Palmetto Linen SVC v. UNX, Incorporated, 4th Cir. (2000)
Palmetto Linen SVC v. UNX, Incorporated, 4th Cir. (2000)
Palmetto Linen SVC v. UNX, Incorporated, 4th Cir. (2000)
No. 99-1209
mercial Code (U.C.C.). See S.C. Code Ann. 36-2-318 (Law. Co-op.
1976).
In November 1998, the district court granted Nova's unopposed
motion for summary judgment on the express warranty claim, leaving
only Palmetto's tort claims. In January 1999, the district court granted
summary judgment to both defendants on the negligence claims on
the ground that South Carolina's economic loss rule barred any tort
recovery by Palmetto. Palmetto now appeals the dismissal of its negligence claims.
II.
South Carolina's economic loss rule provides that where a buyer's
expectations in a sale are frustrated because the product does not
work properly, the buyer's remedies are limited to those prescribed
by the law of contract. See Kennedy v. Columbia Lumber & Mfg. Co.,
384 S.E.2d 730, 736 (S.C. 1989). This doctrine demarcates the boundary between contract and tort in product liability cases by helping to
determine which theories are applicable in a given action. See Bishop
Logging Co. v. John Deere Indus. Equip. Co., 455 S.E.2d 183, 188
(S.C. Ct. App. 1995). Its contours and rationale have been carefully
explained by Judge Traxler in Myrtle Beach Pipeline Corp. v. Emerson Elec. Co., 843 F. Supp. 1027 (D.S.C. 1993), aff'd, 46 F.3d 1125
(4th Cir. 1995) (unpublished table decision). Most fundamentally, the
economic loss rule distinguishes between transactions involving the
sale of goods, where contract law protects economic expectations, and
transactions involving the sale of defective products to individual
consumers, whose injuries are traditionally remedied by the law of
torts. See id. at 1049.
A.
Palmetto first argues that the economic loss rule does not bar its
tort claims because it merely seeks to hold defendants liable for negligence in the provision of services. Although Palmetto failed to raise
this argument below, see e.g., Wilder Corp. v. Wilke, 497 S.E.2d 731,
733 (S.C. 1998), we would nonetheless reject it.
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defect); Neibarger, 486 N.W.2d 612 (tort claim for damage to cattle
caused by defective milking machine was barred because loss was
within contemplation of parties). The destruction of Palmetto's linens
was the natural and foreseeable result of a malfunction in the chemical injection system. The other alleged losses were similarly foreseeable. The parties to the contract either contemplated or should have
contemplated these dangers in allocating the risk of loss. While we do
not downplay the extent of Palmetto's alleged losses, business entities
must protect their commercial interests up front through the medium
of contract. The economic loss rule dictates that Palmetto cannot now
obtain in tort a remedy for which it did not bargain.
III.
The judgment of the district court is
AFFIRMED.
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