AI summary:
Superwood rule established in *Superwood Corp. v. Siempelkamp Corp.* bars negligence and strict liability tort claims in Minnesota commercial transactions when the only damage is economic loss. In such cases, recovery is typically limited to contract-based remedies, such as breach of warranty. The rule primarily addresses situations where a product defect causes a financial loss (e.g., damage to the product itself or lost profits) but not personal injury or damage to other property
The plaintiff in Superwood purchased a hot plate press manufactured by defendant. After a cylinder failed and the press could not be repaired, plaintiff sued in....Plaintiff Superwood Corp. sued defendant for failure of a hot plate press under several theories, including negligence and strict products liability theories... wherein the district court applied Minnesota precedent (Superwood),...See Superwood Corp. v. Siempelkamp Corp., 311 N.W.2d 159 (Minn. 1981) (the theories of negligence and strict liability are available only where there is personal injury to the plaintiff or damage to property other than to the product itself).
The plaintiff in Superwood purchased a hot plate press manufactured by defendant. After a cylinder failed and the press could not be repaired, plaintiff sued in federal court in negligence, strict product liability, breach of warranty, and breach of contract--the same theories employed here. On the basis of limitation, the federal court dismissed the contract and warranty claims by summary judgment, as in the case at bar. It then certified the viability of the strict liability and negligence claims to the Supreme Court of Minnesota. In an opinion we consider dispositive of the case at bar, the Minnesota court held that these claims could not be maintained. "Although this is a case of first impression in Minnesota, this court has already demonstrated its approval of Seely in Farr v. Armstrong Rubber, 288 Minn. 83, 179 N.W.2d 64 (1970)." 311 N.W.2d at 161-62. The court pointed out that the Uniform Commercial Code clarifies the rights and remedies of parties to commercial transactions. To allow tort liability in such transactions would emasculate the limitation, notice, and disclaimer provisions of the UCC. "For these reasons we hold that economic losses that arise out of commercial transactions, except those involving personal injury or damage to other property, are not recoverable under the tort theories of negligence or strict products liability." Id. at 162.
In his dissent, Justice Yetka argued that the rule announced in Superwood should apply
only to plaintiff's action in strict liability, not its negligence claim,
The court recently held in Superwood Corp. v. Siempelkamp Corp. ,22 a case in which the federal district court had certified questions to the Minnesota Supreme Court, that in com-
mercial transactions neither negligence nor strict liability in tort is available to the plaintiff who seeks to recover only for economic loss. The court, believing that to allow recovery under these circumstances would "emasculate" the warranty provisions of the
Code, held that "economic losses that arise out of commercial transactions, except those involving personal injury or damage to other property, are not recoverable under the tort theories of negligence or strict products liability."
Superwood Corp. v. Siempelkamp Corp., 311 N.W.2d 159, 162-
63 (Minn. 1981) (Yetka, J., concurring in majority's conclusion that strict tort liability cannot be used by a commercial plaintiff to recover pure economic loss, but dissenting on the grounds that commercial plaintiffs should be able to assert negligence theories against a manufacturer to recover economic loss);
"[f]or these reasons, we hold that economic losses that arise out of commercial transactions, except those involving personal injury or damage to other property, are not recoverable under the tort theories of negligence or strict products liability."
https://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1091&context=mulr
The court ruled, however, that under Superwood Corp. v.
Siempelkamp Corp., 311 N.W.2d 159 (Minn. 1981), the economic loss doctrine applied only to commercial transactions; a "commercial transaction" under the Superwood rule is a
transaction governed by Article 2 of the U.C.C., Minnesota Statutes, Chapter 336 (1986). Id.
Property damage from defective products - what is recoverable by tort law?
Superwood came before the Minnesota Supreme Court pursuant to an order for certification of an unsettled question of state law issued by the United States District Court for the District of Minnesota.....If the Minnesota Supreme Court's decision in Superwood is based on the factual assumption that the press was unreasonably dangerous, then Minnesota follows the Texas theory, allowing recovery for damage to the product itself only if other
property is damaged or personal injury results. 1 2 Such a result is
contrary to the decision in Seely, on which the Minnesota Supreme
Court relied. If the Minnesota Supreme Court did not assume
that the defect in the press was unreasonably dangerous, the opinion in Superwood stands for the proposition that economic loss is not recoverable in tort in Minnesota, leaving open the question of the recoverability of damages caused by an unreasonably dangerous
defect.
......................
In Superwood Corp. v. Siempelkamp Corp.,12 the court held that economic losses arising from commercial transactions are not recoverable in tort, unless the losses involved personal injury or damage to "other property." Noneconomic losses, on the other
hand, could be recovered under both tort and contract theories. The Superwood court recognized that the rights and responsibilities of parties to commercial transactions are governed exclusively by the Uniform Commercial Code.14 In the years following Superwood, the courts struggled to determine what constitutes "other property" as described by Superwood.
The Superwood Constraints precedence
The Superwood court left open one possibility for plaintiffs seeking recovery for "economic losses" arising out of commercial transactions. A broad definition of "other property" would permit recovery in many cases, and much of the litigation that followed Superwood focused on this exception.
