an 
inherent defect that reduced the property's value without inflicting physical 
harm to the product. See Star Furniture 
Co. v. Pulaski Furniture Co., 297 S.E.2d 854 (W. Va. 1982). In essence, this 
court has reached the same result. See Morris v. Chrysler Corp., 208 Neb. 341, 
303 N.W.2d 500 (1981).

[¶105.]            
In most recent decision, the Ohio Supreme Court forsook a Santor v. A & M Karagheusian, Inc., 
44 N.J. 52, 207 A.2d 305 (1965) posture, but moved no further than the Cloud, 563 P.2d 248 fortuity and 
dangerousness status. Chemtrol Adhesives, 
Inc. v. American Mfrs. Mut. Ins. Co., 42 Ohio St.3d 40, 537 N.E.2d 624 
(1989). Lacking a defect with an unreasonable risk of harm, strict liability 
would not lie. See, however, Mead Corp. 
v. Allendale Mut. Ins. Co., 465 F. Supp. 355 (N.D. Ohio 1979); Iacono v. Anderson Concrete Corp., 42 
Ohio St.2d 88, 326 N.E.2d 267 (1975); and Note, Recovery of Direct Economic Loss: The 
Unanswered Questions of Ohio Products Liability Law, 27 Case W. Res. L. Rev. 
683 (1977).

[¶106.]            
The New Jersey court "readjusted" its posture originally adopted in Santor, 207 A.2d 305 to create a 
differentiated rule for commercial transactions where tort remedies would be 
denied for the economic damage internal product defects and loss in Spring Motors Distributors, Inc. v. Ford 
Motor Co., 98 N.J. 555, 489 A.2d 660 (1985). However, neither that case nor 
more recent opinions from New Jersey have addressed the risk of 
harm-unreasonable danger or calamitous event subjects which are now before this 
court. See also Perth Amboy Iron Works, 
Inc. v. American Home Assur. Co., 226 N.J. Super. 200, 543 A.2d 1020 (1988). 
Cf. Dreier Co., Inc. v. Unitronix Corp., 
218 N.J. Super. 260, 527 A.2d 875 (1986).

[¶107.]            
Within the volume of cases considered, an almost exact duplication in 
kind of equipment damage occurred in John 
R. Dudley Const., Inc. v. Drott Mfg. Co., 66 A.D.2d 368, 412 N YS.2d 512 
(1979). The crane boom suddenly collapsed without injury to people or damage to 
other property. The first inquiry was strict product liability recovery, 
although the only property damage was to the crane itself. The court 
distinguished the benefit of the bargain cases demonstrated by Santor, 207 A.2d 305 and granted relief 
by virtue of the nature of the accidental collapse and dangerous character of 
the alleged product defect. John R. 
Dudley Const., Inc. was followed by a number of New York cases which defined 
its scope to the same principles later enunciated in Washington Water Power Co., 774 P.2d 1199 and somewhat earlier in Cloud, 
563 P.2d 248. In confinement of the principle involved in support for the 
decision made, see Schiavone Const. Co. 
v. Elgood Mayo Corp., 81 A.D.2d 221, 439 N YS.2d 933 (1981), rev'd 56 N.Y.2d 667, 451 N.Y.S.2d 720, 
436 N.E.2d 1322 (1982), Silverman, J., dissenting, with dissent adopted in Trustees of Columbia University v. Exposaic 
Industries, Inc., 122 A.D.2d 747, 505 N.Y.S.2d 882 (1986); Hartford Ins. Group v. Curry Chevrolet Sales 
& Service, Inc., 119 A.D.2d 546, 500 N.Y.S.2d 720 (1986); and Schiavone Const. Co. v. Elgood Mayo 
Corp., 56 N.Y.2d 667, 451 N.Y.S.2d 720, 436 N.E.2d 1322 (1982). Cf. Graham v. Rockwell Intern. Corp., 
135 A.D.2d 1128, 523 N.Y.S.2d 992 (1987) (dissent which compared factually the 
case with those where only the benefit of the bargain issues were presented, 
e.g., Hemming v. Certainteed Corp., 
97 A.D.2d 976, 468 N.Y.S.2d 789 (1983)). See also other economic damage cases 
where clearly neither dangerousness nor calamitous events occurred, Krzys v. American Honda Motor Co., Inc., 
124 A.D.2d 947, 508 N.Y.S.2d 355 (1986) and Cayuga Harvester, Inc. v. Allis-Chalmers 
Corp., 95 A.D.2d 5, 465 N YS.2d 606 (1983).

[¶108.]            
The convergence of three cases provides for California a posture which is 
perhaps different on the subject of economic damages resulting from the damage 
to the product itself than perhaps exists in any other state. These cases are J'Aire Corp. v. Gregory, 24 Cal. 3d 799, 
157 Cal. Rptr. 407, 598 P.2d 60 (1979); Cronin v. J.B.E. Olson Corp., 8 Cal. 3d 121, 104 Cal. Rptr. 433, 501 P.2d 1153 (1972); and Seely v. White Motors Co., 63 Cal. 2d 9, 
45 Cal. Rptr. 17, 403 P.2d 145 (1965). In Seely, Justice Traynor initiated the 
counterpoint rule to Santor, 207 A.2d 305 in directing recourse to contract. Seely did not resolve nor consider the 
unreasonably dangerous, non-accidental divergence later developed for permitted 
recovery in tort as now most clearly identified in Washington Water Power Co., 774 P.2d 1199. Cronin, 501 P.2d 1153 deleted 
the requirement in California product liability cases to prove the factor of 
unreasonably dangerousness. See 
Recent Development, Products Liability - 
Strict Liability in Tort: Defect Need Not Render Product "Unreasonably 
Dangerous" - Cronin v. J.B.E. Olson Corp., 8 Cal. 3d 121, 104 Cal. Rptr. 433, 
501 P.2d 1153 (1972), 49 Wn. L. Rev. 231 (1973). See also Barker v. Lull Engineering Co., 
Inc., 20 Cal. 3d 413, 143 Cal. Rptr. 225, 573 P.2d 443 (1978). J'Aire Corp., 598 P.2d 60 provided a 
broad territory for recovery of economic damages under California law, including 
contractual and implied contractual proceedings as well as negligence claims. In 
result from these three cases, faulty product internal damage litigation has, as 
expressed by one commentator, tended to be targeted within theories of 
contractual adaptation. Rabin, Tort 
Recovery for Negligently Inflicted Economic Loss: A Reassessment, 37 Stan. 
L. Rev. 1513 (1985). See however Franklin, When Worlds Collide: Liability Theories and 
Disclaimers in Defective-Product Cases, 18 Stan. L. Rev. 974 
(1966).

