Tort Law – Page 9 – Marquette University Law School Faculty Blog

Gulf Oil Disaster — Lessons in Torts and Bailouts

Post author:Michael K. McChrystal
Post published:May 5, 2010
Post category:Environmental Law Tort Law

The oil rig explosion that killed eleven workers and causes the daily flow of an estimated 200,000 gallons of oil into the Gulf of Mexico presents a gut check moment on tort policy. A lot of harm has been and will be caused by this catastrophe, and somebody will bear the cost of that harm. Should it be the responsible parties? the victims? the taxpayers?

American tort law, under the principles of proximate cause and nuisance, tells some victims that they must bear the cost of their own harm because it is either too remote (not a “proximate” cause) or too common (to be compensable, damages from a public nuisance must be “different in kind” from those suffered by others) to require the responsible party to pay. The responsibility of those whose conduct caused the harm must have a “sensible and just” stopping point, according to established doctrine. As a general matter, under common law principles, it is “sensible and just” to cause victims to bear their own costs if the harm they suffer is essentially economic or emotional in nature, as opposed to bodily injury or property damage.

These uncompensated losses often hit the taxpayers as well as the victim.

The Economic Loss Doctrine and Other Property

Post author:Michael M. O'Hear
Post published:April 28, 2010
Post category:Legal Scholarship Tort Law

Ralph Anzivino continues his exploration of the economic loss doctrine in a new paper on SSRN. The economic loss doctrine indicates that economic losses resulting from a defective product are recoverable, if at all, under contract law, instead of tort law. In applying this doctrine, however, courts have run into difficulty with damage to other property besides the defective product. For instance, in one case, a ship caught fire and sunk as a result of defective hydraulic equipment, and the court had to decide whether the ship owner could recover the value of other equipment on the ship under a tort theory of strict products liability. Courts have adopted a variety of conflicting and uncertain tests to determine whether such damages to other property are governed by tort or contract law.

In his paper, Ralph proposes a new test that emphasizes contract principles first. Parties should be permitted to allocate the risk of losses between themselves. Thus, if a contract validly addresses losses to other property, Ralph would enforce the contract; otherwise, tort principles would apply. He defends this approach as clearer and more consistent with the underlying purposes of the economic loss doctrine than approaches currently in use.

Entitled “The False Dilemma of the Economic Loss Doctrine,” Ralph’s paper is forthcoming in the Marquette Law Review. His other recent articles on the economic loss doctrine are here, here, and here.

Anzivino on the Disappointed Expectations Test

Post author:Michael M. O'Hear
Post published:June 22, 2009
Post category:Legal Scholarship Tort Law Wisconsin Law & Legal System

Ralph Anzivino has a new paper on SSRN entitled “The Disappointed Expectations Test and the Economic Loss Doctrine.” This makes a trilogy of recent articles by Ralph on different aspects of the economic loss doctrine. (The first two are here and here.) The abstract for this most recent entry is as follows:

The economic loss doctrine is a judicially created rule that determines whether contract or tort law applies when a defective product causes damage. The doctrine’s starting premise is that contract law governs if the defective product causes economic loss and tort law governs when the defective product causes property damage. A common refrain is that the doctrine was created to prevent contract law from drowning in a sea of tort. However, as the rule has developed, courts have continued to expand contract coverage at the expense of tort coverage. First, when the defective product damages only itself, the courts concluded that such property damage should be resolved under contract law, not tort law. Next, when the defective product damages the system of which it was a component part, the courts concluded that such property damage should also be resolved under contract law, not tort law. Recently, another rule has begun to receive judicial acceptance that further expands the coverage of contract law at the expense of tort law. The rule is called the “disappointed expectations” test or the “reasonably foreseeable” rule. It provides that property damage that was reasonably foreseeable at the time of contracting is recoverable only under contract law, not tort law. The purpose of this Article is to examine the disappointed expectations rule and determine whether it is a positive addition to the legal landscape of the economic loss doctrine.

After surveying the development of the disappointed expectations test, which has been adopted by the Wisconsin Supreme Court, Ralph identifies several reasons why the test should be rejected. He pointedly concludes, “The rule is the most recent progression of tort law drowning in a sea of contract law.”