"would thwart the policy implications of Superwood. '
I remember my dad trying to explain "negligence" to me at a legal concept. He didn't go into great detail - he just mentioned it in a sentence as we drove around Lake of the Isles. I had no idea that "negligence" was the focus of a big lawsuit at the time for him. My mom informs me that my dad was the corporate lawyer for Superwood when they got married - so the below case happened around when I was 10 years old. Then as a gift to my dad they took him on a small airplane flying lesson - I know because I was in the backseat of the plane as my dad got to take hold of the steering wheel!! That was in Bemidji where Superwood was based because I also remember Paul Bunyan and Babe the Blue Ox.... (below from Facebook quotes):
Superwood, used wet process and elevator oven to produce hardboard and a unique multistep coating and printing line. Product can still be seen on local bathroom walls. Sold to Georgia Pacific who milked it till unprofitable.... Did you meet Lloyd Johnson? He was the owner, had five homes and was one of the biggest landowners in MN and FL, mostly forest. He sold an island in Lake Superior to the Nature Conservancy.
OK I guess Superwood was based in Duluth though?
Id. at 160-61. The RESTATEMENT gives the most famous strict products liability
rule: "One who sells any product in a defective condition unreasonably dangerous to the
use or consumer or to his property, is subject to liability for physical harm thereby caused
to the ultimate user or consumer, or to his property." RESTATEMENT (SECOND) OF
TORTS § 402A(l) (1965).
So because of Minnesota "adopting" the above therefore my dad's lawsuit achieved a "partial summary" in their favor despite the ....
The federal court granted the defendant a partial summary, judgment dismissing the breach of warranty and contract claims. The statute of limitations had expired on those claims.
Yeah I remember my Dad taking me to Cloquet also - so maybe that was the airplane flying lesson trip and the Bemidji trip probably was a different camping trip....
If property damage had also occurred in Superwood, the plaintiff would have
been allowed to assert a negligence action for the recovery of commercial
losses. In Superwood, the Minnesota Supreme Court clearly aligned itself with
the Seely majority. In a commercial transaction, strict products liability
and negligence actions are no longer allowed unless property damage or
personal injury occurs.
https://www.taylorfrancis.com/chapters/edit/10.4324/9781843145745-37/insurance-regulation-john-darby
The plaintiff relied on Superwood Holdings in support of that argument.
So a 2004 academic book on insurance regulation cites my dad's case!!
Increasing attention to the theories of fraud and misrepresentation has followed the Superwood constraints upon the availability of negligence claims.
The Superwood decision did not extend the economic loss
doctrine to consumer transactions or to tort theories other than negligence and strict liability....
In Superwood the plaintiff was forced to seek recovery of economic damages under strict liability and negligence
(D. Minn. 1982). The court suggested that Superwood's "import and precedential
value are a topic of debate."
In Gates Rubber Co. v. Irathane Systems, Inc., 710 F.2d 501 (8th Cir. 1983), the
United States Court of Appeals for the Eighth Circuit, deciding Minnesota law, reversed
the trial court's dismissal of a claim for damage to other property, holding that Superwood
did not bar an action for damage to property other than the product itself.
.....................
the court noted that damages are only recoverable in tort when they are not the type that would ordinarily be contemplated by the parties to the transaction.62
ther cases decided in the first decade after Superwood resulted in a serious limitation on the
availability of tort remedies for property damages arising from prod-
ucts purchased in commercial transactions. Courts rejected a pro-
posed exception to the general rule proscribing tort recovery for
"economic losses" for those damages arising from a "sudden and
calamitous event." 64 In addition, the term "other property" was
construed to include only those items not within the contemplation
of the parties to the sale transaction,65 and that "other property"
must be a significant portion of the damages sought in order to rely
on the "other property" exception.66
The court stated that
[Superwood] simply does not comport with excepting economic losses arising
out of personal injury or damage to other property when the setting in
which the sale occurred was a commercial transaction. Indeed, making tort
theories of recovery available in commercial transactions flies in the face of
the court's recognition of the intended purview of the U.C.C.
Negligence, Economic Loss, and the U.C.C. DAVID B. GAEBLER
The traditional distinction between tort and contract has been that tort
deals with obligations imposed by law for the general benefit of society
while contract deals with obligations voluntarily assumed by the parties.'
economic loss doctrine does not apply to service contracts
because they are not "commercial" transactions within the meaning of
Article 2 of the U.C.C. McCarthy Well Co. relied on Superwood Corp.
v. Siempelkamp Corp.'75 to reach its holding.
Minnesota has adhered to the ELD for many years, although the doctrine
has been through a metamorphosis. Superwood Corp. v. Siempelkamp Corp., 311 N.W.2d 159; Hapka v. Paquin Farms, 458 N.W.2d 683 (Minn. 1990). In 1991 Minnesota codified the ELD in their statutes. Minn. Stat. § 604.10.
The statute, entitled Economic Loss Arising From The Sale Of Goods, prohibits recovery in tort for damage to the product only, but provides exceptions where there is damage to “other property” or fraud or fraudulent or intentional misrepresentation. The ELD codification was amended in 2000 and applies to sales or leases that occur on or after August 1, 2000. Minn. Stat. § 604.101. Under the new statute, the ELD applies to products both sold and leased and both consumer and commercial transactions.
https://open.mitchellhamline.edu/cgi/viewcontent.cgi?article=1415&context=wmlr
Steenson, Michael K. (2011) "Minnesota Negligence Law and the Restatement (Third) of Torts: Liability for Physical and Emotional Harms," William Mitchell Law Review: Vol. 37: Iss. 3, Article 9.
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