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New Jersey Supreme Court reverses Appellate Division in seminal economic loss rule case dealing blow to manufacturers of home construction building components.

April 1, 2011
Dean v. Barrett Homes, Inc., 406 N.J. Super. 453 (App. Div. 2009), cert. granted, 200 N.J. 207, 976 (2009)

On Monday, November 15, 2010, the New Jersey Supreme Court issued its decision in this controversial case. The issue in Dean was whether the economic loss doctrine, a judicial construct which bars recovery in tort for damage a product causes only to itself, applied to bar a homeowner’s tort claim for a defective exterior finishing system installed on their home during construction. The salient question the Supreme Court had to answer was whether a home built with the exterior siding product, in this case manufactured by defendant Sto Corporation (“Sto”), was considered the “product itself” for purposes of delineating Sto’s tort liability. If the exterior siding product was considered to be fully integrated into the home, then home purchasers would be precluded from pursuing products liability relief against manufacturers of allegedly defective products permanently affixed to the outside of the home for damage those products caused to the home. In a triumph for home purchasers, innocent builders and developers, the Supreme Court held that Sto’s exterior finishing product, Exterior Insulation and Finish System (“EIFS”), was a separate product from, and not fully integrated into, the plaintiffs’ home. A cause of action, therefore, exists against Sto, and likely other home construction building component manufacturers, to the extent that the product caused damage to the house or its structural components.

Case Law Alert - 2nd Qtr 2011

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