In Kmart Corp. v. Herzog Roofing, Inc.(2017AP1041), the Court of Appeals District III ruled that the economic loss doctrine barred Kmart’s negligence claim for property damages.
Herzog and Kmart entered into a contract by which Herzog would provide materials and install a rubber roofing system on an Eau Claire Kmart store. Ten years later, the roof collapsed, and Kmart filed a negligence claim against Herzog.
The court ruled the economic loss doctrine barred the negligence claim. In the decision, the court defines the economic loss doctrine as “generally barring contracting parties from pursuing tort claims…for economic losses arising from the parties’ contractual relationship.” Under the doctrine, the claim is barred if it meets two requirements:
- The contract is predominantly for the sale of a product. Here, the court determined that the contract was predominantly for the sale of the roofing materials, not the service of installing them, so the economic loss doctrine applies.
- The plaintiff is seeking solely economic damages, not including damages to other property than the contracted product. Here, the court determined that the roof was an integral part of the damaged building. Furthermore, Kmart should have foreseen that the roof’s failure would have caused damages to the building and should have protected against that loss in the contract. Therefore, the damaged building was not “other property” that would prevent application of the economic loss doctrine.