Court Opinion

ID: 9774641
Source: CourtListenerOpinion
Date Created: 2023-08-29 18:28:02.728241+00
Date Added: 2024-06-11T07:32:12.328695
License: Public Domain

Justice RIVERA-SOTO,
concurring in part and dissenting in part.
To the extent the majority concludes that the economic loss doctrine bars recovery in this case, I concur. In respect of the remainder of the majority’s opinion, however, I dissent substantially for the reasons so ably set forth in Judge Carchman’s majority opinion. Dean v. Barrett Homes, Inc., 406 N.J.Super. 453, 455-73, 968 A.2d 192 (App.Div.2009). I add only the following two points.
First, the Appellate Division’s decision consists of both a majority opinion and an opinion concurring in the judgment only.1 That concurring-in-the-judgment opinion gratuitously addresses a question that, simply put, is not present in this ease. As the concurring judge explained,
I write separately to express concerns about the scope and application of the “economic loss” doctrine in circumstances involving a homeowner who, unlike the instant plaintiffs, is unaware of the latent risks of a defective component product that was used in the construction of his or her home. In my view, such an innocent home purchaser should be able to recover, under the Product Liability Act, N.J.S.A 2A:58C-1 to -11 (“PLA”), reasonable compensation from the manufactur*307er of that defective component for the physical harm the component caused to other portions of the home and to any other property owned by the plaintiff.
[Id. at 473, 968 A.2d 192 (emphasis supplied).]
Thus, to the extent the concurring opinion deals solely with circumstances other than those presented in this case, that concurrence in its entirety is dicta, that is, “something that ‘is unnecessary to the decision in the case and therefore not precedential!/]’ ” Lucent Techs., Inc. v. Twp. of Berkeley Heights, 201 N.J. 237, 252, 989 A.2d 844 (2010) (Rivera-Soto, J., concurring) (quoting Black’s Law Dictionary 1100 (7th ed. 1999)); see also State ex rel. J.A., 195 N.J. 324, 355-56, 949 A.2d 790 (2008) (Rivera-Soto, J., dissenting) (describing indifference to faithful and disciplined appellate review as “relegatfing] its entire ... analysis to the chiaroscuro of dicta” and noting that “ ‘dicta cannot be res adjudicata from the very definition of the terms.’” (quoting J.J. Hockenjos Co. v. Lurie, 12 N.J. Misc. 545, 548, 173 A 913 (Sup.Ct.1934))).
Second, the majority’s conclusion that “the integrated product doctrine does not apply to the facts before this Court,” ante at 289, 8 A.3d at 768, defies basic common sense. As the majority must concede, the “product” at issue here is an Exterior Insulation Finishing System (EIFS), that is, an exterior finish that is applied permanently to a home. Ante at 289-90, 8 A.3d at 767-68. See Simmermon v. Dryvit Sys., Inc., 196 N.J. 316, 321, 953 A.2d 478 (2008) (describing “Dryvit”—a brand of EIFS—as “synthetic stucco”); DKM Residential Props. Corp. v. Twp. of Montgomery, 363 N.J.Super. 80, 83, 831 A.2d 110 (App.Div.2003) (describing EIFS as “an exterior, synthetic, stucco-like finish” applied to a home). As noted in David L. Grenier and William J. Jorgensen, Exterior Insulation and Finish System (EIFS): An Overview, available at http://www.c-risk.com/Articles/dlg_EIFS_overview. htm:
EIFS was first introduced in post-World War II Germany to resurface buildings, which had damaged masonry. It was subsequently introduced in the United States in the late 1960’s and its use has become widespread over the past thirty years. Sometimes called “synthetic stucco,” EIFS is a multi-layered exterior barrier-type system designed to prevent moisture intrusion into exterior walls. The system consists of four main components:
*3081) Panels of expanded polystyrene foam insulation installed with adhesive or mechanically fastened to the substrate, usually plywood or oriented strand board (OSB),
2) A base coat that is troweled over the foam insulation panels,
3) A glass fiber reinforcing mesh is laid over the polystyrene insulation panels and fully imbedded in the base coat,
4) A finishing coat is then troweled over the base coat and the reinforcing mesh. The base coat, mesh, and finishing coat is usually approximately 1/8 to 1/4 inches thick.
To claim that any system so designed and installed is anything other than permanently integrated into the structure to which it is applied simply makes no sense.
As the facts in this case pointedly describe, the EIFS exterior finish permanently was installed when the home was first built; that permanent exterior finish was part and parcel of the home when the original owners of this home purchased it; and that permanent exterior finish obviously remained an integrated part of this home when plaintiffs purchased it from the original owners. In those circumstances, the majority’s conclusion that the exterior finish to this home had not “been sufficiently integrated into the home to become a part of the structure for purposes of broadly applying the economic loss rule[,]” ante at 302, 8 A 3d at 775, runs contrary to stark reality. According to the majority,
the EIFS was affixed to the exterior walls to create a moisture barrier, much like exterior vinyl siding. That is, it did not become an integral part of the structure itself, but was at all times distinct from the house. It remained, therefore, a separate product for purposes of our analysis.

