Opinion ID: 44649
Heading Depth: 2
Heading Rank: 1

Heading: Negligent Manufacture

Text: On appeal, Pillsbury argues that the district court erred in granting summary judgment in favor of West Carrollton on the negligent manufacture claim. In cases involving an allegedly defective product manufactured or supplied pursuant to a contractual relationship, under Georgia law,2 “[t]he economic loss rule prevents recovery in tort when [the] defective product has resulted in the loss of value or use of the thing sold, or the cost of repairing it.” Flintkote Co. v. Dravo Corp., 678 F.2d 942, 948 (11th Cir. 1982). “Under such circumstances, the duty breached is generally a contractual one and the plaintiff is merely suing for the benefit of his bargain.” Id.; see also Vulcan Materials Co. v. Driltech, Inc., 251 Ga. 383, 387, 306 S.E.2d 253, 257 (1983). But the economic loss rule does not prevent a tort action to recover for injury to other property and persons because the duty breached generally arises independently of the contract. Flintkote, 678 F.2d at 2 The parties have stipulated that Georgia’s substantive law applies. 7 948; Vulcan Materials, 251 Ga. at 387, 306 S.E.2d at 257. Hence, the economic loss rule aids in determining if the plaintiff seeks to recover for injuries resulting from the breach of the duty “to produce a nonhazardous product that does not pose an unreasonable risk of injury to person or property”—a duty “arising independently of the contract.” Flintkote, 678 F.2d at 948. In addition to the duty “to produce a nonhazardous product that does not pose an unreasonable risk of injury to person or property,” id., Georgia law recognizes that extra-contractual duties may arise expressly from statute or common law, or may be implied by law from special contractual relationships. Bulmer v. S. Bell Tel. & Tel. Co., 170 Ga. App. 659, 660, 317 S.E.2d 893, 895 (1984) (citations omitted). For example, Georgia law implies a “public duty,” independently of contract, in certain contractual relations between principal and agent, bailor and bailee, attorney and client, physician and patient, common carrier and passenger or shipper, and master and servant. Id. Pillsbury argues that the economic loss rule does not bar recovery on its negligent manufacture claim because extra-contractual duties did exist between it and West Carrollton based upon, inter alia, the general duty of care, a public duty owed by West Carrollton to the public in general, and the duty West Carrollton adopted for itself when it created its own internal policies to follow all 8 specifications supplied by its customers. Pillsbury also argues that the district court misconstrued the economic loss rule to bar recovery unless there has been physical injury to persons (as opposed to property). Pillsbury further argues that the court erroneously found the printed dividers to be nonhazardous and nondefective because they posed no unreasonable risk of physical harm to persons. Finally, Pillsbury contends that genuine issues of material fact existed on all elements of its prima facie case for negligent manufacture. In its summary judgment order, the district court cited this court’s Flintkote opinion in holding that although suppliers have an extra-contractual duty to manufacture products that do not pose an unreasonable risk of injury to “the people who use the products,” Pillsbury had not shown that West Carrollton’s failure to manufacture the dividers in accordance with Pillsbury’s specifications established that the dividers were “defective” or posed an unreasonable risk of injury “to Pillsbury or its customers.” According to the district court, absent such a showing, Pillsbury could only proceed on a breach of contract theory. The district court apparently construed the extra-contractual duty discussed in Flintkote as arising only if a product creates an unreasonable risk of injury to persons. But this is a misapprehension of Flintkote, in which this court held that under Georgia law, there is an extra-contractual duty “to produce a nonhazardous 9 product that does not pose an unreasonable risk of injury to person or property.” Flintkote, 678 F.2d at 948 (emphasis added). The risk of injury to persons is not the lynchpin of the extra-contractual duty discussed in Flintkote. See id. Thus, in determining whether a material issue of fact existed regarding the duty element in Pillsbury’s negligent manufacture claim, the district court erred in failing to consider evidence that West Carrollton’s dividers posed an unreasonable risk of injury to Pillsbury’s pie crusts. And because Pillsbury presented enough evidence to create a genuine issue of fact regarding the breach, causation, and damages elements of its negligent manufacture claim, we conclude that the district court’s grant of summary judgment to West Carrollton on this claim was improper.3