[¶109.]            
In California, economic recovery is permitted in negligence actions where 
the economic loss is especially 
foreseeable despite the absence of physical injury or property damage. Ales-Peratis Foods Intern., Inc. v. American 
Can Co., 164 Cal. App. 3d 277, 209 Cal. Rptr. 917 (1985). Consequently, the 
case is balanced upon a result which was clearly foreseeable rather than the 
product which was unreasonably dangerous. Pisano v. American Leasing, 146 Cal. App. 3d 194, 194 Cal. Rptr. 77 (1983). Compare, however, Kaiser Steel Corp. v. Westinghouse Elec. 
Corp., 55 Cal. App. 3d 737, 127 Cal. Rptr. 838 (1976); Gherna v. Ford Motor Co., 246 Cal. App. 2d 639, 55 Cal. Rptr. 94 (1966); and Fentress 
v. Van Etta Motors, 157 Cal. App. 2d Supp. 863, 323 P.2d 227 (1958).32

[¶110.]            
The incongruity of the California law and any logical validity to a 
commercial setting dichotomy is currently illustrated by GEM Developers v. Hallcraft Homes of San 
Diego, Inc., 213 Cal. App. 3d 419, 261 Cal. Rptr. 626 (1989). That case should 
be carefully reviewed before adaptation of any California case is currently 
pursued to justify this majority opinion. The significant difference in GEM Developers is the insurance carrier 
paid part of the economic loss damages owed from a judgment based on strict 
liability, negligence and warranty and assigned its subrogation claims to the 
buyer. Here, Continental paid the damages and took the subrogation claim from 
the buyer.

C. The East River - Minority 
Adaptations.

[¶111.]            
The contrary minority posture has been adopted by some states which do 
not follow the risk of injury status of Washington Water Power Co., 774 P.2d 1199 or its constituents of calamitous events or unreasonableness of danger. 
Apparently, five jurisdictions, by most recent case law, do follow East River through calamitous event and 
unreasonableness of danger from the product to tort claim denial. These 
jurisdictions include Missouri as determined in Sharp Bros. Contracting Co. v. American 
Hoist & Derrick Co., 703 S.W.2d 901 (Mo. 1986), with the decision 
created by the court's opinion of two members, two members specially concurring 
and three members dissenting. The dissent noticed the violent occurrence 
divergence from previous Missouri law. See Gibson v. Reliable Chevrolet, Inc., 
608 S.W.2d 471 (Mo. App. 1980), which cited Cloud, 563 P.2d 248 with approval and 
recognized that in Clevenger and Wright 
Co. v. A.O. Smith Harvestore Products, Inc., 625 S.W.2d 906 (Mo. App. 1981), 
the calamitous event was not an external tornado. The court's opinion in Sharp Bros. Contracting Co., 703 S.W.2d 901 apparently adopted the conservative posture of Dean Keeton and denied 
consideration whether an accident should be a factor. See W. Prosser and W. Keeton, Law of 
Torts § 81 (5th ed. 1984). Another justice concurring in Sharp Bros. Contracting Co. found a 
basis for agreement by virtue of the commercial nature and equal bargaining 
power of the participants. The confusion engendered by the decision as to 
whether the exclusion of the violent occurrence factor related both to 
commercial and consumer purchasers was cogently recognized in Note, Is the Ordinary Consumer Left With a Damaged 
Product and No Remedy?, 52 Mo. L. Rev. 961 (1987).

[¶112.]            
The second state that appears to have adopted the same posture, although 
the sporadic adaptations in the cases leaves this conclusion far from certain, 
is Minnesota. The lead case was Superwood 
Corp. v. Siempelkamp Corp., 311 N.W.2d 159 (Minn. 1981). Superwood Corp. responded to a federal 
certification where the cylinder on a hot plate press failed. The premise of 
denial of tort remedies arose out of the commercial nature of the transaction. 
In Superwood Corp., the question of a calamitous event or exceptional 
dangerousness of the product was not considered. Superwood Corp. was followed by St. Paul Fire and Marine Ins. Co. v. Steeple 
Jac, Inc., 352 N.W.2d 107 (Minn.App. 1984), where, with like result 
following litigation, a window washing unit had collapsed without personnel 
injury or other property damage. The appellate court noted "[t]he majority of 
the jurisdictions that follow Seely 
exclude from the definition of economic loss damages arising from an 
unreasonably dangerous defect. They characterize these damages as physical 
damage or physical injury. Damages caused by defects which are not unreasonably 
dangerous are defined as economic loss." Id. at 109 (emphasis in original and 
footnote omitted). The court said it had to follow Superwood Corp. to denial, but thought 
the United States Supreme Court should clarify their opinion. St. Paul Fire and Marine Ins. Co. 
provided no issue of dangerousness and was followed by Minneapolis Soc. of Fine Arts v. 
Parker-Klein Associates Architects, 354 N.W.2d 816 (Minn. 1984). The tort 
denial adaptation was again followed in S.J. Groves & Sons Co. v. Aerospatiale 
Helicopter Corp., 374 N.W.2d 431 (Minn. 1985), where a helicopter collapsed. 
In dissent, it was recognized that "[t]he majority reads this language [Superwood Corp.] to prevent recovery of 
those types of damages, even in cases involving `sudden and calamitous events.' 
Such a holding puts Minnesota very much in the minority. Superwood never intended such result." 
Id. at 435. Alabama also follows the 
East River rule, Lloyd Wood Coal Co. v. Clark Equipment 
Co., 543 So. 2d 671 (Ala. 1989); Dairyland Ins. Co. v. General Motors 
Corp., 549 So. 2d 44 (Ala. 1989).

[¶113.]            
The fourth state which may follow the same persuasion, or at least the 
dissent in the case thinks so, is Texas through Mid Continent Aircraft Corp. v. Curry County 
Spraying Service, Inc., 572 S.W.2d 308 (Tex. 1978). The difficulty in 
perception is both the majority and the minority cited the same case with 
approval, Nobility Homes of Texas, Inc. 
v. Shivers, 557 S.W.2d 77 (Tex. 1977), which clearly recognized unreasonably 
dangerous criteria permitting tort claims. At this time by the decision 
involving Clark Equipment Co. in REM Coal 
Co., Inc. v. Clark Equipment Co., 563 A.2d 128 (Pa.Super. 1989), the 
Pennsylvania law is similarly directed. To recognize the complexities, compare 
Construction Associates, Inc. v. Fargo 
Water Equipment Co., 446 N.W.2d 237 (N.D. 1989) with Frey Dairy, 886 F.2d 128.[fn33] 

V. OTHER 
PROPERTY

(FOR APPLICATION OF ANY 
EAST RIVER RULE)

[¶114.]            
A final aspect of this case remains. Realistically, at least for this 
subject, this court can claim case support not found for the other issues in its 
decision. We still need to consider the determination of what is other property 
when a constituent part of the equipment malfunctions and causes general damage. 
Specifically, this is the present case where the break up of the reeving block 
destroyed the crane boom. On duty to warn, this court had almost no authority to 
support its decision. On non-recognition of the risk of harm differentiation 
from economic damage recovery limitations, a clearly present minority view was 
selected. However, here on definition of other property, I would argue for what 
is probably an academic attainment if the other proper rules were followed, but 
in absence thereof, a minority posture among the many cases.34

[¶115.]            
Currently illustrative for an East 
River (admiralty) approach is Nicor 
Supply Ships Associates, 876 F.2d 501. The issues of the case and the 
singular amount of damage were arguably caused by a faulty fuel pump on the 
ship. The basic off-shore supply ship was modified by structural changes costing 
more than 7.8 million dollars by the time charterer who was then engaged in 
seismic activities with the modified ship. A fire at sea caused more than two 
million dollars damage to the vessel and about eight million dollars damage to 
the installed equipment. Owner Nicor Supply Ships and charterer Digicon sued 
General Motors Corporation which had produced the installed fuel pump. Nicor 
Supply Ships lost on a lack of proof on its failure to warn post-sale tort 
thesis.35