[Ibid]

The notion that an exterior finish that can only be removed by extensive demolition work is not “integrated” into the structure to which it is attached is so fanciful, so nonsensical, that it beggars the imagination. It is a conclusion that can germinate only in the minds of lawyers and can find root only in the rarified environment of this Court’s decisions; it cannot, however, long survive in the atmosphere of the real world. EIFS is in many relevant respects no different than roofing shingles. Yet, applying the majority’s reasoning, the roof of a home is not integrated into that *309home. See, e.g., Lee Wholesale Supply, Inc. v. Yacos (In re Yacos), 370 B.R. 131, 135 (Bankr.E.D.Mich.2007) (“Existing residential homes, like other buildings, have roofs. Repairing and replacing roofs requires one to put the parts together to form the complete integrated object (i.e., the building). That the roof being repaired or replaced happens to be constructed on an existing home rather than a new home does not make it any less an act of construction of a building.”) There is no kind way to put it: the majority’s reasoning simply makes no sense.
Until today, New Jersey courts had embraced the reasonable and logical conclusion that the integrated product/component part rule of the economic loss doctrine forbade the kind of hairsplitting that would permit the result the majority reaches. In Marrone v. Greer & Palman Construction, Inc., 405 N.J.Super. 288, 964 A.2d 330 (App.Div.2009), the Appellate Division recently confronted and readily resolved the very issue that is so vexing to the majority. In that ease, a homeowner—like plaintiffs here—purchased from the then-owners an existing home that originally had been constructed using an EIFS exterior finish. Id. at 291, 964 A.2d 330. After buying the home, the homeowner received notice from his homeowner’s insurance carrier “threatening to cancel their coverage because of the EIFS cladding on the house.” Ibid. The homeowner sued and the trial court dismissed the complaint, explaining that “[w]here a component of an integrated product causes injury solely to the integrated product, the damage to the integrated product is not considered separate property damage that would remove the claim from the realm of contract law into the field of tort law. Such is the case here[.]” Id. at 293, 964 A.2d 330. The Appellate Division concurred, concluding that, in the circumstances presented, “the house is the ‘product,’ and it cannot be subdivided into its component parts for purposes of supporting a [Products Liability Act] cause of action.” Id. at 297, 964 A.2d 330. See generally Alloway v. General Marine Indus., 149 N.J. 620, 695 A.2d 264, 267-68 (1997) (explaining that “tort principles are better suited to resolve claims for personal injuries or damage to other property[,] ... [cjontract principles more *310readily respond to claims for economic loss caused by damage to the product itself’ (citations omitted)).
One cannot help but ponder whether—in the absence of a lawyer’s logical whimsy—everyday homeowners who have exterior finish systems attached to their homes would ever think that those systems are not “integrated” as part of their homes. Because I cannot join in that unexplained, unexplainable and unnecessary departure from reality, I dissent.2
*313For reversal and remandment—Chief Justice RABNER and Justices LONG, LaVECCHIA, ALBIN, WALLACE and HOENS—6.
For concurrence in part/dissent in part—Justice RIVERA-SOTO—1.

 The conflict generated by the Appellate Division's majority and concurring-in-the-judgment opinions also raises a quarrelsome procedural point not discussed either by the parties or the courts. The appellate panel consisted of three judges: Judges Carchman, Sabatino and Simonelli. The "majority” opinion is signed by Judge Carchman, while the concurring opinion—which concurs only in the judgment—is signed by Judge Sabatino and is joined in by Judge Simonelli. If that is the tally, then how does the "majority” opinion command a majority of that three-member panel? Simple arithmetic would require a result different from that embodied in the Appellate Division's dueling opinions, and no satisfactory answer has been provided to that procedural conundrum.

 Despite direct authority in our own State to the contrary, the majority nevertheless discards the application of the integrated product rule of the economic loss doctrine in this case based on two California cases that— incredibly—hold that neither the windows of a home nor its foundation are "integrated" into the home. Ante at 302-03, 8 A.3d at 775-76. In so doing, the majority relies on two outlier decisions and ignores the far better reasoned, almost universal weight of authority nationwide that bars plaintiffs’ action under the integrated product rule of the economic loss doctrine.
The cases either directly or impliedly supporting the rather unremarkable proposition that an EIFS system is integrated into a building and, hence, is subject to the economic loss rule are legion; the following is not exhaustive, but merely illustrative.
