Opinion ID: 1737633
Heading Depth: 1
Heading Rank: 1

Heading: Strict Liability Issue

Text: The application of the tort doctrine of strict liability to economic loss has prompted considerable commentary. [2] Courts of other jurisdictions are split on whether to extend strict liability to economic loss. [3] The two leading judicial opinions are probably Santor v. A. and M. Karagheusian, Inc., 44 N.J. 52, 207 A.2d 305 (1965) and Seely v. White Motor Co., 63 Cal.2d 9, 45 Cal.Rptr. 17, 403 P.2d 145 (1965). In Santor, the New Jersey Supreme Court held the purchaser of defective carpeting could sue the manufacturer, with whom he was not in privity, on either a breach of implied warranty of reasonable fitness or strict liability. In Seely v. White Motor Co., supra , the California Supreme Court rejected Santor's holding. The California court held that White Motor Co. breached an express warranty to Seely but condemned Santor's application of strict liability to economic loss. Writing for the California Supreme Court in Seely, Chief Justice Traynor stated: The distinction that the law has drawn between tort recovery for physical injuries and warranty recovery for economic loss is not arbitrary and does not rest on the luck of one plaintiff in having an accident causing physical injury. The distinction rests, rather, on an understanding of the nature of the responsibility a manufacturer must undertake in distributing his products. He can appropriately be held liable for physical injuries caused by defects by requiring his goods to match a standard of safety defined in terms of conditions that create unreasonable risks of harm. He cannot be held for the level of performance of his products in the consumer's business unless he agrees that the product was designed to meet the consumer's demands. 45 Cal. Rptr. at 23, 403 P.2d at 151. Texas courts of civil appeals have consistently preferred the result in Seely and have held that strict liability does not apply to economic losses. [4] A strict liability action in Texas is based upon section 402A of the Restatement (Second) of Torts. McKisson, supra . Section 402A requires that the defective product be, unreasonably dangerous to the user or consumer or to his property... and that the product cause, physical harm to the ultimate user or consumer, or to his property .... [5] The courts of civil appeals have correctly reasoned that economic loss is not physical harm to the user or his property. As stated in Melody Home Manufacturing Co. v. Morrison, 455 S.W.2d 825 (Tex.Civ.App. 1970, no writ): There is a distinction between physical harm, or damage, to property and commercial loss. We agree and hold that strict liability does not apply to economic losses. There is no finding in this case that the product was unreasonably dangerous to Shivers or caused physical harm to Shivers or his property.