[¶116.]            
Digicon, as the time charterer, was granted the right by appellate 
decision to pursue loss or damage for what it had put on the ship and loss of 
profits from inability to use this "other property" unless the entire 
installation was a total loss. In distinguishing the case from Louis Dreyfus Corp. v. 27,946 Long Tons of 
Corn, 830 F.2d 1321 (5th Cir. 1987), where loss of cargo and not other 
property had occurred, the Nicor Supply 
Ships Associates court informatively added for analysis of precedential 
value:

In a parenthetical 
description of another case, contained in a footnote, this court recently stated 
in Employers Ins. of Wausau v. Suwannee 
River Spa Lines, Inc. [866 F.2d 752, 763 n. 16 (5th Cir. 1989)] that the 
"loss of cargo is not damage to `other property' within [the] meaning of East River." That statement relies upon 
a similar observation in our earlier opinion in Louis Dreyfus Corp. v. 27,946 Long Tons of 
Corn. To the degree, if at all, that these statements suggest that the 
additions to the vessel involved in this case are not "other property," they are 
obiter dicta, not precedent. They may help to explain the rationale of the 
particular opinion in which they were uttered, but they do not bind us as the 
law of the circuit.

Nicor Supply Ships 
Associates, 876 F.2d  at 506 
(footnotes omitted).

[¶117.]            
The review justification is limited by the probability of dangerousness 
and calamitous event circumstance whenever a part damages a significant 
contingent of the remaining machine. Be that as it may, I remain convinced that 
rights of recovery should not be defined by the accident of the company of 
installation of a particular part on the operational machine. How should it 
differ whether the furnace control unit came with the furnace or was later 
installed if thereafter to malfunction and cause damage to the entire furnace, 
the entire house or injury to the owner or house occupants? If the reeving block 
had been replaced by Ajax or Ho-Hum Manufacturing resulting in machine damage, 
why should it differ from the status where the reeving block had been left on 
the machine by Page? We opine to a very involved economic concept by 
differentiating rights of recovery, although the faulty part did the same thing 
and caused the same damage following installation by whoever. Fondyce Concrete, Inc. v. Mack Trucks, 
Inc., 535 F. Supp. 118 (D.Kan. 1982); Largoza, 538 F. Supp. 1164; Hales v. Green Colonial, Inc., 490 F.2d 1015 (8th Cir. 1974); Firestone Tire 
& Rubber Co. v. Hall, 152 Ga. App. 560, 263 S.E.2d 449 
(1979).

[¶118.]            
It is highly unlikely that for most integrated machines, the manufacturer 
actually fabricated most of the composite parts. I would consequently limit the 
scope of a single part defect - non-tort recovery - to whatever originally 
failed and not what it did to the other parts of the machine in failing. The 
courts that have declined this rational approach have espoused the intent to 
limit tort recovery. To reach a result by redefinition is, to me, unnecessary 
subterfuge. If the failed part is not unnecessarily dangerous or damage in 
occurrence reflects deterioration and depreciation as a denied benefit of the 
bargain, I would leave adjudication between the parties on straight contract or 
warranty standards no matter how much or how little of the entire machine was 
damaged.

[¶119.]            
However, where as here, the decisive factor is the character of the 
occurrence and the nature of the fault in the product. The standard to be 
followed should include recovery for all damage however incurred. I find it to 
be linguistically improper and logically unsound to call the crane damage in 
this case economic loss after the reeving block came apart and dumped the boom 
unit. Undoubtedly, there were significant additional economic losses sustained 
from down time and repair complexities, but these costs were neither claimed nor 
a part of this two million dollar damage litigation. Consequently, even if the 
minority rule on tort remedy availability is now adopted as proposed by this 
majority, I would leave application of the resulting economic damage limitation 
to the failed part and not deny recovery for other damage done to the balance of 
the machine, as well as other external property losses or personal injuries, if 
any are incurred.

VI. 
CONCLUSION

[¶120.]            
It is fair to conclude that Washington Water Power Co., 774 P.2d 1199 (Washington), Cloud, 563 P.2d 248 (Alaska), Salt River Project Agr. 
Imp. and Power Dist., 694 P.2d 198 (Arizona), John R. Dudley Const., Inc., 412 N.Y.S.2d 512 (New York), and Capitol 
Fuels, Inc., 382 S.E.2d 311 (West Virginia), as well as the other 
authorities noted reflect not only the developing direction of case law but 
socially appropriate engineered philosophy directed toward better product and a 
safer environment. Neither the pure East River idiom nor its half of a loaf 
commercial transaction offspring as a minority posture deserve adaptation for 
either consumer or commercial purchasers in this jurisdiction.36 Confining recovery to contractual 
remedies makes no real sense. Today the reeving block, tomorrow the heating unit 
control or the vehicle fuel pump. Sometimes by fortuity, other property or 
personal injury will not result but, unfortunately, fortuity is not continuity 
and with faulty and dangerous products, there will inevitably be injury and 
other property damage in time.

[¶121.]            
Finding error by this court in both misunderstanding the duty to warn 
claim and denial of access to the product liability claim, I respectfully 
dissent.

1 Denying appellants' 
motion for leave to amend, which was contemporaneous to the motion to 
dismiss/summary judgment, cannot be justified under Wyoming precedent. This 
majority violates the express terms of W.R.C.P. 15 and permits the trial court 
to flaunt Pace v. Hadley, 742 P.2d 1283 (Wyo. 1987); Torrey v. Twiford, 
713 P.2d 1160 (Wyo. 1986); and Kimbley v. 
City of Green River, 663 P.2d 871 (Wyo. 1983).

2 Appropriately to be 
realized is:

For whatever reason, be 
it an unacknowledged endorsement of caveat emptor, a quiet deference to the 
legislative enactment of the U.C.C., or a more fundamental inability to study 
and understand the issue, the courts have made a mess. The courts fail to 
consider, for instance, the definition of economic loss and whether the 
definition fits the facts in any given case. The courts generally disregard the 
basic policies which support imposition of strict liability in tort and their 
application to the question of economic loss recovery. The differences between 
the opposing theories of recovery are either ignored, assumed, or hopelessly 
confused, as is the question whether it makes any difference which theory is 
applied.

Comment, Agristor Leasing v. Spindler: Economic Loss, 
Strict Liability and the U.C.C. - What a Mess, 34 S.D.L. Rev. 101, 103-04 
(1989) (footnotes omitted).

3 The reeving block costs 
approximately $80,000 to replace; the improved model was available for 
approximately $150,000. After the reeving block broke apart and caused the boom 
to collapse, the damage to the boom and bucket was $2,536,957. Replacement cost 
of the earth digging equipment was approximated to be $16,000,000 with its 
seventy-five cubic yard bucket and lifting capacity rated for 290,000 pounds or 
145 tons per load. Reeving blocks are holders of cable pulleys used in the boom 
operation, lifting and movement processes.