Federal: Saratoga Fishing Co. v. J.M. Martinac & Co., 520 U.S. 875, 117 S.Ct. 1783, 138 L.Ed.2d 76 (1997) (holding that extra fishing equipment and spare parts, added to ship by user after initial sale, were not part of original ship with a defective hydraulic system that itself caused harm at issue); E. River S.S. Corp. v. Transamerica Delaval, 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986) (barring recovery in tort for damages caused by defective turbine engines installed by manufacturer in four ships); HDM Flugservice GmbH v. Parker Hannifin Corp., 332 F.3d 1025, 1030 (6th Cir.2003) (barring recovery for damage to helicopter from allegedly defective landing gear under a species of integrated product rule); All Alaskan Seafoods, Inc. v. Raychem Corp., 197 F.3d 992, 995 (9th Cir.1999) (referring to integrated product rule as "component part rule" and describing it as "[a] corollary to the economic loss rule”); In re GMC, 383 F.Supp.2d 1340, 1343-44 (W.D.Okla.2005) (noting that "[resolution of the issue requires the court to define the relevant product—does it consist of the defective component or the finished product into which the component is integrated[,]” and explaining that "[wjhen addressing claims based on defective components, most courts have held that the relevant 'product' is the finished product into which the component is integrated”).
Alabama: Keck v. Dryvit Sys., 830 So.2d 1, 6, 7 (Ala.2002) (explaining, in context of EIFS system, that "[w]hether an item that is incorporated into real property may be considered [integrated] is determined by whether the item is a part of the structural integrity of the house or building that is reasonably *311expected to last for the useful life of the house or building[,j” describing EIFS as “a multilayered wall system that actually composes the exterior walls of a building. By virtue of the very function of the EIFS as an exterior wall system, the EIFS could not be a structural component of a building that one might expect to replace after normal wear and tear. A stucco exterior wall is the equivalent of a brick wall; it is a part of the structural integrity of a house—a homeowner expects it to be weather resistant and to endure for the entire useful life of the house” and ultimately holding that, for purposes of the economic loss doctrine, an EIFS system is part of the structural integrity of a house).
Alaska: N. Power & Eng’g Corp. v. Caterpillar Tractor Co., 623 P.2d 324, 330 (Alaska 1981) (applying integrated product rule where component parts “are provided by one supplier as part of a complete and integrated package”).
California: Jimenez v. Superior Court, 29 Cal.4th 473, 127 Cal.Rptr.2d 614, 58 P.3d 450 (2002) (barring product liability claim absent proof of economic loss arising from property damage other than damage to the defective product).
Florida: Casa Clara Condo. Ass’n v. Charley Toppino & Sons, 620 So.2d 1244, 1245 (Fla.1993) (economic loss doctrine bars claim against concrete provider for building where there was no damage to anything other than building itself); Turbomeca, S.A. v. French Aircraft Agency, Inc., 913 So.2d 714, 717 (Fla.Dist.Ct. App.2005) (explaining that “[t]he airframe and engine are not two separate pieces of property-they are one product” and that “[cjourts have refused to bifurcate products into parts where a component part harms or destroys the finished product”); Jarmco, Inc. v. Polygard, Inc., 668 So.2d 300 (Fla.Dist.Ct. App.1996) (economic loss doctrine bars claim against distributor of boat resin where only damage was to boat itself); Am. Universal Ins. Group v. Gen. Motors Corp., 578 So.2d 451 (Fla.Dist.Ct.App.1991) (economic loss doctrine bars claim for loss of engine when damaged by replacement oil pump that was integral component of engine).
Hawaii: Va. Sur. Co. v. Am. Eurocopter Corp., 955 F.Supp. 1213, 1216 (D.Haw.1996) (holding that “helicopter and engine, along with the fitting, constitute a single product for purposes of the economic loss doctrine”).
Idaho: Tusch Enters. v. Coffin, 740 P.2d 1022, 1035-36 (Idaho 1987) (holding that “subsequent purchasers of residential dwellings, who suffer purely economic losses from latent defects manifesting themselves within a reasonable time, may maintain an action against the builder (or builder-developer, as the case may be,) of the dwelling based upon the implied warranty of habitability” but not in tort).
Illinois: Trans States Airlines v. Pratt & Whitney Canada, Inc., 177 Ill.2d 21, 224 Ill.Dec. 484, 682 N.E.2d 45 (1997) (airplane hull not separate property from engine).
Indiana: Gunkel v. Renovations, Inc., 822 N.E.2d 150, 156 (Ind.2005) (distinguishing between damage caused by “parts of a finished product damaged by components supplied to the seller by other manufacturers and imported into the seller's product” as barred by economic loss doctrine, and damage caused by “property acquired by the plaintiff separately from the defective goods or services” as recoverable “even if the defective product is to be incorporated into a completed product for use or resale”).
