The Economic Loss Rule explained: Contract vs. Tort Claim

　

What is the significance of the economic-loss rule?

When a party's acts breach a contract and the only alleged injury is economic loss to the subject of the contract itself, the action sounds in contract alone. Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 495 (Tex. 1991); Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986); see also Mickens v. Longhorn DFW Moving, Inc., 264 S.W.3d 875, 879 (Tex. App.-Dallas 2008, pet. denied) ("When a negligence claim is made alleging the breach of the very duties encompassed in a contract between the parties, the action is for breach of contract and not tort.") (internal quotations omitted).

SOURCE: Dallas Court of Appeals - 05-10-00047-CV - 7/15/11

Although [ Appellant's ] brief includes some discussion of the economic-loss rule, its briefing consists only of an abstract discussion of the law. [ Appellant ] does not explain why its negligence, gross negligence, and fraud claims are not barred by the economic-loss rule on the particular facts of this case. See In re Estate of Miller, 243 S.W.3d 831, 840 (Tex. App.-Dallas 2008, no pet.) (holding issue waived because appellant did not analyze legal authority and made "no suggested application of it to the facts"). Nor does[ Appellant ] support its argument with any citations to the record as required by Texas Rule of Appellate Procedure 38.1(i). See In re B.A.B., 124 S.W.3d 417, 420 (Tex. App.-Dallas 2004, no pet.) ("The failure to adequately brief an issue, either by failing to specifically argue and analyze one's position or provide authorities and record citations, waives any error on appeal.").

We conclude that [ Appellant ] has effectively failed to challenge [ Appellee's ] invocation of the economic- loss rule, and so we will not disturb the summary judgment with respect to[ Appellant ]'s claims for negligence, gross negligence, and fraud. See Adams v. First Nat'l Bank of Bells/Savoy, 154 S.W.3d 859, 875 (Tex. App.-Dallas 2005, no pet.) ("[A] reviewing court will affirm the summary judgment as to a particular claim if an appellant does not present argument challenging all grounds on which the summary judgment could have been granted."); see also Jarvis v. Rocanville Corp., 298 S.W.3d 305, 313 (Tex. App.-Dallas 2009, pet. denied) (stating that a general issue challenging summary judgment must be supported by argument "negating all possible grounds upon which summary judgment could have been granted").

SOURCE: Dallas Court of Appeals - 05-10-00047-CV - 7/15/11

The Economic Loss Rule

SIGNIFICANCE OF THE ECONOMIC LOSS RULE

Texas Supreme Court cite on economic loss rule:

The economic-loss rule generally precludes recovery in tort for economic losses resulting from the failure of a party to perform under a contract. Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 12 (Tex. 2007).

When the only loss or damage is to the subject matter of the contract, the plaintiff’s action is ordinarily on the contract. Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991).

SOURCE: Houston Court of Appeals - 14-10-00351-CV - 6/30/11


RELATED LEGAL CONCEPTS: breach of contract vs. tort, contractual obligations vs. obligations imposed by law, contract and non-contract causes of action