4 Continental Insurance 
Company and other insurance companies (designated collectively as Continental) 
paid for repair and present this litigation pursuant to a subrogation receipt. 
The appropriateness of the subrogation rights and process is not considered by 
the majority in its opinion and will not be pursued in this dissent. See Compass Ins. Co. v. Cravens, Dargan and 
Co., 748 P.2d 724 (Wyo. 1988) (Urbigkit, J., dissenting). Not pleaded and 
consequently not considered is whether some theory of equitable indemnity could 
have been pursued either by denial and litigation of the Bridger Coal claims or 
in this proceeding. See GEM Developers v. 
Hallcraft Homes of San Diego, Inc., 213 Cal. App. 3d 419, 261 Cal. Rptr. 626 
(1989).

5 I do not perceive the 
majority correctly references the next to the last paragraph of the decision 
letter for what it actually served to be. That sentence considers the approval 
as to form subject to Uniform Rules for the District Courts 404, which 
states:

Written judgments or 
orders shall be presented to the court within 20 days after its decision is made 
known. Before submitting the judgment or order the party drafting it shall 
secure the written approval of the opposing parties not in default.

In lieu of securing the 
approval of the opposing parties the party proposing the form of judgment or 
order may forward the original to the court and serve a copy on the other 
parties with a notice advising objections must be made within 5 days. If no 
objection is timely made, the court may sign the judgment or order. If objection 
is made, the court will resolve the matter.

Further right for 
Continental to make substantive argument was not addressed or provided by the 
foreclosing decision as then announced.

This court 
should take heed of advice given by one of the most thoughtful and scholarly 
appellate tribunals in this nation in an eighteen page extended tort case 
review:

The importance of today's 
decision lies not so much in its explication of the principles of tortious 
interference and defamation as in its signal to trial courts to approach with 
great caution applications for dismissal under [a motion to dismiss] for failure 
of a complaint to state a claim on which relief may be granted. We have sought 
to make clear that such motions, almost always brought at the very earliest 
stage of the litigation, should be granted in only the rarest of instances. If a 
complaint must be dismissed after it has been accorded the kind of meticulous 
and indulgent examination counselled in this opinion, then, barring any other 
impediment such as a statute of limitations, the dismissal should be without 
prejudice to a plaintiff's filing of an amended complaint.

Printing Mart-Morristown 
v. Sharp Electronics Corp., 116 N.J. 739, 563 A.2d 31, 48 (1989).

6 Since the opinion was 
written, an intermediate appellate court case has appeared deciding non-recovery 
for economic damages will similarly apply to failure to warn for strict 
liability in product liability within commercial transactions. Utah Intern., Inc. v. Caterpillar Tractor 
Co., 108 N.M. 539, 775 P.2d 741, cert. denied 108 N.M. 354, 772 P.2d 884 
(1989).

7 Failure to warn 
liability may arise from spectators watching alligators in a pond when they see 
wayward small children approach to swim. A bridge ahead is out occurrence 
likewise provides a cogent example. Inevitably presented is the legalistic and 
societalistic differences between a moral and legal duty to fellow humans. 
However, in product liability cases, the duty to warn also achieves two faces 
with first application to the dangerous product on initial sale and a different 
obligation for a previously sold product when the manufacturer or merchant comes 
to know that a failure of replacement or repair creates an unreasonable risk of 
danger of damage. The moral duty achieves a legal - tort status - liability 
responsibility.

8 Hopkins v. Chip-In-Saw, Inc., 630 F.2d 616 (8th Cir. 1980); Gordon v. Niagara 
Mach. & Tool Works, 574 F.2d 1182, reh'g denied 578 F.2d 871 (5th Cir. 
1978); Griggs v. Firestone Tire & 
Rubber Co., 513 F.2d 851 (8th Cir.), cert. denied 423 U.S. 865, 96 S. Ct. 124, 
46 L. Ed. 2d 93 (1975); Sliman v. Aluminum 
Co. of America, 112 Idaho 277, 731 P.2d 1267 (1986), cert. denied ___ U.S. ___, 108 S. Ct. 2013, 100 L. Ed. 2d 601 (1988); West v. 
Broderick & Bascom Rope Co., 197 N.W.2d 202 (Iowa 1972); Connelly v. General Motors Corp., 184 
Ill. App.3d 378, 132 Ill.Dec. 630, 540 N.E.2d 370 (1989); Byrne v. SCM Corp., 182 Ill. App.3d 523, 
131 Ill.Dec. 421, 538 N.E.2d 796 (1989); Seibel v. Symons Corp., 221 N.W.2d 50 
(N.D. 1974); Glittenburg v. 
Wilcenski, 174 Mich. App. 321, 435 N.W.2d 480 (1989); and Binder v. Jones & Laughlin Steel 
Corp., 360 Pa. Super. 390, 520 A.2d 863 (1987). Of interest is Hiigel v. General Motors Corp., 190 
Colo. 57, 544 P.2d 983 (1975), where negligent failure to warn justified 
recovery of cost of product destroyed, but not commercial or business losses; Hill v. Air Shields, Inc., 721 S.W.2d 112, 119 (Mo. App. 1986), where it was recognized: "Admittedly, if there is no 
warning, the manufacturer may reasonably assume that the user will neither read 
nor heed it."; Restatement (Second) of Torts, supra, § 388; and Wade, On the Nature of Strict Tort Liability for 
Products, 44 Miss. L.J. 825, 842 (1973). See Lambert, Tom on Torts, 32 ATLA Law Rep. 228, 235 
(1989) and Annotation, Latent Danger 
Incident to Article Sold, 86 A.L.R. 947 (1933). See also Talmadge, Washington's Product Liability Act, 5 U. 
Puget Sound L. Rev. 1 (1981) which discusses the Washington statute where a 
specified post-manufacture duty to warn provision was also included in the 
statute.

9 The Tenth Circuit Court 
of Appeals panel on rehearing added as a pertinent subject of review for this 
case:

The petition for 
rehearing has not convinced us that we should revise our opinion and require 
that any duty to warn claim be based solely on negligence 
principles.

Moreover, under Rule 18, 
Fed.R.Civ.P., "A defendant cannot compel a plaintiff to choose at his peril the 
theory upon which he intends to rely and thereby possibly defeat a recovery 
where two consistent, concurrent or cumulative theories can be urged without 
prejudice to the defendant's ability to defend." Senter v. B.F. Goodrich Company, 127 F. Supp. 705, 707-708 (D.Colo. 1954); see 
also Rule 318(a), Colorado Rules of County Court Civil Procedure (1970) 
(adopting Federal Rule 18 on joinder of independent or alternate claims); Fumer, 
Products Liability § 16.02[1] at 
16-111, 16-112 (doctrine of election remedies has no place in products liability 
area as plaintiff should be allowed to submit to the jury all claims on which 
there is sufficient evidence). There is no evidence of prejudice here. On 
remand, the plaintiff may pursue duty to warn claims under both negligence and 
strict liability in tort theories.

Florom, 879 F.2d  at 803. See 
likewise in tort theory pleading, Printing Mart-Morristown, 116 N.J. 739, 
563 A.2d 31.

10 An issue of unknown user 
duty to warn inquiry is not presented in this case because the sales transaction 
was between Page and Bridger Coal. Tate 
v. Robbins & Myers, Inc., 790 F.2d 10 (1st Cir. 1986). A continued 
business relationship existed here.

11 As William James said, 
the truth of an idea is not a stagnant property inherent in it. Truth happens to 
an idea. It becomes true. It is made true by events. Its verity is, in fact, an 
event, a process. The process namely of verifying itself is verification. Its 
validity is the process of its validation.

