Damages – Economic Loss Rule followed in Ky: Industrial Risk Insurers v. Giddings & Lewis, Inc. (COA 7/2/2009)

Industrial Risk Insurers v. Giddings & Lewis, Inc.
2007-CA-002163 07/02/2009 2009 WL 1884386 DR Pending

Opinion by Judge Keller; Judges Clayton and Lambert concurred.

The Court affirmed in part, reversed in part, and remanded a circuit court order granting summary judgment to appellees on appellants’ tort claims related to damage to a lathe, material handling system and vertical machining centers manufactured by appellees. The Court held that the circuit court correctly determined that the Economic Loss Rule applies in Kentucky and that the destructive or calamitous exception to the Economic Loss Rule does not apply in Kentucky. The claims arising out of negligence and breach of warranty were contractual in nature and thus, were barred by the Economic Loss Rule. However, the claims arising out of negligent misrepresentation and fraud arose out of common law tort theories and did not fall within the rule. The Court then held that the trial court erred in concluding, as a matter of law, that the lathe, vertical machining centers and material handling system were one product and that, considering the evidence, this was a question of fact for a jury. The Court next held that, to the extent any service contract existed, any claims by appellants related to misrepresentation or fraud could be addressed in conformity with the holdings regarding the Economic Loss Rule. The Court finally held that appellants might be able to recover damages related to any other equipment or to its facility to the extent it could prove such damages.

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