*312Kansas: Nw. Ark. Masonry, Inc. v. Summit Specialty Prods., 31 P.3d 982, 988 (Kan.Ct.App.2001) (holding that " 'damage by a defective component of an integrated system to either the system as a whole or other system components is not damage to ‘other property' which precludes the application of the economic loss doctrine’ " (quoting Wausau Tile, Inc. v. County Concrete Corp., 226 Wis.2d 235, 593 N.W.2d 445, 452 (1999))).
Maryland: Pulte Home Corp. v. Parex, Inc., 174 Md.App. 681, 923 A.2d 971, 1003 (Md.Ct.Spec.App.2007) (concluding, in defective exterior finish case, that "the economic loss [doctrine] prevents recovery for damage to property that consists only of the product itself”).
Massachusetts: Pro Con, Inc. v. J & B Drywall, Inc., 20 Mass.L.Rptr. 466 (Mass.Super.Ct.2006) (concluding that EIFS system, once installed on hotel, became an integral component of hotel's wall system barring tort recovery under economic loss doctrine).
Michigan: Sullivan Indus., Inc. v. Double Seal Glass Co., 192 Mich.App. 333, 480 N.W.2d 623 (1991) (concluding that sealant used in assembly of insulated glass units was part of integrated product and, thus, tort claim was barred under economic loss doctrine).
Minnesota: S.J. Groves & Sons Co. v. Aerospatiale Helicopter Corp., 374 N.W.2d 431, 432 (Minn.1985) (claim of failed part of helicopter causing crash barred by integrated product rule of economic loss doctrine); Minneapolis Soc'y of Fine Arts v. Parker-Klein Assoc. Architects, 354 N.W.2d 816, 817 (Minn. 1984) (materialman providing bricks for non-load bearing faqade not liable for failure as fagade integrated into building).
Nevada: Nat’l Union Fire Ins. Co. v. Pratt & Whitney Can., Inc., 107 Nev. 535, 815 P.2d 601 (1991) (economic loss doctrine bars recovery for loss of aircraft that harmed itself).
North Carolina: Wilson v. Dryvit Sys., 206 F.Supp.2d 749, 753, 754 (E.D.N.C. 2002) (explaining that "North Carolina courts have indicated that when a component part of a product or a system injures the rest of the product or the system, only economic loss has occurred" and determining that EIFS system "is an integral component of plaintiff's house").
North Dakota: Cooperative Power Ass’n v. Westinghouse Elec. Corp., 493 N.W.2d 661, 667 (N.D.1992) (holding that product manufacturer "may not be held liable in negligence or strict liability for economic loss caused by a failure of a component part of the [product] which causes damage to the [product] only").
South Dakota: City of Lennox v. Mitek Indus., 519 N.W.2d 330, 333 (S.D.1994) ("When a defect in a component part damages the product into which that component was incorporated, economic losses to the product as a whole are not losses ... and are therefore not recoverable in tort.”).
Texas: Pugh v. Gen. Terrazzo Supplies, Inc., 243 S.W.3d 84, 92 (Tex.App.2007) (noting that "Texas courts have rejected the argument that damage to a finished product caused by a defective component part constitutes damage to 'other property,' so as to permit tort recovery for damage to the finished product" and applying integrated product rule of economic loss doctrine to bar tort claim in respect of EIFS system installed on home).
*313Washington: Stieneke v. Russi, 190 P.3d 60, 66 (Wash.Ct.App.2008) (barring tort liability for defective roof under integrated product rule of economic loss doctrine, and explaining that "a building constitutes a single 'product' or 'property,' not a series of component parts, for purposes of the economic loss [doctrine]”).
Wisconsin: Linden v. Cascade Stone Co., 276 Wis.2d 267, 687 N.W.2d 823, 824 (Wis.Ct.App.2004) (holding that "[t]he integrated system rule holds that once a part becomes integrated into a completed product or system, the entire product or system ceased to be 'other property' for purposes of the economic loss doctrine" and concluding that exterior stone stucco and roof systems were integrated into home); Mequon Med. Assocs. v. S.T.O. Indus., 671 N.W.2d 717 (Wis.Ct.App.2003) (holding that EIFS system is integral part of building subject to economic loss doctrine); Selzer v. Brunsell Bros., 257 Wis.2d 809, 652 N.W.2d 806, 818 (Wis.Ct.App.2002) (holding that "[t]he integrated system rule holds that once a part becomes integrated into a completed product or system, the entire product or system ceases to be 'other property' for purposes of the economic loss doctrine" and concluding that "windows and siding [a]re components of an 'integrated system'"); Bay Breeze Condo. Ass’n v. Norco Windows, Inc., 257 Wis.2d 511, 651 N.W.2d 738 (Wis.Ct.App.2002) (holding that "[t]he economic loss doctrine applies to building construction defects when ... the defective product is a component part of an integrated structure or finished product” and concluding that windows are an integral part of a house subject to economic loss rule).