Here, the duty 
to warn speaks to practical and moral desirability of avoided harm. To know is 
to have an intelligible choice. To deny knowledge is to withhold both 
intelligence and choice. The duty to warn as a moralistic responsibility is not 
limited to continued use of a dangerous product. By legend in the old west, it 
was called putting caution before foolhardy courage or, if you do it, that may 
be the last mistake you will ever make.

12 Caterpillar Tractor 
Company is a frequent visitor to these industrial product liability 
cases.

13 Compare the defective 
milking machines where there was only economic damage in Mulholland, 443 N.W.2d 340, where this 
preclusive issue was not even considered in the first series of 
appeals.

14 See Bland & Wattson, Property Damage Caused by Defective 
Products: What Losses are Recoverable?, 9 Wm. Mitchell L. Rev. 1, 4-5 (1983) 
(footnote omitted), which states:

The line between 
non-recoverable economic loss and recoverable property damage is not easy to 
draw. The courts have had difficulty defining "economic loss" in a manner which 
preserves the warranty concepts embodied in the Uniform Commercial Code as well 
as the tort concepts of negligence and strict liability. To classify a certain 
type of loss as "economic," however, is to predetermine its recoverability in 
negligence or strict liability.

It is the 
central strain of this dissent that adjudicatory deliberation is in many cases 
first made as to recoverability and then the curse of economic damage is thrown 
at the opinion to justify the predetermined denial. A large majority of economic 
loss denial cases involve direct property damage and not economic loss within 
any realistic definition of terms to determine.

It is 
interesting to note that those authors state "Texas is the only state to 
expressly refuse to allow recovery of damages for injury to the product itself, 
even if the injury results from an unreasonably dangerous defect in the 
product." Id. at 14. They then state 
"[t]he law of Minnesota is unclear as to the recoverability of damages for an 
injury to the product itself." Id. at 
16.

See, however, 
the definition in Note, Economic Loss in 
Products Liability Jurisprudence, 66 Colum. L.Rev. 917, 918 (1966) (quoting 
from Fentress v. Van Etta Motors, 157 Cal. App. 2 d Supp. 863, 866, 323 P.2d 227, 229 (1958)) (footnotes 
omitted):

Property damage is 
usually readily distinguishable from economic loss. For example, operation of a 
defective radiator causes property damage when it results in a fire which 
destroys the plaintiff's store and economic harm when it results in conditions 
so uncomfortable that it causes the loss of customer patronage. At times, 
however, the distinction may be more difficult to draw. If A manufactures paste 
which it sells to B who uses it to cement shoes which he sells to C, a failure 
of the paste to properly adhere causes economic loss if it does not physically 
damage the shoes but merely renders them unsaleable; on the other hand, a defect 
in the paste which physically damages the shoes causes property loss. If the 
damage is to the defective product itself, similar distinctions must be drawn. 
When the defect causes an accident "involving some violence or collision with 
external objects," the resulting loss is treated as property damage. On the 
other hand, when the damage to the product results from deterioration, internal 
breakage, or other non-accidental causes, it is treated as economic loss. It is 
also important to distinguish between "direct" and "consequential" economic 
loss. Direct economic loss may be said to encompass damage based on insufficient 
product value; thus, direct economic loss may be "out of pocket" - the 
difference in value between what is given and received - or "loss of bargain" - 
the difference between the value of what is received and its value as 
represented. Direct economic loss also may be measured by costs of replacement 
and repair. Consequential economic loss includes all indirect loss, such as loss 
of profits resulting from inability to make use of the defective 
product.

A somewhat 
different definitional approach is stated in Note, Products Liability: Expanding the Property 
Damage Exception in Pure Economic Loss Cases, 54 Chi-Kent L. Rev. 963 
(1978).

15 "[N]o precise 
distinction can be made between property damage and economic loss." Ribstein, Guidelines for Deciding Product Economic 
Loss Cases, 29 Mercer L. Rev. 493, 511 (1978).

16 Conversely defined, the 
author in Comment, supra, 4 Seton 
Hall L. Rev. at 154-55 (emphasis added and footnote omitted) states:

Purely economic losses 
may be classified into two basic categories: direct economic losses and indirect 
or consequential economic losses. A direct economic loss includes a diminution 
in the value of the product as measured by the difference between the purchase 
price or value of the product as represented to the purchaser and the value of 
the product after discovery of the defect. This type of direct economic loss is known 
as a loss of bargain. A direct economic loss also includes whatever repair 
costs may be incurred in repairing the defective product and any direct 
incidental expenditures which may be incurred in replacing a defective product 
which cannot be repaired. On the other hand, indirect or consequential economic 
losses include both losses of future business profits and business 
opportunities. Such losses are commonly 
referred to as expectation losses. Consequential economic losses also 
include any indirect loss resulting from the consumer's inability to secure an 
effective cover or replacement for the defective product.

It is noted the author 
concluded "the manufacturer should generally be held liable for the full extent 
of [what he classified as] direct economic loss." Id. at 182.

The genius of the common 
law lies in its ability, when presented with a new problem, to provide a remedy 
and, thereafter, to find or to develop a legal theory to justify it. When the 
problems of direct and consequential economic loss were first seriously proposed 
as compensable injuries, the courts had difficulty finding an acceptable legal 
basis upon which to justify recovery. As a result, sympathetic courts were 
forced to justify recovery upon that old standby, public policy, and numerous 
other legal fictions. This ad hoc approach has developed into a hopeless morass 
of conflicting legal rationales and theories of recovery.

Id. at 183 (footnote 
omitted). See likewise Note, supra, 54 Chi-Kent L. Rev. 963 with the 
broad expansive rule then confined by a consumer expectation.

17 This analysis attunes to 
the direction of some cases in analysis parallel with East River S.S. Corp., 476 U.S. 858, 106 S. Ct.  at 2295 that the character of the buyer and his purpose of using may 
determine compensability in any particular case. The arbitrary differentiation 
of users into either a commercial or consumer buyer as the test of providing 
litigative protection is, in itself, an interesting due process and equal 
protection inquiry not pursued here.

18 The recovery denial 
cases provide another incongruity which results from using justification in East River to create a rule for 
application. It is stated "in commercial settings when there is no large 
disparity in bargaining power, economic losses from a product injuring itself 
cannot be recovered in actions for strict products liability or negligence in 
manufacture or failure to warn." Utah 
Intern., Inc., 775 P.2d  at 745.

Consequently, 
this adaptation adds two additional factors to the rule. First, the principle is 
limited to commercial transactions, whatever that means, and to equals in 
bargaining power, however that is to be judged or computed.

How this rule is 
to be differently applied to the leaking fuel pump that burns up the car, house 
and maybe the owner as compared to the commercial trucker where the truck, the 
garage and perhaps the driver are similarly at risk is not logically 
established. Cf. Nicor Supply Ship 
Assoc., 876 F.2d 501.

19 A well-cited review, 
Note, Privity Revisited: Tort Recovery by 
a Commercial Buyer for a Defective Product's Self-Inflicted Damage, 84 
Mich.L.Rev. 517, 521 (1985), finds within the cases "four different approaches 
to determining whether a tort recovery is available for a product's 
self-inflicted damages." That author states:

1. Deny recovery 
for a defective product's self-inflicted damages for the reason that economic 
loss is coincidental with physical damage. Note, supra, 84 Mich.L.Rev. at 521 (citing Mid Continent Aircraft Corp. v. Curry County 
Spraying Service, Inc., 572 S.W.2d 308 (Tex. 1978)). See, however, Note, Torts - Strict Product Liability - Strict 
Liability in Tort Allows Recovery for Physical Harm to the Product Itself Unless 
Parties of Equal Bargaining Strength Expressly Waive Tort Liability. Mid 
Continent Aircraft Corp. v. Curry County Spraying Service, Inc., 553 S.W.2d 935 (Tex.Civ.App. - Amarillo 1977, writ 
granted), 9 Tex.Tech L.Rev. 733 (1978).

2. "[T]he fact 
that a defective product's self-inflicted damage is coincident with economic 
loss does not make it any the less physical damage," and, consequently, recovery 
is justified in tort. Note, supra, 84 
Mich.L.Rev. at 521 (citing Santor v. A 
& M Karagheusian, Inc., 44 N.J. 52, 207 A.2d 305 (1965)).

3. The third 
rule stated is: "Not surprisingly, a majority of courts have turned to a third 
approach, based upon the landmark decision of Seely v. White Motor Co., [63 Cal. 2d 9, 
45 Cal. Rptr. 17, 403 P.2d 145 (1965)]. The Seely court reasoned that a requirement 
for the imposition of strict tort liability is the existence of an unreasonably 
dangerous defect, so that only contractual remedies should be available for 
ordinary qualitative defects." Note, supra, 84 Mich.L.Rev. at 522 (footnote 
omitted). (The author is dead wrong in analysis of Seely, but the statement is clearly 
applicable to Washington Water Power Co. 
v. Graybar Elec. Co., 112 Wn.2d 847, 774 P.2d 1199, amended 779 P.2d 697 
(1989).)

4. The fourth 
approach turns to contract law and introduces as a key factor the existence of 
privity. Note, supra, 84 Mich.L.Rev. 
at 523.

Realistically, 
few cases are confirmable in result by use of this definitional 
analysis.

20 Confusion still remains 
as to what constitutes the defined economic damage for which the rules will be 
applied. The subject of a proper definition of economic damage will be 
considered in the fifth major segment of this dissent regarding "Other 
Property."

21 There are a line of 
cases where dangerousness is absent that apply the rule of no recovery for 
economic loss unless contractual provisions would allow such recovery. These are 
the contra-Santor cases. See Note, Manufacturers' Liability to Remote 
Purchasers for "Economic Loss" Damages - Tort or Contract?, 114 U.Pa.L.Rev. 
539 (1966). Cf. Wade, Tort Liability for 
Products Causing Physical Injury and Article 2 of the U.C.C., 48 Mo.L.Rev. 1 
(1983) where, without unreasonable dangerousness, the buyer cannot achieve the 
benefit of his anticipated bargain by any non-contractual theory. This is the 
"damned poor product, so what?" application of law to the American industrial 
product arising from the generation of greed and the era of irresponsibility. See Hart Engineering Co. v. FMC Corp., 
593 F. Supp. 1471, 1483 (D.R.I. 1984), where that court stated::

There is no parallel 
rationale, however, for extending this special prophylaxsis to provide relief 
for mere disappointment in product performance. In such circumstances, the same 
imbalance is not present; and the need for an expansive rendering of legal 
rights and remedies is considerably less. As the Purvis [Purvis v. Consolidated Energy 
Products Co., 674 F.2d 217, 222-23 (4th Cir. 1982)] court 
remarked:

All products carry the 
risk that they will serve their intended function poorly. In this sense, the 
risk of "ordinary" malfunctions is well within the contemplation of the average 
purchaser.

The author then 
quotes from Jones & Laughlin Steel 
Corp. v. Johns-Manville Sales Corp., 626 F.2d 280, 288-89 (3rd Cir. 
1980):

[T]he Third Circuit 
phrased the ratio decidendi for the 
rules as follows:

The rationale behind 
strict liability in personal injury situations is not well-suited to claims 
alleging only economic loss. Economic loss results from the failure of the 
product to perform to the level expected by the buyer and the seller. Such loss 
is most frequently measured by the cost of repairing the infirmity or by the 
difference in the value of the product as it exists and the value it would have 
had if it performed as expected. Thus, economic loss is almost always incurred 
by the owner of the product, not by persons who merely use it or come into 
contact with it.

Hart Engineering 
Co., 593 F. Supp.  at 1483.

In sum, the better rule 
seems undeniably to be that the law of contracts is the vehicle of choice to 
redress a purchaser's unrequited expectations of product efficacy, at least 
where (as here) the parties are in privity of contract and have had ample 
opportunity to allocate the risks involved. In those regrettable instances where 
the product turns sour and proves to be a lemon, dulcification should flow from 
the terms of the bargain, not from the vagaries of negligence law. To permit 
recovery of purely economic losses in such circumstances would, unless by happy 
coincidence such recovery was consistent with the agreement between the 
contracting parties, undermine the very foundations upon which business 
transactions have historically been built. Thus, to couple product 
disappointment with traditional notions of tort recoupment in such a context 
would be to mix matter and anti-matter; the resultant amalgam would be much too 
volatile to make sense in a commercial setting.

Id. at 1484. The sewer 
sludge pump did not perform. Richard 
O'Brien Companies v. Challenge-Cook Bros., Inc., 672 F. Supp. 466 (D.Colo. 
1987) (the concrete pumps did not perform); Copiers Typewriters Calculators, Inc. v. 
Toshiba Corp., 576 F. Supp. 312 (D.Md. 1983) (the photocopiers did not 
reproduce); Frey Dairy, 680 F. Supp. 253 (the feed silos worked improperly); Allen v. Toshiba Corp., 599 F. Supp. 381 
(D.N.M. 1984) (the photocopiers did not reproduce); Anglo Eastern Bulkships, Ltd. v. Ameron, 
Inc., 556 F. Supp. 1198 (S.D.N.Y. 1982) (the tank coating did not protect 
the ship container facilities); Cincinnati Gas & Elec. Co. v. General 
Elec. Co., 656 F. Supp. 49 (S.D.Ohio 1986) (the nuclear plant material could 
not handle temperatures and forces involved); Argo Welded Products, Inc. v. J.T. Ryerson 
Steel & Sons, Inc., 528 F. Supp. 583 (E.D.Pa. 1981) (the steel did not 
meet fabrication requirements); Klo-Zik 
Co. v. General Motors Corp., 677 F. Supp. 499 (E.D.Tex. 1987) (the truck 
motors did not perform); and Roxalana 
Hills, Ltd. v. Masonite Corp., 627 F. Supp. 1194 (S.D.W.Va. 1986), aff'd 813 F.2d 1228 (4th Cir. 1987) (the stucco did not last in West Virginia 
weather).

We can set 
aside, for the purpose of this drag line collapse, those industry failure cases 
since immediate catastrophic events here did directly threaten greater damage 
where product failure put other property or life at risk.

22 See Note, supra, 9 Tex.Tech.L.Rev. 733 and Note, 
Products Liability in Commercial 
Transactions, 60 Minn.L.Rev. 1061 (1976). See also Note, supra, 84 Mich.L.Rev. 517.

23 Significant federal case 
law supports tort remedies for unreasonable danger. Product damage cases are the 
moderate majority posture. See, as examples, Dixon v. International Harvester Co., 
754 F.2d 573 (5th Cir. 1985); Two Rivers 
Co. v. Curtiss Breeding Service, 624 F.2d 1242, reh'g denied 629 F.2d 1350 (5th Cir. 
1980), cert. denied 450 U.S. 920, 101 S. Ct. 1368, 67 L. Ed. 2d 348 (1981) (defective bull semen); and Texsun Feed Yards, Inc. v. Ralston Purina 
Co., 447 F.2d 660 (5th Cir. 1971) (Texas law applied to weight gain of 
product-fed cattle).

24

During a period in which 
the law is constantly expanding to protect new interests, the loudest debate is 
too often between those advocating no change at all and those demanding 
substantial revision of the legal fabric; too often ignored are the narrow 
distinctions of degree which make the law rational and coherent. Yet in the area 
of economic loss no fruitful inquiry is possible without close consideration of 
underlying factors which do, in fact, dictate the drawing of fine distinctions. 
Hopefully, in deciding whether to expand manufacturer's liability to encompass 
economic loss, courts will not reach results by inadvertence, but instead will 
focus on the policies to be furthered by each decision.

Note, supra, 66 Colum.L.Rev. at 
966.

25 The commercial 
enterprise justification or limitation is the most confusing and logically 
irrational factor of East River. If a product is dangerous, it will be dangerous 
to people even if purchased by large corporations. How can a rule be properly 
injected between one of the few remaining American (or more prevalent foreign) 
manufacturers and a mom and pop small business corporation or the family farmer? 
The thesis of justified dangerousness in commercial activity as an acceptable 
risk lacks any conceivable logic. It is here the inquiry of whether there is a 
tort without damage or lacking remedy is jost visibly presented. The factual and 
principled justification for East 
River rests with the character of seller-buyer relationship, but case 
application tends to suggest that the justification may be disregarded and the 
concept applied even if either a "consumer" transaction exists or the bargainers 
are not equal in economic muscle.

26 In academic analysis, 
the economic damage case law, decisions and discussion line up in the following 
array of concepts. Uniformity of result does not exist and little consistency to 
decision can be perceived. California law, as discussed infra, probably does not 
fall within any of these categories as apparently applying a particularized 
contract approach.

1. Santor - economic damage recoverable in 
tort including obsolescence and wear out. Generally abandoned 
concept.

2. No 
unreasonable danger or catastrophic event failure. Relief confined to contract. 
This includes obsolescence, wear out and insufficiencies of performance cases. 
The predominate rule denies tort recovery by general citation of the California 
case of Seely, 403 P.2d 145.

3. Unreasonable 
dangerousness and/or catastrophic event failure. This, as the case at hand in 
majority perspective, permits recovery for economic damages. This is the Cloud v. Kit Mfg. Co., 563 P.2d 248 
(Alaska 1977); Washington Water Power 
Co., 774 P.2d 1199; and Star 
Furniture Co. v. Pulaski Furniture Co., 297 S.E.2d 854 (W. Va. 1982) 
liability principle.

4. East River totally applied. No economic 
damage is recoverable if damage results only to the equipment machine or entire 
facility of which the faulty part is a constituent part.

5. East River - commercial purchaser - 
bargain equal adaptation where the East 
River denial rule is applied but only to commercial transactions as 
distinguished from consumer transactions and buyer and seller are bargaining 
equals.

Clearly, the 
essential issue presented here is whether the reeving block failure brings 
Continental into a category three standard as the majority rule or whether this 
court elects to adopt either the fourth or fifth East River applications. It is 
absolutely impossible to tell from East 
River and succeeding federal case law whether that finite authority is 
category four or five. Obviously, most admiralty cases would likely be 
more commercial than consumer, whatever the difference may be.

27 In an even more case of 
curious text is the most recent case of Mulholland, 443 N.W.2d 340. The case 
involved what is generally classified as economic loss, but the differentiated 
economic loss rules were not discussed. At issue was an alleged faulty milking 
system supplied by the defendant. Purchaser sued for breach of warranty, 
negligence in design and manufacture and failure to warn. An expert witness was 
rejected as unqualified and a directed verdict for defendant granted on failure 
of proof of casual relation between alleged faulty product and the economic 
damages sustained of damage to the milk herd and loss of milk production. A 
Michigan court of appeals decision affirmed the trial court and the Supreme 
Court reversed. The direct issue advised was qualification of the expert 
witness. It is clear in case discussion that the court, in analysis, perceived a 
claim was stated in tort as well as contract. The validity of the economic 
damage claims in tort seems to have been assumed by the discussion and decision 
which generally reversed the directed verdict.

28 City of Greenville should have 
particular present pertinence to the City of Casper where a major high school 
was closed and school sessions put on split shift because of asbestos 
contamination recently discovered in the building. It may seem sometimes that 
jurists write for academia beyond the real world. Product liability and asbestos 
problems contra-indicate and demonstrate that a real world exists for opinion 
discussion. See, however, Comment, Asbestos in Schools and the Economic Loss 
Doctrine, 54 U.Chi.L.Rev. 277 (1987).

29 A substituted used 
repair part which caused a converted aircraft engine to explode resulting in 
severe damage to the engine produced an interesting by-play in expression 
between the majority and minority in Consumers Power Co. v. Curtiss-Wright 
Corp., 780 F.2d 1093 (3rd Cir. 1986). The majority said:

It is pure fortuity that 
the explosion that reduced Consumers Power's engine to scrap did not damage any 
person or property nearby. The defective compressor disc did not lead merely to 
a loss of efficiency or a decline of profits; the disc's failure caused a 
sudden, violent and calamitous accident which posed a serious threat to persons 
and property. The damage caused by the explosion is property damage, not 
economic loss.

Id. at 1099. The dissent 
then said:

The fortuity that 
personal injury or outside property damage might occur in addition to injury to 
the defective product does not require a different rule with respect to economic 
loss. To deviate from the basic rule would lead to speculation and inquiry 
unrelated to the negotiations between the commercial entities.

Id. at 1102. How fortuity is 
a proper concept defining an exploding motor and consequent risk to persons or 
property is unexplained.

30 In its analysis to draw 
the line between contract and tort, the Arizona tribunal developed five 
hypotheticals to illustrate the problems addressed. In all five hypotheticals, a 
new LMC unit with an unreasonably dangerous and undiscovered defect was 
installed in the previously purchased turbines. Subsequently, the unit 
malfunctioned causing the losses and damages illustrated:

At Plant # 1, the defect 
caused the LMC to malfunction at a time when the plant engineer was aloft on a 
catwalk inspecting one of the turbines controlled by the LMC. The force of the 
resulting explosion (accident) knocked the engineer to the floor, injuring 
him.

At Plant # 2, the same 
malfunction affected only one turbine, which accidentally caught on fire and was 
completely destroyed.

At Plant # 3, the defect 
caused the LMC to malfunction and burn. The fire department responded quickly, 
so none of the turbines or other property located near the LMC was damaged in 
the accident.

At Plant # 4, the plant 
engineer discovered the defect in the LMC and was able to shut down the turbines 
and replace the LMC before any damage occurred. However, the LMC replacement 
cost to [plaintiff] is $50,000, including shutdown, start-up and testing 
costs.

At Plant # 5, during a 
peak demand period, the LMC malfunctioned and failed to start all four of the 
gas turbines. The plant was down for twenty-four hours. As a result, [plaintiff] 
could not deliver electricity to its numerous commercial and residential users. 
[Plaintiff] not only lost all the profits anticipated from the sales to those 
consumers but must replace the LMC and faces lawsuits by some of its large 
commercial users.

Salt River Project Agr. 
Imp. and Power Dist., 694 P.2d  at 
208.

From the 
illustration, the court found unanimous authority that the damages at plant one 
and plant two were recoverable, a split of authority in plant three determined 
by the unreasonably dangerousness rule in application or rejection, and a 
majority rule for denial of economic losses in plants four and five. The turbine 
in Salt River Project Agr. Imp. and Power 
Dist. and the reeving block in Continental have identical placements within 
the hypotheticals as a plant three occurrence dependent on definition of "other 
property."

31 The court in Aloe Coal Co., 816 F.2d  at 119 (quoting 
East River S.S. Corp., 106 S.Ct. at 
2303), in making its "studied conclusion" or more accurately an "educated 
guess," related that "[i]n our present analysis, a murky trudge through 
sophisticated nuances gives way to an unencumbered flight to basics. Damage to a 
product means simply that the customer has received `insufficient product 
value.'" That court also related "[w]e recognize that our conclusion may not be 
considered congruent with two recent cases in the Pennsylvania intermediate 
appellate court. * * * These pronouncements have made our task more uncertain 
than it otherwise would be, yet do not dissuade us from our ultimate conclusion" 
in review of Industrial Uniform Rental 
Co., Inc., 463 A.2d 1085, which embraced Pennsylvania Glass Sand Corp., 652 F.2d 1165 and Johnson v. General Motors Corp., 
349 Pa. Super. 147, 502 A.2d 1317 (1986), overruled sub nom. REM Coal Co., Inc. v. 
Clark Equipment Co., 563 A.2d 128 (Pa.Super. 1989). Aloe Coal Co., 816 F.2d  at 118. See 
likewise King v. Hilton-Davis, 855 F.2d 1047 (3rd Cir. 1988), cert. 
denied ___ U.S. ___, 109 S. Ct. 839, 102 L. Ed. 2d 971 (1989). While this 
dissent was in preparation for publication, the Superior Court of Pennsylvania 
released REM Coal Co., Inc. v. Clark 
Equipment Co., 563 A.2d 128 (Pa. Super. 1989). REM Coal Co., Inc. follows Aloe Coal Co., 816 F.2d 110 in 
intermediate court reversal of Johnson, 502 A.2d 1317 and Industrial Uniform Rental Co., Inc., 463 A.2d 1085. Pennsylvania law will probably remain unsettled in historical 
progression until the supreme court of that state determines whether and how far 
it will follow East River or follow 
the persuasion of the lead cases from Alaska, Washington and West Virginia in 
considering dangerousness and sudden catastrophe, e.g., Washington Water Power Co., 774 P.2d 1199; Cloud, 563 P.2d 248; and Star Furniture Co., 297 S.E.2d 854.

32 In East River S.S. Corp., 476 U.S.  at 869 
n. 4, 106 S. Ct.  at 2301 n. 4, the United States Supreme Court took notice of the 
New Jersey and California developments:

Interestingly, the New 
Jersey and California Supreme Courts have each taken what appears to be a step 
in the direction of the other since Santor and Seely. In Spring Motors Distributors, Inc. v. Ford 
Motor Co., 98 N.J., at 579, 489 A.2d, at 672, the New Jersey court rejected 
Santor in the commercial context. And 
in J'Aire Corp. v. Gregory, 24 Cal. 3d 799, 157 Cal. Rptr. 407, 598 P.2d 60 (1979), the California court recognized a 
cause of action for negligent interference with prospective economic 
advantage.

33 There are a significant 
number of cases where denied recovery of economic damages were either clearly 
within the unachieved benefit of the bargain classification or exceptional 
dangerousness did not exist or was never considered by the litigants or 
appellate court. Twin Disc, Inc. v. Big 
Bud Tractor, Inc., 772 F.2d 1329 (7th Cir. 1985) (Wisconsin law); Purvis v. Consolidated Energy Products Co., 
674 F.2d 217 (4th Cir. 1982) (diversity case, South Carolina law); S.M. Wilson & Co., 587 F.2d 1363 
(California law, diversity case); Posttape Associates, 537 F.2d 751 (law 
of Pennsylvania, diversity case); Hart 
Engineering Co., 593 F. Supp. 1471; Arrow Leasing Corp., 666 P.2d 544; Sacramento Regional Transit Dist. v. 
Flxible, 158 Cal. App. 3d 289, 204 Cal. Rptr. 736 (1984); Kaiser Steel Corp., 127 Cal. Rptr. 838; 
Florida Power & Light Co., 510 So. 2d 899; Clark v. International 
Harvester Co., 99 Idaho 326, 581 P.2d 784 (1978); Alfred N. Koplin & Co., Inc. v. Chrysler 
Corp., 49 Ill. App.3d 194, 7 Ill.Dec. 113, 364 N.E.2d 100 (1977); Prairie Production, Inc. v. Agchem Division 
Pennwalt Corp., 514 N.E.2d 1299 (Ind. App. 1987); McGhee, 296 N.W.2d 286; Clevenger and Wright Co., 625 S.W.2d 906; Hagert v. Hatton Commodities, Inc., 
350 N.W.2d 591 (N.D. 1984).

34 A number of cases 
provide an easy factual answer to the defective product causing damage to other 
property categorization. Hales v. Green 
Colonial, Inc., 490 F.2d 1015 (8th Cir. 1974) (defective heater burned up 
building); Largoza, 538 F. Supp. 1164 
(refrigerator caught fire and burned up house); Romano, 336 A.2d 555 (television set 
exploded and set fire to the house). Not so clearly identified was the concrete 
mixer that fell off of the truck chassis and caused damage to both the chassis 
and mixer. A successful claim was made for recovery under negligence for all 
damage. United States Fidelity & 
Guar. Co. v. Truck & Concrete Equipment Co., 21 Ohio St.2d 244, 257 N.E.2d 380 (1970). See also Fondyce 
Concrete, Inc. v. Mack Trucks, Inc., 535 F. Supp. 118 (D.Kan. 1982) and Wulff, 498 P.2d 766. The differentiation 
of recoverability is between the bucket on the drag line and the wheelbarrow on 
the ground if destroyed when the reeving block disintegrates. See Firestone Tire & Rubber Co. v. 
Hall, 152 Ga. App. 560, 263 S.E.2d 449 (1979) (defective 
tire destroyed truck).

35 Miller Industries, 733 F.2d 813 and McConnell, 646 F. Supp. 1520 were 
consequently inapplicable as a matter of presented evidence.

36 Otherwise, we fail 
to:

Rather than 
contribute yet another unexplained and unreasoned decision to the economic loss 
pile, the court could instead carefully consider the problems of definition and 
commercial transactions. The court could base its decision on a carefully 
articulated argument that the public policy which supports strict liability does 
or does not extend to economic loss.

Comment, supra, 34 S.D.L.Rev. at 136. I would 
hope with that author for "something better."